The Right Franchise Business Investment

numbers planning profit sales Nov 01, 2022

Acquiring a franchise requires a significant investment. And usually, the higher the investment, the higher the Return on Investment (ROI). 

  • But are franchisees investing the right amount and in the correct places, to ensure their long-term success?

That is what we’ll dig into in this blog post. First, we’ll go over what is a normal franchise investment and then, how we at The American Franchise Academy think this process should be, to have a great impact on your business.  

 

What a traditional franchise investment looks like

After you have selected what you believe is the best franchise, you’ll have two types of expenses: one-time investments (or the startup cost of the franchise) and ongoing ones (which you'll constantly have).

 

One-Time Costs
  • Franchise fee

This is the initial payment for the right to open the unit. Multi-unit franchisees will have to pay it every time they open a new unit. It could be anywhere between $20,000 to $50,000...

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Calculate your Turnover, the Highest Hidden Cost in Your Businesses

numbers people planning Oct 11, 2022

Turnover is the biggest hidden expense in your business today, especially if you are in the retail and service industries. Why are you not aware of how much it is costing you? Because it is merged into all of the line items and expenses in your profit and loss statements.

  • Even though you don't have visibility for it, it is affecting every part of your operations. That’s why turnover has the biggest potential for financial and cultural damage.

With this blog post, I will help you calculate the costs of turnover, walking you through each of the line items that are part of this expense. 

Before we start, find a piece of paper and a pencil, or open an Excel sheet, so you can follow the math and understand and be clear on what is the cost of turnover for your organization. 

Please note: this calculator is just an approximation of how much it costs to lose one employee in a hypothetical business. You can use this information as a model to calculate your turnover expense...

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Don’t Let Cost Control Paralyze Your Success!

 Being mindful of your expenses is a critical responsibility for a multi-unit franchisee. However, that alone cannot drive your long-term success. If you focus only on cost control, you won’t be able to move forward with strategic thinking and growth for your business.

  • Every franchise brand has a proven financial model, we call it unit economics. 

There are five things about your business and the franchise brand that you need to be aware of to truly maximize your profits, make the most of your investment, and be successful as a top-performing franchisee

 

1. Understand the Unit Economics of the brand

This is the first step for you to be a successful franchisee. Financially speaking, you need to know the limitations of the brand you invested in. That means, knowing how to maximize the average indicators based on the experience that the franchise has had in its existing years.

Some of those indicators are:

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Do you Have the Right Franchise? 5 Clues to Find Out

numbers planning profit sales Aug 23, 2022

Choosing the right franchise is a very challenging process. Some franchisees may have already started operations and still wonder if the business concept they acquire is the ideal one or not.

How can you tell if you have the right franchise for you? What can you do if you realize that the brand you chose is not your best fit? Answering these questions as quickly as possible is very important for your success as a franchise business owner. And that’s what we’ll be exploring in this blog post.

 

5 ways to detect if your franchise is the right one

First, you have to understand that every franchise is different, especially in terms of the effort and the support needed to operate. The unit economics in the business model is also different, even within the same industry.

Once you are clear on this, there are several reasons that'll make you suspect that a franchise is not perfect for you.

 

1. You have less revenue than you calculated

In most franchises, the level of...

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Are you Ready for a Recession? 4 Smart Questions and Actions to Face it

There is so much talk about recession, whether we are in it or if it’s coming shortly. But what you need to worry about as a franchisee is how to make sure you are prepared for whatever happens in the economy.

You have to be aware that there might be global, countrywide, or local events that could affect your operations. That’s why you need to think through and act to make sure that your business is as protected as possible. That’s one of your jobs as a business owner: take the time to design strategies to minimize the negative impact of outside influences.

That’s when you work on your business, not in your business. Especially if you are a growing multi-unit franchisee, dedicating time to strategic thinking is critical to protecting your business, your people, and the brand that you invested money in.

Entering into survival mode? Review these tactics to grow in 2022 and beyond

In this blog post, I want you to analyze the questions you should ask yourself....

