Buying A Franchise – Mr. Franchise Buys His First Franchise
For the last twenty-eight years, as a franchise attorney, author, instructor and recognized franchise expert, I’ve helped firms enter and prosper in the franchise industry – each hoping to become the next “McDonalds” of their respective industries. Along the way, I’ve met and worked with an interesting group of entrepreneurial founders. From apparel to water treatment, the franchised concepts were also incredibly diverse. Some of them interested me to the point where I considered buying a franchise myself. In two or three cases, talks were initiated to discuss the possibility, but never moved forward. I just couldn’t find the precise set of criteria to satisfy my exacting requirements. After all, I had advised hundreds of prospective franchise buyers, and developed sophisticated radar for detecting the good, the bad and the ugly in franchise investments.
In May of 2002, my life changed dramatically as I took the plunge and became a first-time franchise owner. I’d just completed a franchise development project for a San Francisco Peninsula company poised to enter franchising. They operated a very successful home improvement business that specialized in a unique niche. Targeting homes constructed in the 1960′s to the 1980′s having old, flat, ugly interior doors, this company replaced all interior doors in a home with new, freshly-painted raised panel designer doors, locksets and hinges. Their advertising mantra was “Replacing America’s 1.16 Billion Interior Doors.”
After interviewing a couple interested franchise candidates who didn’t sign up, the company became concerned about selling its first franchise. Selling the first one is usually the most challenging task facing any new franchise company. There are no other franchise owners a prospective buyer can talk to about financial performance, training, ongoing support and other franchise relationship issues. Because of this void, selling the first one is difficult. After I was repeatedly asked when they could expect to sell their first franchise, my hand finally jumped up and I volunteered for the assignment. My franchise agreement was signed May 22, 2002.
Let’s consider the major assumptions and factors I evaluated in making my buying a franchise investment decision, and see how things worked out.
INDUSTRY TREND
As stated in the previous franchise article, a major issue is finding a franchise in a cutting-edge industry that is doing well currently and is projected to do well in the future despite any economic slowdown. From my experience in evaluating hundreds of franchises, I observed the home-improvement industry was a stable segment. People are always looking for ways to improve the appearance and value of their homes.
Unlike other home improvement companies that concentrate on a single, high ticket improvement (a kitchen remodel, for example, that can cost ,000 and more), for a couple thousand dollars (,000 to ,000), a homeowner can give every room in their entire home a major face lift by replacing their old, flat doors with new raised panel, designer doors. In the aftermath of the 9-11 attacks, and the country’s high security anxiety, I felt more people than ever would be nesting at home. A home typically represents the most valuable asset in a family’s portfolio. If the homeowner can be educated and motivated to improve the appearance and value of this asset, by making a reasonable investment, sales are easy.
Major home improvement chains, like Home Depot, realized this and were aggressively promoting interior door replacement. However, they were not organized to meet the needs of the target market in a cost-effective manner. The franchise company had discovered and perfected the “do-it-right” approach for this market, and actually welcomed competitive bids from the Home Depot and other large home improvement chains. In my estimation, all of this bode well for home improvements in general, and this franchise company in particular.
TOTAL INITIAL FRANCHISE INVESTMENT
The franchise company estimated initial franchise investment between 7,00 and 0,000 in its Franchise Offering Circular. Turned out, I came in below the low end of the range. Including the ,000 in franchise fees and the ,000 I used against a home equity line of credit, our total investment was just under 0,000. Incredibly, this was enough to get the business operational AND reach the critical break-even point where cash flow paid all the bills. As discussed in the other franchise article, reaching the break-even point in many businesses can take a year, two years or more.
Getting operational happened fairly quickly. From the time I signed the franchise agreement at the end of May, 2002, secured the real estate in mid-July, 2002, completed improvements then training in August, 2002, and began operations like a rocket in the first week of September, 2002, about four months elapsed. We hit the break-even point in mid-October, 2002, just six weeks after operations started, and began to accumulate an ever-increasing balance in the business savings account.
When I sold the franchise in September of 2003, our interior door replacement business was rocking and rolling. Residential home owners negotiated for position on our six to eight week waiting list to get their old, ugly, flat interior doors replaced with new raised-panel, designer interior doors and shinny lock sets. The new owner paid 6,000 for our franchise, and I received 5,000 after escrow fees. Subtracting our 0,000 investment left a tidy 5,000 profit. Not bad for operating the business exactly one year, and this didn’t include operating monthly income before the business was sold.
