Franchising – Goldmine or Minefield?

Franchising can be a great way to grow your business using other people’s resources and capital.
It would be fair to say that most businesses could be franchised. If your business is proven, profitable and portable (can be taught and replicated) then you have ticked the first box. However it is essential that you make sure franchising is right for you and your business. It is a growth strategy, not a get rich quick scheme. Done properly it can provide an excellent platform to grow your business nationally and internationally.

What is franchising?
Franchising is essentially a “partnership model” between a “franchisor” (the business owner) and a “franchisee” – typically an individual who wants to have their own business supported by a larger business with a proven and successful business model, systems and processes.
The Franchisee pays you an initial investment for the licensed rights to operate under your brand. They receive training and on-going support from you to help them launch, develop and grow their business. They would also expect to pay you a management services fee/royalty payment. This would normally be a percentage of their turnover but could also be a fixed monthly payment. In addition to this you may receive a monthly marketing levy which you would use to market and develop your brand nationally. Their business will be a “mini- me” version of yours and will typically operate within a defined and usually exclusive territory. The partnership is governed by a Franchise Agreement which protects your brand and provides all parties with clarity as to what is expected of them along with the rules for operating and selling the business.

Why Franchise?
There are a number of benefits to franchising your business. Although not exhaustive the following will give you some idea as to the benefits available;
Growth quicker & cheaper than “organic growth” – when you franchise your business you grow using the capital and resources of your franchisees. This enables you to grow without the capital burden required to take on multiple properties or employ staff.
Motivated people – There is nothing more motivating than knowing if you don’t make a success of your business you won’t earn any money. As Owner Managers your franchisees are more likely to go that extra mile, open that little bit longer and try that little bit harder that employed staff.
Brand Development & Consistency – A network of franchisees will help develop brand recognition throughout the UK or even internationally. Having a robust business model underpinned by detailed documented systems (known as your blueprint) supported by a professionally drawn up Franchise Agreement will ensure your franchisees deliver brand consistency throughout your network.
Less Hassle – You are responsible for supporting and mentoring your franchisees. However they are responsible for their staff and the day to day business operations. This means that all the challenges that come with having staff are down to the franchisees to deal with and not you.
Increased Buying Power – As your business grows so does your need for materials/ supplies. This can give you greater buying power, drive down the cost of production and/or increase your profit margin.
The benefits of franchising are clear however. However franchising is not for everyone and not all businesses can be franchised successfully. It is a business journey that cannot be rushed. To execute this form of growth strategy takes time.

Join us next week for our top 10 tips …

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At Billmar we offer hands on, jargon free practical help for businesses. We understand the pressures on small and medium sized businesses trying to juggle multiple things at the one time.

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Cont….Too busy to waste time writing business plans – you know what you need to do – right?

So last week I asked you to think about your business as if we were a full year on and you have had your best trading year ever!   (need a reminder – read it here)

How did you get on? If you wrote it down, dig out the notepad and revisit them. So how do you turn this into reality? What do you do next to make 2013 different and your best year ever?

Get Real! Get a planning system that works for you.

A Good Plan Should Ensure You:

  • Use all resources effectively & efficiently
  • Generate maximum profits available

It should be:

  • A living thing- part of your everyday life
  • A tool to help & direct
  • Written in language & style that works for YOU
  • A regular check point
  • Realistic, stretching but do-able

If you want 2013 to have a different/better outcome than 2012 then you need to do something different. For many business owners that means developing and USING their business plan throughout the year.

Planning x Execution = Success

If you want help to get started visit our 6 point planning for success tool. 

Posted in Billmar Consulting, Business Planning

Too busy to waste time writing business plans – you know what you need to do – right?

get your business fitThe Christmas and New Year celebrations are over, our liver and waistline hate us and many of us are making lots of plans to get fitter, healthier and in some cases thinner during 2013. A few will maintain the discipline into February and beyond but if you are anything like me there is a fair chance you will have the red wine open before the end of the month and that is just to help wash down the chocolate! However at this stage the plans are made and I am full of enthusiasm so wish me luck!

