Want to own a business? Joining a franchise is one option
MAIN IMAGE: Barry Davies, operations director of Chas Everitt International and Jean Botha, COO of Just Property.
Franchising has been called the greatest business model ever invented and has enabled many thousands of people around the world to become owners of their own business. But how do you choose which brand to partner with?
If you’ve always wanted to own your own business, joining a franchise system greatly reduces the risk of new-business failure simply because the idea and process of running that particular franchised business has already been proven; systems are in place and one does not have to re-invent the proverbial wheel.
It is, however, of utmost importance that one carefully evaluates the reasons for entering a specific sector and partnering with a particular brand.
Barry Davies, operations director of the Chas Everitt International property group, gives the following tips on how to select the real estate franchise that’s right for you.
- Do as much research as possible into the companies that interest you and make sure that the infrastructure is in place to actually deliver the services and support that are promised to franchisees. Are there regional managers, for example? Are there model offices/ branches where you can go for training before opening your own franchise? What training will be offered to your agents and how regular, accessible and relevant is this training?
- When you identify a company you like, ensure that there will not be overtrading in your area by other franchisees of the same company
- Speak to at least three or four existing and long-standing franchisees of the company to find out what their experience has been
- If you already have an agency, find out whether your existing company culture will be a good fit with that of the new company. Although all franchising is based on a formula, some companies are very corporate, strict and structured, while others are more like a family and less restrictive although still goal-orientated.
- Don’t get stuck on technology. All the most advanced systems and processes in the world will be no good to you unless you receive regular training and suggestions on how to access and use them to make your life easier as a business owner and to improve the service you are able to offer your customer.
- Make sure the application process is transparent when it comes to the provision of financial information and market reports, for example, and what the expectations are as regards your initial expenditure, turnover, cash flow and the number of agents you will need. There should also be a fairly stringent selection process. You want your fellow franchises to also be top performers that will not let you or the brand down.
- Make sure that the franchise agreement does not contain any untoward restrictions as regards the term of the franchise and renewals or terminations.
Jean Botha, chief operations officer of Just Property, says the first step is to do a careful, honest appraisal of your personality type, special professional skills, strengths and weaknesses, likes and dislikes and dominant traits. This will help you narrow down your search by finding a complementary offering from a business that matches your values and allows you to play to your strengths.
“The good partners out there will have done the same exercise in determining the type of person who will succeed in their business,” says Botha.
Other important points you need to ask about include the brand’s demographics (e.g. national footprint, existing franchisees), policies regarding franchise areas vs. open areas, and your earnings potential based on franchise fees, royalties and market conditions in the area(s) you want to trade.
“Once you have identified a franchise that you are interested in, be sure to carefully study the franchise disclosure document supplied by the franchisor,” Botha advises. “It should contain important legal, business and financial information that give you the full picture of start-up costs, on-going expenses and required working capital. This will give you a good insight into what you could expect should you proceed.”
“Take time to talk to the franchisor’s representatives as well as to existing franchisees to evaluate whether you feel at home with their specific business culture and ask questions about franchisor’s support, training, the profitability of their ventures and overall satisfaction.”
Botha suggests you base your choice of brand on whether it delivers on its promises in terms of on-going training and coaching, regular communication, support, marketing and continuous innovation. “It is all about a track-record of success that stems from the implementation of uncomplicated systems, visual consistency and passionate pursuit of its mission and longevity.”
How much support can you expect to receive from the brand’s head office? Botha says you should expect the company to provide you with up-to-date industry and legislative knowledge and the very best training available in the real estate field; this in addition to being affiliated with a strong brand that understands the real estate market, offers proven systems and excellent support.
“It is very important when you evaluate a franchise opportunity that you understand what role technology is playing to enhance their success. You need to be sure you’re joining up with and investing in a company that is far-sighted.”
In conclusion, Botha emphasises that successful businesses are not created overnight; patience, discipline and hard work are required. “System-driven efficiencies are important, so set up routines from day one. Every aspect of your business should follow due process and everyone in your business should adhere to those systems.”
“Every business, especially real estate, is about nurturing relationships and networks. Make sure people know what business you are in and ask for referrals at every opportunity. When you hear of someone with a need you have a solution for, offer help and advice long before you ask them for business. Finally, market aggressively – spend as much as you can on tactical, measurable marketing efforts.”
Next we want to take a look at the benefits and risks of going on your own – if you would like to share your story and lessons learned, you are welcome to email firstname.lastname@example.org . Ed.