Basics of Starting a Franchise Business

Buying a franchise is a choice that a lot of first-time entrepreneurs opt for in order to provide their business with a head start. On the one hand, running a franchise provides you with an independence that you've always dreamed of, while, on the other hand, it gives you an assistance of having a major brand name behind you. This alone is what provides franchises with a somewhat higher success rate than regular startups and small businesses. Combine this with the fact that buying a franchise often costs less than starting your own business and you'll see no reason why not to do so with your next idea. Here are several basics for you to consider before doing so.

Ask some basic questions
The first thing you need to do is inquire a bit about the franchisor that you're about to reach out to. You need to know what they are like, how much will it cost and how much time it will take until your business starts making some results in this particular industry. Other than this, you need to answer some less general questions like what are your keys to success, what is your end game and what are the risks. Due to the fact that you're starting a franchise, it's also worth asking what kind of help you can expect from a franchisor.

Get the funding
In the previous section, we mentioned the issue of cost, so, now that you know how much money you need in order to get everything started, you can look for a way to secure funding. Going to a bank or a credit union is the most logical first step, yet, there are other ways to tend to the issue of crowdsourcing. Keep in mind that doing so is an option even on a limited budget. For instance, dipping into your 401(k), looking for SBA loans and other methods might be worth taking a closer look at.

Look for some professional guidance
The next thing you need to understand is the fact that starting a franchise is a lot less unique process than starting an independent business. While this statement may have a negative connotation, this is actually a good thing, seeing as how a first-time entrepreneur can get a business model to follow. In fact, some companies are so well-versed in franchising that they have a specialized team that helps franchise companies stand on their feet. This is one example of the perk of having a protection of a larger brand name behind you.

Different franchisors offer a different kind of assistance but this shouldn't hold you back as an entrepreneur. Think about it, as a first-timer, a newcomer to the business world, you're already at a disadvantage. This means that you need all the help you can get. So, prior to starting out, make sure to inquire what kind of help is the franchisor willing to provide. This may end up being a huge factor for your franchise's future success.

Standard business expenses
Keep in mind that, while you're enjoying the protection of someone else's name, you're still running a business on your own. This means that you have to provide the location, the equipment, the signs, the inventory, and the working capital, on your own. Nonetheless, your franchisor might be willing to help. You see, the way in which you run your business affects their reputation as well, so they might offer you a slight “allowance” to do some improvements on the infrastructure of the building. This will help with the uniformity of the business which, down the line, benefits their brand. Also, while this will help you out financially, it won't be enough on its own for any kind of major business operations.

Don't postpone it
Sure, a grand opening is a huge deal and some guides suggest that you might even want to spend as much as 20 percent of your first year's marketing budget on it, however, timing is what matters the most. Don't postpone it, due to the fact that your business needs to become operational (and profitable) as soon as possible.

Conclusion
Of course, it's only fair that we mention the fact that starting a franchise also has some downsides. First of all, you're limited in form of creativity, due to the fact that you can't deviate from some features of the business model. Moreover, a controversy or an issue plaguing another franchise may affect your business even if you're doing everything right. Nonetheless, if you pull off everything that we've just talked about, you might find that it's all still worth it.

6 Ways to Market Your Franchised Business

If you think of marketing as a building, the pillars that give marketing structure are advertising, direct mail, sales, promotions, public relations and online marketing. The most successful franchisors have been able to break down the six pillars of marketing, assign the appropriate resources, track their return on investment and continue to fine-tune and adapt as the results vary. Following are the most important aspects of these pillars.

1. Advertising
You may think of advertising as print media only. The truth is, advertising encompasses any media that allows you to purchase space to promote your marketing message. This includes print advertising such as magazines, newspapers and other printed formats, TV advertisements, radio advertisements, billboards, and now, with the onset of technology, internet advertisements, websites and more.

Although franchise advertising has been around for decades, today's advertisements tend to have a much different call to action that those of the past. Instead of the standard “Call Now,” ads direct viewers to a franchisor's website where they can learn more and engage via email with the franchisor's development department.

