The Franchise Business Model: The Pros And The Cons – Episode 2 – Part 3
Franchising can be an extremely lucrative business opportunity. If you’re contemplating making the move into franchising, there are a few things you should know before you sign the check. Tune into this series with business coach and entrepreneur extraordinaire, Clay Clark, and world famous franchise coach, Terry Powell, as they discuss the pros and the cons to the franchising model. Bench marking is a term that you may have heard before and if you’re not exactly sure what it means, its simply a term used when franchisees are able to share data and positively compare with other franchisees in the industry to help encourage growth. This can be a positive because you not only are aware of the level that many others are performing at, but it enables you to aspire to a higher level or it may encourage others to rise to your level. It allows you to pick the brain of someone who not only understands what you may be experiencing, because they most likely experienced it themselves, without feeling threatened that you might harm their business. The con to bench-marking is that it can often make a business owner feel like corporate is expecting more than may be reasonable. In most franchises you’ll have a 20-60-20 model where you’ll have the top 20 percent doing 3-5 times the amount of business, you’ll have a bottom 20 percent that are just getting started or not following the system, and then you have a large majority of 60 percent who are turning an average profit. There will always be over performers, under performers, and average performers, meaning that the business model can succeed as little or as much as you would like it to. The last and final advantage discussed in this series is the ability to attract new employees with a franchise model. To lean about all of the pros and cons to franchising, tune into the rest of the series.