by Simon Lord

last updated 13/09/2023

Simon Lord is editor of Franchise New Zealand magazine and website and has worked in franchising in NZ and the UK for over 40 years. Inclusion of any franchise system by name within this article does not imply endorsement by the author or publisher.

The Long Game

by Simon Lord

last updated 13/09/2023

Simon Lord is editor of Franchise New Zealand magazine and website and has worked in franchising in NZ and the UK for over 40 years. Inclusion of any franchise system by name within this article does not imply endorsement by the author or publisher.

What makes a franchise such a good choice as a long-term investment?

After 33 years with Rodney Wayne, Adele Flett is one of the longest established franchisees in the country - and she still loves being part of the team. 'We all share lessons and stories and bounce ideas off each other and, although we're all indidvidual owners, we're all in this together.'

Jane Merai, who has owned her Columbus Coffee franchise for over 12 years now, feels the same. With all that experience, you might think that she doesn’t really need a franchise any more, but in fact she values it more than ever. ‘The benefits for me outweigh everything else. I never feel alone and I love being part of the franchise community.’

Adele and Jane aren't the only long-term franchisees in the magazine who feel that way. Quin Wang has owned his Aramex courier franchise for 11 years, while Matty and Sally Lovell have owned their Anytime Fitness gym for 8 years. After just 3 years at Cleancorp, Manish Singh is a relatively ‘new boy’, but he’s already enjoying a work/life balance he never thought possible.

You can read about all these people in this issue. They show that owning a franchise offers many advantages over starting or buying an independent business – and that those advantages often increase the longer you stay with the franchise. That’s why, if you’re investing in a business, you should think long-term. Over 10 years or so, there will inevitably be ups and downs in the economy, in the market conditions, and in your personal life, but a good franchise will help you make the most of the good times – and support you through the tricky ones.

Let’s have a look at some of the reasons to buy a franchise in the first place – and how the benefits you receive can increase over time.

Why start with a franchise?

There are lots of good reasons for buying a franchise in the first place. These include:

Reduced risk

Starting your own business is risky. You need a good idea, the skills to make it happen, the cash to finance it and a whole lot of help to get it right. You need to tell your customers you exist, and give them a reason to choose you rather than your competitors. Buying a franchise means that someone else has already worked all this out for you, so the risk is much reduced.

Training 

When you buy a franchise, a good franchisor will ensure that you are fully trained in every aspect of running your specific business – not only using the equipment but managing people and cashflow, creating your customer database, purchasing, promoting the business, and lots of other things.

Support

As you start to operate your own business, you’ll be given systems to help you monitor your progress, feedback on how you are doing, and ideas for doing even better.

At its best, franchising is like having a dedicated mentor and business coach rolled into one.

Buying power 

Whatever business you go into, controlling your costs is as important as maximising sales. Being part of a franchise can give you better deals on everything from products and ingredients to equipment – as well as services such as fuel or insurance. Combining your buying power with 20 or 100 other franchisees can make a big difference to your bottom line profit.

Promotion 

Having a known name on your van or above your shop will bring in business from day one. With a professional marketing team handling much of your advertising for you, you can concentrate on serving your customers and building your reputation locally.

The net result is that your new business can get up and running faster and with less risk than if you try to go it alone. These five benefits alone will justify the fee you pay to be part of the franchise in the first place – and there are plenty of other advantages, too, that you’ll experience over time.

Why stay in a franchise?

Many franchisees stay in their businesses for a long time, and why not? After all, if you’ve found something which you enjoy and it’s working well for you, why would you change? But it’s not just about sticking with a winning formula – here are some of the reasons why viewing a franchise as a long-term investment pays off.

Increasing confidence

Starting a new business is hard work, whether it’s a franchise or not. In the early days, you’ll find yourself working harder than you ever have in your life. But it gets easier as you get used to the systems, are able to do everyday tasks without thinking about them, train up your staff, and so on. Talk to any lawnmowing or cleaning franchisee and they’ll tell you that the first couple of months are incredibly hard work as they become ‘match fit’, but after that they are able to tackle more work faster. The same applies to any business, even if the challenge is mental rather than physical.

Better time management

As you work more efficiently, you’ll find you have more time to work on the business rather than just in the business. In turn, that will give you more flexibility in choosing when you work to fit in your family and the other things you want to do.

Increasing returns

As sales build and efficiencies increase, your profitability will increase, too. Yes, you can treat yourself now and then – and if you concentrate first on reducing debt by paying down any business loan or reducing the mortgage, you’ll have more money to spend on the things you love. By budgeting wisely, you can build an asset that returns more profit and is worth more when you do eventually sell it. See page 34 for some financial tips.

