Could a Franchise Business be right for you?
Nick Strong, MD - Select Your Franchise
Starting up your own business is often seen by many as an ideal business option: making your own money, managing your own time, flexibility, to name just a few benefits. However, statistically most business start-ups fail. Another option to consider is franchising since successive British Franchise Association/NatWest national surveys report that over 90% of franchisees operate profitably in any given year. This statistic is hard to ignore. With such a high success rate the choice between going it completely alone or whether to take start up a franchise business seems almost a “no brainer”. However, not everyone is suited to franchising so its important to assess whether its right for you.
The Ideal Franchisee
The general feeling in franchise circles is that those with an entrepreneurial personality often don’t make the best franchisees. Surely this can’t be right I hear you ask? An entrepreneur seems on the face of it to be ideal since surely they are motivated to start up new projects and work with new ideas. However its just this need and drive to innovate and develop their own ideas that becomes a potential stumbling block for both the franchisor and franchisee alike. They enjoy pushing the boundaries and trying new things. A franchise requires someone to ‘follow’ a proven system. That is to say, someone that stays within the boundaries of what is proven to work. Because of this an entrepreneur can often be a person that is pulling in the opposite direction to the principle of franchising. To be a success, franchisees follow the proven system and succeed as a direct result of following that proven system.
So who makes an ideal franchisee?
There are certain personality traits that are necessary to be a successful franchisee:-
- Enthusiastic and passionate about the franchise business
- Dedicated and hard working
- Most importantly, they are FOLLOWERS of the system
To be successful, a franchisee needs to be a believer in the system they are following, or an enthusiastic disciple. Franchisees do not and should not feel the need to change the system which is already proven to work. In fact, a franchisee could lose their franchise completely if they decide to not follow the system.
A high performing franchisee will always be an ‘enthusiastic disciple of the system’ he or she works under. This means that anyone that buys a franchise should be convinced in their minds that they do in fact completely believe in the system and support on offer. Franchisees do not have power to change a system. In fact a franchisee can loose their franchise by not following the system. Why is this?
So what are the key benefits to the system that makes the franchise what it is?
- The system is the heart and what gives the franchise value
- The system has been proven to be successful over time
- The system provides identity and branding
- The system becomes the expected service/product by customers
By wandering off the proven path the brand and customer expectation is undermined. Imagine going into a McDonalds restaurant and they were serving a roast dinner which you had to wait 30 minutes for them to cook. Firstly, you would be confused since you really wanted a burger and fries and second you would probably go elsewhere because you expected to be in and out with a takeaway meal in 5 minutes!
This is why a franchise succeeds, because your expectation is met no matter which franchised outlet you go to. Anyone deciding to do things differently is more than likely to fail and hurt the entire brand.
The system is king in franchising. Those who follow it with determination and enthusiasm are most likely to be in the 90% of successful and profitable franchises in UK. If you are entrepreneurial, then be aware that your own tendency to try new things and do things your own way could be a stumbling block to you in running a successful franchise.
Tags: choosing a franchise, entrepreneurs, franchise business, franchisees, nick strong
August 13th, 2010 at 5:50 pm
What a load of bunk.
Franchises have no better success rate than non-franchises. In fact, their success rate may be worse.
August 13th, 2010 at 8:00 pm
If only more would hear your clarion call. Consumer confidence is so low right now that many would be entrepreneurs are terrified of starting a business – any business. Many over 50 are unemployed and hoping the job market will come back before their savings run out. This is their opportunity to create their future, rather than watch it wilt away. Certainly hard economic times require greater caution in business and site selection, but it is always the right time for the right business in the right location.
August 16th, 2010 at 1:51 pm
@John
Thanks for your comments John.
Actually, national surveys carried out show differently and we tend to look at this as a good measure.
It’s quite difficult to find any correlating stats out there for business startup failure rates. I’ve seen everything from 30%-90% of new startups failing within 5 years!! It surprising that official figures are not more readily published. However, even at the most conservative figure from those quoted (30% failure), compare this with the BFA/Natwest Annual Franchise Survey which reports very consistently 90% of franchisees trading profitably in any given year. Thats only a 10% failure rate and thats quite a significant difference from what I can see and a great reason for someone to at least consider a franchise business as oppose to starting up by themselves.
If you have a link to any information that might contradict this point of view we would be most interested to take a look.
Joe