Archive for the ‘NewFranchise Articles’ Category
Wednesday, February 3rd, 2010
You have finally decided that the time is right to buy a franchise business. You have already researched the pros and cons of buying a franchise versus starting your own business. How do you make sure that you choose the right one for you?
A decent franchise will not only be a good idea, it will also be an idea that is under constant development. Find a franchisor that is committed to improving and developing the concept so that it can keep pace with their fast moving competitors.
Before committing to any franchise ask the following key questions:
What training is included within the initial franchise fee? Does the franchise provide you with a comprehensive operator’s manual? Do they have training videos that you can watch in the comfort of your own home?
Does the franchisor offer proper telephone support? Can you call them out with office hours in an emergency? Do they have a decent internet forum where you can chat with other franchisees?
Is the product or service a good idea? Do you think you will be able to market it? Is there decent demand out there in your local marketplace? What are the unique selling points compared to their closest competitor? Will you get an exclusive territory?
Will the business fit in with your lifestyle? Can you work the hours required within the business? Who will cover for you when you go on holiday? Will you enjoy managing the business? Never start any business just because of money. Find a franchise that you will enjoy operating and then you will not dread going to work every day.
Bear in mind that a franchise is like any other business in that it will take time to start making money. How will you cope in the meantime? Do you have enough slush funds to keep paying the bills until your new business starts generating an income?
Speak to your accountant and get him to check out the figures for you. It is always a good idea to get a second expert opinion and who better than somebody that looks at facts and figures all day, every day? At the same time, ask your bank manager what he thinks of the idea. If your bank manager and your accountant both think it is a good idea, it probably is!
How are the royalty payments calculated? When and how often do you have to pay them? Are they within the normal range or are they excessive? Are there any other ongoing payments you need to make? Many franchises charge a marketing levy for national advertising so make sure you check this out.
Read your franchise agreement carefully before you put pen to paper. Is it a fair agreement? Does it protect your rights just as much as the franchisors? A proper agreement will clearly spell out the franchisors obligations to you.
A franchise at the end of the day will only reward you if you put effort in. No business runs by itself. You should always be able to count on the franchisor for full support and guidance but at the end of the day, you will have to work within the business and grow the sales.
Do you think you have what it takes to manage your own business?
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Tuesday, February 2nd, 2010
A good businessman will gladly accept wise counsel wherever and whenever he can get it, especially amidst a global economy elbow-deep in recession. Most methods that businesses use to stay afloat in recession involve increasing cash flow and decreasing expenses. As it happens, that is not a business strategy that is only useful in times of economic meltdown, but rather it’s the goal of most businesses all the time. Therefore, any wise advice a franchise businessman can pick up and put to use in recession will likely be useful in good financial seasons as well.
For those in computer franchises, trying to keep their heads above water, here are 10 bits of wisdom from those who have gone before you.
#1) Do What You Love
If you’re already well into your own IT franchise business, it may be too late to put this gem to work for you, but if you’re just looking into a business opportunity, this is essential to success and satisfaction: do what you love to do. It’s become sort of a cliché notion in recent years, but if you would be doing the work even if you didn’t get paid for it, it’s the perfect job for you; one that you won’t bail on when times get hard.
#2) Start While Still Employed
The last thing any new franchisee wants is to leave a current job, open a new business, and find that the market is doing so poorly that it may be a few months before turning a profit. With a franchise, that may be a rare event, but the fear can still be a reality, so don’t hesitate to ease yourself into a new profession by working part-time until it begins to take flight. Some franchises allow for part-time involvement, which will give you time to make a smooth and financially solid transition from one job into the next.
#3) Keep Your Skills Up-to-Date
The big issue in the tech industry is that it’s always on the move: growing, adapting, and evolving. It’s a hard industry to keep up with, but when you work in the field, you have to; otherwise you and your business become obsolete and risk being thrown onto the scrap heap. If for instance you operate a TeamLogicIT home based business, in order to constantly address your clients’ IT repair and protection needs, it’s vital to know what kind of new equipment is out, what new threats exist, and the best new repair practices. The franchisor often works to keep franchisees abreast of changes, but staying on top of industry magazines, websites, and manuals is a good idea too.
