My reason for accepting the challenge was none other than to create a business that would allow me to pay for my studies. I thought the franchise was only for big players.
Fred DeLuca, founder of Subway
“Franchising with responsibility” is a phrase that I invented many years ago to teach a course to companies that intend to become a franchise and where the first sheet said RESPONSIBILITY, my intention was to convey to the attendees the responsibility that an entrepreneur acquires with that person who places their trust and heritage in your brand, and which must be very high and taken into consideration before thinking about signing a franchise contract.
In order to franchise the company, there are two fundamental issues: one, that of course there is a profitable business model that is in a position to be REPRODUCIBLE (another word that characterizes businesses to become a franchise) and on the other hand, a visionary and capable businessman who is at the RIGHT moment of his life to carry out this titanic task of converting and evolving his company so that it competes in the big leagues of the franchise.
Franchising is an accelerated growth alternative that provides us with a solution to the five main problems of any company that wants to expand its operations: Lack of financial resources, availability of Human Resources, availability of commercial premises, ignorance of the local market and lack of operational capacity. in those markets, the race against time and speed of response to competitive threats.
2X3 or 3×2, the rule that is missing something to be golden. Ever since I can remember I have heard this phrase from a book that says that for a business to be able to start in the world of franchises or for it to be in a franchise position, it must have successfully operated two units in three years or three units in two years. , and the question here is, has the entrepreneur already demonstrated that his business has reproduced successfully with this experience? With this experience, does the Franchisor already have all the knowledge to offer franchises? Is it really the minimum experience necessary to know if the businessman has been able to duplicate his business model successfully and without him or his family being present on a day-to-day basis?
For example, that business that has been in the same place for 50 years in the same corner of Mexico City -and as Juanga said and with the same people- being successful. Has it already shown that it can reproduce its model and be successful in Chihuahua? Is it valid to believe that a business has the capacity to reproduce itself, even if it has been in the same neighborhood for ten years with ten units and has never demonstrated its success outside of its neighborhood? It seems to me that this rule should be reviewed and pay more attention to the subject. Therefore, in my opinion, these businesses need to have demonstrated that the business has been successful outside of their city, that they demonstrate that they can be successful in other different cities so that we really think that success comes from the business model, its definition of the concept, the differentiation of your product and the correct message to your tribe, and not the personality of the owner or the famous corner where they have been operating for 50 years or the flavor of your product.
Although it is true that not all businesses start their franchise plan with 50 units, it is important that the entrepreneur has demonstrated and tested his business model in different markets so that he can tell us about more accumulated experience, which at the end of the road is This experience is what we are acquiring by getting involved with said brand.
This is why I say that the rule should be: Have the greatest number of units, in the longest time, in the greatest number of markets possible, and then it would become a platinum rule. When looking for a franchise, ask the Franchisor in how many markets and/or cities and/or neighborhoods he has been present and what experience, good and bad, can he share with us about it? It is not worth saying that my business is successful when I have three units in five years in the same neighborhood and I have never left Coyoacán; Do we really want to be the first to know if that make and model is going to be successful outside of Coyoacán? The more units and more experience this Franchisor has in different markets and in different locations, the more comparative analysis we can do to know -NOT if we are going to be successful- if the business model and the product will adapt to this or that market in our city. . Again, what you buy is experience.
What you really want them to share with you when acquiring a franchise is the experience that the Franchisor has in doing successful businesses, so it would be inconsistent to join a business that does not have enough experience to share with us. A good Franchisor must be able to share his experience by providing valuable information to prevent you from making the mistakes he made when starting the business, he must be able to provide you with information on the best practices within his industry, on the marketing techniques that best suit you. have worked, why use certain equipment instead of another?, the WHY of every business issue.
Can I lose my investment? Of course! Do not trust businesses that tell you that they guarantee you or that you will recover in two seconds or that they promise you magical things without working. It is very common that at fairs or in interviews people ask that if I guarantee this or that, or that they tell me what guarantees that the franchise will work? And I always answer them the same: “Ma’am, the only thing I guarantee is that you are going to work hard to get this business off the ground and I am not a fortune teller to know if the business is going to work on the corner of the main street in Tinguindin, Michoacan”; For this reason, I don’t have the slightest idea of the answer to the question: How long does it take to recover my investment? The answer is the same I DON’T KNOW, it depends on an infinite number of factors. Be very careful of smoke sellers who tell you a while, in my opinion either they don’t know what they are doing, or they want to sell you dreams, both seem very irresponsible to me; They should send them to take financial management classes. A serious and experienced franchisor will invite you to his office to review the financial model and he will never, ever answer you lightly in order to sell you.
I hope this weekly column is useful for you and your business. Remember to visit my YouTube channel “FranchiseZar” where you will find a great collection of business, franchise and entrepreneurship issues. Listen to me on the FB channel of LA FORMULA DE LA FRANQUICIA every Wednesday at 5:00 p.m. cdmx. Interested in acquiring a franchise? Ask FranchiseZar® and #notedejessoprender. Your friend the Czar of Franchises says goodbye to you, see you in the next one.
Jorge Valencia L.
President of the Latin American Franchise Institute.
CEO Interfranquicias Group Latam.