Franchisors who create innovative advertising campaigns across all platforms realize the best return on investment (ROI).

2. Direct mail
Most of us think of direct mail as postcards that we receive in our mailbox. This is still an effective option depending on the strength of the message and the offer. With the onset of technology, other direct mail options are e-newsletters, drip email campaigns (a series of email messages sent to a prospect over a short period of time) and other opt-in alternatives that send information via the internet.

3. Sales
An effective sales process is a must for every franchise system. It's imperative for every franchisor to have a systematic, step-by-step discovery process for their prospective franchise buyers to follow. This process should be simple to understand, since the prospective franchisee needs to have the information presented to them in such a way that they can absorb it, weigh the pros and cons and eventually make an educated decision. Methods of sales in the franchise world break down into the following sub-categories:

Person-to-person sales that you might experience at a tradeshow, discovery day or other discovery experience that the franchisor participates in.
Phone sales that take place on either an outgoing or incoming basis. It's important as a franchisor to have a designated in-house franchise sales expert who is trained in the entire franchise process so this person can present the opportunity to the prospective franchisee effectively, answer questions and handle objections.
Outgoing phone sales, sometimes called telemarketing, can also be effective. It is far more challenging today to launch an effective telemarketing campaign due to caller ID, do-not-call lists and voicemail. The important element of outgoing phone sales is to ensure that you are offering the franchise buyer information that is important to them and that provides them with an incentive to continue the discovery process with you.
Technology has expanded the sales process. Email, texting, web presentations and calendar syncing are as much a part of the franchise sales process as any traditional sales tool.
You will find that the best candidates will follow your discovery steps, will seldom miss appointments and will quickly get back to you when you leave messages. This is a good indicator of their ability to follow a system and of their enthusiasm and interest in your franchise concept. It also gives you an idea of their potential to be a successful business owner. One powerful tool is to utilize franchise-specific contact relationship management (CRM) software to keep track of your franchise prospects and their progress as they move through your sales pipeline.

4. Promotions
Traditionally promotions have been used to spark awareness and excitement in a marketing message. You've seen promotions like midnight madness sales, 24-hour sales, sweepstakes, giveaways, special events, customer appreciation dinners -- or any kind of special, out-of-the-ordinary promotion that's utilized by various companies to attract new buyers or existing buyers back again. Successful franchisors use a combination of traditional promotions and promotions that utilize new technologies. For instance, they may hold a sweepstakes advertised in traditional media such as print, billboards, radio and TV while also running the promotion on Facebook, Twitter and other social media outlets. The internet options have given franchisors a low-investment way to reach masses of prospective buyers, allowing the smaller brand franchises to compete favorably with the bigger brands.

5. Public relations
Public relations may be the most underused pillar of marketing. Traditionally, public relations campaigns would consist of press releases, press kits, sponsorships and other goodwill events and campaigns that would usually bring brand awareness through publicity. In the internet age, we have found that public relations is still a very viable and important pillar that needs attention. However, the delivery has changed considerably, and in some ways technology has made it far easier to launch a successful PR campaign.

An example of this may be a press release that in years past would have to be printed, put into a press kit and mailed to 100 or 200 news and other media outlets hoping that the individuals at those outlets would find it interesting enough to write it into an article or a category of one of their existing articles or stories. It was difficult to measure success with this technique.

Today, successful franchisors enjoy the ability to release their newsworthy articles via blogs and on industry and business startup blog platforms. In most cases this is free, and the more creative and informational the articles are, the more traffic they will draw. This method is also measurable since the analytics can be evaluated at the franchisor level and fine-tuned.

6. Online marketing
Many franchisors are still pretty new at online marketing -- this gives new franchisors with strong online marketing skills an advantage. Not too many years ago, the “big boys,” or well-known franchisors, had the advantage because they had far more money and resources to market their franchise opportunities. Back then, the marketing and media options were very expensive, and the new emerging franchisors were priced out of the competition. The internet has now leveled the playing field because the barriers of entry are lower, giving creativity and not big marketing budgets, the advantage.