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Do You Qualify?
What it Takes to Own a Franchise:
Master franchises are not for everyone. The franchisor will usually grant the territory to someone or some group with the following four important qualifications:
- Management and/or sales experience. Real life experience running a business or managing a business for someone else is very helpful but not essential. There are successful Master franchisees who are engineers, hair stylists, or homemakers.
- Good people skills. You'll be dealing with your franchisees and will need to treat them like customers, which they are.
- The ability and desire to follow a proven system. The franchise system offered is a system for success when followed. Don't buy a franchise unless you believe you can follow their system. With Master franchising, however, the system is a little more flexible at your level because you help set the standards for your particular area.
- Financially qualified. Franchise fees for a Master franchise will typically range from $30,000 to $250,000 to purchase an exclusive area. In addition, you will need operating capital to support your operation until you can begin to make money. You will also need to allocate funds to advertise for franchisees. Typical operating capital will be from $25,000 to $200,000 depending on how large your set up is. Keep in mind, however, that you can begin with fairly low overhead, perhaps running the business out of your home until you are ready for larger office.
Why is Franchising So Powerful?
Franchising as a whole has a 92% success rate for business owners, according to the Sourcebook of Franchise Opportunities. For franchisees who own multiple units, the rate can increase to 97%. Increased market share equals increased profits and franchising is the best way to gain market share. Right now, retail franchise businesses represent only 8.3% of the businesses on the street. However, the sales from those franchises represent 40.9% of the total retail sales in the United States. Franchising is arguably the best vehicle for capturing market share. One of the best ways to increase profit is to increase market share. The typical franchise, when compared to an unaffiliated business, is more profitable.
As a result of their extensive surveys, the International Franchise Association tells us that:
- 93% of the franchisees say that a franchise gives them an advantage
- 88% recommend a franchise over a non-franchise business
- 83% are happy with their franchise
- 65% would purchase the same franchise over again
- The average yearly net income for a franchisee is $91,630
- The average net income for a single unit franchise is $76,000
- The average net income for a multi-unit franchise is $142,000!
In short:
"Franchising is the single most successful marketing strategy ever."
- John Naisbitt, Author, Megatrends