Ongoing development

When you own your own business, it’s easy to get bogged down in day-to-day operations. This is another area where franchisees have an advantage – in a good franchise, the franchisor team will be constantly looking at market trends, new opportunities, new equipment or software that will keep your business at the cutting edge. If you’ve ever tried to compare something as basic as phone plans, you know how time-consuming and frustrating that can be. Having someone doing the research and negotiation for you on lots of different topics can be a huge relief.

Staying ahead of the pack

Every new business needs a competitive advantage. As time goes by, you have to find new ways of staying ahead. Because a franchisor needs the whole network to succeed to maintain their own income, it is their job to focus on franchisee profitability and competitiveness. This, aligned with benchmarking (measuring and comparing performance in key areas such as, for example, wastage, power usage, sales per square metre or per employee) helps franchisees stay competitive – and increasingly profitable.

Overcoming store blindness

Run a shop or a café for long enough and you’ll find you become what retailers call ‘store blind’ – you won’t notice deterioration in furniture, signage, uniforms or even habits because they happen so gradually. But with regular visits from the franchisor’s field managers, who will often have a checklist, you’ll find that you can stay sharp and go on treating customers just as well as you did at the start.

Knowing when to change

In every business, growth brings new challenges. When is the right time to buy a new piece of equipment, or employ someone for a particular role? Is it worth taking bigger premises or renewing the lease? They are big decisions, and timing can be critical. Having the support of a franchisor who has seen others go through this stage and has the facts and figures to help you, as well as the input from other franchisees, is a huge advantage. All these things reduce stress and help long-term franchisees make sound decisions.

Compliance made easy

Running a small business has become more difficult in recent years, with increasing employment, health and safety, and other regulations. In addition, legislation in areas such as childcare has become so time-intensive that many small operators are being forced out of business. But with a franchise keeping watch on the compliance side, telling you what you need to do and the systems you need to use, you can continue in a business that you know and love. You’ll still have to comply, but you won’t waste time working out how.

Legal issues are something you need to be aware of from the start, so read Thinking Ahead to learn more. The article also covers the length of franchise terms and what is involved in renewing the term, as our featured franchisees have done.

Part of a team

An independent business is just that – on its own. However, in an established franchise you have not only the support of your franchisor, but also all the other franchisees who have been through the stage you are now at and understand the problems. Some of them are certain to become good friends, and there will be franchise meetings, conferences, funny stories, helpful hints … It all helps to reduce that feeling of isolation and prevent burnout so you can go on enjoying your business and making a success of it.

Opportunity to contribute

Just as others share their experience with you, as you become established so there are opportunities to share what you’ve learned with others. Jane Merai sits on the Franchise Advisory Council for Columbus Coffee; Adele Flett trains new recruits; and many franchisees act as trainers and mentors, formally or informally, for newer franchisees. It’s a way to give back, be involved and influence the wider franchise – and it keeps you engaged so you never get bored.

Someone’s always got your back

The Covid lockdowns were a time when a lot of small business owners suffered from uncertainty and isolation. By comparison, franchisees had people to talk to, people who really understood and cared, and who gave whatever help they could. At that time, we ran a series of articles on how franchisors were helping franchisees in everything from finance and fees to mental health and family games – read it at www.franchise.co.nz/articles/3161. And it’s not just about Covid – we regularly hear how franchises pull together to help one of their number who has suffered floods, or health issues, or bereavement … The lesson is: when you own a franchise, someone’s always got your back.

When the time comes to sell

Finally, no matter whether you remain in your chosen franchise for five years or forty, the time will come when you are ready to sell, retire, pass it over to a new generation or start a new life.

That will be a sad moment. In most cases, though, the business will still have one last gift to give you – the capital gain that comes from selling a successful business operating under the banner of a well-known brand. The combination should make it both easier to sell and command a higher price than an independent outlet.

Jane, Quin, Matty, Sally and Adele are all profiled in the following pages, along with many others. Read their stories and ask yourself: is buying a franchise a way to build the business you want in the years ahead? If so, click here and find out how to access advice and resources to help you make the right choice.

 

This article was first published in Franchise New Zealand magazine (Year 32 Issue 2).

 

Simon Lord is editor of Franchise New Zealand magazine and website and has worked in franchising in NZ and the UK for over 40 years. Inclusion of any franchise system by name within this article does not imply endorsement by the author or publisher.

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