Own a Franchise - What about Royalties & Fees?

Posted by Matthew S on Mon, Nov 17, 2014 @ 09:11 AM

RoyaltiesFeesSo, just what exactly is a Franchise fee? How about Royalty fees? What does a franchisee get by paying a franchise fee or royalty fees? For those who are investigating a potential investment into a franchise system, these are important questions.

Think of a franchise fee as the right to use a brand that has been built up over the years, and has many tried and true systems behind it that are designed to help a new franchisee succeed in running their business. Most new businesses go through a period of trial and error when building a following.  This period uses lots of working capital and time.  When buying a franchise you are avoiding many years of this learning curve.  Many times the Franchise Fee may seem expensive, but in the long run it may actually be a bargain for the time and money it will save you!

Royalty fees are those payments a franchisee might send each month in order to continue receiving the benefits of belonging to the franchise system.

For example, these fees not only pay for the rights to use the logos and trademarks of the franchisor's system, but also access to services that are designed to help a franchisee develop their location (demographic information, architectural assistance, site visits, fixtures, signs, and sources for equipment). Franchisees also may receive training, access to software to help run their business, access to advertising outlets (social media, publications, etc.) and access to the franchisor's marketing and graphic design department (which can help deliver customer flyers, ads, artwork and more).  The royalty also gets you the keys to contacting other business owners who are trying to do the same things that you are trying to do - which can save you time and effort.  For example: What is working, what isn't, how can we take something and make it better?  New ideas are sometimes being tried throughout the system, and you'll have access to the success and failure rate of those new ideas.

A good franchisor will also use these fees to grow the system through research and development (in order to stay competitive), monthly meetings, and the continued development of training and operational resources.  Software programs, management and cost saving systems are additional areas where the fees are used.

It's also important to remember that every franchise system is a little different. Depending on the industry, the types of services a franchisor may provide could vary. Also, size could play a factor. For example, while a smaller franchise system may not be able to offer some of the services much larger franchisors can offer - a smaller system can provide a level of personal service that the bigger systems can't.

However, if you really want to understand what you're receiving from the franchisor, be sure to read your franchise agreement. This will detail exactly what the franchisor will provide for you. And if there's something the franchisor said they would do, but it isn't a part of the franchise agreement, you may want to discuss it with them. Also be sure to refer to the Item 11, a document that outlines services the franchisor provides.

In the end, a franchise fee could be looked at as a kind of investment into the future success of a new business. By having access to years of knowledge and experience, a franchisee may take comfort in the knowledge that they won't be wasting time and money or processes that just don't work. And even more importantly, they'll have a friend in the business who is there to help them succeed! 

If you are wanting to learn more, our Franchise Buyers Toolkit in an excellent resource - and it's Shear Madness Haircuts for Kids free gift to you! Click below!

Exploring a Children's Salon Franchise

Topics: franchise, franchise buyers, buying a franchise, franchise opportunity, how to buy into a franchise, career change, how to franchise, successful franchisees, franchise definition, what is a franchise fee

10 Questions to ask before Looking at Franchises for Sale

Posted by Matthew S on Mon, Nov 10, 2014 @ 11:11 AM

10questionstoask

If you’re thinking about joining the ranks of successful franchise ownership you might look before you leap! We at Shear Madness Franchising (franchisor of Shear Madness Haircuts for Kids) have put together a list of ten things that might help you decide if you’re ready to take that next step into this rewarding – yet challenging - opportunity.

1. Are you financially sound? Take a look at your financial resources, and make sure you’ll have enough to not only invest in starting up your business – but run it for 3 to 6 months.  And then consider that your income will be very small, but should grow slowly for the next 2 to 3 years while your business is becoming established.

2. Do you value business integrity? As a franchise owner, you’ll have a lot of eyes watching you. From your employees, to your customers and neighbors in the community, being a good example for others to follow will not only help you succeed in the long run – but also helps others succeed too.

3. Are you task oriented? Are you a task-oriented person who understands the benefit in following a set of guidelines dedicated to the successful operation of a franchise? After all, there’s a reason why your favorite Hamburger Franchise doesn’t sell taco food!

4. Are you a team player? Franchise owners are great team players that enjoy working with people. Running a franchise means not only fostering a great environment for your customers, but for your employees, other franchises within the franchise family, and even the folks who are working hard on your behalf at your franchise corporate headquarters!

5. Do you want to delight your customers? Delight customers with efficient services and promptly returned emails and phone calls. And don’ forget to smile, say “Thank You”, and let your customers and employees know how much you appreciate the work they do!

6. Are you resilient? Enthusiasm, optimism, and the ability to bounce back when a difficult business challenge presents itself are all key to being successful as a franchise owner. Apathy, a low incentive to succeed, or constant worry will hinder the growth of your business.