#4) Find Out What You’re Worth
A great mistake that many self-employed IT professionals make is not knowing what the practical value of their service is and, therefore, either charging clients too much or too little. Study businesses similar to yours and see what the going rate for your kind of work is so that you’re not turning clients away with outrageously high prices or killing your business with unrealistically low ones.
#5) Get Advantages Wherever Possible
Don’t forget that in recession, just as you are lowering prices to keep clients, your vendors need to do the same with you. It’s perfectly alright to ask them for special discounts on the equipment and parts that you need for operating your Computer Troubleshooters computer repair and retail shop. And if you can manage deals with local newspapers, trading IT services for advertising, do that too. Don’t be afraid to ask for deals and discounts on anything possible.
#6) Market to Your Area
Nerds We Can Fix That, a quintessential work from home computer repair business, is much like almost all franchises in that it comes complete with national advertising already at work and a fully established local marketing plan. Whether your franchise comes equipped with all that or not, it’s always a good idea to seek out more ways to market yourself in your area. The more people see your business name, the more business you’ll get.
#7) Always Carry Yourself Professionally
Especially when you operate a home business, it’s very easy to forget to keep a professional demeanor when you interact with a client. Though your primary work goal is to fix the customer’s technical dilemma, you are not serving the computer you’re working on; you’re serving the human client. As such, your intent is to please him, which includes proving to him that you’re a mature businessman, not just an oversized teenager who can crack open a computer tower.
#8) Hire People with Complementary Skills
When operating any kind of IT business, it’s important to hire people who can do what you can’t. This is the very reason that Nerd Force franchisees with no previous IT experience work with a staff of trained technicians who actually make the house calls; their skills complement the franchisee’s business leadership.
#9) Don’t Neglect Your People Skills
Working with computers takes very little charm or charisma, especially if you work at home, but working with people requires a lot of both. Even if you’re the one fixing machines every day, do whatever it takes to keep from losing your ability to relate to other human beings. People are the ones who pay you, not the computers.
#10) Prepare for the Bad Days
In the midst of recession, today might be a bad day, but it’s always possible for tomorrow to be worse, so don’t let up on saving money and prepping the business to survive a hypothetically disastrous day.
People in all industries are just a little shaky in light of the recession, but it seems that many tech professionals agree that this period of economic decline is not likely to damage the technology industry because so many other businesses rely on technology to survive. Put some of these IT business practices to use and there will likely be many years of success ahead of you.
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Monday, February 1st, 2010
Why on Earth is Procter and Gamble getting involved in the Car Wash Industry? Moreover, why is perhaps the greatest consumer product company of all times getting into the franchising business. You see, P&G is a great branding company, and some believe the best in the world.
What intrigues Corporate America about the car wash business anyway? Well, here are some of my thoughts: There is a contingency of Harvard Business School MBA’ers who have as part of their class assignments to access the concept of a nation-wide “Car Wash Company” and once these kids get out of school, they remember this and then think it’s a good idea.
Thus, some end up in large fortune 500s like P&G (which is a GREAT COMPANY, so don’t get me wrong), some end up as investment bankers, and a few turn up in the car wash sector every once in a while.
I can recall P&G’s Mr. Clean showed up to debut at the International Car Wash Convention back many years ago and I actually sensed a bit of angered from car wash owners. It appeared that P&G assumed that car washes would sell their ‘personal’ car washing systems for home washing and thought they are a kindred spirit to those in the car wash industry.
P&G advertised in all the Car Wash Magazines and spent huge money (in relation to the car wash industry, not the behemoth P&G, whose annual gross is 15 times the entire car wash industry combined). I laughed because, I thought it was good to rub it in the face of the arrogant and politically petty car wash industry, they deserve it, mostly knuckle-heads, only a few really get it (5-10%). [personal opinion from years of observing the industry].
