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Recruiting Franchisees: How to Find a Good Egg

On paper, it sounds pretty simple. You have a good business model, you decide to franchise, and you take people on board as franchisees who want to help your company grow. While many franchisors succeed in attracting just the right person to their business, others aren’t so lucky.

The rise in franchise resales could be symptomatic of a failure to find the best people, particularly when it occurs within just a few months of taking on a franchise in the first place. While most consultants would advise you need to keep going as a franchisee and get support rather than sell, many simply find themselves facing up to having made a bad decision in the first place.

Franchisees failing is not unusual. If you are a franchisor, however, you should be making every effort to ensure that this doesn’t happen. It not only impacts on the franchisee as an individual but can damage your brand if outlets fail. Your attempts to attract the right people are vital.

Creating a Strong Business

The first thing you need to understand is how ready your business is for a franchise model. Have you reached the stage when it’s a viable option or is it still a little too early? Is your business model replicable outside of its existing form? What processes do you need to put in place to ensure franchising success and do you have the budget and team to carry it through? All these questions need to be answered before you go ahead and put your brand up as an attractive business that others will want to get involved with.

Choosing the Right Franchisee

The selection process is key if you want to be sure that you get the best franchisees. That means having an intrinsic understanding of what is needed to succeed in your business. It’s not simply a matter of the applicant having the money to invest. Do they have the other qualities that you are looking for? Are they likely to stick around and make a success of it or bail out at the first sign of trouble? How are they looking to develop and evolve and what impact will that have on your franchise?

In the many cases, businesses simply don’t have the experience or processes in place to make good selections when it comes to franchising. Using a franchise consultancy that has experience is the best option and can greatly reduce your chances of making a mistake in the selection process. You need to be choosy here – it benefits no one if your business opts for a franchisee who isn’t going to last the distance.

Support for Franchisees

Finally, the other major factor in ensuring that franchisees don’t drop out is the provision of training and support. Hopefully, not only is the franchise buyer coming into a business that has a strong and successful track record but they also have access to the support and guidance they need to make their investment worthwhile. Again, it pays to liaise with a franchise consultancy who will be able to guide you through what is needed and what works.

Finding a ‘good egg’ is not a complicated process. It does, however, require a good deal of focus and work to put in place the recruitment and retention measures that ensure you get the right person and helps you deliver the support that keeps them on board.

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Preparing to Buy a Business: What You Need to Know


There are numerous benefits to buying an existing business. Firstly, you have the staff and the resources in place who are already operating. There’s a ready made customer base and a product or service to sell. There may also be the potential to expand either through opening new offices or stores or entering a franchise arrangement.

On the downside, buying a business is generally more expensive than starting one from scratch where you can control your budget and grow at a pace that suits you. What might seem like a good prospect in the first instance can turn out to have too many problems lying under the surface that will cost you more time and money.

But, if you are going to buy a business, how should you prepare yourself to take it over and improve your chances of success?

Is It a Good Match?
The first thing you need to do is find a business that matches you – not only your skills and knowledge but also your own personal philosophy. Another issue is going to be the geographical location, whether the company is in one place or has offices in different parts of the country, perhaps even around the world, and how that fits with your circumstances.

You are going to have to decide whether you’ll go to a company direct and make an offer or you go through a business broker. A broker can screen certain businesses for you and, hopefully, find a better match not only for your budget but in line with your values and beliefs. They can also help with getting the right due diligence measures in place.

Putting Together a Top Team

If you are interested in an acquisition, the next step is to get the right team together that can help you move forward. This will include people like your bank, your accountant and a solicitor. Performing your own due diligence and making sure you have all the relevant information you require to make an informed decision is vital. That will not only include looking at the books but also checking out the company’s reputation, perhaps talking to customers and going to meet suppliers, and whether there are any underlying problems that have to be considered.

The Company Prospects

Of course, at the heart of all this is the performance of the company. What kind of revenue is it earning? What are the outgoings? What is the scope for expanding the business, either by investing in new offices or going down the franchise route?

One thing that many buyers don’t factor in is what impact the current business owner has. What happens when they are no longer there? Will customers who valued his or her presence at the helm of the company be likely to look elsewhere or try to find a better deal? How are the current staff going to feel about a new owner? And what restrictions are going to be in place should you wish to bring in your own team?

