The Industry Word

[#1]

It takes the right personality traits to be a franchise business owner. It's just not for everybody.

Just like everyone is not cut out to be a US Air Force Thunderbirds * jet pilot, flying around at 1,000+ mph, so it is with small business ownership. Being a small business owner requires certain personality traits on its own.

The business model of franchising brings with it a totally different set of issues. Not only must you be somewhat of a risk taker, but you must have absolute faith in the system you are investing in. Along with that faith, and a great deal of proper due diligence and fact gathering, there is one other thing that tends to be overlooked. What is often overlooked is what I call, "a franchise personality". What I mean by "franchise personality," is that the person or person's that are purchasing the franchise having the type of personality that is OK with rules. (A rule follower)

Rules like;

• You must follow the franchisors operations manual
• You must use their colors, their logos. (If you buy a UPS Store franchise, the predominant color of their stores is brown. You cannot set up your retail space with splashes of orange and green!)
• You'll be asked (Required) to pay a certain percentage of your gross sales revenues to the franchisor
• Territorial rights. You may not be allowed to market your products/services outside of your protected territory.
• You may have minimum monetary requirements regarding monthly advertising expenditures

It's not just you, the franchisee, who has to follow the rules.

Here's more information of franchise rules that the franchisor must follow, from the franchise specific area of Business.Gov

So, how do you know if you have the right personality for franchise business ownership?

There is a free quiz that I developed which is totally unscientific, but will really help you decide if you should even go down the franchise path.  It will take you all of 5-10 minutes to complete, and I'll score it for you.  Just go to  http://www.TakeTheFranchiseQuiz.com *

Remember that a franchise concept is someone else's "baby." It was not your idea, and it certainly was not your money that went in to create the concept...from its systems, to its marketing and advertising, to its computer networks, and software. For a franchise system to really work, the system itself must remain tight, and well...systemized. 

The rules are there to keep uniformity in the franchise system. That is what you are buying, right?

**Hyperlink directs reader to non-government Web site.

 

{The Franchise King ®, Joel Libava, is president of Franchise Selection Specialists Inc. Joel helps those interested in exploring franchise ownership all over the country find great opportunities that are a great match for them. He is frequently called on by the media for his no-spin insights on the world of franchising. You can follow Joel on his award winning blog-The Franchise King Blog.}

Message Edited by NicoleD on 11-03-2009 11:26 AM

Message Edited by StuartR on 11-09-2009 04:58 PM

Message Edited by FranchiseKing on 12-01-2009 01:03 PM

[#2]

IT seems to be a rough time for Franchises out here in Southern California. I have had three different friends buy into Franchises, and while they have all made relative success out of their respective shops, the Franchises themselves have gone bankrupt. I am not saying that franchises in general are a bad thing, but how does one know for certain they are getting involved with a franchise that is well funded and stable?

cindy@www.whiteinstudios.com

Message Edited by NicoleD on 11-09-2009 10:24 AM

[#3]

Hi Cindy,

Thank you for taking the time to read my post, and ask a question-an important one.

In our not-to-perfect world, one just never knows. Look at the major banks that have gone uinder. GM filed for Bankruptcy protection. it's all weird.

In franchising, due diligene seems to pay off. Have a CPA go through the franchise company's financials, which are readily available. Have a franchise attorney do some digging.

Time spent on research usually pays off.

The Franchise King

Joel Libava

[#4]

I can see what you mean, Joel, about needing to have the right personality to buy a franchise.

Personally I might find that I chafe under so many rules and restrictions. I love being a small business owner -- but part of the allure is that I can make my own decisions. 

Anita

[#5]

Anita,

You and I have more in common than I first thought.

Rules. Not.

Restrictions. Some.

I love the freedom of making my own choices in my business, and having the power to be able to do so.

The Franchise King

Joel Libava

[#6]

As far as this rule goes: "You'll be asked (Required) to pay a certain percentage of your gross sales revenues to the franchisor"

What is the normal required percentage you are asked to pay to the franchisor?

[#7]

Seop,

Great question.

Figure anywhere from 4-12% of your gross monthly sales. It depends on the business.

The Franchise King®
Joel Libava