The steps to buying a franchise Flashcards
What is the franchise development model?
The franchise development model identifies the four stages that franchisees go through. The stages include:
1) Selecting a business
2) Starting a business
3) Managing a business
4) Growing a business
What is the first step in the franchise development model?
The first step for prospective franchisees is not to investigate the various franchise offerings, but to analyse themselves.
This phase of self-analysis is sometimes referred to as the pre-prospective franchisee stage.
It is an essential stage because franchising is not for everyone.
Some people are simply not suited to operating within the constraints of a franchise situation.
What makes a person a suitable candidate for franchising?
Age is not as important as having the preferred skills and character traits, and the ability to commit sufficient physical, emotional and financial resources to the project.
What are the ideal personality traits?
1) ambitious
2) a team player
3) able to work alone
4) able to use initiative
5) happy to conform to strict operational systems
6) prepared to rely upon others
This is an interesting mix of traits because many people who are able to use their initiative are not good at conforming to strict systems.
It is possible that those people would want to
change the system as they go and their innovative flair could be stifled in a franchised business.
The paradox is that in a number of mature franchise systems important innovations have been suggested by franchisees. Some traits, therefore, need to be
tempered by others and it is the balance of traits that needs to be appraised.
There are very few ideal franchisees, but there are many successful franchisees who display some of the above traits. The objective of looking at traits is to try to determine whether a person could probably be content in the role of a franchisee. This is significant for both the franchisee and the franchisor.
What are general skills that would equip a person to successfully embark upon operating a franchised business?
1) flexibility,
2) responsible and positive attitude,
3) ability to manage multiple priorities,
4) need to succeed,
5) creative problem solving,
6) high energy levels,
7) confidence in personal abilities,
8) strong people skills,
9) learning orientation
In reality few will fit perfectly into the profile, but it provides a useful filter for the pre-prospective franchisee.
What are three fundamental questions one should ask themselves in a pre-prospective evaluation?
1) Do I like to do it my way?
2) Do I like to do things alone?
3) Do I enjoy keeping to myself?
If the answer is yes, this would be an indication that a franchise may not be for this individual.
What are the main types of franchise?
1) retail
2) management
3) manual single operator
4) executive single operator
5) investment
What are the advantages and disadvantages of a retail franchise?
Advantages:
1) Can be rewarding and gives franchisees opportunities to develop relationships with customers without necessarily requiring specific industry knowledge.
Disadvantages:
1) Opening hours are often long
2) Suitable locations are usually high cost
3) Wholly dependant on the location of the premises
What are the advantages and disadvantages of a management franchise?
Management franchises are those in which the main role of the franchisee is to manage staff that carry out the work, or provide the services of the franchised business.
Advantages:
working hours are generally reasonable
It is not as necessary as in retail to have premium localities.
Disadvantages:
Strong management skills required
What are the advantages and disadvantages of a manual single operator franchise?
Manual single operator franchises are characterised by the franchisee personally providing the service of the business without the support of staff (at least initially)
Advantages:
Can often be carried out without dedicated premises but might involve the use of a vehicle or van
Disadvantages:
The work is physically taxing so a suitable level of fitness might also be required.
