from David Banfield, president, Interface Financial Group.
Franchising has long since come of age. It is now a very accepted method for individuals to transition quickly, and usually painlessly, from employment into self-employment and entrepreneurship.
Most people, when they start a franchise search to locate their ‘ultimate business opportunity’, gravitate towards things they know and enjoy. Those interested in the world of automobiles might gravitate towards an auto-maintenance or detailing franchise, while those interested in food would have no problem locating a food franchise tailored to their individual taste.
People that search for a franchise rarely move out of their comfort zone, they follow what they know and in some instances they even follow their hobby into a franchise model. In their mind that makes sense – if they are already engaged in a hobby that is also a franchise, then transitioning from one to the other would seem like a very natural and easy fit.
Rarely, however, does it work. What you may do as a hobby is by definition just that, ‘a hobby’. Now the thought process is that you are running that same hobby but on a business footing. When a hobby becomes a business, it certainly ceases to be a part-time hobby approach and takes on a new life form. If you ramp up your hobby to become a business, there might be some justification in the process – as you still own the process – and all you have done is probably taken on more responsibilities and liabilities, and expanded from part time to full time. You are, however, still doing what you want in a fashion that suits you.
There is a very noticeable difference, however, when you are awarded a franchise that parallels your hobby. While it is certainly your business, you will be running the operation in accordance with the franchisor’s manual and code of conduct. You will probably have fixed hours if the business is of a retail nature, and you might find yourself as an employer for the first time. As a franchisee, you will certainly be subject to a form of reporting to your franchisor on a regular basis. Taking a hobby and acquiring a similar franchise is not always a smooth or even advisable transition process.
When you start your franchise search it is good to do so with a very open mind. There are now literally thousands of businesses that run on a franchise format basis. The days of franchising being linked to fast food or automotive service have long gone. Even the old adage of what makes a good franchise – location, location, location – no longer rings true.
Franchising has moved out of the retail, bricks and mortar arena and can now be found in limitless different formats, virtual offices, home based offices, no employees, virtual employees, and so it goes. Opportunities range from high tech products and services to landscaping and lawn care, from elderly in-home care to financial services. And there is even a bank franchise available in some countries. With such an array of opportunities, it pays to take a broad look and not just gravitate to a well-known name or brand.
In searching out the ideal opportunity, start with a list of your requirements. What do you want out of your business? Naturally, everyone says ‘make money’ and that’s a given, but sometimes there are tradeoffs to income in the form of time. Think about franchises that offer you the ability to work either full or part time. Ask yourself, does a franchise offer you the chance to transition maybe from employment into entrepreneurship, keeping the pay-cheque while launching a new business?
Look at territory rights – often people get a pre-set desire to own a specific franchise only to find out that there is no location available in their vicinity. Now if they are set on a specific franchise, it may be a case of physically relocating to acquire an available territory. As you look at the territory issue, think also about the future and what happens if you decide to re-locate – can your franchise operation relocate with you, or do you lose it on moving? There are franchises that are portable, that can be moved from one location to another or even from one country to another.
Take the broad approach when it comes to premises. Many franchises require leased premises with a considerable build-out cost. Others, and this may be a growing number, are based on a minimum overhead approach because they are home-based. However, before you rush to secure a home-based franchise, make sure that you are comfortable working from a home office. Is it free of distractions and, more importantly, are you self-disciplined enough to make a home-based environment work?
The broader view encompasses a plethora of features that you need to review and, as such, franchising is not something to pursue in a hurry or without due diligence and a solid business plan. Once you have executed the plan and found the right opportunity, then franchising will invariably represent a very rewarding business model.
David Banfield is President of The Interface Financial Group, a position that he has held for over 20 years. He has been instrumental in starting Interface as a franchise opportunity and building it to its current international status. Prior to his involvement with Interface, he worked extensively in the banking, credit and factoring financial service areas.
For more information visit: www.interfacefinancial.com