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The “Wild West” past of franchising
Today, franchising is a growing art, a model described by author Mark Siebert Franchise Handbook “One of the most powerful business expansion strategies in the world today.” Siebert’s Reference Guide may be one of the most influential books on franchising to date, as it not only provides step-by-step instructions on how to navigate franchising business opportunities, but also the context of its “Wild West” past. Prior to the FTC regulations that now exist, franchising was a fairly relaxed term and the practice led to some memorable failures. Today, according to the revised FTC rule 436, a franchisee business must meet three specific criteria: 1) it must be allowed to use its name and trademark, 2) it must provide significant operational support and 3) it must collect a fee. You have to do that
Related: Franchise Basics
Old myth debunking
Mention franchising and most people immediately think of McDonald’s. Yes, McDonald’s is one of the most successful global franchise operations in history, but only a quarter of all franchises involve fast-food. In fact, the best-selling book in this clich, titled “More Than Just French Fries”, emphasizes how the franchising industry goes beyond this category and incorporates thousands of different concepts beyond food and beverages. To unravel a few more popular myths about franchising, it doesn’t cost $ 1 million or more to buy a franchise, you don’t have to be an industry expert to own and operate one and – to be honest – owning one doesn’t guarantee prosperity and success. Franchising is actually a mutually beneficial opportunity between a franchisor (brand expansion) and a franchisee (business ownership).
Related: 4 Biggest Myths About Franchising
Finding the right franchise for you
Not everyone is cut off from owning a franchise. It is a business model that requires strict adherence to procedures, activities and systems – Rebel and Mavericks do not apply. But once you decide to enter the world of franchising, the most important next step is to find the right idea to own and operate. How do you determine that? It all depends on your reasons for wanting to own a franchise. Do you want more money? More flexibility? Are you eligible to buy the price range? All of these goals, and to discover your best franchise fit, require their thinking. Many entrepreneurs choose franchising as a professional change – an admirable choice, but you don’t want extra compensation either.
Wading through your options
You can manually search for the right franchisee, or you can hire a qualified franchisee advisor or broker. The latter will probably save you a lot of time and effort, as most consultants help narrow down your choices based on the choices you make during personal assessments or questions. One of the most important aspects of this initial search phase is to keep an open mind about the ideas you are reviewing. At first, a particular idea may not seem like the right choice, but in the end the business model may be the right choice for you. Take the time to consider why you fit in well with certain ideas and – above all – be patient during the investigation process.
Related: Own a franchise in 5 easy steps
Respectful of the process
The franchise search process consists of a number of steps to determine the right fit for franchise ownership. You can expect to review several possibilities, do it carefully, and then narrow it down to one of the most interesting ones. At that point, you’ll be requesting and reviewing the brand’s Franchise Disclosure Document (FDD). The FDD consists of 23 sections and spells the chapters and verses of a particular franchise key, including the most important franchisors and the specific role of the franchisee. At this stage, it is highly advisable to seek professional guidance from an attorney and / or CPA for additional assurance of your suitability as an owner / operator. After that? Validity is your chance to participate in one-on-one conversations with the system’s executive leadership and other franchisees. Only then will you really find out what it is like to own a certain franchise. If all goes well, your next step is Discovery Day, sometimes called “Meet the Team” Day. This usually involves a personal visit to the brand’s headquarters for a one-day intense final interview. If the brand deems you appropriate, you will be given a place in their system – and then you have to make the final decision. As mentioned Franchise Bible, Rick Grossman and Michael J. Katz, Esq. By the way, this is a “decision that must sit comfortably with you on a mental and business and financial level.” Don’t forget to consider it that way. And good luck.
Mark Siebert is the CEO of iFranchise Group, a leading franchising consulting firm and author of the franchise Handbook. Buy it now from Amazon or Burns & Noble.
Rick Grossman and Michael J. Katz SQ. Franchise Bible Author: How to Buy a Franchise or Franchise Your Own Business. Buy it now from Amazon or Burns & Noble.
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