It is not as easy to find franchising now as it was a few years ago, and with the current economic state, it may not be for some time. There are still options available to those who seek out funding to purchase their franchises, however, before doing so, it is absolutely vital to have your finances in order. Once you have taken a long hard look at both your assets and your liabilities, then it is time to seek out that funding. Here, we’ll go into a few examples of how to finance your franchise.

Usually, if you do have decent credit and a bit of collateral to put towards the loan, a conventional loan may still yet be an option for some. In order to obtain a commercial loan, however, you will definitely need to have your finances in order as well as being able to make the lender realize what a great opportunity the franchise, and your ability to manage your own branch of it are.

Some franchise companies finance from within, but it does not happen often. Finding out if your franchise company will offer this sort of loan is fairly easy, as it is usually contained in the Franchise Disclosure Document. Usually, there has to be a solid reason that the franchisor would lend you the capital- perhaps potential gains in a new market or if you are very experienced. In order to raise your chances of being able to use this option, make sure that you are strongly qualified and can outline that to the franchisor. If this isn’t an option, sometimes they are able to refer potential franchisees to lenders who may be able to help.

There are usually options in grants or through the various small business programs. If you are ready to do paperwork, you will find that the time and effort just may work out for you. The state government often also offers help for small businesses or franchises, as well as the small business organizations in various areas. The actual Small Business Association does not lend to borrowers, however, they do guarantee parts of loans made by those lenders who they approve and you may find that there is a loan program that works for you. If you find a franchise that is approved by the SBA, you have a much better chance at this option and usually this option is much more timely and simple.

Another option is using a home equity loan, or borrowing against your house. If you have enough equity in your home, this can be a good source of funding for your franchise. However, the risk here is that you are essentially risking your home. If you make sure that you are able to get with a franchise that shows potential, this can lessen the risk but it is always there, so you have to be very careful. These are a few different ways that you can obtain funding for your franchise, there are others out there available if you do your homework, but these are the ones that most people find the greatest amount of success in.

There are many great benefits to franchising, and that’s something that most people would agree on. However, many people, while doing great research and seriously looking into the franchises that interest them, never sit down to ask themselves about their own goals. There are a number of things that come in to play in order to make for a successful franchisee, and quite a few traits that make a world of difference. Apart from being ready and having the capital, there are some other, deeper questions that you may want to ask yourself before you decide that franchising is right for you.

One of the biggest problems that people come up against in franchising is they do not really realize that with the benefits of being able to use the brand name, and the proven business system- there’s the rub. Using a proven system of business, you have to adhere to someone else’s rules. While this is actually a huge part of what makes franchising such a great option, it’s not for everyone. If you find that you have difficulty sticking to a routine system of doing things, it may be that franchising is not for you.

Do you have issues with sales? If you feel like being your own boss will mean that you don’t have to work with sales, you may not realize how vital being an adequate salesperson is to any business. Being able to knock on some doors and get things started is a very important part of being a business owner, especially in the early days. Depending on the franchise that you go into, sales may be a much bigger aspect of the overall business than you think and it is a good thing to bear in mind.

Another issue is not so much one of personality, but one of finance. Many find that they did not plan ahead and end up in a world of trouble on this one. You may have enough to invest, but do you have enough to support yourself during the start up period? No matter how profitable a franchise may be, or how profitable it may claim to be, having a cushion set aside is an intelligent thing to do. Being absolutely sure that you have this in order makes sure that everything goes smoothly and you are not struggling.

Lastly, if you have not talked to people who are involved in franchises in general, give it a shot. More often than not they are happy to relay their experiences and this may make you feel a bit better about your choice- but it may also change your mind. Being able to decide before you do a great deal of research on franchises if you really feel that is the option that would best suit both you and your lifestyle is an important step that some miss. All too often, the rush of being able to have their own business comes into play and first making an assessment of yourself, your family, your lifestyle and your overall goals and dreams may make a big difference in where you take it.

Never underestimate the value of a great leader, when it comes to restaurant management. This is actually a critical element to any sort of management position, and there are a few traits of truly effective managers that make for a better overall quality workplace. Being able to exhibit these traits to your employees makes for a greater confidence in your abilities, but also, this helps the customer to feel that the management is on their side, and cares about their experience. Being a great manager is more than just being able to make a schedule or take care of a dissatisfied customer. There is much more to it than that, and these traits are important.

