Platt Perspective on Business and Technology

Should I stay or should I go? 19: franchise businesses and becoming a franchisee as a next career step 3

Posted in career development, job search, job search and career development by Timothy Platt on June 12, 2016

This is my nineteenth installment to a series on intentionally entered into, fundamental job and career path change, and on best practices for deciding both when and how to carry through on it (see Guide to Effective Job Search and Career Development – 3, postings 416 and following for Parts 1-18.)

This is also, as the tag line to this posting’s title indicates, my third installment to this series in which I address issues and questions that arise when considering franchise opportunities and options as a next possible career move. See Part 17 for an orienting discussion on this topic and Part 18 for a more focused, though selective discussion of what franchise agreements and contracts entail and as rights and obligations for the franchisee who signs them.

I turn here to consider the question of who this approach would be best suited to. And I begin that by adding an additional detail to my Part 18 narrative. I wrote that installment in terms of pro and con issues and tradeoffs, as I see that approach as useful when approaching any significant career move decision.

• Your goal in framing such a decision and addressing it, is in most cases going to be one of analyzing your possible career path options and looking for the one that offers the best balance of likely favorable and likely unfavorable, for conditions that you would have to accept and live with depending on which franchise option you choose to pursue.

This can and usually does mean making apples and oranges comparisons and trying to evaluate them all in terms of something in the way of a single more unified risk and benefits valuation scale – which is in fact a valid point of concern, and particularly when it means lining up pro and con valuations on a single scale for coordinately evaluating very disparate types of factors (e.g.

• Direct cash flow and profitability issues as for example arise when you would be required to purchase supplies for a franchise outlet for maintaining the facility itself, from a single non-competitive source, versus
• Less easily quantified quality of life considerations for working in a particular business and with a particular franchise system-owning parent company.)

I wrote in Part 18, about the specificity and comprehensiveness of detail of franchise agreements, that franchise system parent companies include in their basic contracts. And I wrote in that regard, in terms of the fixed and largely inflexible nature of those agreements with:

• Their adherence to a more centrally planned business model,
• Their standardized store-front appearance and related branding, and
• Overall marketing,
• Product and service inventory offered and so on.

Once you make a decision to join such a business and sign such a contract, you lock in your having to adhere to all of those contractual details that enter into and functionally define that franchise system. So from that point on, you are dealing with a largely fixed system, and certainly for all of the major details of what your own particular franchise operation will be like. That is the context that I wrote of in Part 18. But before you do this, and while you are still looking at possible franchise operations and their parent companies and their track records, you do have a measure of flexibility there in comparison shopping for the type of franchise you would pursue – if any.

With that in place, I turn to the issues that I said I would address here, at the end of Part 18, which I summarize with a single briefly stated question:

• Who would a franchise decision per se be a good fit for?

There are a variety of ways to address that question and I focus here on two types of decision point criteria that I see of crucial importance:

• Risk tolerance, and
• Consideration of where a would-be franchise holder and outlet manager would specifically see need to hold deciding authority, and where they would be more comfortable having an established business and its systems available for backup and support.

When you set out to build a true, stand-alone startup, as discussed in this series in its Parts 12-16, you get to make all of the key strategic and operational decisions in doing so and you get to design and build out your own business model. But at the same time, you have to find and secure all of your own pre-revenue funding support, and from your own personal wealth, from friends and family, from loans and other business agreements, and from any other sourcing that you can access. And you do have to do all of the planning and first step execution of those plans that would go into designing and building out a new venture – and one that starts without benefit of name recognition or marketplace standing.

When, on the other hand, you buy into a franchise system and become a franchisee, you have to pay a fee to do so, that in many cases can be spread out over time for dates due as you get going; you take on supporting service and related debt obligations up-front that you would not face in building a startup. But you are building into an established and well vetted system that you know in advance has worked successfully for others. You are building your new franchise operation with a great deal of organized and practiced support from the parent company that you have just signed with. And they want to see you succeed as much as you do as your success and that of your franchisee peers in their system is essential if they are to be and remain profitable too.

• Signing up as a franchisee means reducing and controlling a greater measure of risk than you would face if building your own startup, by reducing a range of specific categorically predictable sources of unknowns and uncertainties
• But at the cost of accepting some specific and also largely predictable tradeoffs.

As a franchisee you are your own boss, as already noted in this as of now-three part subseries, and certainly for having the authority in making day-to-day decisions. And perhaps a lot more importantly you have opportunity to drive your outlet towards higher and higher profitability with a significant measure of that performance growth accruing directly to you; you can at least potentially pocket as high a personal income from this as you can build your outlet into as a source of overall revenue generation. But as far as overall operational and strategic planning and decision making are concerned, you are in more of a manager-employee position in a large and carefully organized larger corporation.

I am going to continue this discussion in a next series installment where I will discuss the allure of good brands and products, and of really supportive franchise system parent companies. And I will in that context, discuss franchise entrepreneurs who come to own and oversee strings of franchise outlets. Then, after concluding my discussion of franchise options, I will consider the issues of buying out and rebuilding as needed, an established business. I have already at least briefly touched upon this topic in this series but I will consider it more fully. And then after that, to round out this look-forward, I will discuss retirement as a stay or go scenario, where this increasingly means tapering off employment and making career changes rather than simply moving from being fully employed to no longer working.

Meanwhile, you can find this and related postings at my Guide to Effective Job Search and Career Development – 3 and at the first directory page and second, continuation page to this Guide.

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