What is a franchise?
In simple terms, a “franchise” is an agreement between two parties which allows one party i.e. the franchisee, to market product or services using the trademark and operating methods of the other party i.e. the franchisor.
There are two types of franchise methods –
Business Format Franchising’ and ‘Product and Trade Name Franchising’.
Women in Franchising: This business is not just for men anymore
Franchisors are seeking communication skills, business acumen and a collaborative spirit in their potential franchisees. Well, women have all these characteristics. That’s why there are more women in franchising than ever before.
The latest statistics from the Small Business Administration show women-owned franchises make up 10 percent of all companies that were started between 1975 and 2000. Meanwhile, the recent International Franchise Association study shows women operate 25 percent of all franchises, and another 17 percent are operated by a woman in partnership with a man. That means almost 50 percent of franchises have a women in an ownership position at the business.
When we look into why women are successful franchisees, it’s really no surprise there are so many buying into the franchise concept. Here are several reasons why women make successful franchisees.
Necessary Skills – Many women are detail-oriented, organized and efficient. They can also change courses when needed and think quickly on their feet to make fast and smart business decisions. These traits are invaluable when operating a franchise.
Excellent Communicators – Women often bring more empathy and unique people skills to their franchise operations. They are also considered dependable executors and seasoned collaborators, both critical to franchise success.
Established Community – Most franchises have a built-in community of support, which women tend to seek out in a possible new business venture.
Available Financing – To encourage female business owners, there are a significant number of loans and grants that are earmarked for female entrepreneurs. That makes more cash accessible to women for them to start their own franchise business.
Furthermore, female business owners understand the need to think big even as you start small. Women also tend to be more fiscally conservative and willing to grow at a slow but steady pace. This gives them the drive to grow the business in the short term and the patience to find success in the long term.
At All About People, we value the role women play in business and their potential for success as franchisees.
Are You Suitable for Franchising?
Are you considering investing in a franchise? Why not take the test and see if you have what it takes to make those first steps towards becoming your own boss.
Answer questions on a scale of 1-10 (1 negative 10 positive):
- How supportive are your family and those closest to you, of your plans to start your own business?
- How much consideration have you given to the financial impact of starting a new business?
- How could a drop in household income for perhaps more than a year be managed?
- How effectively can you deal with high pressure and stressful situations?
- How open are you to receiving guidance and support, especially if it does not necessarily reflect your own views or opinions?
- How flexible is your work mentality and can you apply focus to different jobs as may be required and multi-task effectively?
- Do you usually have a positive mindset, and have plenty of drive, determination and perseverance?
- How acceptant are you that self-employment, including franchising, often requires harder work and longer hours than employed positions?
- How acceptant are you that a franchise does not bring a guarantee of success, but is more likely to be successful is you work hard and follow the proven business model that a franchisor provides?
- Do you have a decisive mindset, and could you make the decision in the first place to step out of employment and into self-employment?
How did you score?
|75% +||Above 75 points||Highly suitable for franchising|
|50-75%||50-75 points||Possibly suitable for franchising following research|
|– 50%||Below 50 points||Currently not suitable but maybe in the future|
How to Choose the Right Franchise
Potential entrepreneurs who want the independence of running their own business without the hassle and risk of building their own original idea from the ground up often choose to become franchisees. A proven model and the support of a parent company give franchise businesses an edge over new startups, so it’s not hard to see why this option is so appealing.
The hard part, of course, is choosing which franchise to invest in. Even if you have a general idea of the industry you want to work in — food service, health care or something else — there are countless options at different price points within each one, leaving you the task of sifting through dozens of websites and information packets to find the one that’s right for you.
Questions to ask yourself
If you have no idea where to start, you’ll want to begin by asking yourself a few broad questions that will place some parameters on your franchise search.
What are my personal goals? Everyone has different motivations for wanting to become an entrepreneur. Depending on your goals, different franchises can offer you different results, said Dan Martin, president and CEO of franchise consulting firm IFX.
“Is your goal to make money, spend more time at home or take an entrepreneurial step in your career?” Martin said. “By figuring out your actual goals, you will be able to determine what franchise is a good fit to help you meet those goals.”
What role do I want to play in the business? There are two types of franchisees: Absentee owners, who hire staff to manage the business on a day-to-day basis, and owner/operators, who are directly involved in running the business. It’s important to find a franchise model that fits the role you want to have, said Rhoda Olsen, CEO of Great Clips hair salon franchise.
“Many franchisors offer a hands-on opportunity, [while] others offer more of a management opportunity,” Olsen said. “The key question [franchisees] need to ask themselves is what they see themselves doing on a day-to-day basis. Do they really want to do a specific job every day? Do they want to lead an organization? Do they want to manage managers?”
