Franchising

Another advantage for the franchisee is security of knowing somebody else has worked through the majority of difficulties in running a business. That somebody, the franchisor, has been through all of the hard knocks and has set up a program that has demonstrated success in the past. So the risk of failure to the franchisee has been reduced.

While franchise fees may seem steep to some, starting a business from scratch also will inevitably require capital. And when it comes down to securing financing, having the name, brand and stability of a franchise actually can improve one’s chances of securing a loan. In fact, the Small Business Association (SBA) has developed a program called the Franchise Registry that is designed to streamline the SBA loan application process for franchisees.

The annual fee that franchisees pay to franchisors can be viewed as a disadvantage, but it is a necessity. Franchisors cannot support the franchisees entirely. The annual fee goes toward marketing and the franchisor’s efforts to continually fine-tune its program. On the other hand, it should be noted that the annual fee works out to be an advantage because the franchisor is there to increase the franchisee’s productivity.

The professionalism with which a franchisee conducts business affects the reputation of the brand and, consequently, the franchisor and other franchisees. Therefore, be certain a franchisor sets professional standards that are adhered to at each and every location. The bottom line is salon owners should understand the costs involved in opening a new salon and must be financially prepared. They also should hire professional employees that reflect the positive image the franchise brand desires. In addition, owners need to make sure they emphasize education because it is a major part of a salon’s success.

Hard Work Pays Off

As with any business venture, there are challenges to being a franchisor and a franchisee. Franchisors have to satisfy their own goals as well as everybody else’s. For the franchisee, the biggest challenges are to keep up with the franchise system, make it better and be more productive.

Franchisees don’t have the same challenges as a chain-store operator. They don’t have to develop programs; they only have to make the franchisor’s program better. The challenge is to not just go out and sell the name, give it away or make deals to move some equipment and turn some cash. The real challenge is to constantly have salons under the brand that make good money for the owners so the owners can get people to invest with them and grow the business in their exclusive territories.

While it may be complicated for the franchisor to put together a franchise, it isn’t difficult to become a franchisee. And whether a person is a potential franchisor or franchisee, the best advice he or she will ever receive is to do their homework. Be sure to ask a lot of questions. How many locations does the company own? Are there stipulations for the number of franchise locations within a certain area? What unique items and programs does it have that goes along with the franchise? How does the franchisor define why it’s different from somebody else? Does it have operations manuals and an ongoing training program available? A franchisor has to have a good enough training program and facilities to fulfill the needs of the franchisee.