First and foremost, management has to be openly communicable with those in their employ. Unclear instruction or inadequate communication can lead to many problems, and most of which a loss in productivity. Changes in the system, changes in the way that things are done need to be communicated immediately, and conveyed in an understandable way. Vagueness or rushing to express a given demand usually will result in either a job not done correctly, or a complete do over- this is to be avoided. When it comes to training, being open and receptive is also good, and a back and forth with regard to communication can enable a much smoother workplace environment. Not only is communicating change important, but acknowledging the hard work and effort of the employees, as well. Food service of any kind can be a rather high stress work environment, and being able to encourage the staff helps a great deal more than many people realize.

Secondly, when it comes to organization, an effective restaurant manager knows what’s going on in his or her location at all times. There is not anything that the management should be unclear on, and this sort of ties into the first area- because communication being open enables a greater understanding of issues sometimes even before they arise. If the management team is not in synch, it makes for an uncertainty in the workplace, or opens the door to manipulations. Being careful to ensure that everyone is on the same page and communicating that well is vital to the success of a restaurant management team. This also has bearing on numbers, as it is really important that any member of a management team be able to keep not only accurate records, but organize all of this in a way that makes sense to others.

Lastly, making sure that everything is balanced is important. What discipline was handed out to one employee for an infraction, has to be to the next who causes the same issue. When looking at situations and analyzing problems, it is a must to be able to see all sides of any given problem and come to an intelligent resolution that does not breed any sort of animosity. Fairness in all things is important and being able to balance these things will make for a much more efficient and effective management team.

When economic times are good the food-service industry can be pretty brutal in its competitive nature.  When the economy hits a slump, that competition can become downright bloody.  Never before has this been more apparent than in recent times.

As consumers cut back their spending, restaurant owners become increasingly frustrated in trying to bolster flagging profits.  Many continue to look for better ways to do business, while others collapse and shut their doors.  Others, in their frustration, may even resort to less than scrupulous marketing tactics.

I drive past a prime example of this latter case on a regular bases.  In area in which I reside there are two well known fast-food hamburger chains on either side of the street, directly across from one another.  One of the franchises is from a slightly more successful brand and has weathered the economic decline fairly well.  The other seems to be declining rather rapidly.

As the frustration and panic of the owner of the less popular franchise escalates, there has been a degenerative quality to the blurbs on the franchise’s marquee.  The statements began as vague innuendo about “the other guy across the street”.  Over time, as the less popular franchise’s parking lot become increasingly less crowded and the “other guy’s” parking lot remained fairly consistently packed, the adds got worse.  Before all was said and done, the owner of the less popular franchise had accused the “other guy” of almost every conceivable crime against food, taste and humanity in the book (and a few I’d never considered before).

Obviously, this rather aggressive and distasteful tactic was ineffective.  The “other guy” continued to prosper while the less popular franchise was forced to eventually shut its doors to the public.  What made the difference and why does mud-slinging fail?

The difference, quite simply, is value.  The “other guy” is well known for providing a substantial value of food per dollar.  In fact, they have an entire section of their menu dedicated to just such value.

While the less popular franchise across the street was engaging in low blows, was the more popular franchise reciprocating?  Not at all.  The owner of the more successful franchise was using his marquee to consistently promote the franchise’s value items and special promotions.

The community honestly didn’t care what was said about the franchise on the competitor’s sign.  What the community did care about was getting the best value for their already stretched tight dollar.  This is exemplary of where a successful restaurateur needs to turn his or her focus when the economy begins to slip.

When people are scaling back their budgets and cutting back on how much they dine out, it is no time to go on a campaign against what the other guy does or does not do.  Rather it is time to look internally and start focusing on giving the public what they want most:  more bang for the buck.  Perhaps if the failed businessman had realized that the “other guy’s” customers were there for the prices rather than how much better the food was, he or she would have altered their tactic and promoted their own value items.  If so, then that franchise might still be open today.

For a franchise to succeed, the franchise owner cannot simply rely on the widespread marketing campaigns carried out by the franchisor.  Certainly those advertising campaigns do help the individual franchisee in most instances, but there are other factors that must be overcome within any given community.  The franchise owner may start his or her business with a certain degree of brand recognition and acceptance, but he or she still faces the task of raising community support for the new business.

Local Merchant Antagonism

The need for the franchise to thoroughly establish itself and gain community acceptance is especially relevant in smaller, rural areas.  In these locations there is a greater trend toward viewing franchises as “outsider” business that has come in to take business from local merchants and to hurt the community.  For the most part, those who espouse such views fail to consider whether or not the franchise owner is actually someone local, or even to view what the franchise may be bringing into the community – such as commerce and jobs.

