Want to be your own boss? Start a business where you will be the sole individual in charge?
For many, the idea of being self-employed is akin to nirvana, but how to ensure that one will be successful can be a daunting challenge. Nonetheless, being a franchisee is increasingly an option that is enticing to baby boomers looking to supplement their retirement, as well as veterans seeking to forge a new career. And then there are those who are changing careers, who have been downsized or who have just burned out on the corporate world.
• Critical for success are excellent communication skills. Bock has experience in helping people explore and understand their own goals, what they want and how best to achieve
• He has served on the WMCA Central Maryland Board of Managers, Chair of the Harford County Chamber of Commerce Education Liaison Committee, President of Harford County Business Roundtable for Education and Commissioner of the Middle States Association
of Colleges and Schools.
• He’s currently a member of Harford Community College Foundation Board.
To help make the process easier to navigate, there is Richard Bock, of FranNet Maryland and an 18-year veteran of the franchise Huntington Learning Centers, who notes that most of his clients are between the ages of 45 and 65 and that many view franchising are a retirement career. It is also a world that welcomes men and women from all ethnic backgrounds.
Furthermore, notes Bock, while franchises account for 12 percent of retail outlets, they are responsible for 50 percent of the revenue there. Not unexpectedly, crucial to one’s success is grasping the importance of following a tried-and-true system that is already in place.
“Franchises – there are some 3,600 businesses in 90 industries out there – are a sort of hybrid between starting a business from scratch and buying an existing enterprise,” says Bock. “I work with people to educate them about franchising, to determine their personal goals and objectives for owning a business, and to match them to a franchise that will help them accomplish those goals. Not surprisingly, however, some are top rated, while others are not so enticing.
“And of those 3,600 franchises, 58 percent have a total investment of under $250,000 with many of those under $50,000.”
Bock’s role is to take potential buyers through the process to make sure that they will make the best decisions. “I help walk people through the process of doing the due diligence – and that usually takes three to six months – to give them the lifestyle they want, but also to make sure that they are working with a reputable and safe enterprise,” says Bock, who in addition to being a franchisee himself has put in a good number of years working in the corporate world. “When franchises fail, it typically is because prospective buyers have not done their homework. I work to make sure that my clients are doing their research thoroughly.”
When considering a future in a franchise, there are a number details to take into account. When one is researching a particular franchise, it is wise to seek out a variety of business resources, and Bock can refer his clients to other professionals who can help, such as franchise attorneys, real estate professionals and CPAs for help and support.
“I help my clients put together a team of professional advisors,” he says.
Crucial to doing one’s due diligence is the Franchise Disclosure Document (FDD), which is a requirement of the federal government, the Small Business Administration, a strong supporter of franchises, along with the Small Business Development Center. “This document is federally mandated and mandated by the state of Maryland and is important when it comes to protecting oneself from bankruptcy,” says Bock, who is compensated by franchisors to find candidates who are likely to be successful franchisees. “The FDD provides a broad range of information that can help with due diligence including earnings information, financial details about the franchisor, lists of current and past franchisees and so forth.”
Equally important, notes Bock, is that there is access to those who have left a given system. “I advise people to make 15 to 20 phone calls … these men and women are surprisingly helpful and are great resources to figures out what one might be getting into,” he continues.
Among other important information, the FDD also makes public litigation against a franchisor, its bankruptcies, how many enterprises were terminated and whether those terminations were voluntary.”
A good franchisor, says Bock, provides extremely well documented accounting, sales and marketing systems, as well as information on employee management, inventory management and the importance of location. And with a reputable franchisor, one will continue to have on-going training and on-going support, Bock adds.
Nonetheless, Bock hastens to advise that one should not expect to be turning a profit immediately. It may be as long as three months to a year or even longer from when one opens the doors of a new business to when a positive cash flow may be seen. Many businesses fail, notes Bock, because owners do not understand how long it will take to turn a profit.
So what are the financial obligations of a franchisee? “To get started there is the initial investment, as well as ongoing royalty payments and possibly other monthly fees,” says Bock.
Not surprisingly, lenders view franchises favorably because there is a system has been proven over time.
“The beauty is that you are in business for yourself but not by yourself, and that you are working with a business model that has been proven to be successful,” says Bock. “I spend a lot of time talking with potential franchisees about what they want out of life both professionally and personally, as well as developing a psychological profile for them.” I95