(FS4) Deciding Between the Fine Details on a Franchise
There are many small details that will make one franchise, even within the same industry. This can include things like purchasing an older franchise or buying a completely new store. This will be something you ask your franchisor and you evaluate, but here’s a place to start.
Working With a Pre-Existing Franchise Location
There are many reasons that franchisor might have an established place created for your purchase. It can cause by the failure of a franchisee to meet standards, follow protocol or contract, or simply someone looking to get out of their contract because of personal reasons.
You must approach these as established business. There will be regular clientele and experiences in this specific place that have already been had. There will be expectations from you as the owner, even if you were not the one who provided these experiences to the individuals before. The benefits of a fully-established site are not only that people know about it already and have established feelings, but that you will have all the equipment you need for it to work. You will not have to wait for anything except for legal papers to get started. This saves you the trouble of having to find a location, negotiating a leasing price, hiring a contractor, and building the store.
Another benefit for purchasing an already existing franchise is that it already has fully-trained staff. If this is your first time running a franchise, it might be helpful to not have to manage hiring and training a full staff on your own from the get go. A downside to this is that you do not know the personalities or skill levels of the hired staff. You will have to assess them and make sure they are something you can manage and get along with. If the staff was poorly trained or offers poor personalities to you, that will lead you to having to hire and train a new staff anyways.
Purchasing an existing franchise doesn’t just help you, but it also has its benefits to franchisors such as:
- Trading out an unhappy franchisee and ending the contract with no loss to either person.
- The process for purchasing the franchise is typically faster.
- Franchisors can establish new or changed prices on products. An established franchise will benefit from this as they already have a presence in the community.
There are other things to be notes when you purchase a pre-existing franchise. While you do cut out some fees and costs for startup from scratch, there are fees that don’t exist for a fresh location such as a transfer fee and the legal cost that goes with it.
More research will need to be had if you’re purchasing a pre-existing franchise. There is a reason that a franchisee is trying to get out of the contract and if you are purchasing, you will want to check that it’s not something specific about the location such as a huge need for repairs or that it’s in a hard to reach place so customers are fewer than they should be. Another thing you’ll want to take into account are personal feelings of an individual. While franchisees are a great source of information on the franchisor and how they treat their franchisees, you’ll want to take what an exciting franchisee says as grain of salt while you confer with franchisees who are sticking with the company. One bad experience can jade an entire relationship and sometimes personalities just don’t work well together. There are a dozen and a half reasons why a franchisor-franchisee relationship might end and as a franchisee hopeful, it’s your job to find out all this information for yourself.
Building From the Ground Up
This is far more common than people purchasing existing franchisees. Building from the ground up means just that. Finding and purchasing a location, building the building. You will have to get permission from the franchisor when you pick your location. While most Franchisors offer help through the entire process, but you’ll want to do research on how involved the franchisor is and how much support they actually present you with. There are many franchisors who are happy to be hands on with you as you make any and every decision regarding your business, but there are also many who just want you to pass your decisions to them to okay, but won’t offer much support in the way of making any of those decisions.