What is my investment budget? Franchise costs vary greatly, depending on the industry and specific business model. While some upfront fees are less than $10,000, others can cost upward of $1 million. Terry Powell, founder and CEO of franchise business coaching company The Entrepreneur’s Source, said prospective franchisees should weigh the initial investment against their expected return, along with their income, lifestyle, wealth and equity (ILWE) goals.
“Opening a food franchise will have a much higher investment than a home-based, business-to-business franchise, simply due to the amount of equipment and inventory necessary to start the business,” Powell said. “It’s up to the prospective franchisee to decide how much they would like to invest and what will help them achieve their goals, both short- and long-term.”
Once you know your budget, you have to be sure that you’re comfortable with the potential investment you’d be making. Most experts recommend having at least six months’ worth of capital for living expenses and overhead costs, on top of the initial franchise fees, before starting up.
“If you have to stretch too much, it could easily lead to bad decision making down the road,” said Ray Barton, chairman of Great Clips. “This isn’t one of those lessons you want to learn the hard way. Avoid the stress [of] getting in too deep financially.”
Do I have basic business skills? While some franchises do want their franchisees to have industry experience, what’s more important to them is that a franchisee have the basic business know-how and entrepreneurial drive to succeed.
“We want franchisees who understand the art of marketing and the need for sales [rather than flooring industry experience],” said Tom Wood, president and chief executive officer of the Floor Coverings International franchise. We want franchisees who are focused on customer service and ways to increase transactions. Good-quality franchisees are hard to come by.”
For this reason, Powell noted that potential franchisees should enter their search with an open mind — in other words, don’t only search for franchisors in industries in which you have prior experience.
“The systems and processes put in place by the franchisor should set a franchisee up for success, regardless of their past experience in the field,” he said.
What to look for
Once you’ve narrowed down the field and business model you’re interested in, it’s time to choose a specific franchise. To help you narrow down your list, our sources advised looking for the following attributes in a company.
They stay on top of trends in offerings and operations. “Franchises that invest in developing new technologies, such as loyalty apps, will not only increase ticket totals for their franchisees but also create smoother and more efficient operations.” —Jitendra Gupta, founder, Punchh
They offer a strong support system for franchisees. “Since you are buying into an established brand that works best when the model is followed, there should be ample support through every stage of your franchise, since they should know how to guide you.” —Jeff Salter, CEO, Caring Senior Service
They have a great corporate staff. “[Ask yourself], how is it to work for the franchise owners? What kind of people are they? It’s important for franchisees to meet … the corporate staff. That face-to-face interaction is huge. You have to have a connection.” — Andrea McGinness, COO, WineStyles Tasting Station franchise
They’re invested in your potential. “When interviewing with Hungry Howie’s Pizza, I participated in a series of tests to determine if I was entrepreneurial-minded and if I had the ambition to grow with the company. It was their interest in not just their personal, monetary gain, but in my vision that incentivized me to work with Hungry Howie’s.” — Don Copus, franchisee, Hungry Howie’s Pizza
They’re selective about their franchise partners. “Candidates should look for companies that truly invest in their franchisees and carefully select who they allow to become franchise partners. Although a franchisor could accept everyone, franchises that are selective and vet quality franchisees to carry their brand vision are better-suited for long-term stability.” — Barry Nelson, vice president of operations, Pancheros Mexican Grill
Reviewing the FDD
Before you make a commitment to any franchise, you’ll be expected to review its franchise disclosure document (FDD), which provides information about the franchisor, current franchisees’ activities and your obligations as a franchisee. Michael Daigle, a partner at franchise industry law firm Cheng Cohen, said that both you and a legal and/or financial adviser should read the entire FDD thoroughly, and pay close attention to the following sections:
Past or current litigation. Items 1 through 4 of the FDD will tell you all about the franchisor’s experience and whether the franchisor or any of the people in charge are or have been involved in bankruptcies or litigation relevant to the brand or their experience as a franchisor. Existing and historical litigation between the franchisor and its franchisees might show a level of discord in or dissatisfaction with the system, Daigle said — or it might show that the franchisor is serious about upholding its system standards for the benefit of all franchisees.
Payments and revenue model. The FDD also explains what you’ll be paying to the franchisor and its affiliates pre- and post-opening, as well as how much the franchisor relies on franchisees for revenue. Daigle said that items 19 (financial performance representations) and 21 (historical growth and revenue sources) give you a glimpse into how well the units are doing financially. Depending on your particular business, this information could be invaluable to the development of your own business plan, and in determining whether or not the franchisor’s model is worth investing in.