7. Do you have a marketing mindset? Franchise owners enjoy finding unique ways to promote their business in their communities. From taking part in parades, local sporting events, and much more – there’s many opportunities within your community to get the word out about what your business offers!

8. Do you love to learn? Are you someone who enjoys reading, listening to podcasts, attending seminars and talking with others about how to better run a business? 

9. Do you enjoy networking? The more you share and build each other up, the better! Franchise owners who work with other franchises and communicate what works and what doesn’t will have a competitive advantage over those who don’t!

10. Are you a person of focus? Don’t fall victim to being a jack-of-all trades, and a master of none. The risk here is that by spreading yourself to thin, you’ll limit how effective and productive you can be - which may result in poor products or services. Zero in on achieving perfection!

One thing to remember is that when an individual buys into a franchising opportunity with Shear Madness Haircuts for Kids, they won’t be going at it alone. Our team excels at being a partner who wants our franchise owners to succeed! If you’d like to learn more tips on how to achieve success from our team of business experts, click the below banner.

Exploring a Children's Salon Franchise

Topics: kids salon franchise, franchise buyers, buying a franchise, franchise opportunity, Shear Madness Haircuts for kids, how to begin a business, Business Tips, Free Resources for Businesses, successful franchisees, small business how-tos

7 Things Successful Franchisees Appreciate

Posted by Matthew S on Thu, Oct 9, 2014 @ 13:10 PM

small2textFranchisees should feel like they are being served by the franchisor.  Shear Madness Haircuts for Kids understands that the road to becoming a successful business involves many unique challenges. Our franchisees have taught us that being a great franchisor is important to the success of the individual franchisees.  Here are a few things that we have discovered that our franchisees really appreciate.

1. Great Customer Service: Quickly deliver your quality product with a smile! Time is a valuable resource to your customer. Delight them with efficient services and promptly returned emails and phone calls. And don’t forget to smile, say “Thank You”, and let your customers and employees know how much you appreciate the work they do!  As a franchisor we realize that a franchisees time is just as important!  And just as our salon customers' deserve prompt answers our franchisees deserve prompt answers from us - the franchisor!

2. Optimism: It’s important for business owners to always be optimistic about the future. Attitude will quickly infect your employees and ultimately impact what the customer receives from your business. If a customer believes they aren’t getting a great product or experience from your business, they may look elsewhere.  It takes a while to really build a succesful business of any kind - we understand this!  There are always going to be ups and downs in any business.  We are constantly on the look out for successful marketing techniques to pass along to our business owners.  Optimism and success by others is contagious!  We share store results with all owners so they are able to encourage one another.  Every store has the ability to be a success!  We know this and help provide that optimism in both intangible and tangible ways!

3. Think Different: Think "Outside the Box". This may require a business owner to get out of their comfort zone, but your customers will be drawn to products and advertising that looks different from what everyone else may be doing.  Franchisees buy a franchise because they want to know "how to do it" and they expect that the Franchise IS doing it differently than everyone else!  A succesful franchisee will always ask the franchisor when they are thinking of doing something outside the box!  The franchisor most times has experience with that idea and can guide a franchisee to either do it better - or maybe help them avoid a costly mistake!  Franchisors that reward those franchisees who have thought of something "outside the box" and have a system in place to share this information is much appreciated by all franchisees within the system!

4. Team Building: Good franchisors don’t just hire another employee to do a job – they find people who are excited to be part of your team. These employees will help build your business through delivering great products and services, and caring about your customers as well as you as a franchisee! Franchises typically do not have many employees in their home offices - so those that they hire need to be carefully chosen.  

5. Focus: A good Franchisor will not allow you to fall victim to being a jack-of-all trades, and a master of none. The risk here is that by spreading yourself to thin, you’ll limit how effective and productive you can be - which may result in poor products or services. Zero in on achieving perfection! A good franchisor will help you with this - if you are thinking too far "outside the box"  the franchisor should alert you to this!  Every idea may have merit, but doing them all well is usually not possible.  

6. Do What You Love: A Franchisor chose you as a franchisee because they see something in you that brings strength to the business.  Building a business around what you enjoy and a good at gives you a greater chance for success. The franchisor may pull you back in and remind you of why you were chosen for the task!  They will also help you get better at those skills that may need improving.  AND they may improve the entire system based on what knowledge your strengths have brought to the system!

7. Don’t be a loner: Successful Franchisees and Franchisors realize the value in sharing!  You are NOT in it alone as a franchisee.  Franchisees appreciate built in systems, meetings, conference calls or other systems that the franchisor has put into place to allow them to communicate and learn from other franchisees, employees, and the franchisor. There isn’t anyone out there who can knows everything. Being able to seek out those individuals who enjoy being expert advisors and mentors within the system is valuable.  As each store becomes more successful it helps everyone within the system.

