Home-based Franchises
In recent years, home-based franchising has become more popular as a range of companies have discovered that working from home can be just as effective as having an established office elsewhere.
Franchisors in several sectors such as consulting, children's services, financial services, computer training and repair, cleaning, pet care, photography and travel, are now actively offering potential franchisees opportunities to have their headquarters where they live.
Potential home-based franchisees must check with their local authority to see if there are any rules restricting the commercial use of a property and then decide if it is still worth working from home. Some businesses require special commercial planning permission. The use of a private residence for business is usually subject to planning permission and is known as ‘change of use’ planning permission. In most cases, local authorities will not deny planning permission where there is no impact on neighbouring properties. Conditions for planning permission vary from case to case and you should contact the Planning Section of your local city or county council to discuss your situation further.
If approved, this arrangement can save costs for both franchiser and franchisee, although specialist training will be needed to ensure that franchisees will be ready and able to run a successful franchise from home, as they will have to adapt to a unique working style.
It is important that franchisees working from home have in place the right equipment. To make sure things are run efficiently, a desk, stationery, posting equipment, notebooks and other items should be in a set place. Establishing distinct boundaries between the office and living space will help to make the franchise more professional.
It is advisable to have a separate business phone line to keep work and home life apart and if using a computer, it should operate at a fast speed so that more work can be done during a day. The same applies for an internet connection and email software. Franchisees at home must have their office or workspace in an area away from potential distractions such as roommates, children, pets and television.
Having a schedule and sticking to it as closely as possible will also help, including regulated breaks, although franchisees should not fall into the trap of working too long because they do not have to travel to work, which can be counterproductive and have a negative impact on the business, as well as family and friends.
Those who are self-motivated and can work to these conditions should do well as long as the franchise they choose is right for them and gives them sufficient training and support. However, it can be lonely at times so franchisees wanting to work at home are advised to develop a network with the company's other home working franchisees and business owners in their area. These groups can provide each other with useful ideas and vital support.
Part-Time Franchising
Starting a part-time franchise is a great opportunity that can lead to the growth and development of a successful business. Part-time franchising is defined as any franchise in which the franchisee works on average between twelve and twenty hours a week.
This work arrangement can be the ideal job for an entrepreneur who is looking to start a franchise and keep their work-life balance. Work-life balance attractions include family responsibilities and recreational and leisure activities. An individual’s civic responsibilities can also increase the need for reduced or more flexible working hours. These obligations can include volunteer work, community work such as local school positions and environmental protection jobs, or serving on a legal jury.
Franchisees that are looking to work at their own pace, control their own schedule, or earn a supplemental income are frequently opting for the part-time franchise option. Part-time franchises are also good for workers who are changing from a corporate job who don’t want to leap directly into franchise ownership, but want to phase into their franchise lifestyle over a period of time.
The motivation for starting part-time franchises can differ for males and females. Research shows that combining work with education or leisure time is the main goal for male franchisees. Female franchisees prefer part-time franchising as it helps balance work and family. In this way, part-time franchising is an attractive option for women returning from maternity leave, people with young families, or stay-at-home parents.
With an increased focus on family-friendly work and the work-life balance, part-time franchising is a viable option for entrepreneurs and/or first time franchisees.
Alternative Modes of Franchising
In most cases, entrepreneurs arriving fresh to franchising would invest in a new, single unit franchise. In this type of franchise, the franchisee is only responsible for running one unit where they are involved with all of the daily operations of the business. However, there are other ways to enter the franchising world.
Multi-Unit Ownership
Multi-unit ownership is where the franchisor grants a franchisee the right to operate more than one outlet within a defined location. With this right comes the potential for serious money making as well as increased responsibilities in operating your businesses.
Franchisors have high standards in regard to granting multi-unit rights. You must have a proven track record of successfully managing a business, with the ability to motivate your staff and continually seek performance improvement. If you already own a franchise, expect the possibility of having to make a convincing argument in support of your application to own multiple units. Exhaustive research about your market and competition for each unit must be done, along with a strict accounting of your own personal and professional finances. However, some franchisors do offer a discounted rate on the start-up costs involved in the case of franchisees opening multiple units.
Resale Franchises
You may have opportunities to buy existing franchises from either a franchisee or the franchisor. Often you can get a discount on these sales, and since it is an existing business, you can examine all the records for sales, costs, and profit margins to make an informed decision. A franchise unit that has changed hands repeatedly probably has problems, and you should take extreme care in reviewing its history for several preceding years.
Master Franchisee Licenses
Another means of expansion in franchising is to acquire a Master Franchise license. This puts you in charge of other franchisees within an established territory, which could be as small as a county or as large as a country.
A Master License requires a significant investment, but offers tremendous rewards in return. With the Master License, you have the power to appoint and train new franchisees, and the right to collect a portion of the fees these franchisees pay to the franchisor.
As with buying an individual franchise, you will need to do extensive market research before making an investment in a Master License. And just as with the Franchise Agreement, you must carefully scrutinise all the terms so that you fully understand your obligations and rights as a Master Licensee. Be sure the territory is carefully defined. Consult an attorney experienced with licensing contracts. Expect some of the franchise units to flounder, and be prepared to step in to help run the operation.
Area Developer Rights
In addition to Master Licenses, one can also purchase the right to be an Area Developer. In this case, the franchisor enters into an agreement with an area developer to sell a specified number of franchises in the area within a specified time. Area Developer agreements are not common in Ireland, but tend to be used more for international expansion.
Make Sure Your Franchisor is Open With You
We’ve put together some tips to learn the nitty gritty about the franchise business that may change your life.
- If you are invited on a tour with a current franchisee and the current franchisor comes along, try to come back later so the franchisee won’t feel under pressure to present a perfect image of the business.
- Be aware that the franchisors may give bonuses to current franchisees that help get newbies on board, so try to figure out if they are being totally truthful.
- The more franchisees you talk to, the better the information you will get.
- If the franchisor supplies you with a small pool of contact details, get out the phone book and ring around other franchisees. Use Google to research what news and events the franchise has been involved in.
- Try to get in touch with a wide variety of franchisees, from the most successful, to the struggling. This way you can assess whether the business is flourishing or failing because of the business model or the franchisee themselves. Talk to the oldest franchises and the newest ones. The guy who is just scraping by six years in will be as valuable to talk to as the star new kid in town who has already broke his first million.
- Use your gut, and try to get a feeling for the motivations of the franchisees you talk to.
You should have your own questions for franchisees depending on which industry you’re investigating, but here is a checklist of must-ask things to quiz franchisees on:
Franchisors Are There To Help You
It might be useful to rate these questions on a scale of one to ten:
- Are you happy with how the business is working out? If not, what issues are affecting you?
- How is your experience different from what you expected?
- Have you made your initial investment back yet? Did it take longer than you thought?
- How many hours a week do you work? Has this impacted on your personal life?
- Was the training what you expected it to be? Was it intensive or tailored to your own needs and abilities?
- Does the franchisor put any restrictions on products/services you can supply? How has this affected you?
- How would you rate marketing and advertising? Does the franchisor do all you expected or they promised?
- What support do you receive now? When problems have arisen how responsive was the franchisor?
- What did it cost you to build and start the franchise? Were there any hidden costs?
- What are the best and worst moments since you started?
If the average score of the franchise interviews is coming in at more than five out of ten, it could be an indication that this could be the right franchise for you!