The Mr. Clean product showed up at major box store retailers in little packages and sold well, as expected and well researched I am certain. Again, I felt the tension, it appeared to be making the industry angry, kind of like Maguire’s did when it turned on the auto-detailing industry and sold directly to the public, it pissed off everyone. Good move for their bottom line, but bad move for their dealer networks, especially with other strong product lines like Pennzoil’s sub-brands or Auto-Magic an industry mainstay, ready to pick up new dealers.
Car Wash Owners and the Car Wash Industry; well, it’s a cut – throat, throw you to the dogs industry, it’s a cash-cow business and it attracts disreputables, wannabe mafia types, it’s pretty sickening. Many have been critical of players like Mace Securities that got into the business for instance, interesting history there.
P & G could make a go of it, but I believe they should buy Mister Car Wash, change the name to Mr. Clean, and make the “Mister Car Wash” a mini-sub-brand, merging without disrupting either brand; I think I could make that happen well enough. This would give P & G market notoriety, but would cost them too.
Then, Mr. Clean could sell off those units as Master franchises, where they were clustered and use them for new training facilities, for new owners. P & G has big guns and could use this to help get financing since new car wash business building has come to a standstill, financing issues. Still, car washing is down straight across the board, virtually everywhere. Yes, it will pick up and the new model will have to be $5.00 car washes in 5-minutes. Only, a couple of companies have mastered that so far.
P&G plans to sell its franchises for $500,000 and that may not be enough to do a car wash venture, and I have not seen the FDD (Franchise Disclosure Documents), to see what all that gets the franchise buyer. Indeed, I’d like to see the “Pre-Fab” buildings first (if that is there strategy), then maybe it could fit into a 500K deal.
P&G could also make it work, as an all-hand-wash, mostly outdoor thing, like they do outside Tempe, AZ near the college, where college students wash cars on top of a concrete slab with a clarifier underneath, but that will not be so great for a inclement climate weather locations. And I doubt if P&G would be looking there because that is not their style, but it would work well. Although I have not seen the plans, I doubt they are looking there.
Instead they are looking at a full-on facility, it’s just not in the cards in my opinion and I question their strengths and weaknesses, I’d like to see their SWOT Analysis, and poke some holes in it. Plus, for a company like P&G, they want to sell their products, thus, they do not want to own the car washes so they wish to franchise them. Wrong! That’s not right for their corporate focus, or core-business. And franchising is a litigious industry, just as Amos their new CEO, he knows better than anyone in the industry that truth.
Most franchisors in the car wash sector; Bob’s Car Wash, Rapido Rabbit, etc, have failed due to undercapitalization, and selling to franchisees that didn’t get it. Whereas P&G doesn’t have to worry about that, it doesn’t mean they need to go and throw money into a car wash sludge pit!
The car wash industry is over-saturated now and with the economy down, more so, it will be clearly 18-24 months until it returns, meanwhile new outlets will not be hitting legitimate ROI targets in that climate. Sure, things will return, but it will be a while. Any company entering this market will have to be low-cost, extremely high volume to win.
Most cities will most likely expedite building permits now, meaning 6-9 months max between submitting plans and first shovel turn, and 6-months to build. That is 12-months and means 6-12 months of dismal performance. Yes, the best time to go for it is when land is cheap, available, and distressed sales. But there is a gap in the time lag here and biting the bullet now, for big a full-on-franchise system is the wrong strategy once again in my opinion. I could make it work, but I guarantee they can’t as it’s been laid out.
Mr. Clean brand is in a pickle, because NPDES and storm water rules are tightening, their home-use product puts consumers in jeopardy of breaking the law with water pollution rules. So, their only option is to do something different, but I do not think they have thought this through correctly. It will be interesting to watch, that’s for certain. Think on this.
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