REAL BUSINESS
I operated a retail business with a storefront, as opposed to a “work out of your home” operation.
FRANCHISE MANAGEMENT EXPERTISE
The management team of the franchisor had no past achievement and experience in operating a franchise company. They had just started the franchise company and were learning on the fly. That was definitely a major risk. However, I’d given them detailed seminars on how to operate a franchise company and manage franchise relationships based on my twenty-plus years of franchise industry expertise, and had every reason to believe they’d follow my advice. And, because I was their very first franchise, I also believed they would do everything it took to make me a success. My goal was to develop the first franchise from scratch, build it up, then either develop other franchises for them, or sell out – depending on what happened in the franchise relationship. I opted to sell out.
NORMAL WORKING HOURS AND DAYS; SUFFICIENT INCOME LEVEL – FRANCHISE PROFITS AND FRANCHISE PROFITABILITY
The nature of this business was a normal five-day, forty-hour workweek. Our business hours were 9A to 5P, Monday through Friday initially. After talking with the owner of the second franchise in early 2003, I discovered and copied his idea of a forty-hour work week spread over four, instead of five days.
Although this meant our employees needed to work four ten-hour days, they were very receptive to the idea. By starting on Monday and getting all door orders for the week installed by Thursday, everyone had a three day weekend every week, not just on an occasional holiday. Of course, I didn’t have to work ten hours a day. I arrived by 10 a.m. and usually finished by 4 p.m. – Monday through Thursday. Supervising four employees, working 24 hours a week and having 3-day weekends off every week – try finding that in another franchise!
What about the financial picture? Let’s take June of 2003, the tenth month of operations when I started interviewing a number of interested buyers. Sales were ,000 less expenses of ,500, left an income that month of ,500. Of course other months varied, and the business was still in the start-up development stage operating with only a single crew of four employees – but you get the idea. Using the results for June and multiplying by twelve for an annual result, I’d entered financial performance territory only enjoyed by a select group in the entire franchise industry.
MINIMUM NUMBER OF EMPLOYEES
Remember my key question here: can you operate the business with six or fewer employees? When we started business operations in September, 2002, we had two employees. A month later, we added another. When the business sold a year later, our crew consisted of one part-time and three full-time employees.
LEASING AND LOCATION
Our interior door replacement business operated from a low rent commercial business zone, so high square foot rent and triple net leases were never a concern. The 7,200 square foot warehouse and retail showroom we settled on in San Carlos, CA, with rent starting at .65 per foot the first year, seemed almost too big (and expensive) initially. Cutting a rental check to the landlord for about ,000 every month, by far the biggest initial operating expense, made my heart race while I thought “is this whole thing going to work and how long will it take to reach the break-even point?” But, as things turned out, our location was perfect, sales were never an issue, and we hit break-even just six weeks after operations started.
Due to the size of the facility and nature of the interior door replacement business, three crews were possible and bringing them online, one crew at a time, would double then ultimately triple sales. Also, because we were the first to enter the franchise system, we selected the very lucrative, exclusive territory that stretched from Palo Alto, CA all the way up to San Francisco, CA. Although we never expanded the business
How to Retain Experienced and Efficient Employees
The multinationals and global organizations of today are notorious for their high attrition rates. Hence, retaining employees has become one of the chief tasks of modern Human Resource Managers. Human Resource Managers feel proud if they are successful at retaining employees for over a year, to work for companies in which most employees are over a year old.
What is it with employees today? Or is it the fault of the organizations? Let us delve deeper into the problem of high employee turnover, to understand it better.
Globalization
The high employee attrition rate is largely due to globalization. This is a truth, which we have to acknowledge. As globalization has spread all across the world, countries are reporting higher GDPs and economic growth rates. Economies of most nations are bubbling despite occasional meltdowns. Almost all major transnational companies have opened up offices in different countries, across continents in a bid to expand their operations. As a result, there are more options available to the workforce of a nation nowadays than there was, about half-a-century ago. Employees have more opportunities at their disposal to switch jobs for higher salaries and better prospects.
Globalization, Airports and Railway Stations
Yet another reason why the employee turnover rate has skyrocketed is because widespread globalization has made cities wealthier than what they were. Hence, airports have cropped up in almost all the cities of the globe. Therefore, traveling has become hassle-free and less time-consuming. A person working in Paris can fly to Nice every weekend to meet their family. The person can also take a train to his or her hometown to meet his or her family every weekend as the railway industry too has flourished with globalization.
