Is previous sector experience a prerequisite when buying a franchise? Or will a detailed operations manual and watertight franchise model suffice?
There’s an old adage that says “do what you love and you’ll love what you do.” When it comes to franchising, this sentiment is a great way for potential franchisees to begin the lengthy franchise exploration process. But passion is just part of the equation when it comes to finding the perfect franchise match. In addition to exploring industry trends, identifying current and local market conditions, and finding a franchise that realistically fits one’s budget, there’s also the question of franchisee experience level and how much experience a franchisee needs within a particular industry to find success within their local market.
Trust the process evangelism
On one end of the spectrum, some anti-experience evangelists within the franchising industry espouse the idea that experience doesn’t matter because franchise systems inherently provide just that ̶ a system. By providing an extremely detailed operations manual suite that often outlines even the most tedious daily job duties, disciplines of this school of thought argue that a good franchise system requires little to no experience because a franchisor will provide the franchisee with all the tools and training necessary to run the operation.
Some within the franchise community might even argue that less experience in an industry is better. The thinking here is an inexperienced franchisee is a blank slate and doesn’t have any pre-conceived notions or bad habits that are in conflict with the franchisor’s operating procedures or brand standards. In theory, the franchisee would learn the franchise system in the purest way possible – as the franchisor intended it.
Experience (medium) matters
On the flip side, many franchisors will argue that experience does indeed matter (although to what extent will always be up for debate.) The main theory behind this more widely-accepted theory is that while quality systems may exist, the franchisor generally makes assumptions about his or her franchisees’ existing level of knowledge. For example, a franchisor would assume that a potential gaming café franchisee would at the very least own a video game console and a fitness franchisor would assume that potential franchisees have gym membership cards in their wallets.
Experience is not equal
However, the experience threshold differs greatly across franchising sectors and even within those sectors’ sub-sectors. The restaurant sector is one of franchising’s largest and most profitable sectors, with approximately 275,000 food and beverage franchises currently in operation. Food franchises account for 36 percent of the establishments and 48 percent of the annual financial output of the U.S. franchise industry. However, not all restaurants are created equal and therefore, equal experience is not required.
The franchising sector can roughly be divided into several categories: full-service restaurants, fast-casual restaurants, quick serve, limited menu restaurants (sandwich shops, ice cream shops, coffee/tea cafes, gourmet bakeries, etc.), and more recently, food trucks. On one end of the spectrum, a full-service restaurant franchisor will likely assume that his or her franchisees understand the general nuances of working in a restaurant.
While a franchisor can provide a detailed menu specifications manual, they generally do this with the assumption that the franchisee knows how to operate industrial kitchen equipment and understands the ebb and flow of restaurant volume and is capable of adjusting accordingly. (And that’s before even dealing with the alcohol licensing and bartending operations.) Most franchisors would be hesitant to bequeath a full-service restaurant franchise to someone with no restaurant experience. (That said, they may also be hesitant to grant a franchise to someone who has thirty years of experience running their own restaurant as they might be less coachable).
However, a potential franchisee with limited experience may find success in a fast-causal or quick service restaurant or even a food truck. This is because the system, equipment, and menu items are generally less complex and can be more quickly learned than in a full-service restaurant.
The same idea holds true within the fitness sector of the franchising industry, another one of franchising’s most profitable and growing sectors. (Gym and fitness franchises in the United States account for a $4 billion annual revenue dollar slice of the overall Gym, Health and Fitness Clubs industry pie, which is estimated at $34 billion.) A former professional boxer or mixed martial arts athlete may be a subject matter expert on his or her particular sport, but have limited experience when it comes to operating a general gym with traditional gym equipment (treadmills, ellipticals, etc.) and may not be as used to its customer base. This situation could not only interfere with daily operations and customer interactions, but also limit the franchisee’s ability to market as widely as the franchisor intended.
In this scenario, a boutique gym would be a far better fit for the potential franchisee because he or she would be more familiar with the specific operations and clientele of the franchise. Boutique gyms, such as kickboxing studios, MMA gyms, indoor cycling studios, and other sport-specific facilities, are often a good choice for franchisees with limited or very specific prior experience. Aside from their specific nature, they’re also rarely in competition with “big box gyms.” For these and other niche franchise systems, relevant prior experience is of great value to the franchisor and the franchise system as a whole.
Regulations still rule
Additionally, some franchise systems may require special licenses or certifications. No matter how passionate a potential franchisee may be about home improvement, for example, the fact of the matter is that many states have strict regulations when it comes to performing certain types of activities. As more home and business owners look to renovate buildings, residential and commercial repair and other remodeling franchises have experienced tremendous growth. But many of these concepts are required to have at least one owner of the business be a licensed plumber, electrician, or contractor.
Home healthcare is another franchising sector that is expected to continue to grow over the next decade and will have wide appeal to baby boomers entering retirement years. While this type of franchise is appealing to many due to its relatively low overhead, insurance companies often require certain supervisions by a nurse, doctor, or other licensed healthcare provider. Additionally, as marijuana legalization spreads, grower and product regulations are going to need to keep pace with industry demand. Therefore, the hurdle of getting licensed or certified (or, in the healthcare field, even attending medical or nursing school) is a barrier to entry that must be identified sooner rather than later.
Beyond the resume
Another experiential factor extends far beyond potential franchisees’ former job titles and addresses their soft skills. Has a franchisee ever been in charge of supervising people? If so, how many? Have they ever done social media marketing? How much do they know about liability insurance? Are they comfortable at professional networking and community events? Have they shown that they can take direction and constructive criticism in past positions? Do they want guidance or are they more infatuated with the idea of “being their own boss?” Experience often dictates not just an individual’s technical skill set, but also provides the basis for developing certain strengths such as interpersonal, organizational, and time management skills, as well as particular skill sets such as marketing, networking, recruiting, and more.
Before deciding what kind of franchise interests them, franchisees need to perform a realistic self-assessment of their own skills and identify not just their professional strengths and weaknesses, but their personal ones as well.
For example, retail businesses rely not just on a franchisee’s ability to provide niche products that cannot otherwise be purchased locally or online, but also quite heavily on quality, personalized customer interactions. While most people can easily memorize product specifications, features, and benefits, a retail franchisee should ideally have a strong sales and customer service background.
While there is no formula that will predict with one hundred percent accuracy the level of experience needed to turn a profit and run a successful franchise business, experience is indeed an important factor that franchisors consider when accepting a franchisee and it should be a key consideration for potential franchisees as they go through the process.
Selecting the right franchise system is a balancing act that involves weighing and prioritizing multiple factors and ultimately finding a franchise that is in alignment with a franchisee’s personal and professional goals as well as their local market conditions.
Another adage that applies to franchising is that it can be compared to a marriage. It’s not wise to rush into a franchise partnership any more than it is wise to rush into a marriage. The franchise “courtship” period is a time for franchisors and franchisees alike to do their research, conduct discovery days, and ask the hard questions. For franchisees, these questions are not not just for the franchisor, but for themselves: Does this match my experience? Do my skills align with the system’s ideal franchise candidate? What do I think will be my biggest obstacles and do I think I can overcome them?
Most importantly: Is this truly right for me?
ABOUT THE AUTHOR
Mark Kulkis is the CEO and founder of Chop Stop, a fast-casual chopped salad chain founded in 2010 in Los Angeles.
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