Why did you write HIRE YOURSELF?

By Pete Gilfillan

There are over 3000 franchise concepts in today’s marketplace, and although most people still think first of “fast food” when they think “franchise”, franchising extends to almost every industry.  Franchise business opportunities abound all around you.

Think about a typical day in the life of an American adult. If you wake up in the morning and head to the gym, you’ve likely had your first franchise encounter there. If you stop for a coffee on the way to work, odds are you’ve visited your second. If you go out for lunch, go to the dry cleaner, take your kids to karate lessons or a tutoring center, get a massage, have your car’s oil changed, or pick up takeout for dinner—you’ve been patronizing franchises all day. While investigating and evaluating a franchise you should think about all of this before deciding on a concept.

President Lyndon Johnson once said, “The noblest search is the search for excellence.” If you’re seriously considering franchising, you’re not only pursuing excellence in your personal path, but also seeking it in the franchise you choose to partner with. Sifting through the ocean of information about your options can be a daunting process.

Here are seven key qualities you can use to help prioritize the most important qualities of each contender.

Franchise Qualities

I’m always amazed at the tremendous ingenuity franchisors show in coming up with new ways to implement the franchise model and make it profitable. For example, look at the Massage Envy concept. This franchisor took a traditional small business and created a win/win model that provides value to everyone involved. Customers get discounted massage services by having memberships; franchisees get a reliably steady stream of income from membership dues. The concept created a whole new segment in franchising—one I think we’ll be seeing more of in the future.

The leap from investigating a franchise to buying one requires a reality check from any potential investor. Franchise loans are out there, but getting selected as a franchisee has different requirements. Funding is important, but it isn't the only step to financing your first location. There are three main components that will determine if you are financially solvent and solid enough to buy into the franchise you choose: your net worth, your liquid capital, and your credit history.

With your business plan in hand, it’s time to tap all your available resources to find the best available financing at the lowest cost to you. As you enter this phase of capitalization, keep in mind that there are lenders, accountants and attorneys who specialize in franchise financing. In some cases, they represent your best chance of a smooth, successful financing experience.

Putting together a solid business plan before you file any applications or sit down with a finance company, a loan officer—even with a family member—will help you make a clear, compelling case for funding. It is also the first step to successful franchise management. You've gone through your options and now a plan is the best way to have a clear path and direction when owning a franchise.

Your business plan should include each of these basic components if you want to make sure your franchise management is solid.

Plans and Goals are important, listen to pete and nat's ideas on how you can master goal setting

As the owner of a startup business, you’re going to start out spending working capital—money you’ve set aside to live on and run your business with until it becomes profitable. In time, you can expect to reach a point where your business breaks even, when you’ll have more cash coming in than going out. When that happens, the business becomes self-sustaining. You have career security!

Most franchise companies require a minimum level of liquid capital to fund a franchise unit. They know that businesses often fail because they are undercapitalized, and they want to be sure franchisees are set up for success.