So before dashing off to the gym take a minute to reflect on the plans for your business. What did you do last year? Did you start the year full of enthusiasm, with your goals clearly defined and a robust plan in place to make sure had the best year ever? Did you stick with it month on month and did you have the best year ever?

  • If you did, well done I am delighted for you!
  • If you didn’t, well, you can always blame the current economic climate, the government, the market, the competition – can’t you? i.e. anything but the lack of a well prepared and executed plan.

Sometimes it feels as if life just takes over. You end up really busy, headless chicken at times, not enough days in the week and yet didn’t quite have the best year ever. In fact you may even be wondering where the year went and what you achieved? You are not alone… may have prepared your business plan but by February it was living in the drawer or perhaps you just knew what you had to do – you didn’t need to write it down or work it? Many reasons… but the bottom line is there are many businesses out there just like you – they had a busy 2012 but not a good one or great one and for some…..not a good year at all.

So how do you make this year different? How do you make 2013 your best year ever?
Get Real! Get a planning system that works for you.

So lets start right now….  This will only take a few minutes

moneyAction: Fast forward to December 2013 and if you have had the best year ever trading what had happened to make it so?

  • What 3 things did you change?
  • What 3 things did you stop?
  • What 3 things did you start?

To help you, here is one of my clients answers they would like me to share

Lesley I felt it necessary to email you ahead of our next coaching session.   After going through and implementing the ‘3 things process’ it has made an immediate impact to our business.   By talking in the past tense it was easier to be positive and more constructive when we took this back to the team and discussions were vibrant and uplifting.

We have been recording, in our daily sheets, our hourly rate for every meeting which has made us see clearly where we used to waste money driving miles for non productive meetings.   We have started to schedule all our work from admin, bookkeeping and even sales calls per day which has allowed all our team to be a lot more productive and focused.

The most significant change has been our approach to sales and how we present it to potential clients…

We cannot thank you enough for the continued help you provide to our company and we know this year will be our year to break all records.

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Franchising – Our top 10 things to consider – before you start the journey!

When we meet with any business owner who is thinking about franchising their business the first thing we do with them (well, after we put the kettle on) is to work through our top 10 things for consideration …

1. Why am I doing this? – ensure your motivation is business growth and not fixing a “sick” business. Be honest with yourself. Do you truly want to grow your business and are you prepared for the good the bad and the ugly that comes with it!
2. How long do I want to be in my business? – if you want out within the next couple of years franchising may not be the right way to go as it takes time to build your franchise network.
3. Is my business proven, profitable and sustainable? – Franchisees are looking to reduce the risk of start up. They are looking for a business that has learnt from its mistakes and is making money year on year. Franchisees are in it to make money and no-one wants to invest in a failing business.
4. Is there enough money in your business for you and your franchisees? –You make money from your franchisee paying you a monthly management/royalty payment. While you will also make money from franchise fees the model must be sustainable after all the territories have been sold and should not rely on franchisee fee income. There must be sufficient margin in your business for your franchisees to make a good income after he has paid you.
5. Investment in time and money – Franchising your business does mean a commitment in both time and capital. Even if you work with a franchise consultant who can remove a significant amount of the time burden you must still be sure that you have a clear understanding of what will be involved and have the capacity and resources available.Time is Money
6. What is my hook –After the honeymoon period is over i.e. your franchisee has been trained, launched their business and is trading successfully will they still see the value in the monthly payment they are making to you? Consider what support and franchise package you could offer – would you buy it?
7. Can my business be taught – The most successful franchises are ones that have an excellent training and support program underpinned by clearly documented processes.
8. Is there a market nationally/internationally for my product/services? – Successful franchises are able to sell their products/services irrespective of geographies.
9. Do I want to change my business /role and do I enjoy helping people– Franchisees are buying your expertise and help. It can be very rewarding but you need to enjoy helping people or have the funds available to bring in the skills to make it happen.
10. Is my business in good shape – You may have heard sellers say that their house has never looked better than on the day they put it on the market. Franchising your business is similar. Before you ask people to invest in your business and replicate your systems it is essential that it is in the best possible shape.

In summary Franchising your business doesn’t have to be a minefield and there is opportunity for the goldmine – but do it right or don’t do it at all.

Posted in Billmar Franchising