Franchise Entrepreneurs – Buying Yourself a Job?

A Franchise Opportunity – What Is This Exactly?

The best way to describe a franchise is to imagine it as a business that is delivered to you in a box at a certain cost and after approval. When you open the box, you will find marketing materials, contract templates, business plan templates. In short, everything you need to get legally started with a business, usually in an exclusive territory where only you can operate and sell.

Why Are Franchises Popular?

Franchises are popular. Research was conducted by the International Federation Association and the National Franchise Association recently. In 2005, there were about 850.000 franchises operating in the U.S. alone in which around 10 million people are employed. Sales volume accounts for about 40% of all retail sales with around $1.5 billion.

At this point, I do not really know if there is any business left that has not been using the franchise model already. You can find restaurant franchises, cleaning services and even dental practices. Most popular franchise categories still seem to be the restaurant, deli and sandwich franchises.

Franchises all have a couple of things in common that makes them attractive to potential business owners:

1. Fast start up utilizing a working marketing system;

2. Peace of mind because it has been proven to work already;

3. Exclusive territory (in most cases).

There are known disadvantages as well. For example, a lot of franchise companies do not give the level of support they promise. Some of them can be overly strict with their branding and marketing requirements, which may be disappointing for a creative entrepreneur. And there is obviously the work pressure, especially when operating a franchise that requires staff as well.

Cost and Benefit Analysis – Quick Overview

Costs

The convenience and peace of mind comes at a certain price. Let’s look at some typical startup fees.

The average investment level is around $250,000 excluding real estate. This is the average investment requirement for about 80% of the franchises.

A typical example is Rising Roll sandwiches who requests a total capital investment of $300,000 and a net worth requirement of $500,000.

So called low cost franchises can start with a capital investment typically in the range from $15,000 – $40,000.

A typical example is a video business card distributorship that comes at a cost of around $15,000.

Benefits

No exact figures are known but I found the following indications based upon figures researched by the International Franchise Association. They found that the annual gross income for a typical franchise ranges between $75,000 – $125,000 (before taxes).

With an investment level of let’s say $250,000 you can expect a pay back time of around 3 years.

It is clear that becoming a franchisee requires cash to sustain yourself and the business in the first years. It also requires some sustained hard work to get the business off the ground so to speak.

Franchise Entrepreneurs – Are You Capable

An survey among Franchisors (by Franchise 500 and published in Entrepreneur Magazine Jan 2007) has revealed they are looking for the following characteristics in a person to be considered to become a successful franchisee.

1 – People Skills
94% of the franchisors that were interviewed mentioned this to be a key skill. Not really a surprise. Even if you do not have staff, to move goods in most industries, you need at least some communication skills.

2 – Coaching
If you are unwilling to learn or accept proven formulas and methods it is very unlikely that you will become successful. Reinventing the wheel is not what makes franchisees successful. A view shared by around 87% of franchisors that were surveyed.

3 -  General Business Skills
This is an interesting one. The percentage agreeing with general business skills being a requirement to become successful is 86%. Interesting because you would expect proven methods and systems to be in place already. Not so. In order to make it all happen, you need to study financial information, cash flow, balance sheets on a regular basis. You need to make decisions on your own regarding additional investment, marketing strategies, staff and so on. 

4 – Access to Capital
If you do not have any money to get your business off the ground, it’s better not to start at all. Careful planning is the key combined with a preparedness to live a frugal lifestyle for years to come.

Conclusion

Buying a franchise is a popular thing to do nowadays but it never appealed to me. It always felt like buying your own job. The amount of investment combined with the amount of work to put in simply does not match with my personal lifestyle. I would rather invest a bit less and work less hours but with a much faster pay back time.

There are still plenty of opportunities with proven track records over a couple of years that are suitable for lifestyle entrepreneurs and that will generate good income for years to come.

– Marius is full-time Lifestyle Entrepreneur. Helping others to become successful. Used to be a successful business development executive in IT industry. Already helped many people finding their path in life with concrete jobs, opportunities and contacts.