Globalization and Consumerism
Globalization has boosted the purchasing power of people. People have become more materialistic as they have more spending power. It is the age of consumerism. People want to earn well so that they can live well and in style. The idea of saving has taken a beating. People of the 21st century would not mind taking loans so that they can buy houses, cars and so that they can holiday in exotic places. Fabulous and well-decorated houses with spacious living rooms, island or modular kitchens, several bedrooms and guest rooms, a basement, a wine cellar, a swimming pool, a games room, and a driveway is what most modern people want, nowadays. Additionally, they want a few cars including one or two racing cars, in their garage. Besides, they want to wear trendy clothes, dine in expensive restaurants, put their kids in expensive private or boarding schools and live in luxury. All this costs money. And so people naturally want to change jobs in order to earn as much as possible so that they are able to pay for their luxurious lifestyles. As soon as they get better offers, they are willing to change.
Technology
Another reason for the current high employee attrition rate is technology. Technology has turned the world into a global village. An employee working in the US can connect with their family in Shanghai through email and video conferencing in a jiffy. Modern connectivity software is very hi-tech and user-friendly so that people do not face any problems while chatting with their friends, family members, and colleagues across seas and oceans. Due to the near exponential boom in social networking, employees feel no less confident when they leave station to work in distant lands, as they are sanguine that keeping in touch with families and friends will be no problem. Grown-up children, hence, do not think twice about hopping jobs and moving from one city to another, as they know that they will be able to keep in touch with their parents via Facebook, Twitter, and Orkut, and will even be able to talk to and see their parents on a daily basis through Skype and other easily-accessible video-call and live chatting software, with the help of a webcam. It is the same with married couples. Wives and husbands reach out to each other over social networking sites and Skype video call. As communication has become a cinch, people do not bat an eyelid about living apart from their families.
About fifty years ago, a person would have to deliberate a lot before changing their job and going to a different city. Such a move would entail difficulty, as the person would not be able to see their family regularly. He or she would have to keep in touch with family members and friends by sending letters, which would take their own sweet time to be delivered. Once the letter would reach the person’s family, the family would have to answer it by sending another letter, which again would take time to reach the person at the other end. Family members would thus end up missing each other terribly.
Job Portals and Application Procedures
Job portals also play their roles in pushing up employee attrition rates. Monster and other renowned job portals have hundreds and thousands of resumes registered with them. These portals manage to earn lots of money because of their worldwide popularity. They are excellent platforms that connect employees to prospective employers. Thousands of employers rely on these portals to scan the resumes of and select future employees. Most well-known job portals take money from the employers. Securing employment has become easy with the presence of such gateways. People no longer have to sit and read piles of newspapers in order to apply to jobs though newspaper classifieds continue to advertise for situations vacant and wanted. Also, the manner of applying for a post has changed drastically with the ubiquity of the Internet. Jobseekers do not have to take printed copies of their CVs, certificates, testimonials and other documents, pack them up, put them in envelopes, seal the envelopes before sending them by post to the places where they are applying. No indeed. The process of applying for a job has been rendered extremely easy with the help of the Internet and the email. All that jobseekers have to do is to open their email accounts, compose a covering letter addressed to the prospective employer, attach soft copies of all their particulars to the covering letter and send the letter along with the attachments by just clicking the Send button. Employee loyalty rates have plummeted as job application procedures have become simpler.
The Age of Globetrotters
However, experts opine that apart from the individual reasons, which have been cited above, and which are responsible for high employee attrition rates, the primary reason behind the high employee turnover figures is a general cause that is linked to a general worldwide trend. Experts, business psychologists and HR managers have analyzed this trend to be the chief cause behind the high attrition rates. They have found from various studies and research papers that the under-forty workforce is very ambitious and tends to consist of globetrotters. The lure to be a global citizen has more power over them, much more than the lure of the lucre. Youngsters nowadays love to brag that they have worked in different cities of the world, that they are jet setters, hopping from city to city, across continents at a moment’s notice. Young people, therefore, like to land jobs that give them ample opportunities to travel around the world, to explore new countries, to get acquainted with new cultures and new cuisines. Even if they have good and stable jobs, they will not think twice about dropping their jobs like hot bricks if they find new jobs through job portals on the Internet that promise them a global lifestyle.
