So you are interested in becoming a franchisee? But, what is really necessary to be successful?
Before you go investing your life savings in the next grand franchise opportunity there are a few things experienced franchisees think you should consider.
“It is important for people to figure out before they even start looking around if they are really right for franchising,” said Joel Libava, franchisee turned broker in an interview with Entrepreneur.
“There’s this myth created by franchise marketing that franchises are businesses-in-a-box or turnkey businesses. It creates a false sense of security,” continued Libava. “That’s the part I fight every day. You have to make sure you have the right traits and characteristics needed for franchising, or you’re going to fail.”
Every year in Canada, hundreds of franchisees fail, with the most common causes being lack of funds, poor people skills, reluctance to follow the formula or poor management.
Libava, who is nicknamed the “Franchise King”, says before anyone invests any money, they should really determine whether or not franchising is even for them.
“If you want to become a franchisee, you have to lose your ego, even if you come to the table with 25 years of experience as a VP of operations and you know more than the franchisor,” said Libava. “You need to remember why you’re getting into a franchise business to begin with. You want to avoid mistakes. That’s why you bought into their system.”
Libava has developed an online quiz for those thinking about franchising to determine if they have the right temperament and expectations to be successful.
If you think you are bound to be successful in the franchise industry, the next step will be to find a franchisee that suits your business motivations.
“It is vital to do your due diligence. You need to consider all aspects of the business to ensure it will be successful,” said Denis Vranich, who found franchise success with Quiznos Canada.
In 2000, Denis Vranich acquired the franchise rights for 13 Quiznos locations across southern Ontario and in 2006 he signed two franchise agreements with Intercontinental to develop two hotels in the Hamilton, Ont. area.
When acquiring a new franchise, Vranich says that you can never be too thorough when investigating the current business model.
“I would look at all of the company’s framework and operation policies to get a thorough understanding of expectations and to determine whether I would be comfortable operating under these standards,” said Denis Vranich.
“As a franchisee, you are not an entrepreneur. You can’t make up your own operating policy. You must work under their conditions, so having a clear outline of what the expectations are is necessary.”
He recommends looking at all aspects of the business, including the things that will matter to its customers, like availability, parking and area competition.
“I would also recommend investigating one of the franchises open, successful locations to see how they operate,” said Vranich.