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Do You Have What It Takes To Be An Expat Entrepreneur

Expat entrepreneurs live a certain lifestyle that allows them to be at home in a foreign country so to speak. There are different reasons why people move abroad. Retirement, health reasons, family, the climate, the career of the other half for example. I have been living abroad for longer periods in my life and I have always enjoyed it. For me, being a Dutchman living in foreign countries has always been good. We meet each other in the so called expat communities and find ways to support each other on may occasions. This really is an article based upon my own experiences and observations.

Expat Entrepreneurs Categories

I have been observing quite a few people who moved abroad initially for job reasons. If they are not diplomats who are automatically rotated to next destinations, they usually end up in three categories after the expat contract has come to an end.

1. Accept a regular job

Usually, this happens if they get roots in their new country and need to make a living. Continuing the profession they had is the easiest way to keep themselves going in the host country. Big disadvantage usually is the drop in salary, bonuses and other nice perks that come with an expatriate contract. Life is all about choice.

2. Go back or move on

If they do not have roots in the host country, they are likely to move on again. Either to another location on another expatriate contract or they might simply go back to where they came from.

3. Become self employed

If you like to be in a foreign country and have saved up some cash from your expatriate assignment, becoming an entrepreneur is a very attractive option. Most of these entrepreneurs tend to choose something they can take with them should they decide to move on. Also, because they are not completely local or might not speak the language, they typically benefit from globalization allowing them to plug in from anywhere in the world.

This way, you can set up your own company, provide a service or sell products, make a good living and still keep your options open. I am obviously situated in this category and I love it!

I found the mindset of getting started in a foreign country and becoming an entrepreneur are not that dissimilar. They are both pioneers so to speak.

Typical Expat Entrepreneur Activities

Expat Entrepreneurs often do something that provides them with an experience and skill they can take with them should they decide to move on again. At least that is my experience when talking to people.

- Real estate. Many expats who stay go into real estate business. Helping others (foreigners) to find accommodation in a foreign country, like they did when they first came. I have a couple of real estate project going myself.

- Tourism related services. A friend of mine is a medical doctor offering medical tourism services in Central Europe where fees for medical or dental treatment are more affordable than in the US.

- Online services. I am working with a friend of mine currently to establish an online academic resource service. Once this is up and running, we can take it to anywhere we want to.

- Internet Marketing. My own core activity is around Internet Marketing and helping other setting up their businesses working from home. This is a fast growing industry and obviously meets my own criteria of flexibility and portability.

- I also have seen people bringing products and services from the US to Europe and the other way around. Mostly as franchise entrepreneurs (see on of my next articles).

Do You Have What It Takes To Be An Expat Entrepreneur

Mindset

To be successful as a entrepreneur requires you to adopt a certain mindset allowing success to happen. Worry, fear, procrastination are your worst enemies, so take action to eradicate those first. Beyond that, it helps if you adopt a mindset of persistence and growth.

Being in a foreign country gives an extra dimension to being an entrepreneur in terms of an extra excitement that keeps you moving ahead.

Cash flow

In terms of material things, it helps if you have some cash at hand allowing you to survive a couple of months when starting up your business. You also would need to get your infrastructure sorted in terms of computer access, Internet access and so on. The good news is that telephony has become virtually free by now using online Internet telephony services mostly. You can conduct business all over the world at extremely low cost levels now.

Attitude

In terms of your attitude, set goals and commit yourself to an action plan to achieve them. You need to be able to learn new things quickly rather than being slowed down by minor obstacles. For example, if you have a weakness in advertising online, get yourself trained up quickly, adopt it as a new skill and get the ball rolling again.

Being able to structure your own day obviously is very important. I follow a rigid exercise scheme to keep me motivated. I also ensure to meet enough friends for lunch or coffee to keep me socially engages as well.

If you like this type of lifestyle go for it is my honest advice. There are plenty of legitimate business opportunities around. Keep in mind that the price of success is much smaller than the price of failure, so it is wise to give it your full energy and overcome obstacles quickly.

– Marius is full-time Lifestyle Entrepreneur since 4 years. Coaching others to success. Prior successful as business development executive in IT industry. Already helped many people finding their path in life with concrete jobs, opportunities and contacts.

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