Fly the Friendly Skies…of (Franchising)

Two weeks ago, I focused on the very basics regarding franchising and covered a bunch of facts. Today, I want to share my analogy about franchising that might be helpful to some who are considering it. Franchising is like flying an airplane. You, as the business owner, are the pilot. The plane is the business. The franchise provides you with a runway that (hopefully) helps you get off the ground a little smoother than if you tried to go it alone. The franchise also provides the control tower; they’ll give you some direction while you’re in the air.

Now, just as with airports, there is quite a bit of variability out there. If the franchise is relatively new, that runway could be more like a grassy field, less bumpy than taking off in a forest, but not exactly smooth sailing. In that case, the franchise may not have all the answers, particularly regarding specifics about market conditions in your area/state. The runway may be under construction and getting better all the time (although that might not do you any good once you’ve gotten started). You may be helping to build the runway and make it smoother for others. Franchises that have been around for a while will often have that ‘runway’ pretty well built. If there are hundreds of locations or franchisees in existence, chances are they’ve been through the start up phase enough times to be able to pretty well tell you how to do it.

The second part of what the franchise provides is the ‘control tower’. That’s the ongoing support, guidance and direction you receive once you’re up and running. As with the assistance on the startup, there will likely be variability in that ongoing support. Some franchises are extremely proactive in monitoring your performance and giving you feedback on ways to improve. Others are much more reactive and it will be up to you as the owner to ask for assistance. I find one of the biggest mistakes new franchisees make is to sit back and wait for someone to come to their rescue if they are having a problem. If you need help, ask for it!

Always remember it’s your plane to fly, the runway and the control tower won’t save you from crashing or prevent you for soaring, that’s up to you.

Just because a (Franchise) is new, doesn’t necessarily mean that the runway won’t be developed or the ongoing support won’t be great. And just because it’s been around for a while doesn’t necessarily mean that they have everything figured out. It’s always important to do you home work and talk to existing franchisees….more about that next time!

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The Importance of Location

The location of your business is as important to your success as having a good product to offer to your customers. For retail businesses in particular, the location can make - or break, the business. It is important that the demographic profiles of people who work or live in the trading area match the target customer profile for income level and age group.

Manufacturing or distribution businesses may be less dependent on the need to be close to its customers or have drive-by visibility. Instead, it may be more important to have larger premises at a lower rental cost.

Businesses such as motels, doughnut shops, gasoline service stations, and small family restaurants may be better located near a highway.

Walk-By Traffic
Does the business require a high level of walk-by traffic to be successful? If so, is it in a location that provides sufficient pedestrian traffic now and to provide sufficient growth, or will you have to consider relocating the business at some point in the future?

Drive-By Traffic
Does the business rely on drive-by traffic? Is there adequate parking readily accessible to your business operation? Is the parking free, as in a shopping mall, or will your customers have to pay to park in an underground lot or in a coin-metered space? If you have a business that serves trade customers and delivers products to them (for example, textile materials), then parking for your customers may not be an important factor. Is there traffic congestion throughout the day or just at various peak times during the day, evening, or weekend? Do any of these traffic problems seriously affect a customer’s access to the business?

Shopping Centre
If your acquisition target is located in a shopping center, you should do your research thoroughly. Evaluate the type of tenants in the mall where the business is located to determine whether they would draw traffic to you or be in competition with you. If the shopping centre has several major or national anchor stores, this should attract a large volume of potential customers. Major tenants might include department stores, large supermarkets, and many national chain or franchise retail or service operations.

Also, take the time to check out other malls within the trading area, to see how they compare with the mall in which the franchise is located. You should also check out if any other shopping malls are in the planning stages and how they might impact consumer traffic in the future.

Shopping-centre leases tend to be very complex and have stringent clauses in terms of the landlord’s requirements. It is also common for the landlord to request a percentage of the tenant’s gross sales in addition to the base rent and this needs to be weighed against the benefit of exposure to a high volume of potential customers.

History of the Location
At first glance a location might appear to have all the necessary ingredients for the business to be a success, but upon further research it may turn out to be a location where many businesses have failed. Look for such warning signs as too many vacant suites in the building, for-lease signs, or going-out-of-business sales. Another factor could be adjacent buildings to the location. They could be drawing away traffic because of better promotions, nicer facilities, and more attractive leasing rates. Possibly the landlord is difficult to get along with, and that is why many tenants are not renewing their leases. Maybe there has been a turnover of landlords or property management companies, which has caused instability in the operation of the building.

