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Livin The Dream
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Livin' The Dream Is Franchising Right For You?
By Tamara E. Holmes In this three-part series, we guide readers through the initial phases of franchising. First, in today's installment, writer Tamara E. Holmes explores how to determine if franchising is right for you. Check back next Tuesday when we’ll look at how to choose the franchise that’s best for you, and finally, on Sept. 12, we’ll guide you through the process of buying a franchise. After holding management positions in various companies for more than 18 years, Isaac Madison, 41, thought he might want to own a franchise—a McDonald’s restaurant. But before jumping into a new venture, Madison decided to embark on a period of introspection and learn the business through hands-on experience—actions that franchising experts say can make all the difference in determining if franchising is a smart move for you. “Franchising is not for everybody,” says Kathryn Tito, director of product development for FranchiseSolutions.com, an online company that helps franchisees and franchisors find one another. Not only does franchising come with the risk of failure, but it also takes a special kind of entrepreneur with a certain type of personality to make it work. “If you really want to do things your own way, and you like to call all the shots, and you’re extremely independent, those might not be the most positive attributes for someone who’s going to be successful as a franchisee,” says Matthew Shay, president of the International Franchise Association. That’s because franchisees must adhere to certain operating procedures as part of the franchising arrangement. “But on the other hand, if you’re good at implementation and execution, if you can follow a plan, and if you’re looking for someone to give you some guidance, then maybe a franchise is a better fit,” Shay says. For Madison, the allure of opening a business such as McDonalds, which already has a proven business model and an extensive support system is key. “You don’t have to reinvent the wheel,” he says. “They have been successful for years so you can basically adopt their philosophies and put them into practice.” There are other things entrepreneurs should consider when contemplating buying a franchise: The money. Buying a franchise can range anywhere from a couple thousand dollars to several million dollars, says Tito. Prospective franchisees should make sure they’re comfortable with such an investment or explore ways to get financing. The time commitment. Most franchising agreements commit franchisees to the venture for a minimum of five years, Shay says. “You can’t really get into it and try it out for six months and then say, ‘this doesn’t work I want to get out.’” The fit. Franchisees come with all types of educational backgrounds but “if you’re comfortable managing finances or you’re open to being trained in financial management and business operation, then you stand a greater chance at succeeding,” says Tito. Madison, who is from Covington, Georgia, hopes his stint managing a McDonald’s franchise will make him more appealing as a candidate to have his own restaurant. Pointing to the rising profits in the store he manages, he says, “I have positives that McDonald’s can look at and say ‘he would be successful at this’ as opposed to someone coming in and saying ‘ok I have the money. But I don’t have the experience.’” At the very least, Madison’s experience is letting him know whether he can withstand the lifestyle demands of running a McDonald’s franchise—another thing that’s crucial for prospective franchisees to understand, says Tito. Another way to understand what franchising entails is to talk to current franchisees of the business you’re interested in buying. “You really have to approach this carefully,” says Shay. “You have to be certain that this is really what you want to do. You want to be in this business for the next 10 years.” |