Turnover and resource strain. Item 20 of the FDD provides a list of currently operating franchisees and a list of franchisees who have exited the system or stopped communicating with the franchisor. You should contact as many current and former franchisees as you can and ask questions about their experiences, struggles and profitability, Daigle said. High turnover rates could indicate issues with management or infrastructure.
“Look behind the curtain and the sales pitch,” Daigle told Business News Daily. “Don’t be afraid to ask the hard questions — in fact, ask the same question of different people to see if you get consistent answers. Talk to as many franchisees as physically possible, and don’t stop until you’ve heard at least some of each of the good, the bad and the ugly.”
What to ask the franchisor
Alan George, vice president of Franchise Marketing Systems, recommended taking some time to ask specific questions of the parent company that may or may not be covered in the FDD, such as what its sales approach is, whether there’s enough available business in your marketplace and if you have enough money to wage successful campaigns. He also advised asking about their sales and advertising approaches, and whether they will work in your marketplace.
Bryan McGinness, CEO of WineStyles Tasting Station, added that a potential franchisee should be very clear on what the franchisor expects of him or her, and vice versa.
“Make sure it’s a good fit for both parties,” McGinness said. “It’s easy to sign franchisees and take their royalty money. What happens after is what matters. [Figure out] how to make this a long-term partnership and a win-win [situation].”
Best Franchise Businesses You Can Start in the Philippines
Franchising is one of the most popular businesses that you can do today since most of them have already built their own names in their industry. Thus, you just need to manage an already established business.
If you are planning to invest on franchising a business, you should do your research on how consumers look at their business. If you think it is all good, then you can have a go. Consumers tend to ignore business that they don’t know or are not familiar with.
Let this list guide you some of the best businesses that you can franchise here in the Philippines.
Best Franchise Businesses You Can Start in the Philippines
1. Food Cart Franchise
Food cart franchise business is the most common franchising business here in the Philippines. You will mostly notice them in every busy streets and mall.
There are different kinds of food carts, which are mostly franchised. Food cart franchise is a very good investment considering that you only need a small capital for it.
We are all aware that food is one of the necessities of any human. This is also the reason why most food carts franchises earn profit, aside from being very accessible to people.
2. Fast Food Restaurant Franchise
Fast food restaurants are very convenient to busy people. Many people who only have a short break or time from work rely for fast food restaurants to have their meals.
Filipinos love food by nature and fast food restaurant is one of the best franchise options which will surely give you profit. However, investing on the most popular fast food restaurant would be the best. A well-known fast food restaurant will not come cheap but the likelihood of success is very high.
3. Service-Type Franchise
This type of franchise business is very popular and very profitable. You might not be aware, but many businesses are of this type. These are businesses that offer services to people. The most popular ones are call centers, car wash, printing, and many other businesses that offer service. But not all service-type businesses are open for franchising.
Choose the best service-type franchise business that you think will fit in your area. Always research what will be the most effective business in your place to gain a higher chance of profit. The most common places for this are located at busy roads or at the center of the town. Though it is not cheap to franchise businesses of this type, you will have a good chance to be more successful compared with other businesses.
4. Personal Care Franchise
This type of franchise business can apply to any product or service that is aligned with personal care. Usually, franchise business like this requires you to sell products. If you will research for the best product, then you might have higher chances of making it successful.
Popular products are usually easy to sell because many people and celebrities do the marketing for you. The good thing about this type of franchise is that the main company is doing the marketing for you while you only do the selling.
5. Bar and Café Franchise
Filipinos by nature are fond of socializing, this is why they are so friendly.
In Philippines, people love having fun with their friends, and a bar is always their destination. Although we know that you need higher capital here to start, franchising a reputable bar will let you have your return of investment in no time.
Café is also a popular place for people. Although the products don’t come cheap, consumers still love going to popular cafés because of the atmosphere.
6. Bakery and Food Store Franchise
Filipinos love to eat—a lot. Bakeries and food store are popular businesses that you can franchise that also deals with food.
Bakeries and Food stores have been here for more than decades, and until now, more and more are rising. This is enough proof that businesses like these are gaining profit from time to time. If you are going to franchise a business like this, be sure to research for the most known bakeries and food store around your place to have a higher chance of success.
7. Education and Training Franchise
We know how valuable knowledge can be. Education and training type of businesses are helpful for most students or someone who wants to know about a certain industry.
This is a type of business that never gets old, thus it is a good investment for anyone. However, it doesn’t usually come cheap.
8. Water Refilling Station Franchise
Water is very important to our daily life, thus it can also be a good franchising business for you. Not all water is clean, and people can’t possibly live with dirty water. With our technology today, there are already machines that can clean water.
If anything happens to your customer because of the water you are selling, then you and your business will be in a big trouble so make sure that you do your research before franchising one.
