Archive for the ‘Franchise Business’ Category
Buying a franchise business is very different from buying an online business. Each business model represents two ways of doing business. One is not necessarily better than the other. They are each a good fit for the right business owner.
Let’s break down three areas that you will need to consider when buying either business. You want to look at what kind of investment capital you will need. You want to look at what kind of overhead costs are involved, what kind of profits can be obtained, and finally what kind of daily challenges you will face.
Investment capital can not be avoided by any real business owner. It takes money to get a business going. In some cases, the business owner may need to constantly fund the business. Let’s look at the cost of buying a franchise. It usually can cost between $250,000 to $1.5 million depending on the type of product, and the company you associate yourself with. If you consider paying any less, you will most likely end up investing more at some point in your start up.
Let’s examine the cost of buying a successful online business. There are many out there, and you want to do your homework. You should expect to pay between $500 and $20,000 depending on your income goals. In this business model you would be paying a fraction of the cost of a franchise. Make sure it is legitimate, and a partnership you can be proud of.
With an online business, you should look for a business that includes complete online training, and a website set up so you can market immediately. Your monthly overhead will be minimal since you can do the work from home. You will need a good computer, internet connection, and a marketing budget.
With a franchise, your monthly overhead will be extensive. You will want a complete list of all the areas of operation. You will have a lease to pay for a high traffic space, employees to pay, workman’s comp insurance, building insurance, inventory, and maintenance costs. Some of these items are big ticket items so you will want to make sure you have a fair amount of working start up capital to fund these items while you get your business going.
One of the most important areas to look at in owning your own business is the profit and loss category. You must make sure that after your overhead is covered, your profits are still there. With the large expenses of a brick and mortar business, it is easy find the profits are low and your return on investment is not always there.
With a quality online business, profits can be very high. Overhead is low and there is more room for profit in your pocket. There are two things to look for when your evaluating which online business to go with. Look for a quality product that has high commission sales. This will allow you to make a high monthly online income. Make sure that the marketing and website system doesn’t require more than twenty percent of your profits to reinvest back into marketing and advertising.
Daily challenges with both businesses are inevitable. With a franchise you will be challenged by the head aches that come with managing employees, managing the fine line of stocking inventory to meet demand. You will have paperwork to file, submit and coordinate to keep your books in line to manage the company efficiently.
The online business model has completely different challenges. The number one challenge is learning something new if you are not familiar with online marketing. With this in mind the learning curve is quick with the right mentors. This challenge comes with a huge reward of learning how to market anything, to anyone, from anywhere in the world.
Only you can decide if you are a good fit for a brick and mortar business model, or if you would be better suited with the freedom of working online. I have personally worked both business models and find that the online business model works better for me and those I coach.
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Some estimates claim that Americans eat a whopping 100 acres of pizza a day. To give you an idea of what that means, imagine the entire landscape of Disneyland covered in tomato sauce, cheese, and pepperoni. But it doesn’t stop at the fences, because Disneyland is only 85 acres; this pizza hangs over into the surrounding neighborhoods. That is how much pizza America eats every single day.
With so many people eating pizza, it’s no wonder so many people are trying to sell it. Drive down virtually any street, and you’re likely to run into a pizza restaurant before too long,. The fact is that pizza profits are huge, and anyone with the desire can easily get in on it, making their dough by tossing dough.
Of all the business opportunities available in this tasty industry, at least two are going to stand out to anyone who has ever turned on a TV; these are the dominant masters of the mass-pizza world. We all know them, and we’ve all had their product time and again and are quite aware that everyone else has too, giving them a heavy-duty staying power in the market. Who are these dough-tossing, sauce-spreading moguls? You know them by the names Pizza Hut and Domino’s, and anyone with the financial backing and a desire to sell low-cost pizzas by the truckload can easily get into business with them, instantly profiting from their universal brand recognition and mass marketing capability. There isn’t a whole lot of wiggle room for franchisees to make up their own rules here, but that’s a small price to pay for the selling power that comes with joining one of the dominant forces in the pizza industry.
Not everyone is content to wear the same red uniform, cook the same discount pizza, and accept the same little coupons that half of the rest of the pizza market does. If all you want is to not be “the man” of the pizza world, there are a host of selections for you as well, and here are a few of them.
Not necessarily a far cry from Pizza Hut or Domino’s but far enough apart that it still carries some intrigue and homestyle charm, Hungry Howie’s Pizza is a rising star in the industry. Now with 575 locations in 24 states, they have proven in their 35 year run that they have the product quality to last and the business know-how to expand. The secret to their success is that they have uniquely flavored crusts (eight of them, in fact); not only do the toppings change, but so does the dough itself. Nearly every aspect of Hungry Howie’s Pizza has been tested and perfected within its own walls, so you know that it works.
