Franchising TNT

Franchising is known to be among the available options that businessmen and entrepreneurs can use as business opportunities without having to go through the usual motions of having to brainstorm and hypothesize on studies that most business tycoons would initially make. Franchising can be seen today in local food chain stores like McDonald’s, Burger King and Subway. They are practically seen in all countries of the world.

Mixed Origins of Franchising
Franchising does not really have a clear trace of its background. There has been various information as to where the franchising business originated. These include countries like China, England, and Europe and of course the United States. It is even traced as far as the Middle Ages where the business opportunity issues back then was more on the lack of transportation for the goods to be transferred from one place to another. Other considered franchising as well as a means of establishing stands, vendors and a better means of being able to offer goods towards customers in other places within the coverage area.

Franchising at a Glance
Franchising is not a new term for defining business opportunities. It extends as far as home business opportunities for people who would want to be their own boss and hold their own business hours. Franchises would usually depend on the location to which franchisees would want them to be located, ideally in populated and commercialized areas for maximum exposure. Depending on the product or service to which the franchise caters, people can even do business from their own footsteps at home. This way the expenses to be incurred such as rent or warehouse allocation expense can be avoided, an expense that is certainly something tough on the budget allocation constraints of franchise owners.

Think Big but Start Small
A franchising business does not have to start big. Just like any ordinary business, it can start from the simplest and smallest business. Like most business endeavors, as long as they are managed properly, business can grow at an instant at any time. Franchises are not different from conceptualized businesses and the varying factor would be the people who would run it and how they would view such a business at a glance.

Placement and Scope of Target Market
Placement of franchise establishments, just like any other product that most people would be interested in today would have to analyze and survey the market class to which they would want to serve. It is not merely a place and operate venture. It requires gathering strategies and putting minds into action, the usual backbone towards success in business ventures.

There will always be issues concerning the target market and identifying what product or service to serve. This has always been the issue that makes businesses different from others and unless it is properly defined, a franchise or business will falter eventually if franchising business owners are not careful.

Putting up our very own company or business requires so much time and effort. Building your own company from scratch is hard; so many people go for franchising instead. Franchising a business has its own benefits and drawbacks.

Benefits of a Franchise

Less Start-Up Problem.
A franchise is defined to be a turn-key business. When you franchise a business, the owner will be responsible for all of your marketing strategies and logo. Your products and suppliers are already defined, with pricing already in place. Franchises normally have a software package for product sales and data processing.

Training and Support.
Most franchises require you to fly to their corporate headquarters for a few weeks of training on all aspects of the company. Youll learn about everything from product preparation to bookkeeping practices. If youre a novice to the business world or lack a business record, a franchise is actually a good fit.

Brand recognition.
Whenever you join a franchise, youre registering with a business that is already firmly established in the market. Youll reduce costs time and expense convincing customers that your product is great-they undoubtedly recognize the brand.

Fast Turnaround.
If youre chomping at the bit to start your brand-new store, a franchise could be the solution. Because franchises offer you all the tools you may need for your organization, you can open far more quickly than if you had to figure it all out on your own.

Disadvantages of a Franchise

Numerous rules.
Firms that offer franchises set up typical practices for their business, and they expect you to closely follow a strict set of guidelines. If you dont like the thought of somebody else dictating the way your company runs, a franchise is not for you.

Price.
Fees vary extensively, but you should intend on investing in the brand recognition and groundwork that youre getting when you buy into a franchise. Most franchises call for an initial start-up fee. Soon after, youll assume responsibility to pay the franchise a percentage of your sales. If youre ready to pay fees and royalties for the convenience, a franchise is a great move. However, if you wish to start your business on a shoestring, franchises arent for you.

The franchise determines the culture.
Each and every business has a certain personality-and a particular set of company ideals. Before signing on with a franchise, be sure that your values and personality get in line with the companys-otherwise you may find yourself feeling stifled or upset.

Their very own status is your standing.
This can work either way. You will get brand recognition with a franchise, but this can actually turn towards you if the business makes national statements for shady business procedures. Even when you might not be directly involved, their brand is on your own door.

