Master the balancing act: How entrepreneurs can leverage
the opportunities franchise organizations offer.
By Rob Basso
Is it possible for an entrepreneur to work within the framework of a franchise system? Is the desire to take risk, think outside the box and create new products or services possible when owning one or more franchises?
The answer to these questions is yes. However, people with an entrepreneurial spirit and desire to take risks must understand that there are some challenges awaiting them in the world of franchising. Nevertheless, the opportunities abound within franchise systems. For me, having worked within a franchise structure and having interacted with many successful franchise owners, it is clear that the entrepreneurial spirit can survive and thrive within a franchise system.
The paths that people take to franchise ownership and systems are often very different, with their goals also varying significantly. Some people pursue franchises to achieve their desire to own a business, some want to change careers and others see franchising as an investment. Some others choose a franchise as a way to make a living (in a sense, “buying” themselves a job), and another group might see franchising as the starting point for building a network of businesses across a region, state or even a nation. These are all sound reasons to get involved in franchising.
Even taking all of these rationales into consideration, owners must still face a balancing act. For hard-driving, risk-taking and highly motivated entrepreneurs, there are lessons to be learned and opportunities to be leveraged within a franchise model.
Often entrepreneurs are fast-moving and ambitious people with personalities that match. The “I’ll do it on my own” approach is often the driving force behind their desire to achieve. However, building a business on your own often takes time and money that causes significant stress. Yet, this does not have to be the case.
Eager entrepreneurs want to get their businesses up and running quickly, and the time that it takes to put structures and systems in place often frustrates them. I saw this firsthand and knew that I needed to have an infrastructure in place for quickly processing payrolls. For me, finding an existing model made it easy to ramp up and start selling services.
Franchise companies have solved the ramp-up and fast-start problem for the entrepreneur. Before franchisors can even sell their first franchise, they need to have their systems for delivering products and services in place, operations manuals created, along with marketing plans and training programs developed, tested and implemented. These resources and time-consuming processes are completed well before the first franchisee signs his or her agreement. The business model and system are in place the entrepreneur, allowing them to start almost immediately.
Although there is a strong desire for the new owner to start quickly and use the systems provided, let’s not forget an important business axiom: success in business, no matter what you’re selling, takes hard work and you have to spend money to make money. Franchise models and systems are great and certainly offer many advantages. However, to paraphrase Ron Popeil, the man who made the table top rotisserie chicken cooker famous with his line “set it and forget it,” if you take this approach when franchising, you might as well forget it. While there may be a road map with systems available, the entrepreneur must leverage and use them to build his or her business.
It can be stressful starting a new business, especially when you don’t have a partner or others to rely on. Again to the rescue comes the franchise model. Owners are never alone; they have a franchisor and franchise support team available to them. Certainly the level of support varies depending on agreements and structures, but the franchisee is not alone.
Taking it a step further, franchise companies that have strong owners’ groups provide an additional level of support, comradery and opportunity for individual owners to share ideas and best practices. The solo entrepreneur might never have access to allies, advisors or friendly competitors with experience to call upon. While support from consultants, coaches and advisors can be purchased or retained for a fee, for a new business or even an established one, these costs can be significant, creating even more issues and setbacks.
Evan Bloom is co-owner of Sir Speedy of Westbury, N.Y., one of the top centers in his franchise’s system. He participates in a board group that consists of other Sir Speedy owners twice a year, attends two franchise run conventions per year and is a member of the Sir Speedy Owners Marketing Advisory Council.
“As a member of the marketing committee I am given the opportunity to interact with corporate leaders, discuss and play a part in the development of new products and services as well as marketing campaigns,” Bloom says. “I value the information that I receive and my ability to play an important role in the direction the entire company is taking.”
For those whose entrepreneurial drive includes the desire to add more locations, it is the franchise model again that makes it easier. With demographic information, site selection services and expansion incentives, franchisors give the entrepreneurial owners a leg up on the competition. This support provides significant cost savings for geographic expansion efforts. The ability to grow a network or multi-unit empire fits well within most franchise systems. However, there is a downside: Geographic limitations, occupied territories and other factors might constrain expansion desires.
