A recent article on FranchiseDirect.com, entitled 5 Traits of Successful Franchisees, discusses what it takes to grow a profitable franchised outlet. Here, franchisee attorney Jeffrey M. Goldstein shares his thoughts based on more than 30 years of experience exclusively representing franchisees and dealers.
Trait #1: Resilience
Resiliency is certainly a key trait for franchisees. Building a profitable franchise is not easy, and franchisees must be prepared for both the ups and the downs. Additionally, while franchisees should expect to receive support from their franchisors, they must also be prepared for the possibility that this support will not come. In many franchise systems, selling franchises is the first (and only real) priority—and once you are in you are largely on your own.
Trait #2: Financial Literacy
Financial literacy is also extremely important. In order to succeed, franchisees need to make sound financial decisions. They need to be able to budget effectively (including budgeting for royalty payments and marketing fund contributions), and they need to know when (and if) they can start paying themselves.
Having an understanding of basic financial principles is important during the due diligence phase as well. Whether you prepare your own pro forma or hire an accountant to prepare it for you, you need to be able to decide for yourself if a franchise opportunity makes financial sense. If the numbers don’t add up, this is something you need to know before you sign the franchise agreement.
Trait #3: Humility
“You will be learning some things at an elementary level, and sometimes it will feel as though you are starting at the bottom.” When buying a franchise, it can certainly seem like much of the initial training phase is unnecessary. However, franchisees need to remember that they are buying into an established brand and that failing to adhere to the brand standards can have significant repercussions. As a result, while franchisees can (and should) form their own opinions, they must also accept that they will have to set their opinions aside in many cases.
Trait #4: Boldness
While franchisees have the ability to rely on an established brand and system, they are ultimately responsible for their own success. As a result, they do indeed need to be bold—although confident is perhaps a better word. Prospective franchisees need to be confident in their ability to succeed; and, if they are not confident for any reason, then they should explore other opportunities.
Trait #5: Perspective
When operating as a franchisee, perspective is very important. You need to be able to see things from the franchisee’s perspective—and this perspective is very different from that of an independent business owner or employee. It is important to understand your franchisor’s point of view as well, as this can help you avoid issues that can lead to franchise disputes, and it can help you understand why your franchisor makes the decisions it makes over the life of your franchise.
Contact Franchisee Attorney Jeffrey M. Goldstein
Do you have questions about buying a franchise? Or, are you struggling as a franchisee? If so, we encourage you to contact us for a free consultation. To speak with franchisee attorney Jeffrey M. Goldstein in confidence, call us at 202-293-3947 or inquire online today.