The worldwide use of social networking media such as Facebook, Twitter, LinkedIn, MySpace and many others has grown by leaps and bounds in recent years, affecting the business world in radical, unforeseen ways. These online media phenomena are increasingly used by brand owners, their customers and their employees alike as what is now the topmost marketing tool. This article details some of the challenging issues and implications that have gone along with the use of such sites and the particular impact of such issues on global franchising.
We at FGS hope to provide some practical guidance on how social media usage should be managed and controlled in international franchise arrangements. Because of the relative infancy of most social media and their recent adoption by franchise systems, many of these issues have only recently been identified, and the bulk are still searching for a final resolution.
Social media is dramatically changing the fundamental forces of that economy: who pays attention to what, who influences such decisions, how that is tracked and measured, the speed of response, and how it’s monetized. Just as the average prospective customer will check the online reviews for a particular business, many potential franchisees these days are highly web-savvy, and will research a particular business on the web to get a sense of its franchisable status, by its social media presence.
The opportunities in this arena are enormous for franchisors. For a good number of consumers, online communication is now more likely through social media than through email. The commercial potential of this trend has long been surmised, and legitimate companies must take advantage of these opportunities.
The incredible rise of online networking has been driven by younger age groups, but social media are no longer the domain of this demographic only. Consumers from a broad range of demographics are now regular users of social media, although preferred sites will show some variation in their audience.
Social media represent a relatively inexpensive method of (franchise) marketing. However, not all campaigns achieve desired success, and many marketers are still struggling with these relatively new formats. Companies will be better served by listening to customer contributions on such sites as Google Places pages (the #1 source for business reviews online), Yelp, and other user review/ratings sites, rather than using social media as another channel to dictate established brand values. Google now counts the social media conversation regarding your company as the highest indicator of your worth as a business.

Classical Franchising Facts and the New Online “Marketology”

Franchising traces its roots back to ancient China. It is a system for expanding a business and distributing goods and services. It is a marketing method, which has been called by many business experts, the greatest marketing strategy ever created. It is a program that creates amazing opportunities for business ownership, brand awareness and success, and personal wealth.

In the United States, only 8% of retail businesses are franchised. Amazingly enough, these same 8% of franchised businesses do over 40% of the retail sales in the United States. Franchising has the ability to capture much more of the market share. The increased market share is due to three main attributes comprising a franchise:

1.A brand name. Even a newer brand name usually has an advantage over an unaffiliated business.
2.A successful business system. The proven system allows franchisees to follow a successful plan with a high success rate. The franchisee can also enjoy cost savings as a result of the buying power of the franchise.
3.A support system. The franchise will have the expertise of its successful franchisees and franchisor to help them succeed. They are not in business alone.

The Gallup Organization conducted a poll on franchisees’ ownership experience and attitudes. Here are some results:

More than 90% said that their expectations were met, or mostly met.
More than 90% said they considered their franchise to be successful.
More than 65% said that they would have not been as successful if they had tried to open the same business on their own.

Here are some eye-opening social media networking facts, gathered by EPM Communications Inc. (May 2010):

More than 140 million Americans log on to a social media site every month and that number continues to grow.
70% of adults have Facebook profiles.
One-third of social media users are 45 and older.
The majority of travelers visit social network sites to plan and share details of their trips.
Half of those who friend restaurants on social media want to be alerted to deals or receive coupons.

Imagine the number of those folks who are savvy entrepreneurs or business owners (or prospective business owners) who may “stumble upon” your franchise marketing material or companys social media conversation. It certainly spins the wheels of possibility, doesnt it?

Let FGS experienced team of advisors and marketing professionals guide the way toward your franchising success and high-level brand recognition. Call 480-223-1500 for a free consultation today!

Business franchise loan challenges in Canada? We’re the first to admit that the concept of getting a ‘ tip ‘ in business is not always a good thing but we’re drawing from successful experience in franchising loans that assist clients who are serious about entering this type of business.. and being successful!

There is of course a long journey between the time you decide to purchase a franchise to the time that ribbon opening! Along the way you have been vetted by the franchisor, investigated, probably spent some time in training and orientation, and… Oh yes, we forgot… faced the finance challenge of buying the business!