Future Prospects

At the top your list is also going to be how you drive the business forward and what prospects lie ahead. While you may have had these in mind from the start, once you get into the detail of the transactions, these can change drastically as you learn more about the company itself.

Preparing to buy a business is not a simple matter of getting out your cheque book and taking over. There are a multitude of issues to consider and decisions to get right which can impact on the final cost. Having the right team of advisors and support in place is key to success. Knowing what you really want is absolutely vital.

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Spring Clean Your Business In Preparation to Sell

There are numerous reasons why you may want to sell your business. It might simply be that you want to move onto something new. You may have decided to retire. Or you might think the future of your company is better served by new investment or different management. This is particularly relevant in areas such as franchise resales.

Selling a business, of course, is one thing. Actually getting it right is another thing entirely. If you want to sell your business for a good profit, then first you need to make sure it is worth it.

Is it the Right Time?

There’s often an optimum time to sell a business. It’s worth getting professional advice about the true worth of your company – a third party review of your assets and processes can not only be very revealing it can also give you a pathway to putting in the changes that increase your attractiveness to potential buyers and improve your ability to obtain a higher asking price.

One thing you need to ask is whether it’s the right time for you as a business owner. This is a judgement call but one which is quite important in the whole equation. The other issue to consider is if the industry conditions are good for getting a strong sale.

Get Your Books in Order

No business or individual buyer worth their salt will consider your company if the accounts are not transparent. Most will want to look at least the last three years of books and this needs to be formally laid out for them. The better your books look, the more likely you are to create a favourable impression. A review of your accounting procedures could well highlight areas where you could improve and make your business appear more attractive.

Keeping Your Business Clean

Any potential buyer will want to know that there are few, if any, underlying problems that might have to be handled in the future. Again this comes from having transparency about how you and possible franchisees conduct your business. That includes all written documentation concerning any contractual arrangements. It will also include details of any other relationships such as property leases and supplier information.

Is Your Business Growing?

Potential buyers aren’t going to be interested in a business that is stagnating. If you are too dependent on one particular customer or there isn’t the option to expand that makes an increase in profits realistic, then you may find that interested parties are few and far between. Another problem could be how much the business depends on you as an individual. This can be off putting because you are soon going to be exiting the scene. Putting in the processes that address this prior to going for sale can make a big difference to how attractive your business is and that often means handing over responsibility to your best employees.

In essence, potential buyers will look at:

  • Your track record and the potential for future development.
  • Your brand and how it fits into the market place.
  • The experience of staff currently on board.
  • The marketing support you provide to enable your franchisees to succeed.

Giving a shout out about how your business has a good track record and is set for expansion will appeal to potential buyers. When there is a prime opportunity to expand, buyers will not only be able to find new and exciting markets but also access services like bank loans to push their growth model forward.

How your business looks and it’s potential for the future is what largely determines the price that you will eventually be paid. Having the right team in place to make sure that your franchise resale looks as good as it can is important. For most business owners, getting an outside, professional review of the franchise and how much it is truly worth is the first place to start.

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Can you earn your current corporate salary from day one of starting a business?

Something that I seem to come up against all the time is people coming out of corporate employment and want to be their own boss but still earn their corporate salary.

 

So, is that even possible? the answer is yes of course it is. However, you are going to need to have pretty deep pockets to earn a big salary from day one.  Let’s say you earn 100k now and you want to earn that by starting your own business, the best way to start is by buying an existing one. This then gives you a head start by already having customers and cash flow from day one.

 

Now that doesn’t have to be a franchise, it can be a stand-alone business, however we all know the benefits of buying a franchise!! especially when you are coming out of a corporate environment. So what better way to buy a business than to buy a franchise resale. Not just an existing business with customers and cash flow from day one but the support, knowledge & expertise of a franchisor who knows how to grow a business quickly.

 

A big myth that I’d like to dispel here and now is that franchise Resales are failing businesses, it’s not true, like any business franchises can and do fail, but there are so many other reasons for selling any business including a franchise.

