Franchising & You

by Simon Lord

last updated 09/12/2021

Simon Lord is Editor of Franchise New Zealand and has worked in franchising for over 35 years.

Strength In Numbers

by Simon Lord

last updated 09/12/2021

Simon Lord is Editor of Franchise New Zealand and has worked in franchising for over 35 years.

Franchisees are feeling much more positive than independent small business owners. Why does buying a franchise give you such big advantages over going it alone?

The last 18 months or so haven’t been easy for anyone, and that’s especially true for small business owners. Lockdowns, online sales and contactless delivery have created challenges, and, while small businesses can move fast, they don’t always have the resources, the systems or the expertise on hand to cope. 

‘As a result, my estimate is that 40 percent of small business owners are seriously stressed,’ says psychologist Greg Nathan. ‘But the figures are significantly better for franchisees, where over 80 percent report that they are functioning well, or are slightly stressed but functioning normally. Independent owners are struggling because they don’t have the business and social support that good franchise networks provide. Franchisees feel part of a wider group, part of a team, and that can be very reassuring – they know someone has got their back.’

So if you are considering buying your own business, buying a franchise makes more sense now than ever. Starting a new business – or even taking over an existing one – is hard. You need a viable business model, a reputation and the right equipment and connections. You need finance and you need customers. You need to be good not just at doing whatever you do, whether that’s holding classes or making coffee, but at running a business: marketing, managing cashflow, pricing and negotiating, to name a few key activities. Not many people have all those skills when they start, which is why many small businesses never get off the ground. If you’re used to having a team of specialists around you, being your own boss can also make you feel very isolated.

Buying a franchise, on the other hand, means that you will have strength in numbers. Although you still own your own business, you’re also part of a much bigger operation. You’ll get the training, systems, marketing, help and support you need to have the best possible chance of success. You’ll have more options when it comes to funding, because banks know the value of good franchise models. And when something goes wrong (as inevitably happens sometimes), you’ll have all sorts of help and support available.

Buying a franchise also means that you can take your existing experience and abilities and channel them into something new. It’s just a question of matching your skills, goals and attitude to the right opportunity.

Strength in training

Over the years, we’ve talked to hundreds of people who have changed careers through buying a franchise: bankers who have bought cafés, restaurateurs running laundromats, and retailers who took up lawnmowing. That’s reassuring, especially if you are currently facing redundancy. In some cases, franchisees have gone from knowing almost nothing about their new industry to winning awards for their performance.

How is this possible? Well, franchisors select franchisees based on ability rather than experience, then train them in exactly what they need to know to run their own business. This training will vary according to the complexity of the franchisee’s role and the degree of familiarisation required with new equipment and/or systems.

For example, a training programme designed to help you run a pizza franchise – where you will be producing product, recruiting, training and managing staff working shifts, running a retail and delivery operation, and complying with health & safety requirements – is going to be rather longer and more detailed than one aimed at a courier franchisee. 

But whatever the technical requirements, the training provided by any good franchise should also cover the administrative, financial and marketing tasks required to run a business profitably. It should provide the systems to help you do that, too: many franchises these days provide quite sophisticated tools to help you manage your time, boost your performance and compare your performance with other franchisees. All this provides a level of support that independent business owners can only dream of. That reduces your stress – and increases your chances of success.

Strength in opening

Once you’ve completed your training, you’re theoretically ready to run your own business. In practice, there is another stage to go through – opening the business itself – which requires the detailed input and support of the franchisor. This can be divided into two types of assistance: business preparation and personal preparation. 

Business preparation 

In the case of a premises-based franchise, your new location has to be selected, designed, equipped and stocked to the franchisor’s specifications. For this reason, the franchisor will usually be heavily involved in the process. Assistance may cover the areas of:

  • Site selection
  • Lease negotiation
  • Premises design and fit-out
  • Initial stock ordering
  • Staff selection and training
  •  POS and IT set-up
  • Opening promotion

Where the franchise is a mobile or home-based one, preparation will usually include:

  • Vehicle leasing or purchase
  • Signwriting
  • Equipment 
  • IT systems
  •  Initial stock & supplies
  • Office set-up
  • Initial market promotion

All this means that you can start your business confident that you’ll have everything you need, and will be free to focus on your customers.

Personal preparation

No matter how well a new franchisee performs in training and work experience, opening your own business is inevitably a nerve-wracking time. This is the business in which you have invested and on which you are going to be relying. Nerves are normal.