Fewer Commitments
Another factor that emerges from these studies is that young people nowadays have lesser commitments. About forty to fifty years ago, most people were married and settled by thirty-five. Currently, however, most under-forties prefer live-in relationships to marriage. They find such relationships more convenient than marriage as live-in relationships can be dissolved at the drop of a hat. Also, live-in relationships mean a general no-no to children as the relationships, being essentially makeshift, may not last. Many married couples too, prefer not to have children, nowadays as, since the husband and the wife both work and are both engaged in building their careers, who has the time and energy to look after kids? There are many married couples who stay married but live apart for the sake of their careers. It is common to find the wife living in San Francisco and the husband living in Tokyo or the wife living in Boston and the husband in London or husbands and wives separated by as much distance as mentioned above, across the globe, only because they are pursuing their careers. So, such husbands and wives are pretty willing to switch jobs and are not daunted by the thought of living apart from their spouses by thousands of miles (though this kind of setup often causes infidelity and cheating in marriage and marriages to fail, but that is another issue altogether.)
The Million-Dollar Question and Its Answers
So the million-dollar question is: how do you keep efficient employees? We, Senior HR Managers and Business Psychologists have really racked our brains about this problem to find some workable solutions. After much research, debate, deliberation, and on-the-job experience, we have come up with some answers to this apparently mind-boggling question. We propose the following set of solutions to effectively tackle the problem of mounting employee attrition rates:
• Make Your Company World-Class: Try to make your company a world-class company. All standard world-class companies give about
Service Apartments Bangalore improve costs compared to any budget lodge
Service Apartments Bangalore
Were you hit with a 5000-dollar bill for a cosmetic dental process? Do you desperately covet that rhinoplasty but can not have it since your insurance coverage doesn’t cowl it? Have you been shocked that your out-of-pocket expenditures estimate for that heart valve surgical procedure runs into thousands of dollars?
According to market reviews, Health-related Tourism in India is expected to earn income of $ 1-2 billion by 2012. Bangalore guarantees to get the perfect vacation spot for any health care tourist. The assortment and diversity the region gives is unmatched. Professional medical tourism in India is now a swiftly growing marketplace. The government, the professional medical fraternity as well as the tour operators are all preparing for this new revolution.
Service Apartments Bangalore
provides health travellers various advantages:
Cost Advantage:
The prime advantage may be the cost savings with respect to health care consultancy or surgical procedures. Many of the Bangalore hospitals, serving international sufferers, have state-of-the-art infrastructure, highly educated health professionals and top-notch services however the determine on that price tag tag is really a fraction of what it would be in developed international locations. Even if your insurance coverage isn’t going to cover the prices of therapy in India, the last invoice in an Indian hospital would most almost certainly be lower than your out-of-pocket expenditures.
Service Apartments Bangalore is deemed to become an different for an high-priced lodge keep. We at Transit Living make certain that you just get all of the amenities at affordable price, in contrast to a resort. Our Service Apartments Bangalore are centrally situated in Bangalore and in greater than 6 Locations spread across the town with more than 150 serviced rooms, apartments and offices. No matter whether you happen to be wanting for short remain or lengthy remain, you improve costs in comparison to any budget lodge or luxury serviced apartments or any other lodging.
Transit Living will be the 1 in the pioneers in this segment offering some in the finest Service Apartments Bangalore India. We offer you protected, secure and economical Service Apartments Bangalore in Backyard metropolis, Bangalore India, are it for work or for pleasure.
Small Business Retail Spaces: Post Recession Considerations
Despite the official end of the most recent UK recession, many businesses (particularly small retail businesses) are still feeling the pinch. In such situations the general consensus is to stick to tried and tested methods of marketing. Retailers and buyers alike aim for the same thing – trusted brand identity.
In times of financial hardship most buyers will stick to what they know – broadband provider, parcel delivery service, hairdresser, silk flowers crafts, fruit and vegetable stall – the importance of brand identity is relatable and changeable through every level of business.
For retailers, nurturing strong brand identity encapsulates techniques ranging from shop floor décor and sale pricing to customer service and stock quality. Arguably the most important factor of frugal business brand growth is brand promise. Break that promise and it could prove incredibly difficult to win back customers.
An important lesson to be learned from America’s Great Depression of the 1930′s is the value of customer service. Take care of customers competently through both fruitful and financially difficult times to boost business/customer trust, foster strong brand identity and increase customer loyalty that will likely span times of economical abundance and hardship alike.
Successful retail design needn’t be showy or expensive to convey business identity and enhance brand promise. The simplest retail spaces are often the most effective. Take the burgeoning art of colour psychology, for example. Identifying the most appropriate colour for a brand message isn’t hard, and could thriftily help create a soothing, buyer-friendly atmosphere. Why are floral arrangements and silk flowers delivered to patients in hospital? Nature-inspired decoration like floral arrangements and the colour green encourage feelings of health, trust and confidence in brand authenticity.
