Franchising von Start-ups

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Ob Sie daran denken zu franchisen oder selbst ein Franchise zu kaufen - wir geben ein paar wichtige Insider-Tips für die Zukunft und für zukünftige Geschäftsideen und erklären warum Investoren lieber in Franchises investieren.

Franchising, Franchise
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How to be a successful franchisor?

Do you have a great business and are thinking about franchising it? The following article presents a list of factors that will help you become a successful franchisor. The first important thing is to be very selective in establishing franchisee relationships; treat franchisee applicants as if you were hiring them as a management employee in your company. Also think of additional revenue streams next to the standard franchise fee like for instance the sale of goods or services to the franchisee. In addition, on-going services like training or advertising assistance will create multiple revenue streams. A great success factor is the uniformity of your business: Try to build every shop or store as uniform as possible and the customer will value the consistent experience. Implementing policies and standard procedures as well as inspections and audits will help you maintaining high quality standards. However, franchisors should also try to create a system that allows some degree of creativity and innovation as franchisees are often a good source of inspiration when it comes to business model improvement.

For more advice on how to franchise your business, please click here.

Franchise your business in 7 steps

Franchising a business can be a great expansion strategy and a good way to establish a well-known brand name. However, the process of franchising is usually long and cost-intensive and is not an automatic ticket to success. The following article presents the most important steps you will need to take along the road to becoming a new franchisor. First, it is important to evaluate if your business is suited to being franchised. Therefore you need to consider your concept, which has to appeal to end customers as well as to future franchisees and the business has to be replicable. To attract franchisees you should be profitable with more than one unit in order to show them a proof of concept. Second, you should learn the legal requirements of your respective country. It might also be helpful to hire an experienced franchise consultant that makes sure you are doing the required steps correctly. Furthermore, it is important to make decisions about your own business model: What fee and royalty percentage will you charge? What geographic area will you focus on? What type of training programs will you offer? After the preparation is done, you need to create the necessary paperwork and register as a franchisor as well as to make key hires like a trainer, a creative director or a franchise-process manager.

For more information, please click here.

Think cash, not ideas

Which businesses appeal more to investors - small startups or franchises? In his Harvard Business Review Blog, Anthony Tjan, CEO and Managing Partner of the venture capital firm Cue Ball, argues that franchises offer a lot of advantages for investors because they allow them to quickly assess the economic potential and the paybacks. Investors like the simplicity of most of the franchises’ business models, as they focus on profitability and risk minimization. However, especially in business circles of MBAs, tech entrepreneurs and private investors, franchise restaurants, retail or other consumer services have a bad reputation because they are not big ideas and not considered cool enough. Anthony Tjan states that yet from an inventor’s perspective, the “little guys who have the simple idea but real cash flow models may have as much of a chance to create value as the big thinking guys who have the big idea without the cash flow model.”

The complete article is available here.

10 Reasons to purchase a franchise

Many start-ups fear that their new business might be too risky, that their capital might not be enough and nobody will buy their product. The following article highlights 10 reasons why becoming a franchisee could be the solution for their problems. First, you are buying a proven formula; problems are already worked out by the franchisor. Second, larger franchising companies offer in-house lending or assistance attaining financing. This eliminates unnecessary time seeking money from outside investors. Also, a franchise provides a built-in support system, the franchise will help you if you need any kind of assistance. Further reasons are: Franchise loan applications are looked upon more favorably, you can (almost) be your own boss, and especially low-cost-franchises have a strong ROI. Also, having access to a well-known brand provides a built-in security blanket. However, franchise concepts don’t fit everyone. If you are a true entrepreneur and you can’t imagine taking direction from a franchisor or if you really want to change the world, buying a franchise might not be a match for you.

To read the full article, please click here.

Franchisor checklist

If you consider becoming a franchisee, these are the things you should keep in mind when searching for the right franchisor. Usually, you should first receive a set of materials, the “Franchise Prospectus”. It should inform you about the benefits and strengths of the franchise opportunities and contain information like the directors’ and key executives’ business experience, the initial investment required, restrictions on franchisee’s personal participation etc. As a next step you should talk to the franchisor in personal, but before that you should write down a list of questions you want to ask: Type and level of head office support, details and costs of training, any need to buy products from the franchisor etc. If you decide to take the franchise opportunity, make sure the franchise contract meets important requirements such as the franchisee’s right to sell or transfer the ownership of franchise and the right to renew or extend contract beyond original term. In general, be careful if the franchisor promises huge profits with thin investment or if he fails to give you statistics on sales and profits etc. Also talk to established franchisees because after all they are the people that are currently experiencing the pressures, pitfalls and profitability of the franchise concept.

The full article can be read here.

Mit freundlicher Unterstützung vom LMU Entrepreneurship Center

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