It falls to the franchisee to remind the community that just because his or her business carries a brand name does not mean that it is not a valuable part of the local business community.  Establishing a positive image means more than weathering the storm of local resentment and hoping that, in time, the business will be accepted.  Rather, it requires a proactive stance on the part of the franchise owner; a commitment to becoming involved in the community in a positive and beneficial way.

Offsetting Negative Marketing

Sometimes a franchise owner may find that the marketing strategies of his or her franchisor have actually worked against his or her franchise.  This is a rarity, but it does happen.  Franchisors, seeking to benefit the majority of franchises, may advertise in manners that do not appeal in all localities and may even create a negative image of the franchise on a local level.

In these instances, the franchise owner may find, even if a good rapport with the community has already been established, that he or she must redouble the efforts of the franchise to stay connected with the community.  The franchise owner should distance his or her franchise from the national marketing campaign as much as possible.  If they are required to display ads that might be perceived as distasteful within their communities, franchise owners would do well to consult with the franchising organization and see if alternative marketing might be acceptable.  The individual franchise owner must find ways to very publicly embrace local values, even if the franchising organization does not.

Becoming Visible

As with most things, the public is inclined to believe what they hear until given reason to think otherwise.  Therefore, in areas where franchises are seen as antagonistic to the business community, or where marketing campaigns have presented the franchise as antagonistic to the values of the community, the franchisee must find ways to change his or her franchise’s individual presentation.

This can only be accomplished through community action.  By becoming an active and contributing part of the community and by supporting community action, a franchise owner can overcome preconceived notions or misperceptions about the franchise and become a thriving part of the community.

It has been said, on more than one occasion, that what is good for the franchisee is good for the franchisor.  This is certainly true in a very general sense.  After all, the more profitable the individual franchises become, the more alluring the franchisor becomes in the eyes of new investors.  Since each new franchise is a source of royalties and other income for the franchising company, the franchisor has a steep interest in boosting its appeal by boosting the success of its existing franchises.

As we say, though, this mutually beneficial arrangement is only true in the broadest sense.  When taken to the level of the individual franchise owner’s relationship with the franchisor, the truth may be somewhat different.  While the franchisor may, overall, act in the best interest of the majority of franchisees, the individual franchisee may, at times, find him or herself at odds with the franchising company.  This can be most easily seen in the area of marketing.

Marketing Strategy

As stated, the franchisor’s aim in marketing campaigns is to benefit the broadest range of its franchises.  This is not a light undertaking, and many franchisors expend a great amount of money and energy into marketing research to determine just what tactics will be most likely to succeed for the greatest number of franchisees.  On the franchisees’ end, there is probably little or no involvement into the process of developing marketing strategy.  This is simply one of the cost of franchising for the individual owner.

Marketing Conflict

Conflict arises when the marketing techniques hit upon by the franchisor as most likely to benefit the greatest number of franchises actually work against a percentage of its franchise owners.  Quite simply, what plays well in one region may not be well received in another.  In these instances, the goals of the franchisor come into direct conflict with those of a small group within their organization.

The CKE Example

A rather prominent example of this can be seen in advertising campaign carried out by CKE to promote business in the franchisor’s Carl’s Jr. and Hardee’s fast-food chains.  CKE, deeming that the child/parent market was fairly well cornered by competitors such as McDonalds, decided to target the less sought after demographic (in the fast-food industry) of young men.  To accomplish this aim, they ran a series of advertisements featuring prominent female celebrities in risqué outfits and scenarios, designed to appeal to the average young male.

While these advertisements played remarkably well in most areas and many of the franchise locations saw the anticipated boom in young male customers, some franchises actually suffered from the ad campaign.  In the south and in other typically conservative areas the ads were not received well and many franchisees in those areas found themselves under attack rather than raking in profits.  So, though the campaigns could be construed as an overall success for the Carl’s Jr. and Hardee’s brands, a number of franchise owners saw their business decline because of them.  However, such incidents are not the rule, but rather are the exception to it.

At the heart of franchising is the root concept of taking a business model that has proven effective and distributing it so that other aspiring business owners can reproduce it.  For a franchise to be successful, it must mirror the bulk of the key aspects of the original company, or reflect the changes implemented by the franchisor across all franchises.  This requires uniformity, not just of appearance and procedure but of each franchise’s products and/or services.

