Joined: 19 Dec 2002
|Posted: Sat Feb 08, 2020 1:45 am Post subject: Franchising Vs. Entrepreneurship
|Franchising Vs. Entrepreneurship (Differences and How to Succeed)
Whether you're interested in starting a franchise or not, this article will help you understand much of how the process works.
By Benjamin Hardy, Ph.D.Contributor, Inc.com
I recently came across the book, No New Ideas, by Tim Conn, who is the co-founder of Image One Facility Solutions. No New Ideas details principles and strategies for starting a successful franchise.
This was a new topic to me, so I thought I'd give it a read. I'd, of course, heard of people who started franchises, like McDonalds or Subway or a gym. I'd heard Shaq was quite successful with businesses like Papa John's. One of my mentors owns 16 Keller Williams franchises and is worth over 100 million dollars. To me, franchising was like real estate. Something I'd heard a lot of people make money at, but also was a little bit of a mystery to me.
In No New Ideas, Conn breaks down a lot of the benefits of Franchising, and how to do it successfully. Many of the principles of success generalize to entrepreneurship and wealth creation in general. This short article breaks down what makes franchising different from traditional entrepreneurship, and how to be successful at it. Whether you're interested in starting a franchise or not, this article will help you understand much of how the process works.
Some Unique Aspects of Franchising
A few unique aspects of Franchising are:
You don't have to start a business from the ground. You start with an "engine" that was already successfully built by someone else. You start with a system that already offers a well-established product or service.
You already have a system and process for running that business (the franchisor has already made the mistakes and learned from them so you don't have to). Many franchisees get in trouble by trying to "buck" the system already designed. The most successful franchisees follow the system "to the letter."
You start with a brand that is already well-established, like McDonald's, etc. You also start with an immediate support group of other franchisees. Community is key when building a business, as it can be a lonely place.
You get to be on a team of franchisees but at the same time, you're an independent business owner. You can hire your own staff, make your own schedule, and make a lot of decisions yourself independent of the franchisor.
You give up a lot of control to the franchisor, but you also gain the opportunity to share the risk with the franchisor. Through the initial investment, the franchisor is motivated to help you succeed. You both have skin in the game. You both have a shared vision.
From day one, you get lots of training from your franchisor. You can learn sales, hiring, marketing, etc. from someone very knowledgeable in your exact business. Thus, you get immediate mentoring.
Often, you can get financing to start a franchise because of the sales records of the franchise, which is often easier than establishing sales in a new business. When problems arise, which they will, you will be able to get technical support. If you'd like to sell your franchise at some point, the franchisor can help locate a new buyer (they are invested in keeping the location going).
How To Succeed
The following are tips provided on how to succeed if you so choose to go into franchising:
Engage your franchisor. Develop a relationship. Be proactive. Develop a relationship of trust. Don't lose sight that YOU are just as important to them as they are to you. Even still, don't expect too much from the franchisor. Although there are many benefits to having a franchisor, at the end of the day, it is your business.
Don't expect to get rich quick. Always have cash reserves because sometimes, you'll have a down month or two.
There are no guarantees. Starting a franchise is filled with plenty of risks and unknowns, including whether or not you can handle it. Ask for help, especially with hiring, firing, and marketing.
I thought No New Ideas was an interesting book. For me, it helped delineate the differences between traditional entrepreneurship and franchising. In reading this short article, my guess is that you can see the pros and cons of both starting your own business or buying into a franchise.
Both are potential paths to success, freedom, and wealth. You've ultimately got to do what excites you most. Which path reflects the identity you want to embody in the future? Which one allows you the freedoms you want? Which one can you more fully utilize your strengths?
Published on: Feb 7, 2020