Are you interested in being self-employed, but don’t want to start a business from scratch? Have considered owning a franchise?
In this Lunchtime Topic, we explored the process of starting a franchise business, including the advantages of owning a franchise, how to find the right business or industry, capital needs, financing options, and more!
Danielle Stankiewicz, who is a Certified Franchise Consultant (CFC) at Horizon Consulting Partners, joins us for the Lunchtime Topic on How to Open a Franchise Business.
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Why Consider Franchising?
Danielle emphasizes that franchising offers a unique opportunity for individuals who aspire to be entrepreneurs but prefer not to start a business from scratch. There are several advantages to opening a franchise business:
- Control and Support: Franchisees benefit from the franchisor’s established business model, support, and expertise. This reduces the learning curve and increases the chances of success.
- Reduced Risk: Franchising leverages a proven concept, reducing the risk of failure compared to starting a new business from scratch.
- Brand Recognition: Franchises often come with well-known brands, which can help attract customers and build trust.
- Operational Guidance: Franchisors provide ongoing training and support, helping franchisees run their businesses efficiently.
- Flexibility: Franchise opportunities exist across various industries and investment levels, making it accessible to a wide range of entrepreneurs.
The Franchisee Profile
When considering franchising, it’s essential to understand what type of individual is an ideal fit for franchise ownership. Danielle categorizes potential franchisees into three groups:
- Entrepreneurial Beginners: Those who want to own a business but lack the experience or resources to start from scratch.
- Small Business Enthusiasts: Individuals with an entrepreneurial spirit who have launched their businesses but face challenges due to resource limitations.
- CEO Aspirants: Those who want to focus on overseeing and growing a business rather than managing day-to-day operations.
The Franchise Discovery Process
Danielle outlines a systematic approach to discovering the right franchise opportunity:
- Initial Phone Call: An introductory call with the franchise consultant to discuss key points and learn more about the potential franchisee.
- Educational Process: Attend informational sessions to explore different opportunities and gather information about various franchises.
- Due Diligence: Engage in multiple calls with franchisors, ask questions, and gather information to make informed decisions.
- Introduction to Key People: The consultant makes introductions to key people within the franchisor’s organization to support the franchisee throughout the discovery process.
Financing a Franchise
The financial requirements for franchising can vary depending on the brand, location, and industry. Danielle explains that franchisees typically need capital to cover various expenses, including the franchise fee, exclusive territory, inventory, overhead, and three to six months of working capital. The net worth requirements vary but aim to ensure that franchisees have sufficient resources to support their businesses.
Danielle highlights that funding options exist, and franchisees don’t necessarily need to have substantial cash reserves. Loans and working capital financing can be viable options, allowing potential franchisees to pursue their entrepreneurial dreams without excessive personal investment.
The Franchise Discovery Day
Once a potential franchisee has progressed through the initial stages of discovery, they often get the opportunity to attend a Franchise Discovery Day. This event allows them to meet the leadership team, tour the franchise’s headquarters, and gain insights into the brand’s operations. It’s a crucial step in building a mutual understanding between the franchisee and the franchisor.
The Franchisee-Franchisor Relationship
The nature of the relationship between franchisees and franchisors can vary based on the brand and industry. However, it’s vital for franchisors to provide ongoing support and guidance to ensure the success of their franchisees. Franchisees receive coaching and assistance throughout their journey, from training to opening and operating their businesses.
Final Words of Advice
In closing, Danielle offers two essential pieces of advice for aspiring franchisees:
- Do Your Due Diligence: Research and gather as much information as possible about potential franchise opportunities. Commit yourself to the process and ensure that you have a solid understanding of what you’re getting into.
- Overcome Fear: Don’t let fear hold you back from pursuing your dream of business ownership. Have confidence in your abilities and trust the due diligence you’ve conducted.
Danielle has a diverse background in education and experience. She possesses two bachelor degrees in the field of social sciences and a masters in psychology.
She began her career teaching public and private school before discovering she could make more of an impact working outside of the traditional school system. With a reputation for professionalism, she built her career as a private governess and high profile nanny. In 2018 she moved her life abroad, working and living in England and Hungary, before returning to the states to become an entrepreneur in the field of real estate and stepping into the world of publishing. She currently works as a certified franchise coach, helping others to achieve their dreams of entrepreneurship. She also continues in her passion of education, through writing and offering conscious parenting resources online.
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