To achieve a uniformity of products or services across a wide geographical range of franchises, a franchisor may place certain restrictions on franchise owners regarding acceptable sources of supplies.  This control may range from strict guidelines as to what vendors may be used, to simple guidelines regarding product quality.  There are a number of basic models employed by franchisors to ensure uniformity and any, or a combination of several types, may be used by any given franchisor.

Unrestrictive

In some instances a franchisor may completely forgo setting restrictions on what vendors or distributors its franchisees may use.  Rather, the franchisor will establish guidelines concerning the quality of product used and guidelines for the products and services provided by the franchisee.  The franchise is free to pursue its own supply sources, so long as the standards of the franchisor are upheld.  This model, however, is relatively uncommon.

Franchisor as Supplier

A slightly more common model of supply and distribution features the franchising organization playing the role of supplier and distributor for its franchises.  Though this is the most effective means of ensuring absolute uniformity across all franchises, it is really only an effective approach for relatively small franchising organizations.  Larger franchisors attempting to fill the role of supplier could quickly find that the bulk of the company’s resources are wrapped up in the supply and distribution end and the focus is taken away from franchise development.

Approved Vendors

For larger franchising organizations, the approved vendor-distributor model often works best.  This method allows a greater control of uniformity than the non-restrictive model, but does not put the burden of supply and distribution on the franchisor.  Instead, the franchisor seeks out vendors that meet the quality standards of the franchisor and franchisees are contractually obligated to obtain supplies only from these approved vendors and distributors.

Purchasing Cooperatives

Many well established franchisors may choose to allow and encourage their franchisees to establish purchasing cooperatives in conjunction with obtaining supplies from approved vendors.  As with the above mentioned model, the franchisor has final say over which vendors and distributors the franchise owners may use for obtaining supplies.  However, under this model the purchasing cooperative of franchisees bargains collectively, on behalf of franchisees, to purchase supplies in bulk.

By this method, franchisees are able to enjoy greater purchasing power and can obtain supplies at reduced prices.  Franchisees purchase their supplies directly through the cooperative, paying into the cooperative rather than to the individual vendors.  The purchasing cooperative can then oversee the distribution, or bargain for distribution via the supplier.

As a restaurant owner you are undoubtedly all too familiar with the ongoing struggle to find ways to contain and reduce costs in your business.  Though cost management is always an important aspect of the success of your business, it is becomes even more important when the economy begins to suffer as it has over the past few years.  As more and more restaurants begin shutting their doors for good, it becomes even more important to be smart about the way that we run our businesses so as to avoid joining those who have failed.

When every single penny counts you cannot afford to leave any stone unturned in your quest to maximize profits by reducing costs.  There are a number of cost management measures that many fail to notice.  One of these lies in the area of insurance.

Insurance is an absolute necessity.  Not only are you legally obligated to carry certain coverages, but it is just good sense to protect yourself and your business.  Though we all hope that we will never have cause to utilize those costly plans, it is certainly an instance of “better to have it and not need it than to need it and not have it”.  There are ways to reduce your insurance cost without sacrificing the amount of coverage that you carry, though.

One of the most obvious ways to drop the cost of the insurance you carry as a business owner is to raise your premiums.  You can potentially save a lot of money this way, especially if you are fortunate enough to not have to file claims.  The best way to protect yourself if you choose to do this is to set aside the difference between what you would be paying for a lower deductible and what you pay for the higher deductible.  By setting aside money in this way you can cushion yourself should you find yourself needing to pay out of pocket.

Of course, should you find yourself not needing to cover those deductibles, then so much the better.  The best way to do this is to crack down on safety issues in your establishment.  Knuckling down about safety in your restaurant can work in your favor in several ways.

Most obviously, if you are doing everything in your power to prevent accidents from occurring in your place of business then you stand a much better chance of avoiding having to pay out those costly deductibles.  This means that the money you set back, which you saved from your reduced insurance payments, is money for your business – a net gain.

Improved safety works in favor of your business in another way, though.  Businesses that report few or no workplace injuries become eligible for further reductions in the cost of their insurance policies.  In fact, by just reporting less than average workplace injury claims you may be able to save as much as 25% off of your insurance premiums.

Finally, shop around for insurance often.  At least once a year, when it comes time to renew, take a look around and see who is offering the best rates.  Never make the mistake of simply renewing with your current company just because they are who you have always used.

At some point in almost every young person’s life, usually fairly earlier into their work career, they set their sights on a leadership position within whatever organization they have gained employment in.  While restaurant management may offer its own rewards, it isn’t a task that just anyone is well suited for.  Successfully managing a restaurant requires the ability to think on your feet and to multi-task to a high degree.