 

So back to my main point; if you want a business that will earn you 100k, then you really need to be looking at the purchase price and the profit margin. There is no easy answer to this, it’s not easy to say what the profit margins should be because different sectors and even businesses in the same sector will vary because the overheads and the costs of sales will vary.

 

So actually, you might need to invest 800k in a business to earn 100k. You need to do your due diligence on the business to find out what it’s making.   On the point of due diligence, it’s worth pointing our here that people tend to wake up in the mornings and decide to sell their business with very little preparation. The accounts might look bad, because they have employed a good accountant to keep their tax liability down.  So, you might only need a business that is £300k. Are you catching my drift?

 

We all know a business is worth what someone is prepared to pay for it. So, you want to earn your 100k? you have come out of the corporate world with a nice pay off or have some savings and you have £30k cash to spend.  What do you do? A bank could lend up to 70% depending on the Brand and your individual credit rating. So, with 30k cash, the bank will lend you 70k, you have to take into account working capital and any extra fees a franchisor will charge on top of the business selling price. So based on what I have said about profit margins that means you will have an income of around 25-33k in your first year. So ask yourself, do I need to earn £100k in the beginning or will a lower income suffice to begin with if it gives you a better work life balance? of course this is a guesstimate and not based on anything in particular, but I hope it’s given you some quick food for thought when you are looking at the earnings aspect of buying a business.

Michael

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The Advantages of Attending a Franchise Event

Whether you are thinking of investing in a franchise or are running one already, attending a franchise event can be a great way of meeting like-minded people, getting to know your subject better and exploring new and exciting opportunities.

  1. You Get to Talk to the Experts

You can get all the advice in the world but if it doesn’t come from the experts, how much use is it? At franchise exhibitions, you can be sure that the people you are talking to are all running successful, profitable franchises. At the bigger events like the bfa exhibitions you can meet a range of experts from all sectors, across all industries and get the right information you need to make more informed decisions.

  1. Franchise Clinics

Franchise events generally involve walk-in clinics where you can get specific advice about how to go about investing as well as how to get involved with the best franchise. That can mean getting the heads up on things like financing, choosing the right franchise that fits your skill set and the pitfalls to avoid if you want to be successful.

  1. Seminars and Real Life Experience

Franchise events also hold seminars on specific issues relating to the industry, all of which can be very useful to the budding franchisee. You get to listen to real-life stories that can help build your confidence and point you in the right direction. With guest speakers who are at the top of their game, you also get the opportunity to quiz them about all aspects of investing in a franchise.

  1. Learn About the Latest Developments

Whether it’s help with funding or finding out what’s hot and what’s not, a visit to a franchise event can help you discover a whole lot of information you can’t find anywhere else. Like most industries, franchising doesn’t stand still and there are always innovations and new ways of thinking coming to the fore. If you want to keep your finger on the pulse of what’s happening, then these are the events to attend.

  1. A Great Place to Network

Not only are there plenty of experts at a franchise exhibition, you’ll be able to talk with and get to know other people who are thinking about investing. These can be individuals from all walks of life and with a variety of interests who can help you make up your mind which direction you are going to take.

For those offering a franchise, an event such as this also provides the opportunity to meet and get to know potential high quality franchisees. It’s an opportunity for them to show why they think their brand is suitable for investing in and what potential franchisees can get out of a partnership with them.

The next big one, the National Franchise Exhibition at the NEC in Birmingham, starts on 30th September and runs through to 1st October 2016. All the exhibitors are quality accredited franchise brands and there are some big names amongst them, including McDonalds.

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Why People Buy from Brands

One of the major advantages of taking on a franchise is that you have a readymade brand to work with. There are a number of reasons why this makes sense, not least the availability of a proven product and, hopefully, all the support you need when you decide to come on board.

But why to do people buy from brands in the first place? Here are just a few reasons:

Peace of Mind

People like to be sure that they are getting the right product or service for them. A well-known brand comes with a reputation for delivering what is required, wherever it’s bought in the world. Peace of mind can’t be underestimated when it comes to people’s buying behaviour. That doesn’t mean they aren’t prepared to look at new products and services on the market but they will be more likely to choose a brand they recognise when they want a specific outcome, particularly at short notice.