But although this is a new experience for you, your franchisor will have done this many times with other newbies. They’ll usually supply an experienced field manager to support and work with you in your own outlet or territory both before and immediately after opening. The field manager will help to reduce your nervousness by ensuring that everything is set up properly so that you can apply your training. Once you are up and running, expect them to stay with you for long enough for you to feel reasonably comfortable operating on your own. They are there not to run the business for you, but to ease you into independence.

The amount of time that this takes will vary enormously. In food or retail businesses, a week or so of on-site support before and after opening would be quite usual. In some franchises – particularly service-based ones – the training and opening periods may overlap if, say, the franchisor’s representative goes out to meet prospects with you and helps secure your first clients.

As you can imagine, the strength of having experienced support like this makes a big difference to the speed with which you can get established ­– and start making money.

Strength in operating profitably

Once you are comfortable with the day-to-day operation of your business, you should really start to see the power of the franchise kick in. Some of the benefits include:

Buying power. A sizeable franchise can negotiate good bulk-buying arrangements not only on product but on services such as insurance, telecommunications, IT, fuel and even on financial services such as credit card and EFTPOS and borrowing arrangements. This is such a massive benefit for franchisees that we call it ‘franchising’s secret advantage’.

Field visits. Visits from field managers and other specialists can be incredibly valuable. While part of their function is to ensure compliance with the franchise’s systems, the major focus is on helping you build your business – finding opportunities for improvements in sales, service and cost control. Field managers are like free business consultants – find out what field managers really do.

Marketing & merchandising. Most franchises have a national marketing fund to which franchisees contribute. The franchisor administers this, often in consultation with the franchisees. They’ll also keep your product or service up-to-date with the latest trends, from changing customer tastes to new technology – something that can be a big distraction (and cost) for independent operators.

Ongoing training. This ensures that franchisees and their staff are kept up-to-date and provides an opportunity to share solutions to common problems. It not only helps maintain consistency of standards throughout the network, but can also help you build relationships with other franchisees and ensure you feel part of a network. Running a business by yourself can be a lonely experience, but being part of a franchise means always having someone to share your triumphs and disasters with.

Management & business advice. Experienced franchisors provide assistance in areas such as goal setting, cash management and exit strategies. In addition, standardised computer systems make it possible to ‘benchmark’ your business against others in the system, enabling you and your advisors to see at a glance what you are doing well and where you might find room for improvement. 

Compliance. With increasing legislation in areas such as health & safety and employment law making life more complicated for operators in many industries, being part of a franchise that works out systems for you can be hugely valuable.

Product development. While franchisees focus on the customers, franchisors focus on the future to ensure that products or services are constantly improved or replaced where appropriate. The franchisor will also monitor the competition and advise franchisees of any developments.

Staff Matters. Your franchisor may help in the recruitment and selection of staff, as well as advice on how to keep them motivated and reduce staff turnover. This also helps the franchisee maximise profits. 

All of these benefits add up to provide franchisees with the sort of financial and operational advantages that independent business owners can only dream of. 

Strength in yourself 

For anyone looking at moving into their own business, then, franchising has a lot to offer. You’ll have the support and guidance of the franchisor behind you, and you’ll be provided with systems to help you handle most of the practical obstacles along the way. You won’t have to create products or services to sell, won’t have to work out where to source them or how to price them, and you’ll have the benefit of an established brand name that will bring customers to your door.

You’ll also have the reassurance that a number of other franchisees have been before you and proved that the franchise model works. But the success of your own business will still depend very much on your own efforts, and that’s where determination and commitment matter more than anything else. Franchisors say that the biggest single obstacle which faces people moving from employment to self-employment for the first time is the need to change your mindset from ‘doing a job’ to ‘managing your own business.’ 

‘There’s more to it than just getting used to the idea that you won’t be getting a regular pay cheque every week,’ said one. ‘You have to accept that if you want your business to grow, it’s up to you to grow it, and if you have a problem, it’s up to you to fix it.’ The good news is that, with a franchise, you have someone who understands your business inside out to turn to whenever you need advice. 

If you want to own your own business, then, franchising offers you the chance to do it with real help and support behind you. In a time of uncertainty there’s strength in numbers, so make sure the numbers are on your side. You can find more tips about how to find a franchise to suit you here.

Simon Lord is Editor of Franchise New Zealand and has worked in franchising for over 35 years.

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