Franchising is a powerful route to entrepreneurial success, but it can sometimes be intimidating for new entrepreneurs. It’s a resilient business model that only becomes more appealing during economic downturns, because the established audience, brand and systems can provide stability over a risky startup. But where do you get started?
BusinessesForSale.com interviewed a number of franchise industry experts at the British & International Franchise Exhibition. They told us what they look for in potential business partners, and what they think makes the ideal franchisee. We’ll break down the essential information you need to get started in franchising, as well as the trade secrets that can give you a head start on the competition.
What is a Franchisee?
Before we jump into what makes the perfect franchisee, let’s have a quick recap. What is a franchisee? It’s someone who purchases the right to use the name, equipment, marketing and operations systems of an existing brand. Fast food chains like McDonalds are some of the most iconic, but franchise systems extend to all corners of the business world. That could mean training, security, car repair, accountancy, and much more. What’s the difference between a franchisee vs franchisor? It’s simple – the franchisor is the brand, or the representative of the brand, that you choose to align yourself with.
How do Franchises Work?
You pay a franchisor an initial franchise fee, and you’ll also need to show you’ve got a certain amount of liquid capital available to invest in the business. This will vary for each franchise, and there may be additional fees you’ll need to pay for marketing or equipment. In return, most franchisors provide training and mentoring to get you up to speed. Then, once you’re operational, you’ll pocket a percentage of the profits. Most franchises take at least a year or two, if not more, to see a significant return on the initial payments. Remember - this is a long-term investment.
What makes a good franchisee?
We spoke to some franchise success stories at the British & International Franchise Exhibition, who told us what makes a good franchisee, and what you can do to set yourself up for success. Have a watch of these video interviews to discover how to run a successful franchise.
1.) Communication & Adaptability
“A passion for the industry, enthusiasm and a bit of business acumen,” says Tom Bower, Senior Marketing Communications Manager at Snap Fitness. That’s what he thinks is essential to becoming a good franchisee – meaning it’s something anyone can do with the right mindset. Strong communication and adaptability are also valuable traits that Snap Fitness look for – especially in a changing fitness industry that is becoming more digital, and where the Gen Z audience are demanding different things from their gyms.
2.) Passion & Dedication
Keeping within the fitness industry, here’s Anytime Fitness UK’s Senior Property and Development Manager, Kieran Hyde-Moody. He echoes the sentiment about passion being important above all: “You have to be all in. The fitness product isn’t just about making money, it’s about making a difference in your community. We want someone who has that ability to be adaptable, and positive.”
3.) Curiosity & Openness to Change
Franchising always requires a bit of a leap of faith. The initial fees aren’t cheap, and for many new franchisees, it’s a big change of career path. But that shouldn’t put you off trying. Henryk Matysiak from Jackson Fire & Security pivoted from being a firefighter to running a franchise – similar industry, but a very different skillset. “I got my retirement funds and decided to completely change my life,” says Henryk. “I wanted something more stable and with more support. My son’s an engineer, so he joined the business alongside me while I handled the legal side. Fire safety is a very recession-proof industry, and customer service is also essential.”
4.) Personability & Sales/Marketing Experience
For Gina Piper, Director of Franchise Development at Pitman Training, the ideal franchisee is someone who has previous experience running a business – ideally in sales or marketing. “In the training industry, you do also need to be a people person – you have to enjoy working with people on a daily basis and helping them learn.”
The Mindset of a Successful Franchisee
Many of our franchise experts said that having the right mindset was key to becoming a franchise success story. You should be aware of the risks, committed long-term, and able to balance independence with following orders. Franchised businesses don’t offer the same degree of autonomy as a startup, but that’s offset by the extra stability and often easier access to funding.
If you’re thinking about making the leap, check out our detailed guide to joining a franchise. It looks in closer detail at the kind of fees you can expect to pay, the legal requirements and how to secure a loan from a bank or other source of funding to get yourself off the ground. You might also want to check out our article McDonalds Franchisees Share Their Secrets to Success, where we spoke to entrepreneurs from one of the world’s most iconic franchise brands.
FAQs
What is a franchisee?
A franchisee is someone who signs up with an existing brand, paying for the legal right to use their name and brand. Franchisees don’t own their businesses in the same way a startup would, but they take a percentage of the profits and benefit from the recognizability and existing customers of a franchised brand.
How do franchises work?
You pay a franchisor a series of fees to use their name, equipment, marketing, operations, systems and more – then you pocket a percentage of the profit. In return, the franchisor will usually offer you training and mentoring support to help you drive the brand forwards.
How to become a franchisee?
You need to have the available capital to get started with your chosen brand, then pass a series of eligibility criteria with them. A good place to get started is to have conversations at franchise exhibitions such as the British and International Franchise Exhibition.
What makes a good franchisee?
Being aware of the risks, committed long-term, and able to balance independence with following orders. It helps to be passionate, adaptable, curious, and have some experience running a business, especially in sales/marketing.
