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TIPS & TRAPS WHEN BUYING A FRANCHISE

By Mary E. Tomzack

I reckon you have probably considered investing in a franchise or business opportunity for month’s now and you are still unsure of all the peculiarities of a franchise operation and what your role will be within the business operation? Well, wonder no more!

Mary E. Tomzack in her latest edition of “Tips and Traps When Buying a Franchise” unearths all the little problems you may encounter when you invest in a franchise and forewarns you of what to be aware of (traps) and what to keep in mind (tips) so that you get the best deal from your franchise business investment.

Tomzack begins by introducing the franchise concept as it now operates in the 21st Century and what this means for potential franchisees hoping to invest in a business. Never before has franchising been so strong and considering the last few year’s of economic prosperity- franchises have evolved into multiple operations combining many different franchise units.

As Tomzack notes: “The franchisee of the 21st Century is very likely to be the owner and manager of a sizable corporate entity…”

So what does this signify for potential franchisees?

Simple! It signifies there is a lot of potential for single-unit franchisees to expand their business into multi-unit entities with the support of the franchisor. In addition, this means that you can build a very strong and profitable business or businesses within a short space of time.

But how do you make sure you are getting the best business for your investment? Like many other franchise books I have reviewed the central issue in all of them is for potential franchisees to always choose a franchise industry they:

a) have previous work experience in, or

b) interests them or motivates them. One thing is certain- you must be passionate about the franchise you invest in…
Once you have decided to invest in a particular franchise opportunity, what TIPS and TRAPS should you be aware of?

This is where Tomzack’s book differentiates itself from any other franchise book I have read so far. Tomzack literally tells you the “tips” and “traps” to watch out for in the following franchise topics and many others :

1. The UFOC- what it tells you and what it does not tell you!

2. Financing your Business - who you should approach, how to approach them, what to ask, what not to ask and much more…

3. Choosing the right Location – what to look for and what to avoid when choosing a location for your business…

4. Business Bankruptcy - what if your franchise goes bust? How to avoid this happening and what to be aware of…

5. Franchise Trends – what franchise industry is currently booming? What franchise industry should your put your financial investment in to?

6. International Expansion - when to expand your business? How to expand your business internationally? The tips and the traps when expanding your franchise…

After reading Tomzack’s book I was left with the notion that I was after learning much more about the franchise industry than I ever thought possible. I was much more informed about the franchise industry and what to look out for and what to avoid when choosing and setting up a franchise.

This book is easy to read and you can dip in and out of it when you want to explore a specific chapter on its own. It is definitely worth reading- even if you only want to know the tips and traps about the 6 points I mentioned above…

Happy reading…

BEST FRANCHISE BOOKS

If you are interested in purchasing a franchise or business related book - you should check out Best Franchise Books - a comprehensive website which provides a list of all relevant business related books.

This website is the only portal of its kind in the industry to provide a dedicated resource for franchise and business related books.

It is worth checking this website out…

Franchise Reporter

On Tuesday, June 24, the IFA in association with MinorityFran will be holding an annual conference in Dallas, Texas. This conference is set up to help minorities, women and veterans interested in obtaining a franchise, locating a franchise or financing a franchise to learn more about the franchise industry.

Programs include - The Fundamentals of Franchising; What Franchising is and is not! Franchisee experiences and advice; Legal aspects of Franchising; Financing options and Franchising and much more will be discussed in various seminars held throughout the day.

If you would like to book your place at this conference, you should register ($20- includes breakfast, lunch and seminar materials) via The International Franchise Association’s website.

In addition, if you are one of the first 150 people to register you will receive a gift on the day of the conference.

Venue Details:
CHG Cityplace Conference Center
2711 North Haskell
Dallas TX 75204

For more information on this conference and any other conference in your locality, please contact me and I will write back to you,

Franchise Reporter

When you decide to invest in a franchise or business opportunity you will need to create an effective business plan if you hope to be accepted by the franchisor as a new franchisee or if you want to acquire funding for the franchise investment. In this blog post you will find a brief outline of what a business plan should contain. Use these details as a reference point when you are creating your personalized business plan.

