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You've worked hard to build your business, and now you're contemplating
your next step. Do you focus on increasing sales at your existing
location? Do you expand? Before you make a decision, review your
operational and financial plan. (Don't have one? Get to work on
it now! A detailed plan is critical to success in any business.)
Then ask yourself, where have I succeeded? Where am I falling short?
What do I need to do to achieve my goals?
Now that the difficult questions are out on the table, you may
be surprised to learn that, for many business owners, becoming a
franchisee is the answer to building a long-term, profitable business.
"People become franchisees because they don't want to waste
time reinventing the wheel," explains John E. Shepanek, Chairman
and CEO of OCH International, the franchisor of Oil Can Henry's
quick lubes. "They want resources, and they recognize the value
in partnering with an organization that is experienced in the industry
and is staffed with people who are experts in specific areas of
the business."
Is Franchising for You?
Franchising isn't right for everyone. So, the first step is to
decide if you would be comfortable in such an arrangement.
As a franchisee, you must follow the franchisor's business formula.
While some small business owners find that this takes a little getting
used to, doing so will enable you to focus on serving your customers,
not on development and implementation of operations, training, financial,
marketing, and human resources systems.
You'll also make royalty payments to the franchisor. Think of
royalties as rental payments for use of the franchisor's established
brand and business systems, as well as access to operational, financial,
training and marketing programs that have been tested in the real
world. In fact, your sales and profits - after deducting royalties
- should be higher than they were when you were on your own. Suddenly,
royalties look like a great investment.
Becoming a franchisee makes you part of a group, which gives you
the opportunity to share ideas and learn from the experiences of
fellow franchisees.
What to Look for in a Franchisor
Clearly, there are many advantages to becoming a franchisee. The
question is, "What should you look for when reviewing your
options?"
Shepanek, who launched Oil Can Henry's franchising effort in 1987,
encourages prospective franchisees to evaluate franchisors on how
they invest in their brand and business systems, as well as the
financial, operations and training support they provide to their
franchisees. "Make sure they provide the complete package and
continue to invest in the company," he emphasizes.
Investment in the Brand
A franchisor should offer a strong brand and demonstrate that
it continues to invest in that brand.
"When it comes to buying a franchise, nothing is more important
than the brand," Shepanek emphasizes. "After all, the
brand is the essence of your company; it's what consumers think
of when they hear or see your name. A strong, well-communicated
brand will separate your company from the competition, build an
emotional relationship with your customers, and motivate purchase
decisions; it can even enable you to charge a premium for your service."
Developing, managing and expanding an effective brand is an intensive
and expensive process. Every single thing a company does - from
the look and feel of its service centers and employee uniforms to
its customer service procedures and advertising, even how employees
answer the phone - contributes to the strength, or weakness, of
that brand.
A strong brand also requires constant attention and investment.
Over the course of the past two decades, Oil Can Henry's has crafted
its respected brand through hard work, consistency and execution.
"We positioned ourselves as 'The One You Can Trust' because
we recognize that trust, not speed of service, is the most important
factor in choosing an automotive service provider," Shepanek
says. "Our brand requires an attention to detail and consistent
effort. That means our centers must be clean and inviting, our employees
must look sharp, and there must be friendly interaction with our
trained technicians throughout the service."
Investment in Marketing
A franchisor should provide its franchisees with a variety of
marketing programs designed to build the company brand and generate
sales at the center level.
"Marketing is an area where many independent business owners
fail," Shepanek stresses. "They don't proactively market
their company and, instead, react when business is down. By that
point, it may be too late." He notes that Oil Can Henry's emphasizes
the importance of marketing. As a result, franchisees enjoy promotions,
advertising materials and employee incentive programs that they
couldn't afford on their own, and unlimited access to the company's
marketing agency so they can ask for guidance.
Investment in Systems
A franchisor should have extensive operating systems in place,
and should offer training and assistance that helps franchisees
follow those systems.
"Clearly defined and detailed operating systems that cover
everything you do at your center, from opening to closing, are critical
to long-term success," explains John A. Ayres, Jr., President
and Chief Operating Officer for OCH International. "The best
system leaves nothing to chance."
Investment in Testing
A franchisor should offer an active product development and testing
program. While oil changes continue to serve as the foundation of
a quick lube's business, it is absolutely critical to seek out new
products and services that will attract customers and increase sales.
"Most independent business owners don't have time to carefully
test new products and equipment, or the sales volume to negotiate
favorable prices," says Don Weber, Director of Operations for
OCH International. "A franchisor provides value to its franchisees
by taking on these responsibilities."
Investment in the Future
A franchisor should act as a resource on financial matters, providing
franchisees with guidance tailored to specific needs. That includes
the critical, and often overwhelming, process of applying for a
business loan.
OCH International, Ayres explains, enjoys positive relationships
with a variety of lenders, which enables the company to assist franchisees
in securing favorable financing. The company also helps franchisees
with important financial systems, such as developing and implementing
financial plans and analyzing Profit & Loss statements.
Resources to Grow
For many independent business owners, becoming a franchisee is
the best way to grow their business. A franchisor invests the time
and effort to develop the brand and business systems necessary for
success. And, for franchisees, that makes "reinventing the
wheel" a thing of the past.
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