You have done your research and decided that buying into a franchise system is the right course of action for you and your family. Franchising is a proven business model that offers the chance to be in business for yourself - but not by yourself! But before you sign on the dotted line, let me offer you a final check list of things that may make or break your franchise:

 

*   Strong Demographics  - It sounds almost elementary, but make sure there are enough customers in your protected territory. Depending on what franchise system it is that you own, it takes a lot of customers to make a profitable location. 

 

*   Recurring Revenue  - Don't try and reinvent the wheel, or be talked into something that is not proven. Look at the top franchises over a long period of time. They almost all have one thing in common: customers that come back again and again. Franchises that have a high Customer Long Term Value (also referred to as CLV) have sustainable business models. 

 

*   Competition -  Make sure that you are bringing a new and exciting franchise business into your market. Creating the pre-opening buzz will get you off to a strong start. If there are already lots of businesses doing what you are doing in your market, then you're banking on the fact that your franchise differentiates itself enough to steal loyal customers from those other businesses. And that may be harder then you think! 

 

• * High ASI Ratio - Simply put, you want to own a franchise with a high Average Sales to Investment Ratio. The higher this ratio, the higher the return on sales. Look for a ratio of at least 2 to 1. So if Your build out cost is $200K, then this would be  $400K in revenue.  

• * High ROI - You will want a good return on investment.  If you can determine what the average Net Income is then divide that by the your investment ($50,000 Net Income/ $200,000 Cost) - this gives you a return on investment (ROI) - if this is really high, it may be that although you may have a low ASI ration - the investment is still worth it.  And Vice Verso - if the ASI is high - looking at the ROI is important as this could still be low even with a high ASI.  Normally higher return on investment means that you will need to be more involved with your business.  So when evaluating your ROI make sure and take into consideration the amount of work you the owner will have to do.

 

If you have a passion  for business, franchising is an exciting way to create income and accumulate wealth for yourself and your family.  Additionally, if your franchise has these four business metrics you should be well on your way to owning a successful business! 

 

When you buy a franchise there are lots of things that the franchisor will teach you. The systems that a franchise has and how well you follow those systems may ultimately be the difference between your success or failure. One area that you will have the most control over is your staff and employees. Your franchisor will help you with build-out, initial and on-going training support, marketing, even guidance on getting to break even and beyond, but you will have to manage your staff. Your Human capital is one of the most vital parts of your franchise operations for a number of reasons. Your employees deliver your product, they are the face of your business, they create the fabulous experience that brings your customers coming back, they create those little interactions that make your customers think, " Wow, this company really gets me". Developing a great staff doesn't happen over night, it takes time. Additionally, if your new hires don't have the following two attributes, getting your franchise to where you want it to be is going to take longer than planned. 

* A Work Ethic - You can't teach someone to have a work ethic. Work ethic is a tricky thing, some people have it out of need, they have a family and need to support and provide for their family. Some people learned it from there parents and are modeling it. But one thing is for sure, if you are going to put together a great team, having employees with a good work ethic is critical. 

* Attitude - I have heard people say, "That person needs an attitude adjustment", and you know I have seen that work, but only on a temporary basis. You know what behavioral psychologists will tell you, past behavior is the best predictor of future behavior. Companies spend a great deal of time and money working with and trying to fix people with bad attitudes. Find people with a good attitude about your company right from the beginning, nurture and train them, show them there valued, and your people will work together as a team. 

Getting your staff to work together as a team to create a fantastic customer experience is crucial to your franchises success. During the interview process you can ask questions that will give you clues on whether your candidate has these two important attributes. You are going get to where you want to go a lot faster if you can find candidates that have these two attributes. 

There are lots of moving parts to a franchise, including your franchisors opening assistance, training and ongoing support. All of the aforementioned are important to your success as a franchisee, and the best way to measure these are to talk to current franchisees.