Cover Page

Name:

Address:

Telephone

Name of Business

Summary

Brief statements of following: business description (products or services), overview of industry, franchise profile, amount of loan request or investment capital needed, intended use of capital, repayment details.

Business Description

Legal business form; names and addresses of parties involved and general information on franchise, franchisor, franchise sector and industry.

Marketing Plan

Customer base- demographics; rationale for site selection and/or location of franchise business, analysis of market competitors, advertising and PR campaign plans.

Financial Forecast

Pro Forma Balance Sheet; Projected Cash Flow and Projected profit and loss accounts for the first year in business.

Investment or Loan

State the amount of your loan or investment needs, use of the funds and terms on why you are requesting this amount.

Other Documentation

Anything else that will help your case in understanding the business you hope to invest in.

If you would like to know more information about the Business Plan or any other franchise document, please leave a comment and I will get back to you,

Franchise Reporter

After you have invested in a franchise or business opportunity and you have received the necessary training, tools, resources and so forth to get your business up and running- there can be some problems that will occur despite the careful initiation program started from the outset by both you and the franchisor.
These problems will occur in any type of business, whether it is a franchise or independently owned business.

However, always remember that in a franchise business you will always have the back-up support from the franchisor, head office and franchisees, the Franchise Association and other leading franchise organizations set up to help franchisees. This is an important point to remember. Always seek the advice from your franchisor before making any decisions about the business when you are unsure of a solution and possible outcome.
View the following list of problems you may encounter within the first year of your franchise operation:

1. Not Enough Capital

This has to be the biggest problem franchisees encounter within their first year in operation. Ascertaining how much capital you will need at the beginning of the franchise start-up can be quite difficult to determine. But if you gain the advice of an expert financial consultant prior to the franchise investment - he/she will be able to calculate how much everything will cost to set up and operate your business in its first year.

It is vital you understand and are clear about your financial resources from the start so that your financial advisor can make the best cost-decisions for you and factor in any future financial eventualities so that you are covered for the business year…

2. Business Sales

I know that I am not a big fan of cold calling, I prefer emails! But if you are intending on operating your own business- then you will have to either cold call customers for sales purposes or partake in some sort of sales during the business operation. You must be able to retain customers and attract new customers to your business and the best way to achieve this- is of course implementing effective sales techniques.
A lot of franchisees can be anxious or nervous about selling products and services in a business if they have never encountered sales before- but if the business sales aspect of the business makes you nervous, then perhaps you really shouldn’t be in business in the first place. If you are determined to be in business consider employing a sales rep to help you achieve your necessary sales targets for the business to be profitable in its first year.

3. Staff/Employees

Another problem many first time franchisees encounter in their first year in operation is hiring, firing and the retaining of staff members. Often it can be difficult to hold onto good employees but if you provide employees with work incentives, benefits and other types of employee packages, then you will have a much higher rate of employee turnover.

Implementing employee benefit packages prior to your business launch will ensure you have the necessary procedures in place when you come to the stage of hiring and retaining key employees.

4. Time Management

Perhaps one of the biggest problems franchisees face in their first year of business, is the ability to time manage, prioritize and organize the business with familial and social obligations. But if you prioritize your skills in what you can do best for the business- for example, managing the accounts, hiring employees or ordering supplies- then you can employ other people to join your team to take care of the tasks you are unable to cope with. Knowing how and when to delegate power is one of the biggest challenges a new franchisee will experience.

Finally, remember that in business there will always be problems and as a Franchisee operating your own business you must account for these eventualities and handle them in a professional and effective manner. One thing to remember is- if a problem becomes too large to handle- always seek the advice of your franchisor who has year’s of business and franchisee experience.

Franchise Reporter