Identifying and implementing the most apposite fixes for the small business retail space doesn’t have to be financially pressing. During times where money is tight and the future uncertain, the importance of simplifying business practice cannot be overemphasised.
By a Large, Business Travel is not a Pleasurable Experience
Business travel has become so common that a considerable proportion of the corporate world of America is spending more time in airplanes and hotels than on their couches or in their automobiles.
According to a recent estimate, about 40 million adults in the US travel on business at least once a year to a location about 50 miles from home. More than 20 percent of the trips made by African Americans, for instance, are related to their work.
Those who do not need to travel frequently on business consider business travel glamorous and exciting. However, in reality, business travel is often arduous.
It is tough physically, tough on the family, and especially tough on the pockets of businesspersons who do not have the luxury of generous expense accounts to take care of their travel expenses.
In addition, those who travel on business regularly, quickly wise up to the fact that a stress-free and safe journey requires the smooth functioning of a number of interconnected factors, which includes the vagaries of the weather.
According to a study conducted recently, monitoring business travel trends:
> 58 percent of business travel is undertaken for association meetings and conferences,
> 43 percent comprising of business travel made by individuals,
> and 29 percent for corporate meetings.
The study also identified some of the most popular destinations within the US for business travel. They are:
> Washington, D.C.,
> New York,
> Los Angeles/Long Beach,
> Chicago,
> Atlanta,
> Boston,
> Houston,
> Minneapolis-St. Paul,
> Detroit,
> and Dallas.
Irrespective of what the destination is, business travel is seldom an enjoyable experience. Some companies will allow their business travelers the opportunity to enjoy their travel surroundings but this is usually short lived depending on the demands of the trip.
Business travelers, who have to make frequent trips, need special facilities to ease the hassles of traveling. Airlines and hotels are increasing the levels of services they provide in order to meet the growing demands of business travelers:
Usually, business travelers research fares on their own and make their reservations online. According to a survey, it was found that only 32 percent of corporate travelers used the services of travel agents for their reservation needs, while the rest, 68 percent, preferred using the internet or online services to plan at least some part of their business traveling arrangements.
Business travelers are usually technologically conversant; hence, choose to handle all their traveling arrangements through the Internet, limiting the necessity of having to interact with travel agents and professionals dealing with customer service.
Most tourism related sites offer one-stop travel facilities for reservations of flights, booking rooms in hotels, and providing transportation on the ground.
Major airlines like Delta and American have included travel-friendly features like locating cheap fares, finding economical hotel accommodation, and hiring cars on a rental basis inexpensively on their websites.
Travelers, thus, can make arrangements for an entire business trip, which includes seating preferences, confirming special food requests, and a text message or e-mail verifying their flight status and information about the departure timings with a few clicks of the mouse button.
Most of these sites provide boarding passes that can be printed out and online check-ins within 24 hours of the departure of the flight.
At the airport, those travelers in a hurry can take advantage of check-in kiosks in order not to have to wait in long lines, and get their boarding passes and their seating information.
Frequent Flyer Miles, Automatic Upgrades, and Comfortable Seating:
One of the biggest perks of traveling frequently on business is the facility of accumulating points, which can be exchanged for vacations. Travelers, therefore, are always on the look out for hotels offering generous points facilities.
Frequent air travelers also favor automatic upgrades and comfort inside the airplane, such as generous legroom and additional storage facilities overhead. Business traveler programs like EliteAccess provided by Continental Airlines offer comforts like guarantees of no-middle-seat and upgrades to the first class if possible.
Getting Value for Money:
Companies are constantly curtailing overhead expenses by cutting down on the travel allowances they give their executives, while business travelers look for ways in which they can maximize their allowances to the fullest.
For example, several hotels offer free breakfasts, while others provide complimentary facilities such as a welcoming snack or allowing their guests to make free long distance and local calls. Many hotels also offer free newspapers, tea and coffee.
Feeling at Home Far Away from Home:
Business travelers are so frequently away from home that they look for services that replicate their home comforts.
Although hotels are selected primarily for value and location, but business travelers expect home-like comforts like high quality toiletries, comfortable bedding, choices in beverages, cable TV and films, broadband internet access, exercise and convenient check-in/out facilities, and so on.
<>WordPress ·