Changing Patterns of Neighbourhood
Take a look at the surrounding neighbourhood. Is there growth activity occurring in terms of buildings or houses that would show an increase in a potential market? On the other hand, if there is a declining pattern, it could negatively impact the business in the future. Contact the municipal office and make inquiries regarding the development in your geographic market area over the next few years.

Competition
Thoroughly research the competition that is in the market area. Possibly there is very little competition, or the kind of competition that could be threatening to you. For example, a large retail store or business could spend a lot of money on advertising. Also look at the proximity of the competition and determine their strengths and weaknesses. Would you have a competitive edge?

Hours of Operation
If hours of operation are important to the success of the franchise, check to see if the landlord has stipulations in the lease that the building is open for operation only within specified hours. If you the business is located in a shopping mall, you may be required to be open for business at all times that the mall is open and restricted from opening outside of those hours. If opening the business on a Sunday is important to your business, check if the municipal bylaws will allow you to do this.

Rent Payment
Obviously, the amount of rent you are going to pay is a critical factor in determining whether the location is attractive. Many small business bankruptcies are due to excessive rental payments. Ask yourself how the proposed rent measures as a percentage of your anticipated sales. Is the rent within industry averages as a percentage of sales? Rent costs in excess of industry averages can be justified only if the location allows for higher mark-ups or other benefits that offset the higher cost.

There is obviously a lot more that goes into choosing a good location. You can learn more about the important of location and franchising by looking at our Franchising Tips.

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TFP World Exposed
Growth through franchising, management services and franchise business ,upside-down franchising - just some of the phrases used by Les Dyson of TFP World to describe what they allegedly do. If you’re considering getting involved with TFP World with one of the positions they’re advertising which “require investment”, then you you might want to look into their background further . TFP World is the successor to The Franchise Group which was wound up by the British High Court in June 2008 owing Partners and suppliers millions.

TFP World, is what used to be The Franchise Group.

The Franchise Group recruited “Partners” to come and work within their so called franchise consultancy. In return for an upfront investment - anywhere between £30,000 and £60,000 - The Franchise Group offered the ability to earn a six figure income. The justification for the investment was to fund their marketing efforts used to attract clients whose businesses were to be “franchised” using the so called upside-down franchising system. Problem was, very little was invested in marketing although the Partner fees - anywhere between £30,000 and £60,000 - represented the real revenue for The Franchise Group Directors. Some 60 Partners were recruited, lured by the promise of big rewards.

The Franchise Group was wound up by the High Court in June 2008 and is subject to a forensic investigation into the Directors’ by the appointed liquidator. The Franchise Group was also subject to an investigation by DBERR (Department for Business, Enterprise and Regulatory Reform) .All those who invested, lost their money in entirety. Their initial investment and monies owed for work carried out. This was devastating for the Partners, many lost homes and suffered ill health as a result of getting involved with these people.TFP World, a company registered off shore , is effectively a reworked version of the The Franchise Group. Same upside-down franchising system, same Partner recruitment (investment required), and same Les Dyson and Jeff Smith .

A Business in Trouble or a scam ?

In September 2007 The Franchise Group announced that it was to be taken over by investors Les Dyson (CEO) and Jeff Smith (Chairman). To this day it is not yet publicly known what the details of this deal were although it was reported that the group was bought for £9.7m and that the company was to be floated on the Toronto TSX Ventures Market .

The floatation never happened and the exchange of monies is shrouded in mystery. What is known however is that shortly after the so called takeover. Creiditors and Partners stopped getting paid. By Christmas of 2007, some Partners were desperate. Many wanted their money back but despite continued promises that payments would be made and investments refunded, they were never forthcoming .

The company attempted a CVA (company voluntary arrangement) but this was blocked by the creditors and ultimately the business was wound up. To this day no one has received a penny of what they are still owed. And so it goes that following the demise of The Franchise Group, Les Dyson and Jeff Smith reappear as TFP World .

Click TFP World, for more information about TFP World, The Franchise Group and Rapid Results Marketing.

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Life is for living right? So why is 90% of the world stuck working 40 - 60 hours a week, in a job they can bare - just to be living pay check to pay check not making enough money? It doesn’t seem fair that we are given restrictions on when we can see our families, when and how much time we can have on holiday or be restricted to a pay rate that suits the company in making money - not so we can enjoy life!

Here are 5 options for you to consider - helping you out of the rat race and making money to be a catalyst to your freedom

PROPERTY - Yes, I can hear you say - property NOW? In this economy! To be honest, yes property is a great one. Do the research, look in the papers, talk to real estate agents, and your bank. There are many ways of making money in property - a fantastic book to read is “0 to 150 properties in 3.5 years” by Steve McKnight. It shows you many different ways in an easy to read format! Follow this and you will be on your way!

