Growing Your Business

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Ask the Expert: Franchising

By: Eden Creamer-Hurdle
  • Category

    Growing Your Business

  • Author

    Eden Creamer-Hurdle

  • Post Date

Marcel Portmann, BNI’s Director of Global Franchise Development, joined the BNI family in April 2016, after a 20-year career in franchising. Beginning in hotel management, including systems, manuals and procedures, Marcel began consulting and helping companies standardize processes and franchise internationally. From there, Marcel worked with a franchise group in the United States called FranNet, before moving to the International Franchise Association, where he spent the last 10 years, moving to the Vice President of Global Development position. Marcel is also quoted in Franchising for Dummies.

 

Question: What type of person is the ideal candidate to purchase a franchise?

Marcel Portmann's Answer: Certainly someone who is entrepreneurial, who wants to be in business for themselves, but hopefully not by themselves. That is a tagline you hear a lot in franchising – Be in business for yourself, but not by yourself. An ideal franchisee is somebody that wants to own their own business, have some liberty in terms of what they are working on, but also appreciate the know-how and support that they are getting from the parent company(the franchisor). They must be someone that is willing to accept procedures, but is willing to contribute as well. They should not only follow the manuals, they should be involved in the business. And, in the case of a large majority of businesses, it’s ideal when they are in some way involved in the business [prior to franchising].

Q: What should a potential candidate for a franchise consider before taking the leap of purchasing?

A: The first step is to determine if they have the investment required, or if they need to get financing. If financing is needed – where is that coming from? Also, it’s important to consider how the business will impact your personal family lifestyle. You and your family must be willing to make sacrifices. If you are used to taking a one-month vacation every year, these are things that you might have to put on hold for the first few years as you get the business going. You’ll need to set aside time for the training, and make sure that you are willing to put in the time to make the business grow. Unless you are buying an existing franchise that is already up and running, it’ll take time.

Q: What kind of time frame does it take?

A: For most franchises, 26 to 48 months is realistic. Some require less, but you should be willing and able to put in at least that time frame.

Q: What would be your top suggestion to someone purchasing a franchise?

A: Investigate. Do your homework. With today’s technology you have enough resources online to basically find out everything you can about the company. There’s really no excuse to say, “oh well, nobody told me.”

Q: What makes a business ideal to franchise?

A: A lot of companies started franchising because they wanted to grow, and they see franchising as a way to increase their market share. You need to ensure that your existing business is 100 percent franchisable. Are there pieces that are not replicatable? If so, you should change the way business is done. If your supplier doesn’t have the production capacity for you to grow, you’ll be in trouble with your franchisee because you have no products to give them. If the reason people go to a restaurant is because the next Frank Sinatra sings there, it isn’t really a franchisable business unless you find another guy who sings just as well as the first guy. Talking to companies that want to franchise, just make sure that 100 percent, all aspects of your business, are able to be put on paper and can be taught to someone that might not have experience in the business.

Q: What steps are typically involved in franchising your business?

A: The first step is assessment of your existing business – sometimes you may have to do some reengineering, or change the way you do something because franchisees may not be able to do it the same way you do. Next, you have to consider the legal aspects. Manualization or standardization – creating your franchise package. Finally, you must consider the franchise development process, or determining how you are going to sell it. You have the franchise package; now how do you get it out there? Do I go online, a show, a trade broker? If you ask a franchisor, ‘why did you start franchising?’, the large majority of them will tell you that someone came and asked them for it. Very few actually had this in mind and went through the process without having a potential buyer ready. Franchising is a very entrepreneurial experience, and it can be very successful – or unsuccessful for some.

Q: What is a reasonable timeline here?

A: I have seen companies that take 60 days to jump into a franchise program, but a healthy timeline is 12 months to 18 months. If you have your business ready to franchise, you need to have it run at least one business cycle (a year). That way you have financial data as well to verify that it is a good business. Of course, in the U.S. there are some restrictions on what you can and can’t say, but you need to have experience to be able to say if it is a seasonal business or not.

Q: What is your top suggestion to those considering franchising their business?

A: If your business has anything you think needs to be changed or improved, make sure you do that before you franchise. It’s like giving away a piece of a pie that you made, but you know it isn’t good. Would you buy your own franchise?