Many franchisees either struggle or are uninformed about how much equity, aka ‘ down payment ‘ they have to put in the business. We forgive them for this confusion because it’s a three pronged issue –

1. How much capital the owner can comfortable raises or put in

2. How much equity capital is required by the type of financing you ultimately enter into?

3. How much capital in some cases that the franchisor insists on as a prerequisite to entering into their program – typically that amt. is one to listen to carefully as its often based on the franchisors experience as to what it takes to be financially successful, not just ‘ sales and revenue successful ‘!

While Canadian chartered banks have in essence recognized and embraced the franchise industry as a key borrowing segment it is very important to note that almost never to they finance franchises directly – even less so when it’s not an ‘ asset heavy ‘ deal . So what our banks do is to carefully tailor some large national programs around the franchisors willingness to work with them in a worst case scenario – i.e. The financial failure of your business!

If you are fortunate enough to acquire a business that’s a part of a very large and successful respected chain you should be congratulated and might find some financing solace. If that is not the case one of the best possible solutions for your financing decision comes from an acronym. And that acronym? It’s the BIL loan program which hundreds/thousands of franchisees use to facilitate the financing of their franchise if the purchase price is under 350k – which is the program finance cap.

Whether you are borrowing from a specialty franchise lender (yes they do exist) or from a bank or commercial finance firm it’s important that the franchisee demonstrate reasonable personal financial history. That of course means that you can demonstrate that you have run your personal finances in a manner that reflects how you would run your franchise.

Lenders and even the franchisors themselves can easily verify your personal financials via credit bureau reports, statements of personal asset, etc.

Understanding the up front challenges of franchising loans will save you time, money and ultimately guarantee financing success. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your business franchise loan needs.

They usually always start with only one question. Who is ‘ they ‘? Its clients with that age old question ‘ How hard or difficult is it to get a business loan for a franchise in Canada these days? They of course have made one of the biggest decisions in their lives/ careers, vis a vis becoming a franchisee in this booming industry – now the only problem is …’ What type of franchise lending and funding is available ?’

Well, we’ll share with you some tested and proven strategies around franchise financing in Canada, focusing on completing a successful transaction in a minimum amount of time, with a finance plan that works for you, not just the lender!

On its own franchising has somehow become an industry with a strong and viable reputation. It, like all industries was hammered hard during the 2008-2009 recession; bus has bounced back strongly, even moreso than many other industries.

So, it becomes a simply two part question then, can you get a franchise loan these days, and more importantly, how?

There are some key factors to consider, one of which is simply aligning you, hopefully with a strong franchisor. So once you have made the decision to partner with a franchisor (we use partner because we think they need you as much as you need them!) you only need one thing. Whats that one thing?

It’s a ‘ package ‘. By that we of course mean that you need a solid little package that convinces both the franchisor, and of course moreso the lender that you are equipped, from a financial and planning perspective to be a winner as a franchisee.

So what are the key elements of a successful winning plan? It’s really pretty basic stuff, and in our experience many good franchisors have already done a good job of helping you prepare for this. Those key elements are as follows – an overview of your own background and experience, an overview of the franchisors business ( its your new business too, by the way!) and a solid financial plan that demonstrates two things: how you will make money , and of interest to the lender, what type of cash flow you will have to repay the loan!

It’s a bit of mis information when franchisees come to us having assumed the franchisor helps them get the financing. Some do assist in a mild sort of way, but we can assure you that you’re on your own when it comes to achieving final success.

So the question then becomes how do you get prepared and qualified? Answers as follows! Get working on that business and financial plan we talked about. Identify the amount that you can contribute to the business, essentially your ‘ owner equity ‘, with the rest coming from your loan or loans. Typically a minimum of 10% and up to 30-40% is required.

It’s always helpful to know how the last guy succeeded, don’t you think. In reality the largest per cent of franchise financing in Canada is done via a government sponsored loan that’s formally called the BIL/CSBF program. Why that loan , and why you should investigate it ?Some great reasons are 5-7 year payback terms, great market interest rates, no pre payment penalties , and you don’t even have to personally guarantee the full loan . Is there a better deal in town? Maybe, it just that we haven’t found it.

We also hasten to add that for any type of business loan, and certainly in franchise lending, the funding and approval of your loan assumes you have a reasonable personal credit history.

So, want to get with the program? Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you to meet your franchise funding and lending needs, today!