It is because the duties of a restaurant manager are so stringent that leadership positions within a restaurant are often broken down into a number of subsets, such as assistant managers, crew leads and the like.  In many large restaurants the kitchen may operate under the auspices of an executive chef who undertakes most of the duties of managing kitchen operations while a floor manager supervises the servers and greeters.  However, at the top there must always be one main supervisor holding the totality of operations together into a fluid and cohesive whole.

At the very core of anyone with an eye on advancing through the ranks of restaurant management must be a strong sense of customer service and duty to the public.  The successful manager understands that his or her first duty is always to the customer.  This is often displayed by the most successful managers, not in how they deal with customer complaints or concerns, but in their willingness to get out there with the rest of the staff and assist customers on an especially busy night.  At heart, all good restaurant managers are still servers or cooks at heart.

It is for this reason that many restaurants choose to promote from in house.  Anyone who has never filled the entry level roles in a dining establishment could never hope to have the in depth understanding of the intricacies of restaurant operations coupled with the true spirit of service.  It is almost a universal truth that the employee who worked his or her way up from the kitchen to the office will do a better job than a party brought in from the outside.

Since the best managers generally come from in house, it falls to existing management to be able to spot potential, initiative and a natural bent toward leadership within the ranks.  Employees demonstrating these capacities should be encouraged to develop them and placed into leadership roles as soon as they are ready.  The shift lead of today is the outstanding manager of tomorrow.
Of those traits listed above, initiative is probably the one most often overlooked or left uncultivated.  A decent manager will ensure that all of the day-to-day duties of a restaurant are carried out, that employees are performing up to expectation and that customer issues are handled appropriately.  That is simply the baseline that defines an adequate manager.  The truly good manager, the one you want running the show in your absence, is the one who shows initiative.

The employee with initiative doesn’t ask, “Did I do an adequate job?”  The employee with initiative doesn’t even ask, “Did I do the best job I could do?”  No, the employee who will make a great manager some day is the one that asks, “How could this job be done more efficiently and effectively?”  It is this sort of employee that, when promoted, will begin to look for ways to improve the restaurant and make it more profitable.

There has been a pretty popular movement in recent years, especially in more rural areas, to support local business.  Certainly this is a very noble aim and one that should be supported by anyone who wants to see their community prosper.  However, in the push to support local business, many franchise owners are thrown under the bus of public opinion.
To say that franchises are not local business is misleading and misguided at best.  In fact, such assertions are patently false in a great majority of cases.  Just because a franchise’s franchising organization may be located in a far distant city says very little about where the profits from that business are going.
The fact of the matter is, well over half of individuals who decide to purchase a franchise go into business within the community in which they live.  This means that the franchise owner is, in fact, local business.  However, if this simple truth is not sufficient to quiet those who would see franchises driven out of communities simply because they pay a small percentage of their profits to a corporate office for use of a brand name, then more facts are warranted in support of franchises as local businesses.
Beyond being owned by individuals from the communities in which they operate, franchises also draw their workforce from that same community.  What may be perceived as taking away business from one local businessman is simply providing business for another, as well as providing jobs for many others within the community.  Because franchises are more likely to succeed than independent businesses, anyway, the jobs of those employed by these franchises can be viewed as more secure as well.
Furthermore, the simple fact that a franchise operates under a corporate logo does not mean that they, in some form or fashion, necessarily exist outside of the normal business community within an area.  Though a franchisor may establish regulations regarding the quality of goods purchased by its franchisees, or may even establish guidelines about specific vendors and suppliers that may be used, in many cases those vendors and suppliers deemed acceptable fall within the locale of the franchise.
For a franchisor to insist that franchisee use products from across the country when a vendor within the region may be just as well suited is hardly sensible.  This is especially true in the cases of fast-food franchises, where a high degree of product freshness is necessary.  Therefore, to assume that franchises are eschewing the services and products of other local vendors is not true in all cases and should not be used as a blanket accusation against franchising as a whole.
The simple truth is that franchises do represent, more often than not, local business.  Yes, the name may be national.  However, the owner, the employees and even the supplies are most often local.  The franchise bolsters the economy of the community and the franchisee most likely keeps his or her money in the same bank that supplied the loan to establish the franchise.  Franchises are every bit as much a part of the communities in which the operate as the most provincial “Mom and Pop” type of establishment.

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