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The 3 Roles of the Franchisee

Building a profitable and proven brand is hard! But franchising allows entrepreneurs to own their business and achieve the time and financial freedom they want and deserve. Without franchises, many people wouldn't have the opportunity to make the American dream of business ownership a reality. 

But there’s a catch. Many franchisees come from a corporate background or haven't had a job for a little or a long time. And when they finally invest in a franchise, they realize how different it is to be an employee vs. owning a business.

Why is this? When you work for a company, your role within the organization dictates what you focus on day in and day out. Someone defines your goals and monitors your impact on the overall results. And, most importantly, you're clear on what your job is and the activities you must execute every day to accomplish the business objectives.

When you are an entrepreneur, especially a franchisee, that's not the case. You don’t have that...

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When to Give a Raise to Your Employees: 4 Scenarios to Consider

When it comes to managing people, why, when, and how to give raises to their employees is one of the biggest challenges that franchise or business owners face. Why? Because given at the right time and in the right way, raises can impact the company culture positively. On the other hand, not having them can affect the working environment negatively. 

You must remember that there are two objectives when it comes to giving people this financial benefit. First, to give recognition for performance. Second, to provide fair and competitive pay according to the market, to be able to retain those employees.

Think about it! Upgrading a person’s salary when they outperform will get them excited and motivated to be in your organization and willing to continue giving you that extra effort when they come to work. Otherwise, even if you have a great culture and you do everything right, if you don’t offer the pay that the employees deserve, then they might end up leaving you.

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5 Keys to Achieving the Expected Business and Financial Results

There are seven critical responsibilities that the district manager has to command to achieve the business and financial results that the franchisee business owner expects.

In past blog posts, we covered leading, planning, staffing, execution of brand and business systems, maintenance, and marketing. Last, but not least, we’ll analyze the results responsibility, which ultimately sums up why these leaders do their job every day. 

If you want to see all prior responsibilities, subscribe to our YouTube Channel to review the rest of the District Manager’s playlist!

If the district manager does what he needs to do in all the other responsibilities, he’ll be able to accomplish this one. That’s why this position has to be clear on what are the duties and routines they have to perform to achieve the desired results

That’s not all. Aside from that, they need to develop these specific five skills:

 

1. Understanding financials

The district...

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Survival Mode: Tactics to Grow in 2022 and Beyond

 

 (Part 8 of the 2022 Multi-Unit Franchising Conference)

For the last eight weeks, I’ve been reviewing what I experienced during the 2022 Multi-Unit Franchising Conference. To close up this blog series, today I’m sharing particular tactics that four successful multi-unit franchisees are implementing to grow their organizations and their portfolio. 

The best part is that you too can take these actionable to increase the revenue of your business not only in 2022 but beyond! 

Did you miss the past video sessions of the 2022 Multi-Unit Franchising Conference? Subscribe to our YouTube Channel to review the rest of the series!

 

Donna Lafreeda, Denny’s multi-unit franchisee

She operates over 80 restaurant units in multiple states. She is focused on growing her organization with this single brand, and her current goal is how much cash flow she can get out of her business. 

One of the things she looks for is to take out language that...

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2022 Disruptions in the Franchise Industry: Where Should Leaders Put Their Sights On?

(Part 7 of the 2022 Multi-Unit Franchising Conference)

What is the state of the franchise industry nowadays and what should franchise owners and franchisees be preparing for? During his lecture at the Multi-Unit Franchising Conference, which happened earlier this year, Darrell Johnson, CEO of Frandata, shared his thoughts and deep analysis on this matter. 

Frandata is the premier source of market intelligence data in the franchise world, across 230 industries and over 4,000 brands. In this blog post, I’ll be sharing the takeaways of this session, which was, as you can imagine, very informative and eye-opening. These are the things that franchise leaders need to be aware of and understand so that they can make better decisions in their present and future businesses.

Did you miss the past video sessions of the 2022 Multi-Unit Franchising Conference? Subscribe to our YouTube Channel to review the rest of the series!

 These are the things that franchise leaders need to...

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