Now let’s look at marketing. For a small business or a startup, the cost to market and advertise is significant. For businesses such as restaurants, quick printing companies and tutoring centers with one or two locations, the cost to market to consumers is often prohibitive. The franchise model comes with built-in marketing approaches and materials. Often there are advertising funds and once a system is large enough, it possesses an established brand.
RE/MAX, Subway, McDonald’s and Retro Fitness all have strong branding and marketing support that independent businesses have a difficult, if not impossible, time competing with. The level of branding and marketing support received through franchising systems allow the entrepreneurial owner to leverage awareness and grow their business. Resources can be focused directly to local marketing efforts to drive business.
All franchise systems and models are different. Some offer more flexible rules while others are stricter. For restaurant franchises, the ability to change menu items is not permitted. However, other franchises, such as those in the marketing, printing and
HR /staffing and payroll sectors are given more latitude. These can offer more comprehensive product lines and services. This flexibility is appealing to the entrepreneur who is constantly on the watch for new revenue streams and opportunities to provide more services to existing as well as to new clients.
“We have chosen to add services and products to meet the changing needs of our clients,” Bloom notes. “While we exist within a franchise structure, we also have the flexibility to identify and take advantage of opportunities and changing technology.”
The framework and the rules that govern a franchise can be stringent, but virtually all franchise companies are seeking to grow, serve their owners, identify ways to improve operations and enhance efficiency. To achieve this, many have created owners’ groups, councils and committees. Each of these entities creates a forum where owners and operators can provide feedback, share ideas, offer new products and services, contribute to goal setting and participate in the development of marketing campaigns and as well as programs. There are many areas where franchisees and franchisors can and often do work together.
“We have a vibrant and active group of owners within the Sir Speedy system,” Bloom says. “We exchange candid advice, support and ideas with each other at conferences and meetings. While we are in the same business, many of us are from different parts of the United States and even other countries. This diversity of people and markets creates great comradery and we are motivated to assist each other to achieve success.”
Although an entrepreneur might feel constrained within a franchise system, these groups give them the opportunity to contribute and play a role in the growth of their individual franchises as well as the overall course of the franchise brand.
“Entrepreneurs and business owners are responsible for developing the culture of their organizations,” points out Devon Bandison, a nationally respected business/life coach, expert on leadership and author of “Fatherhood is Leadership – Your Playbook for Success, Self-Leadership and a Richer Life.”
“Franchise companies can foster a community and a culture, but it is the entrepreneurial owner who is responsible for creating the culture within his own business,” Bandison says. “While strategies and a playbook are important, culture is how employees are motivated, productive environments are created and successful teams are built.”
The Owner’s Role
There is one balancing act with which many franchise owners struggle: marketing and branding. It is a challenge that I have faced personally and one in which I have seen others struggle. The fact is that today in business, owners need to take an active role in promoting their businesses and must be visible. Whether you call it personal branding or marketing, the role of an owner is to help grow the business, oversee operations and lead.
I recognize that there are many absentee owners and investors; these comments are not geared specifically for them but I personally believe that every business owner – entrepreneur or not – must play a role in marketing his or her businesses. For me, it involved being active in the business community, speaking and doing media interviews. I built a brand and reputation that played an important role in building my business, especially in the early years. I continue these efforts today and there is no reason why any and every franchise owner cannot be visible and actively publicizing their business.
Entrepreneur owners can thrive in this environment and leverage it to enhance growth and success. While there may be other constraints in terms of operations and product offerings, the freedom to build a personal brand is unstoppable.
The facts are clear: the entrepreneurial franchise owner must recognize that he or she does not have complete control; however, they do have the ability to pursue and feed their entrepreneurial desires. Owners must keep a careful eye on their franchise agreements and, while there may be challenges, stay within boundaries to ensure they will be able to renew their agreements. Franchises offer structure and freedom, which many independent businesses simply do not have. With an understanding of the rules, structures and advantages, the entrepreneurial franchisee owner’s potential for growth is unlimited.
Rob Basso is the author of the “Everyday Entrepreneur,” publish by John Wiley and Sons Inc. in 2011, and is founder and CEO of Associated Human Capital Management, a provider of HR-related services, payroll and benefits consulting services.