Quality Guarantee

Along with peace of mind, is the fact that a settled brand provides the quality that customers are looking for. Whether that’s a cereal that always tastes good when you pour on the milk or a car that brings more miles per gallon and comfort. Quality products, fast delivery and strong customer services are all part of those brands that have strong core values. This leads to loyalty amongst advocates and is an essential part of the emotional attachment to chosen brands.

Value Added Extras

People may choose a brand because of its value added extras, the things that competitors don’t deliver or don’t deliver as well. A prime example would be Apple iPhones that not only give customers a recognised design and feel to their products but also extras such as quality app, music and media downloads.

Reflecting Values

Brands work best for customers when their core values match each other. So, for instance, if one of your key concerns is the environment and climate change, you are more likely to opt for a brand that has sustainable working practices and has made key commitments to reducing their impact on the world around us. If you are concerned with good, healthy eating at a low cost then you might be attracted to a supermarket brand that has a wide range of fresh vegetables that are organically produced at a price you can easily afford as well as ethically sourced.

Sharing and Social Acceptance

People like to fit in with other people who share their world view. That’s why demographics are so important when a product is being marketed to the wider world. The brand will have a specific customer in mind but those same customers will want to fit in with their peers as well. So clothing brands become popular amongst certain types of young adults, who want to maintain their standing amongst peers, and all subcultures develop their own trends that brands can connect with.

The major factor in brand development is making that big emotional connection with consumers. Once people feel something for a product or service then they are more likely to use it again and again. Don’t forget that each of us has our own brand, good or bad, as well. A computer geek may well favour a brand that is pushing the boundaries of tech rather than one that produces the same old product each time.

People buy from brands because they fulfil their core needs and wants and if you can find what appeals to your chosen demographic and deliver it in spades, then you have a head start over your nearest competitors. When it comes to buying a franchise, this aspect of business development is already in place.

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The Benefits of Buying a Franchise

There are many people who dream of being their own boss and running a business. Go online and you’ll find plenty of stories of entrepreneurial success – simple ideas that have taken off and made their creators successful. It’s a big move though. Going out on your own is fraught with dangers, however, even in today’s hi-tech world where we have so many business tools available.

Buying a franchise is one option that many budding entrepreneurs consider as an alternative. It provides a way of running your own business with an already proven product. You also get the support you need which, while it doesn’t guarantee success, gives you a good chance of making it if you put in the work and have the right attitude.

A Ready Made Business Model

Choose the right franchise to buy into, and you have a business with a proven track record, a strong, recognised brand and a loyal customer base. It gives you a big leg up compared to starting a business of your own from scratch and the effort you need to put in to get traction in a competitive market place. The way business is done in a franchise has already been mapped out for you including the look and feel of the product and how it is marketed to customers.

Training and Support

One of the key factors in going it alone is learning the skills and developing the business acumen that lead to success. For many new entrepreneurs with start-ups this can be an extremely sharp development curve and mistakes can often be costly – that’s why a large number of new business fail within their first year.

A good franchise opportunity comes with the right training and support that is tailored to your needs. They’ll be able to identify where you need to develop your skills and provide the kind of help that many start-up entrepreneurs can only dream of. With all that experience and assistance to fall back on there’s obviously more chance of success with a franchise. Don’t forget, a good franchisor will only choose those people who have the potential to help grow and promote the company – it’s not just a simple question of attracting people who are willing to pay to use their brand. That’s not in their interest.

Lower Risk, Great Returns

Because you’re buying into a proven product or service, the risks of failure are certainly lower. If you have the right drive and determination and pick the appropriate franchise that matches your entrepreneurial character, then you should rightly expect to succeed.  In return you get the independence that you would expect from running a small business with the financial benefits which go with that. You might also find it easier to get finance to run a proven franchise rather than one that is being started from the ground up.

You don’t need to have experience of running a business yourself to own a franchise and it gives you the chance to learn and develop your entrepreneurial skills ‘on the job’ as it were. What franchise companies are often looking for is the determination and ability to succeed rather than a proven entrepreneurial track record per se. That’s what makes it an ideal place to start for people who want to step out into the business world and blaze their own trail.