One thing to remember is that when an individual buys into a franchising opportunity with Shear Madness Haircuts for Kids, they won’t be going at it alone. Our team excels at being a partner who wants our franchise owners to succeed! If you’d like to learn more tips on how to achieve success from our team of business experts, click the below banner...

The Franchise Buyer's Toolkit

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Topics: kids salon franchise, franchise buyers, franchise opportunity, Shear Madness Haircuts for kids, how to franchise, Free Resources for Businesses, successful franchisees, marketing strategies

7 Habits of the Most Successful Franchisee in the Franchise System

Posted by Janon Otto on Mon, Oct 6, 2014 @ 16:10 PM

In Franchise systems there is a rule of thumb.  Twenty percent of your franchisees will be great, sixty percent will be average, and twenty percent will be underperforming locations.  Then within that top twenty percent there will be a few superstars.

What makes a franchisee a superstar?        

1. Use What is Provided - They use the tools the franchisor provides to their full extent.  Most franchisors provide tools for their franchisees to use.  These might be personalized web pages per location, advertising design, marketing calendars, discounted printing services, etc.  The star knows and uses what the franchisor provides.  AND if the franchisor doesn't provide something they need - they are not afraid to ask for it!  Many times they find out about a new resource they had overlooked or the franchisor adds something as a result!99watermarktext

2.  Not Afraid of Franchisor Input - They contact the franchisor about ideas they have for product or sales ideas they have.  Franchisors have been in this business much longer than a franchisee.  Many times a franchisee has an idea they think has never been tried - however many time it has already been done.  Contacting the franchisor makes whatever idea the franchisee has - BETTER!  Because if it has been done or tried it either succeeded or failed and the franchisor can guide the franchisee as to whether to throw the idea out or how to make it better.  They can also point out potential problems or successes that need to be thought through before going forward.

3.  Answers Franchisor Correspondence - The star reads all correspondence from the franchisor and consistantly is among the first to answer!  They make decisions quickly and don't wait until the last minute to answer - many times the franchisees who don't answer correspondence and wait - never get to it as the emails, mail, just pile up and they forget.  Usually missing out on opportunities or direction the franchisor has provided.

4.  Plans Ahead - Franchise Systems have to plan well in advance for marketing and product introductions and promotions.  The Star franchisee plans well in advance as well.  They make sure that supplies are on hand when needed, and products are in place for any promotions the franchisor is offering.  They also add to these offerings with ideas of their own to increase sales.

5.  Works Hard - The Star Franchisees in a Franchise System realize that success takes work!  Even though they bought a franchise with proven success this does not happen without work and effort on the franchisees part.  Businesses do not run on their own without supervision and guidance.  Even the owner who is not onsite must be aware of what is going on and the location must also know that the owner cares about the business.

6.  Invests the Capital it Takes to Build the Business - Word of Mouth is the best advertising a business can get.  Successful Franchisees realize this and also realize that this takes time.  They are willing to put in the working capital neccessary to keep the business at its best at all times until the word is out and the business can sustain itself.  A business may break even early, but it really takes about 3 years before it is entrenched and well recognized within its area of operation.

7.  Uses the In Store Systems -The Star Franchisees within a Franchise System make sure that they understand how their business is to operate using the in store methods that the franchisor has provided.  They are the ones that ask and ask and ask again making sure they understand how operations are to go.  They are smart but realize that there is a learning curve that is shortened drastically because they bought into a franchise.  They realize that the franchisor has the experience and that systems that don't make sense must be there for a reason.  They ask so they understand.  Customers want to visit happy and efficient operations!

     Royalty Payments are well worth it - the star realizes that they could not hire an employee with the knowledge of the franchisor for what they pay in a royalty.  They make sure that they get their money's worth out of this payment.  Use what the franchisor provides!  It is amazing that many franchisees in a system will flounder and struggle just because they don't pick up the phone, answer emails, or follow the system.  They pay a royalty and complain that it is not worth it, when in reality they are not taking advantage of what the franchisor is offering them.  

This article was written by the CEO of the franchise Shear Madness Haircuts for Kids.  Franchise systems are not equal and many provide tools that others don't.  If you are thinking about investing in a franchise - find out what those tools are.  Ask other franchisees if they are using them and how valuable they are!

Are you thinking about becoming a franchisee?  You may enjoy reading The Top Four Considerations when becoming a Franchisee:

The Top 4 Considerations

Topics: franchise buyers, buying a franchise, Small Business Franchise Information, Business Tips, successful franchisees, small business how-tos