10 Things you should know about yourself before investing in a franchise

AWARD-WINNING THAI FOOD, BROUGHT TO YOUR DOOR.
Video

Camile Thai Kitchen

  Opportunities:
In the UK
  Business Type:
Franchise
  Minimum Investment:
£100,000
  Training Provided:
Yes
  Home-based:
  Part time:
No

10 Things you should know about yourself before investing in a franchise

In Brody Sweeney’s Franchise Diary, the founder of Camile Thai Kitchen lays out the Top 10 Things you should know about yourself before investing in a franchise.

A popular misconception with people looking at a buying a franchise, is that by virtue of sticking the franchisors name over the door, they will be successful. What they don’t realise is that a franchise is made up of individual business owners, and the success of the franchise is mostly down to them, not to the franchisor. The franchisor does however have a crucial job to do at the early stage, and that is to make sure, as best as possible, that they choose the correct franchisee’s for their system.

I’m Brody Sweeney, the founder of Camile Thai Kitchen, an award winning home delivery franchise. It’s my third and most fun franchise business, and after 40 years in the franchise industry, I guess you could say I’ve seen a lot – good and bad – about this industry. This blog is not about my business, but rather some advice for if you’re thinking about franchising, or indeed already involved in it – and want to learn more.

That’s why when we are talking to a prospective franchisee, we spend as much time as we can talking about them, and why they want to operate their own business, to help them and us figure out, if they are right for our business.

1. Your starting a business, not buying a job

The key difference between owning a business and having a job, is that in a business, you are totally responsible for the performance of the business.

This can be a huge misconception for prospective franchisees. They may be coming from a corporate environment, where the actual performance of the overall business is someone else’s problem. You go home in the evening, and get to relax, secure in the knowledge that your salary will be paid, and your job secure.

Not so in your own business. Every little decision you make has repercussions – good or bad. If you’re making a mess of things and not fixing it, there’s only one place the results of that are going to land, and that’s with you.

So definitely not buying a job.

2. You need to love working with people

All franchises involve you working with customers, and most involve you building a team, and if you’re not great with people, and some people aren’t, then starting any new business, never mind a franchise is probably a bad idea.

I had a friend once, who lived in a big house, but who was very comfortable in his own company, and indeed in his own house, and who didn’t really like visitors. When he told me he was thinking of putting the house on AirBnB, I didn’t think twice about persuading him that, that this was not a good idea. He didn’t like friends coming to his house never mind complete strangers.

We conduct psychometric tests with prospective new franchisees, partly to find out about this. Someone could be totally happy as a desk jockey – and good luck to them – but for most businesses, you need to love people.

3. You need to be exceptionally resilient

For most people, starting a new business is one of the most difficult and challenging things they will ever have to do. It’s not just the physical bit of working 12 hour days at the start, but the mental side of dealing with stress, deep disappointments, and crazy highs when you think you are a rock star. All businesses have highs and lows, and require exceptionally hard work, often for extended periods. You need to have the stamina and positive mental attitude to keep going, even in the difficult days.

4. You’re business plan will not work out the way you think

A business plan is a vital element of your preparation for opening your new business, and a good one gives you a road map, down which you drive yourself and your business.

But when preparing a business plan, you need to understand they never work out as planned. You will either do better than you think (this is a good thing), or worse than you think (not so good), but it is extremely rare, for a business to perform exactly as predicted.

It’s a fact that all banks love business plans, and insist you prepare one, but also know the predictions will not hold true. As one bank manager friend said to me “Brody, I have never seen a business plan presented to the bank, that did not show the bank being repaid in full and on time”. This was not the banks actual experience in very many cases.

Of course, because very many business plans don’t work out exactly as planned, it’s your capacity as a business person to adjust your plan, and keep adjusting it, until you get it right, that’s what separates the winners from the losers.

5. You will have to move way outside your comfort zone

Being in business for yourself, often involves you having to do things that are really hard, and which in normal circumstances you would like to avoid. Having to let someone you like go is one, another good example is cold calling. That’s hard.
To go and knock on a strangers door, offering your product/services for sale for most people is really tough, knowing that on nineteen out of twenty doors you knock on, they will not want your product / service and you will be rejected.

But to build a successful business in many franchises, requires just that, and if you know your hit rate is just one in twenty, then it means you have to knock on ever more doors to build your sales. Avoiding doing it, or making excuses won’t cut it.

Unsuccessful business owners will try it, and probably stop when the going gets tough and then make excuses. Successful ones get it, and when they get the rejection, brace themselves as they stand in front of the next door.

6. If you don’t like being told what to do, it’s not for you

Being in a franchise means you have to sacrifice some of your independence, and toe the line – for the prize of greater and more secure profitability. You might want to paint your shopfront blue, and sell Pizza, but in Camile, you’d have to walk over my dead body before you would be allowed to. That’s because your franchisor realises that a brand is about reliability and consistency, and a common standard. Common standards adhered to by all the franchisees, is the best way to ensure the common good.

If your someone who really likes making all their own decisions, you might find the restrictions placed on you as a franchisee very restrictive, and you could be better off on your own.

7. If you can’t do stuff without being told, it not for you either

This is the complete opposite of the point above, but nevertheless equally true. While your franchisor will want you observe their brand standards, keep to their standard operating procedures, and promote the brand in the same way as all the other franchisees. they also need you to be a motivated self-starter capable of making decisions and getting things done.

This is about you being in charge of running your own business, and doing whatever it takes to make the business successful. Disaster for the franchisor, is a franchisee who waits to be told what to do by the franchisor.

8. You have to be extremely disciplined

Running any business requires huge amounts of personal discipline if it is to be successful. For example in our retail restaurants we have be extremely disciplined about cash. We take cash very seriously, because if we don’t it has a habit of disappearing in an unexplained way.

It’s so easy to lose money in business if you are not carefully watching your key performance indicators, and taking appropriate action where you are not meeting them. It’s very hard in the stress of opening a new business, to sit down and work out your margins for the previous week, but if you want to avoid unnecessary losses, and potentially running out of cash, you need to have the discipline to do these calculations every week, even when you have myriad excuses not to do them.

9. You have to put your customers and staff ahead of you

It’s mostly a laughable misconception, that fat cat business owners exploit staff and customers, to make huge profits for themselves, at the expense of others.

Modern business owners realise that to generate consistent sales, you need to deliver great service, and put the needs and wishes of your customers at the centre of your business strategy.

Great service come from staff who are happy on their work. And if they’re not happy in their work, your customers will notice it.

Being of service to your staff and customers does not come naturally to everyone, but if like me, and thousands of other business owners you like doing it, then this is for you.

10. It can be very lonely

It’s not something people often consider, but running a new business, where you have to make difficult decisions, potentially with far reaching implications is really hard. Often things will be happening to you, that you have no experience or knowledge of how to deal with them. Realising that your business is not performing as it should, and that you might run out of cash and the business fail, is a very lonely place to be.

Even with the support of a great franchisor, the buck stops with you, and that can be hard to handle mentally,

My experience in franchise businesses would suggest that the biggest risk factor for a new franchisee, is not the franchise itself, but rather themselves – the prospective franchisee. You are the most important element that makes the franchise business successful. In Camile we talk about our job being to give the new franchisee a toolkit (business system, brand, marketing strategies etc.) – but it’s up to the franchisee whether they use the toolkit well, or indeed at all.

Before making the decision to invest in a hands on franchise, have an honest conversation with yourself about your strengths and weaknesses, and your capacity to be your own boss.

Good luck and stay safe.

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