Before we can tackle this completely subjective question, we’ll have to cover a few basics first:
What is a franchise?
What are your strengths?
Have you ever used a behavioral assessment tool like the DISC Profile or Meyers-Briggs personality test?
Do you have clear, written goals for personal and professional achievement over the next 10 years?
Have you declared your values and know what it will look like to support them behaviorally?
Have you reached out to your local loi bai hat SBDC (Small Business Development Center) or SCORE (Service Corps of Retired Executives) chapters?
Let’s begin by defining what a franchise is exactly.
Did you ever watch an episode of the hit television series, “Breaking Bad?” If so, everything you need to know about a franchise, Walt described in an early episode where he argued with Jessie – “I’m manufacturing, you’re distribution.”
Yes, I’m telling you that everything you need to know about the franchise industry you can learn from a fictional drug dealer.
My colleagues will probably roll their eyes and laugh me out of the building, but let’s keep it simple okay.
The franchise model is simply a form of distribution; a method of expansion; a way to grow your business. Some other popular growth strategies would be:
utilizing bank loans or other external investment capital to fund additional locations and employees
partnership, merger or acquisition with strategic partners or competition
Not so scary once you level set with that info is it? Not as complicated as some tend to make it either. There are of course Federal and State definitions as well which are important to recognize:
Federal Law: Under the FTC Franchise Rule, there are 3 elements of a franchise:
Trademark. The franchisee is given the right to distribute goods and services that bear the franchisor’s trademark, service mark, trade name, logo, or other commercial symbol.
Significant Control or Assistance. The franchisor has significant control of, or provides significance to the franchisee’s method of operation. Examples of significant control or assistance include:
approval of the site
requirements for site design or appearance
designated hours of operation
specified production techniques
required accounting practices
required participation in promotional campaigns
providing an operations manual
Required Payment. The franchisee is required to pay the franchisor (or an affiliate of the franchisor) at least US$500 either before (or within 6 months after) opening for business. Required payments include any payments the franchisee makes to the franchisor for the right to be a franchisee. These include franchise fees, royalties, training fees, payments for services, and payments from the sale of products (unless reasonable amounts are sold at bona fide wholesale prices).
If all 3 elements are present, then the relationship will be a “franchise” for purposes of the FTC Franchise Rule.
State Law: State law definitions of franchises vary, but the common themes include:
Marketing Plan. The franchisee is granted the right to engage in the business of offering, selling or distributing goods or services under a marketing plan or system substantially prescribed by the franchisor.
Community of interest. The franchisor and franchisee have a community of interest in the marketing of goods or services.
Moving on… I live in the San Francisco Bay Area and everyone loves to talk about their new Start-Up.
I’ve got news for you: stop talking about the start-up and get to work building your business. Likewise, stop talking about starting a franchise or getting into franchising; just embrace the concept of starting a small business with the rules, regulations, process, and operations already pre-determined.
Keep in mind, determining whether you’re right for the franchise business model is subjective; but past experience is a good sign of future accomplishments.