STOCKS - Again, I hear another moan of resistance. This is where I will simply say - read the article (”Buy American, I am” New York Times) by Warren Buffet the man who has made the most in the world off stocks. He basically says right now he is buying stocks. He has survived two other stock market crashes and has done the same in each one, why do you think he is wealthy? As with property - the biggest thing here is to research, research and do more research.

DEVELOP YOUR OWN BUSINESS - You may be sitting on an idea that the world is craving right now! Put a comprehensive business plan together and ask people what they think. This may be hard, as it is your “baby” they are talking about - but see if there is a recurring theme in their comments, if there is, adjust it so it becomes a positive attribute. A fantastic book to read is “The E-Myth” by Michael Gerber - he writes in laymen’s terms on how to make a business work for you, not you work for the business. After all you are after freedom not working harder than you are now right?

FRANCHISES - These are proven systems that make you money. The biggest thing here is you will need to outlay a reasonable amount of money. However as these are proven, it may be easier to get a business loan for a franchise than for an unproven business of your own. Again, find a franchise that aligns with an interest of yours, which has similar values to you and yep, you guessed it, research! If you are looking for less of a risk than building your own business, then this will definitely be something to consider.

BUSINESS BASED FROM HOME OFFICE - A home based business is ideal for the stay at home parent looking to watch their children grow up. With the internet so useful and phone deals quite cheap, you can be at home - yet connected to customers around the globe! Home based businesses are often cheap to start up and can have the potential to make a lot of money. It is important to do your research as there are thousands out there, and some are illegal. Find the one that interests you and most importantly, has the potential to deliver the freedom and income you are looking for.

So where to start from here? I would look within, listen for your internal voices - one of those options will feel more comfortable than the other when you imagine yourself doing it. Start with that one. If that doesn’t end up being, try the next one…and the next. It will get easier as you determine what is right for you and then you will be living the lifestyle you choose.

You should keep in mind that there are many coffee franchise businesses that are so much more than just a few cups of coffee. There are those that also serve tea, those that have bakeries, those that have cafes, and many other great combinations to compliment the coffee being sold. This means that you are not necessarily limited to coffee if you choose to go with a coffee franchise for your business investment.

A coffee franchise might very well be the perfect business for many would be business owners seeking the safety of buying into a name that is well know and well loved rather than engaging in the riskier business practice of building a business and a brand name from the ground up. If you are looking for a franchise opportunity, consider carefully the gold mine that a coffee franchise can be in the coffee culture of the new millennium.

In addition to a coffee franchise that deals solely with serving coffee to the demanding public there are plenty that also offer goods and services that compliment coffee quite nicely and go well with your coffee time. From wi-fi access and Internet cafes to those coffee franchise restaurants that offer smoothies, bagels, sandwiches, baked goods, and countless other enticements to get customers in the door there are plenty of options when searching for a great coffee franchise investment.

How much cash do you have available to invest in your coffee franchise? Most franchises will require a personal commitment of finances even if you can arrange for a good portion of the costs through financing. The reason for this is that most people are going to work twice as hard when their own money is on the line to make the business a success. It is a sound business move on their behalf and one of the reasons that they are able to become franchises and maintain a solid reputation for quality goods and services.

Finances are surprisingly the most overlooked aspect of building a business such as a coffee franchise and one of the most important and necessary for doing so. You need to plan to support your family while you are building your business in addition to having the money that will be needed to start your business in the first place. It takes money to run a business and this is true in the first few years of your business than at any other time.

The options

The first coffee franchise that you might want to consider and one that requires the smallest investment is the kiosk. This is a very small venture for your investment dollar that doesn’t promise the eye glazing profits that some of the larger franchise stores present but does at least offer an affordable entrance into the world of franchise ownership. By purchasing one adding another to your portfolio once you get the first up and running you have the potential to add more to your investment portfolio and build a substantial income.

The drive thru coffee shop is the second on the list. This is a great high volume business. There are some that choose to have two drive thru windows so that more business can be accommodated simultaneously. This is a great business decision if your coffee franchise store is located in an area that is busy enough to accommodate both windows. The expenses in an operation such as this are a little more than a kiosk but not as much as a walk in coffee shop.

There really is no one right or wrong option to make when selecting your coffee franchise only the decision that is either right or wrong for you. Not everyone wants a business with a split focus and there is a good bit of argument in favor of a business that does one thing and does that one thing exceptionally well. It is up to you which of these will be appealing to you. If you grow quickly bored with the same thing variety may be the perfect spice of life however, if you are the type of person that enjoys the idea of perfecting one thing then you might be more inclined to stick with coffee and make your coffee franchise business the best on the block by far.