Is a Home-Based Franchise Right For Me?
The concept of a home-based franchise can seem very appealing, and for good reason. Having the ability to earn a living while maintaining a flexible schedule at the same time is the “dream job” for many people. Additionally, being able to own and run a business in addition to your current day job is a great way to increase your personal income.
However, not every home-based franchise opportunity provides for the same level of balance, and sometimes an uneducated or unprepared franchisee can find that they’ve been sold a bill of goods.
Some franchisors may make claims that their business can be run completely out of your home and/or without taking the time commitment of a traditional 9 to 5 job, but when reality sinks in, you’re spending more time working on the business than you expected or were promised. How can you tell what is a genuine home-based franchise opportunity and what is not?
Typical Home-Based Franchise Industries
The number of industries where home-based franchises are popping up continues to grow as entrepreneurs’ imaginations develop solutions that can be solved using the home-based franchise model. Traditionally, home-based franchising has been used in service industry businesses where work is done on location at the client’s business or residence and the franchisor has no centralized brick and mortar location.
These are just a few examples:
- cleaning/janitorial services
- home decorating/repair
- mobile pet services
- computer repair
- Kiosk quick-service food concepts (i.e., mall/alternative setting locations with minimal menus and prep)
- consulting services
- tutoring and other educational services
- senior care
The key is to find something that you have a great interest in and see if that business has a well established home-based franchise system.
Like any business opportunity – franchise or otherwise – it is imperative that you do your due diligence. Of supreme importance is to talk with existing and past franchisees.
While a franchisor may tell you that the concept can easily be run from your home office, those past and current franchisees will be able to tell you the real story. Often times the transition to running the business can require more time at the office in the early stages – even for a number of years – before being able to truly take a more “hands off” role. The franchisees will be in the best position to give you guidance on that transition. Also contact the Better Business Bureau and do a search online for any potential red flags.
Characteristics of a Successful Home-Based Franchisee
Running a business from home is not for everyone. The idea of a flexible schedule and getting work done in your pajamas can be extremely appealing, but running a home-based business brings with it a number of unexpected challenges. Anyone interested in pursuing this type of opportunity would save themselves a lot a time, money, and aggravation by doing a thorough self-evaluation before entering into such a business.
Self-motivation is critical. It’s relatively easy to get motivated when your boss or coworker (or even a subordinate!) is poking their head into your office every few hours to see what you are working on, but what happens when the only one poking their head in is your dog asking to go for a walk? It is also easy to get distracted by all the daily tasks and projects that linger throughout every home, some of which can seem more appealing than what is on your work agenda. The discipline to separate yourself from you daily “home life” while still inside your home is a very difficult skill to master.
Organization can also become an issue. Many “home offices” start out as simply the kitchen table, or at best a desk in the corner of the bedroom. Office spaces are hard to keep organized in an actual office, so when those spaces are doubling as home décor in the evenings, organization can fall by the wayside fast. It is critical to assign a specific space – whether it be a desk, a corner of a room, or an entire room if available – that is only for work-related activities and to keep that space as organized as possible.
On the flip side, it is important to remember that even though you work at home, you are not ALWAYS at work. Set specific “working hours” and try your best to stick to them. Obviously one of the major benefits of working from home is the flexibility to work whenever you need to, but the danger is never truly feeling like you ever leave work.
Benefits of Running a Home-Based Franchise
- Flexibility – You can be your own boss and have a decent amount of flexibility with your time.
- Cost effective – No overhead from a traditional brick and mortar office can be a huge money saver
- Start out part-time – For many franchise concepts, you can start as a part-time business while still working your traditional 9-5 job until your franchise business begins to establish and take off into a more full time operation
- Personal touch – For home-based businesses where you personally are offering services (home décor, consulting, etc.) there is an extra element of your own personal brand going into the service that doesn’t often shine through when a customer comes into a more traditional brick and mortar location.
Challenges of Running a Home Based Franchise
- Work/Life Balance – It is increasingly difficult – but imperative – to keep your home life and work life separate.
- Wearing many different hats – In home-based franchise concepts, you will be the owner and the employee, wearing many different hats in running the daily operations of the business. It can sometimes be difficult to determine when you should be servicing your clients as “the employee” and when you should be keeping the books and servicing the business as “the owner”.
- Many hours – While you can be more flexible with your work schedule, you will often times find yourself spending more hours working on the business than you had with a traditional 9 to 5 job. With great flexibility comes great responsibility.
Investing in a home-based franchise opportunity can be very rewarding and can be a perfect fit for some people, but it must be in the right situation. Take the time to really do the research and find out what specific opportunity is the right fit for you.
For more information and guides on franchising, you may visit the following websites
Association of Filipino Franchisers, Inc.