Advice for would-be Franchisees
Owning and running a business is a long-held dream for many people, with franchising being a popular avenue for making the dream a reality.
Owning your own business is exciting and extremely rewarding. It’s a very powerful feeling to be able to create something of your own and, hopefully, achieve success for your considerable effort.
But there is no doubt that owning your own business can also be tough – it requires lots of hard work and sacrifice, and it can sometimes be very lonely.
That’s why franchising is often a popular choice for people. Being part of a franchise allows people to tap into that entrepreneurial side of themselves to create and grow a business, but with the structure, systems and support that comes with being part of a successful franchise group.
That can be a very powerful combination and can increase the chances of making your business a success that you just don’t get when you go it alone.
But making the decision to join a franchise, and determining which franchise you want to be part of, is not a decision that should be made lightly. Considerable time and effort needs to be put into researching the various options and ensuring that you are completely aware of – and comfortable with – what will be involved on your part.
Make sure the work works for you
When you’re choosing a franchise, it’s critical to understand the work involved and feel confident that you are suited to this type of work.
While that might sound quite obvious, sometimes people can get so caught up in the idea of having their own business that they lose sight of what will be required day in, day out.
For example, if you’re looking to buy a mortgage broking franchise, do you enjoy paperwork, and meeting and interviewing people? Are you a detail person? If you’re looking at a service or retail franchise, are you passionate about providing good customer service or do you prefer not to deal with people? If you’ve been a highly ranked corporate executive managing hundreds of people, are you going to be prepared to roll up your sleeves and do everything yourself, with no-one to delegate to?
Don’t assume technical experience will equate to success
While it can certainly help, industry experience and technical ability don’t guarantee success in your own franchise business. We often see that with people looking to be mortgage advisers. Just because someone has worked in banking for 20 years, it doesn’t automatically mean they’ll do well as a self-employed mortgage adviser. There are many other skills that are needed.
As a franchise owner you need to be self-motivated, disciplined and organised. Depending on the type of franchise, you may well need to have the ability to network, create leads and grow your business. These are all essential skills, but not everyone has these skills or wants to have them.
Look for good support and systems
Running a business requires you to wear many hats and have skills in areas such as marketing, finance, human resources and customer service above and beyond the core technical ability.
The beauty of being part of a franchise is that as the business owner, you should receive help and guidance in managing these many different elements. That’s why it’s critical that you thoroughly investigate and learn about the systems and processes that are available to you and understand what level of head office support will be provided. Comprehensive training should be provided initially when you first join, but good franchise systems invest considerable time and effort in providing their franchisees with ongoing training and development.
And be wary of franchises that seem more focused on their branding and image than the ‘back end’ that actually runs and supports the business.
Talk with current franchisees
One of the best ways to research a franchise group is to talk with those already in the franchise group – the franchisor should be happy to help you do that in line with their commitment to be transparent and open in all their dealings with you.
These discussions should give you a good feel for the culture of the group. Use this as an opportunity to find out if the franchisees are happy. Are they doing well in their business? What is and isn’t working for them? Is there a good team environment? You could also use these discussions as an opportunity to find out how it was for them when they started, how they built their business and whether there is anything that they might do differently with the benefit of hindsight.
Prepare a business plan and budgets
It is critical that you have a real understanding of the business before you become a franchisee through the preparation of a business plan and cash flow projections. If the thought of putting the time and effort in to preparing these leaves you cold, then you have to ask whether you’re really cut out for business ownership.
Preparing a business plan will help you to understand where your business will come from, what you will need to do to attract clients or customers and how long it will take to get up and running.
Running the numbers as part of the preparation of a cash flow forecast will give you a good idea of your expenses, likely income and any profit or shortfall. One of the real benefits about going through this process is that putting it on paper highlights what you do and don’t know, which will help you as you do your research.
Run your business plan and figures past the franchisor for their feedback on whether some of the assumptions you have made are accurate. If there are gaps, go and find out more information until all your questions are answered and you feel you can make an informed decision.
View the recruitment process as two-way
The recruitment process and associated interviews should be two-way – with the franchisor determining your suitability to take on the role of business owner within their system and you deciding whether this franchise is right for you.
One of the keys to our success as a franchise has been that it’s always been our view that our needs as the franchisor need to be completely aligned with those of the franchisee. We believe that everything we do needs to be a win-win for both the wider group and the franchisees.
Don’t rush this process, but take the time for both parties to work out whether this is a good fit. As part of this process, it’s also important that you are honest with yourself about your strengths and weaknesses and whether you are up to the challenges of having your own franchise.
Chris Acret, Managing Director of Smartline Personal Mortgage Advisers, is a pioneer of the Australian mortgage broking industry and has been involved with mortgage broking for 20 years.
Smartline Personal Mortgage Advisers is a multi-award winning franchised mortgage broking group which has been named Australia’s number one franchise system by Topfranchise.com.au for the past four years.
Phone: 1800 020 066
Smartline Home Loans Pty Ltd and their representative have made every effort to ensure that the information is free from error, neither Smartline nor its representative makes any representation or warranty as to the completeness or accuracy. Readers must decide if this
information is suitable for their personal situation or seek advice.