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The benefits of operating as a franchisee

Written By: Tom Rothrauff, president and COO of Basement Living Systems U.S.A.

The recent economic instability and uncertainty in the marketplace is exerting a far-reaching impact that, for some professionals, influences much more than just the bottom line. Challenging times often inspire new solutions and provide many individuals with a heightened degree of analytical and strategic insight into the business model that works best for their personal circumstances. For a great many struggling professionals, the answer is to enter into a franchising agreement with an experienced franchisor and a proven product. Taking advantage of quality franchising opportunities can be a logical and lasting professional solution; a solution with both short- and long-term benefits that provides an appealing combination of security, support, and flexibility.

Operating as a franchisee can promote a productive exchange of ideas and information, provide access to an experienced network of peers and fellow professionals, and facilitate a number of substantive financial benefits. Franchising agreements confer virtually all the pluses of owning your own business and reduce or eliminate so many of the headaches and liabilities that can become even more of an issue during challenging economic circumstances. In the current climate, so many professionals – particularly smaller startups and independent contractors – share a common problem: they are simply undercapitalized. It takes time to generate a reliable flow of revenue, expenses may be higher than expected, and smaller independent operations are more vulnerable to sudden shifts in the market. None of these things is an issue with franchises. Taking a closer look at some of the benefits of franchise agreements not only provides important insights into how this phenomenon is helping growing numbers of professionals weather the storm, but reveals some fundamental truths about long-term success in a challenging and competitive industry.

As many business owners will explain, experience is an extraordinarily important asset; even the most successful professionals have frequently been able to learn from their mistakes and benefit from past experiences the second or third time around. But in today’s marketplace, there is almost no room for error. If those mistakes are too big, you may not get another chance easily, soon…or ever! A franchising partnership can guide you around those pitfalls, providing the hard-earned experience and insight so that you don’t have to try and reinvent the wheel on your own. Like the contestant who enters a pie into a county fair contest for the very first time, the odds are stacked against newcomers. Now imagine if that same contestant had access to the winning pie recipes from past champions, and could spend time in the kitchen learning firsthand from award-winning bakers? The odds of winning go way up. Information is power in any industry, and access to that information is one of the greatest benefits of a franchising agreement.

Another important benefit for franchisees is the level of professional support they receive as a result of entering into a franchising agreement. Support that comes not only from the franchisor, but from fellow franchisees; professionals who are dealing with the same issues, overcoming the same challenges, and are subsequently able see things from the same perspective. It can be an enormously valuable resource to be able to consult with, talk to and compare notes with professionals who are working in a similar environment and can offer relevant insights and suggestions. One of the perhaps underappreciated benefits for franchisees is the way in which a franchising agreement can transform potential competitors into allies. In addition, the impact and significance of brand recognition and the proven power of established advertising and marketing campaigns is a tremendous boost for smaller operators. By facilitating access to a support network of collateral materials and marketing and communications infrastructure, franchise operations make it possible to save time, money and human resources.

Franchise fees can be a concern for some who are considering entering into a franchising agreement, but for the vast majority of franchisees, the overall financial benefits of a franchising relationship far outweigh the liabilities. A franchising revenue sharing fee of 4-6 percent is a small price to pay for a package of established services and proven resources that can potentially consume up to half of all profits for an independent outfit.The amount of money saved by being able to utilize established marketing, operational, staffing and legal resources, and the ability to leverage the collective buying power enjoyed by many franchise operations and buy in bulk or direct from the manufacturer can generate huge savings. In addition to the financial security, franchisees frequently enjoy operational security as well, with a clearly defined or established territory and the knowledge that they are providing a proven, market-viable product or service. The bottom line for many franchisees is both a more robust bottom line, and additional peace of mind.

Professional flexibility and freedom is another important plus. Franchising arrangements also make it possible for construction and development professionals to push the envelope a little bit; to attempt to broaden the scale or scope of operations without exposing themselves to undue risk. Experimentation and innovation can sometimes fall by the wayside during tough times, and with a greater margin for error, franchisees are better positioned to translate their drive and ambition into bigger and better things. Many franchisors are looking for responsible professionals with management skills and initiative, and while skilled workers are always a priority, someone who knows how to run a business, generate revenue, control expenses, and exhibit sound managerial judgment is an attractive candidate.

While the potential benefits of a franchising relationship are significant, franchising is not for everyone. Entrepreneurs who savor the challenge and excitement of setting out on their own may be averse to feeling like they are part of a team, and there will always be those who may prefer to make their own mistakes and forge their own path forward. Increasingly however, today’s uncertain economic landscape is inspiring many to take a closer look at their franchising potential. In the final analysis, potential franchisees need to do their homework and make an effort to educate themselves about potential franchisor partners; to try and get a feel for the culture of an organization, and to talk to other franchisees and business partners to elicit additional perspectives. Individuals need to ask questions about territory, competition, and expectations. Are there soft goals or firm mandates? Are there consequences for failing to achieve performance standards? Examine the franchisee disclosure document closely to ensure that the full extent of training and marketing programs is made clear and that the costs and potential liabilities are laid out as well as the benefits. Ultimately, being a franchisee means being an active participant in your business. You are still your own boss, an engaged and responsible owner, and for more and more professionals, that is the biggest selling point of all.

Tom Rothrauff is president and chief operating officer of Basement Living Systems U.S.A.  Basement Living Systems U.S.A. is affiliated with Champion Window, Manufacturing and Supply Company and is committed to executing superior service. Basement Living Systems U.S.A. and its franchisees provide the finest quality modern basement finishing products, combined with worry-free installation and service.

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