Want to Start a Franchise Business? Here’s How.

blr-editor | September 19, 2011 | Comments (0)

It can make sense to use a tried and tested business model

Many who begin their own businesses have a specific and original concept in mind. They have a definite idea for their business and its form, function and vision. Others however, are more ready to be guided by a business concept that is already tried and tested, with name recognition and support and mentoring available.

In other words, the latter group may be ready to begin a franchise business. With franchising, you simply use another firm’s successful business model and name. For the franchisor (the company lending its business model), the franchise is a cheaper alternative to building ‘chain stores’ to sell goods, avoiding the investment and liability of a chain.

The expertise and past success of the franchisor, along with name recognition is the attraction to the franchisee. In addition, the franchisee has a greater motivation to succeed than an ordinary employee, because of their direct stake in the business.

An attractive franchisor should have;

a successful business model that can easily be replicated
a unique and attractive product
name recognition and broad geographic appeal
a business model that is easy to operate and is inexpensive to create.

The agreement between the franchiser and franchisee must be carefully negotiated. The franchisee should seek a clear picture (written also) of all costs involved – startup, and recurrent costs. They should find out whether they are limited to franchiser choices for the purchase of supplies for the business and whether these prices are the lowest around.

Franchisees should also seek to know how big their sales area is and how close other franchisees are allowed to be. Independently, they must consider the competition from other businesses in their chosen sales area.

The top home-based U.S. franchises and their costs for 2011 include;

Franchise	Cost to Setup
Vanguard Cleaning Systems	$8.2K – 38.1K
Servpro	$132.05K – 180.45K
Jan-Pro Franchising Int’l. Inc.	$3.15K – 50.41K
Jazzercise Inc.	$2.98K – 75.5K
Matco Tools	$82.3K – 191.82K
StratusBuildingSolutions	$3.45K – 57.75K
Snap-on Tools	$17.93K – 289.08K
CleanNet USA Inc.	$6.66K – 92.95K
BonusBuildingCare	$9.02K – 41.92K
System4	$5.46K – 37.75K

For those with deeper pockets, the top U.S. based franchises were:

Franchise	Cost to Setup
Hampton Hotels	$3.75M – 13.11M
ampm	$1.79M – 7.6M
McDonald’s	$1.07M – 1.89M
7-Eleven Inc.	$30.8K – 604.5K
Supercuts	$119.35K – 196.55K
Days Inn	$211.17K – 6.76M
Vanguard Cleaning Systems	$8.2K – 38.1K
Servpro	$132.05K – 180.45K
Subway	$84.3K – 258.3K
Denny’s Inc.	$1.13M – 2.4M

Many franchisees were driven out of business during the Great Recession and so while the entrepreneurial spirit burns bright among millions, starting a franchise-based business is not for the faint of heart. You pay for the privilege of belonging to an established business in addition to normal business expenses.

Being part of the family of businesses does not guarantee automatic success however. Much hard work is still required. Do you own a franchise-based business? If so, write and tell us about your experience.