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How long does it take to see a return of investment as a franchisee?

How long does franchise ROI take?
People often ask me how long it takes to return your investment on a franchise. When discussing franchise ROI, there are really several seperate questions. How long does it take to make a return of your investment, how long to make a return on your investment, and what is an acceptable ROI for a franchise model. Today, we are just looking at the first, but keep in mind all three of these are covered in the book How and Why to Franchise Your Business.

The amount of the investment
How you fund the business
The profitability of the business

Profitability
Lets look at the last one first, to set a baseline. A good rule of thumb for ROI potential in a franchise is a minimum of 20% + equitable salary after two full years in business. To remove variables, we are going to assume that you are investing in a manager-ran business, so you don’t get the equitable salary piece, so now we are just working with the 20% number. So lets use 20% of full investment in year three and beyond as your profitability.

Investment
Next, lets look at the investment. Franchises can range from literally less than $10,000 to in excess of $10,000,000, but the vast majority of franchises range in the $100K-$1mil range, all-in. All-in means all costs to purchase the franchise rights, start the business, and keep it running until it is profitable. To narrow that down even more I would say that around 50% or more of franchises are between $200K-$750K. Lets use a nice round $400K for your investment. Now, based on the answer to question 1 (this paragraph) and question 3 (the last paragraph) we know […]

Password formula, just in time for world password day

IT’S WORLD PASSWORD DAY!
 

Using a password formula
I can hear you now; “wait a minute, you are the the franchise sales guys! Why are you writing about cyber security?  It’s simple; regardless of your line of work, cyber security is important to you.

If you are a franchisor, you likely protect your franchisee’s bank account information, credit card information, SSN, etc. with a password. If you are a franchisee, you likely protect your franchisor’s intellectual property, as well as your employee’s personal information, with a password.
BESIDES, IT’S WORLD Password day!
We all use them, and most people’s passwords are simply not safe. Why? There are four steps to a secure password, and I am of the opinion that, for most people, following them is impossible. This article talks about those steps, why they are unrealistic, and, most importantly, gives a solution.
So what’s the solution already?
If you don’t want a little education on passwords and some 90’s Angelina Jolie history, however, feel free to  jump down to the solution, a password formula, if you want. Also, if you want to know more about world password day, cyber security, and other things you can do to besides using a password formula, check out Intel’s World Password Day site.

 
The Four Steps to a secure password
Step 1: Make it unique
This one seems obvious, but many people don’t even take this simple precaution. How do I know? Because many hacks and password dumps have shown that the top five passwords in use today are “password”, “123456”, “12345678”, “1234”, and “qwerty”.  Now, for a little history, we can swing back to 1995 when the movie Hackers taught us that the top 4 passwords were “love,” “secret,” “god,” and  “sex”.

 

Of course, clever […]

Be first or Be Last Method

The Be first or Be Last Method of Franchise Sales

 
What’s Be First or Be Last?
This is a franchise sales method build around the guiding principle that professional yet relenteless followup is a must for franchise sales sucess.
Why call it a “method”
Method: noun is a particular form of procedure for accomplishing or approaching something, especially a systematic or established one.
The Be First or Be Last method is a series of procedures that we here at Beacon systematically follow.

 
So what’s the method?
Check out The Be First or Be Last method, but I have to warn you its a long read.

The pros and cons of joining a franchise

We have tackled the subject of becoming a franchisor often. What does it take to become a franchisor, is your business right to franchise, are you the right person to be a franchisor; all of these have been addressed. But we don’t often talk here about joining a franchise as a franchisee.
Joining a franchise
We don’t talk nearly as much about the pros and cons of joining a franchise. However, the answer to a franchisee are similar. Like any business model or business decision, there are pros and cons. I am going to assume that you have already decided that you have what it takes to be a business owner in general, and now you are just considering if you want to go it alone or be a join a franchise. I’m a positive guy, so lets start with the pros!
The pros
Faster start-up
In a franchise system, the franchisor steps in to help you expedite the start-up phase by providing you with a plan of action. They help you crucial decisions such as site location, hiring new staff members and the initial marketing and advertising of the business.
Brand Recognition
One of the benefits of joining a franchise is the brand awareness and national advertising power, either present or future. In addition to managing national advertising campaigns, most franchisors help you develop an effective marketing plan and often provide advertising assets as well.
Risk Mitigation
Joining a franchise is largely about risk mitigation. Everything in business is risky. Small and large companies fail all the time, franchisees included. However, a franchise is, at least to some extent, a proven business model. Naturally the more successful franchised locations in various locations a franchisor has, the more their model can be considered […]

Working with franchise brokers and coaches

Why working with franchise brokers makes sense
I went to the  Franchise Broker’s Association Annual Convention some time ago. Afterwards, I was in the Houston United Club on a layover, and I had a call with one of my franchisor clients. He was shocked to learn that we were working with franchise brokers. “They are so expensive! Why should they get $20,000 just for a lead?”
The commissions paid to brokers “just for a lead” are surprising to many would-be or brand new franchisors. For some reason the franchise broker/zor relationship can become occasionally adversarial. I have never understood this. To franchisors; franchise brokers are out there building YOUR brand. You are NOT paying them for just a lead; you are paying them because they are your brand ambassadors.

Below is an excerpt from my book How and Why to Franchise Your Business that addresses the coach/zor relationship.

Brokers, coaches, consultants-they are known by many names. Basically, franchise brokers are responsible for generating their own leads, and they refer interested parties to franchisors.
I have heard it said that brokers just bring you leads that you would already get elsewhere. I can tell you that I have worked with franchise budgets in excess of $100K a month in lead procurement. I currently manage a budget close to $1mil/year, and in all my years of franchise development, I have only had one lead come through a broker and another franchise lead source.
If you chose to work with brokers, and I think most franchisors should, then you need to learn how. This is not a set-it-and-forget-it model, though it is often treated as such. It’s important to understand that most broker networks have several hundred franchisors in their portfolio, but most […]