Some people are very particular about the style of pizza that they eat-and thus the kind that they make-and few styles are more distinct or popular than New York style pizza, which is what makes NYPD Pizza such a hit Although the name might imply that you’ll be getting a New York pizza served by a retired police officer, the idea behind NYPD Pizza is a bit different . They do use a police theme (you can open either a “metro unit” or a “precinct” depending on the needs of your area) but the name is primarily to denote that their pizza is 100% Brooklyn-style, regardless of where in the country a franchise pops up, and it is popping up everywhere.
Maybe you’re interested in a more novel idea for your own food franchise, like take-and-bake. This concept works exactly as it sounds: you buy it, take it home, and bake it yourself. Papa Murphy’s Pizza is front-runner in the take and bake pizza industry and this non-traditional pizza concept makes smart business sense as well as tasty pizza. Because the pizzas aren’t cooked or served on-site, less labor and space are required, and purchase and upkeep costs are much lower than a traditional pizza place. To make matters better, customer loyalty is through the roof wherever a location pops up. Whether it’s the control over how long your pizza cooks or being able to eat hot pizza fresh out of the oven in the comfort of their own home, Papa Murphy’s Pizza has developed a strong brand with more customer loyalty than just about any other pizza chain.
Finally, for the true connoisseur who is not content with an ordinary pizza, allow me to recommend two other companies that are making a splash in the industry. Pizza Fusion is a sprouting miracle of a restaurant that combines first-rate pizza-making with a healthy, environmentally friendly approach to the pizza industry. How does a pizza place go green? Simple, they follow all conceivable energy-saving guidelines, which both saves the planet and saves up to 30% on energy bills for the operation. Another unique pizza choice is zpizza, a franchise operation quickly scaling the ladder of success, opening franchises all over the nation, and abroad. What they really excel at is mixing non-standard flavors to concoct pizzas that wow the taste buds and continuously bring back customers who are looking for more than sausage and pepperoni. And yet, they don’t miss the basics either, as noted by the LA Times, announcing confidently that they have “the best crust on the planet.” Both of these businesses make for happy owners and happier customers.
When looking for a food business opportunity, one of the most important things to consider is whether or not the business and its product have a future. With pizza, there’s no doubt about the future. I don’t know anyone who expects to never eat pizza again, and it might serve you well to be the one selling it, because we’ve got quite a few more acres to go before we’re done.
1. RAPID NATIONAL GROWTH
For businesses that experience finance, human resource and property restraints to achieving expansion, franchising can offer a solution by allowing franchisees to fund the expansion of premises, vehicles or whatever is necessary to grow the business. In return the franchisee is
granted the privilege to use the intellectual property rights, knowledge and experience of the franchisor in a truly win-win philosophy.
The expansion and development of a managed business seldom exceeds the rapid growth of a successful franchised business simply because the franchisees provide access to more finance and capital investment to grow the business and remove the requirement to find a salaried manager for operation.
2. INCREASED NATIONAL MARKET SHARE
National coverage can be achieved relatively quickly via franchising if the franchisor provides the necessary support services. As well as capturing market share this will boost the company’s brand recognition.
It is important to maintain good service levels across the network and it is important for the franchisor to have the right, as custodian of the brand, to protect it from misuse within the network. Having a clear franchise agreement and operations manual avoids any ambiguity.
3. HIGHER SERVICE LEVELS
Regional franchisees operating within their specific territories provide a personal touch to the customer or client which elevates it above company-owned and employee-managed outlets.
The franchisee is granted the rights to sell the products or offer the service under the specific terms and conditions.
The service levels are usually monitored at regular franchisee reviews and through mystery shopping activities. The information received from these sources, plus customer or client feedback, can bring valuable knowledge and experience to promote success and knowledge within the business.
4. SELF-FUNDING EXPANSION
Franchising should become self-funding as the initial costs of creating and providing the franchise – including the training, launch support, site selection, intellectual property rights and software licence – are recovered through the initial investment fees paid by the franchisees. Additionally, the investment requirement to open each operation, including lease, store fittings, vehicles and staff recruitment, is taken on directly by the franchisees.
The ongoing costs of providing support, marketing, sales, websites, promotional activities, products or services, ongoing communications and managing the franchise network will be met by an ongoing management service fee paid to the by the franchisee, usually as a percentage of the franchisee’s turnover. It is important that the support services represent value for money to the franchisee both in the short and long-term success of the business.
The success of the franchise will ultimately be measured by the ongoing trading position of the company. In effect the franchisor is required to make its money on the ongoing products or services provided and not on the initial franchise package fee.
5. INCENTIVISED MANAGEMENT
One of the best elements of the franchise system is the dedication and commitment created in the management element of each outlet – the franchisee – by the fact that they have personally spent a the money, time and effort to start the business and they earn by its success
alone. This commitment is unparalleled when compared to an employee-managed company-owned operation and there have been many situations where franchise operations have outperformed the in-house management unit.
The quality of a franchisee – their abilities, qualifications, skills and experience – will ultimately reflect on the success of the franchise, so taking the time initially to implement an efficient selection process is paramount.