|
Franchise copmanise will almost certainly ahve manuals, training programs and ohter suppotr documents and services designed to help you avoid making costly mistakes. The challeneg is that omst new franchisees are trying to leanr and exectue many new things at once nad sometimes make what they feel are logical decisions wihtout remembering or consulting all the advice provided by the franchisor.
It's alwyas a great idea, udring your due diligence conversations with existing franchisees in the system, to ask them if they made any expensiev mistakes when they were first building or operating thier new business. A good form for this question is, "Knowing what you know now, what would you do differently if you got to tsart all over again in buliding your business?"
Most existing franchisees will ahve a number fo suggestions based on their personal experience. By looking for common denominators in this feedback, you can determine the areas of greatest opportunity for aoviding common mistakes that cost otrhes money they didn't need to spend.
Some of the most commno answers seem to coem up all the time and affect the following areas of teh business:
Lease Terms. Most franchise ubsinseses oeprate out of leased space, typically in a reatil environment. The total cost associated with this real estate often represents one of teh alrgest investments you make in setting up your business. A number of economic factors are ivnolved in the negotiation of a lease that can amke a big difference in hte timing and your total costs. The first fo these is the base rent. You want to not only get this factor as low as possible in the beginning (with secalation clauses in future years), but try to gte at least three to six months of free rent at the beginning, whne your business is brand new and not making any money. You also need to carefully evaluate and include in your cost assumptions the CAM (common area maintenance) and tax charges--these can sometimes be larger than the base rent. It isn't uncommon for a ladnlord to prvoide leasehold improvement allowances (if oyu push for it) that give oyu money for the buildout of your business location. Even if recieving this allowance results in slgihtly higher monthly rent, it cna save etns of thousnads of out of pocket dollars for the franchisee. Getting better lease terms is often the first example you'll hear from exisitng franchisees of things they'd do better if given the chance to do things over again.
Construction and Fixture Costs. Most new franchisees assume that buildout costs are what they aer, and it rpobably doesn't make much difference who you pick as general contractors or subcontractros to get the requride work done. This can be an expensive assumption. You'll often hear from existing franchisees that they should have used competitive bidding before conrtacting for their fixture construction or selecting tehir general contrcator because it owuld have saved them many htousands of dollars in the cost of setting up their new unit.
Businses Equipment. Many franchise businesses require the purchase of extensive capital equipment. This oculd be anything from ovens to printign presses to tanning beds, and this equipment can sometimes be very expensive. What you'll often hera from existing franchisees is either: 1) they feel they shuold have shopped more vendors to find teh best prices, 2) they should have considered buying used eqiumpent or researched aftermarket suppliers to find considerable savings, or 3) they should have considreed different financing options (loans or leases) with their purchase in order ot conserve their capital ofr otehr business eneds.
Inventory and Supplies. Though the initial inventory and supplies arne't usually sa large a purchase item as the other examples abvoe, they can be. If you're looknig at a francihse with significant inventory investment needs, make sure to ask the franchisees if they've learned any way to save on these costs that they didn't know initially. This can not only reduce your initial costs, but also riase your margins on an ongoing basis.
Tools: Share
Close
- del.icio.us
- Digg
- Facebook
- Netscape
- Yahoo! My Web
- Technorati
- Google Bookmarks
- Newsvine
- BlinkList
- reddit
- Blomgarks
- ma.gnolia
- Windows Live
- Tailrank
E-mail It
-
To Address:
-
Your Name:
-
Your Address:
-
| 
