What is a franchise owner?

1. What kind of people become franchise owners?

What kind of people become franchise owners? Below you are going to see things like, “how much in initial funds did people have when they started their business?”, “how old were they when they started their business” and “what kind of experiences did they have?”  

1-1. Average amount of initial funds when franchise owners join a franchise.

When you start a business, you need to have funds more or less. The amount depends on what kind of business you want to start. So then, when you want to start a franchise business, what is the amount of funds will you need? For example, if you start a business without an office or brick-and-mortar store, you have many options for business types. You can also start with a small amount, from about $18,000 to $26,000. Some of them can start with even about $8,500. On the other hand, if you want to have a brick-and-mortar store, the general cost would be at least about $88,000.

However, some franchise headquarters in the food industry will lease properties, including the land and a building, this type allows owners to start with a small amount of funds.

1-2. Ages of franchise owners had when they start their franchise businesses.

In reference to the average of ages of franchise owners had when they started their franchise businesses, most of them were around 45 years old. In other words, people who are between the ages of 35 to 55 tend to start franchise businesses. It’s because when people are in 20’s, they do not have much experience, and people in their 60’s don’t have enough physical strength to manage a businesses.

We can confidently say that the number of people who are starting businesses in their 20s is decreasing. This is because young people tend not to take risks because of changes in the job environment. It is very difficult for them to raise the initial funds for it. Also some say that the young people don’t have as much energy compared to the past.

On the other hand, the number of people starting business who are more than 60 years old has increased compared to the past few decades. This is due to the Japanese population having large senior population. Moreover, many of them are very healthy, and they think that they are still young enough to start a business and want to have success again in their life.

1-3. How many inexperienced people become franchise owners?

Most of franchise owner are around 45 years old when they start their businesses. This means that most of them have work experience. Each owner has a relationship with his or her former jobs, and also with the job that they choose when they start their franchise business, We can  categorize them into 4 cases.

    No.1 Their former job was the same job as their franchise business.

          Ex) A person who worked at a bar, who then started their own bar by using the franchise system.

    No.2 Their former job is related with the job of franchise business.

          Ex) A person who had worked at a restaurant who then started a franchise business in the food industry.

    No.3 They have some experience, or had worked before in the same job environment.

          Ex) A person who had worked at a bar as a part time job when he/she was a student who then starts their own bar by using the franchise system.

    No.4 There is no relationship between them.

          Ex) A person who starts a franchise business in an industry that he/she has never experienced before.

Many successful cases are case no.4. For example, few people who start a franchise business with a convenience store had ever worked as staff at a convenience store. Many of them also did not have much experience with convenience stores. The advantage of a franchise business is that even the inexperienced can start business because the franchise headquarters provides its knowledge how to run the business.

2. Mental attitudes you should have when you become an owner of a franchise business.

What kind of mental attitudes should you have as a franchise owner? Let’s think about your missions, and relationship with the franchise headquarters before making contracts.

2-1. Your mission is to develop the franchise’s service by using their style.

The franchise and franchisee have the same objective, that is to increase sales and make profits. We cannot deny that the franchise and franchisee are in the same boat. Both have the role of “development of product and improvement of brand power”. It directly affects its ability to attract customers.

On the other hand, franchisees have the role of “gaining sales and making profits”. They do this by improving staffs’ skill, educating employees and reducing costs. The franchise headquarters’ mission is not to just improve the brand’s power, but also to focus on its store’s sales and profits.

2-2. You must keep a strong relationship with the franchise headquarters.

One of the characteristics of franchisees is that in order to make a profit, they must keep in touch with the franchise headquarters very frequently. Most of them have this characteristic. The reason to have a good relationship with the franchise headquarters is that the better relationship you have, the higher the possibility of getting advantages from the franchise headquarters is. For example, if you have a good relationship with the franchise headquarters, you can get some opportunities to try new products and knowledge and advice.

The supervisors from franchise headquarters are also human beings who have feeling. You need to understand that the relationship with the franchise headquarters could have a big impact on your business. It is important for franchise headquarters to get “accurate information” and to send feedback to them.

2-3. Don’t think that you will make a  profit from the beginning

No matter what kind of business you decide on, the highest priority of a business is to make profits. Even though you have the franchise, and the franchise headquarters gives you some information, management of a business is not so easy.

Some franchisees think that they can make huge profits as soon as they start their business, but it is not true. You need to consider that you cannot make a huge amount of sales from the beginning. You need to realize that you should practice the knowledge from the franchisee.

For example, it is important to make some efforts to increase the number of regular customers, to educate employees to improve their skills or to think about suggestion for improvement depending on the local situation. We can apply this proverb to franchise businesses, “Rome wasn’t built in a day.” You must understand that it takes time to establish a business.

2-4. Think deeply about your decisions as if you are completely independent from the franchise headquarters.

If you are going to start a business as a franchisee, it is essential to confirm all the contents of the job and contracts. By comparing some franchises, your understanding toward the franchise business will deepen.

Don’t rush to choose a franchise. Make a comparison with an objective analysis. Especially, you MUST compare some franchises from within the same industry that you are going to join, otherwise you will miss many opportunities to learn the differences, which is very important.

2-5. Find the best franchise headquarters that you can have a long relationship with.

To start a franchise business means that you need to devote all of your energy to the business. You are responsible to not only yourself, but also to all the members of your family and employees.

When you make a franchise contract, it is important to choose the franchise based on criteria of whether you can have a reliable relationship with the franchise headquarters. Also that you can understand, and use the franchise’s service fully long term. It is recommended to compare your advantages and disadvantages with the characteristic of the franchise you are considering.  

Continuing a business could be too difficult if the industry doesn’t match you. For example, if you are confident in your sales ability, you should choose a franchisee that allows you to improve in a new market. If you are confident in your skillset, then you should choose a franchisee that already has prepared sales environment.

3. Summarize

 As we have seen, franchise owners  have varied ages, amounts of funds, and experience. Also the franchisee is the manager of a store, therefore it is necessary to make profits based on reliable relationship with the franchise headquarters. Because of that, you need to compare franchise headquarters before you make a contract in order to find the best franchise headquarters for you.

Copyright © 2018 Basic Inc.