Exclusive to Al Watan Daily
Monday,14 March 2011
By : Dr. John P. Hayes
KUWAIT: People (and companies) buy franchises for many different reasons, and unfortunately, often for the wrong reasons. For example, it's not a good idea to buy a franchise to replace a job, but many people do so. Others buy a franchise because their friends or competitors did so, and they don't want to be left out. Others buy franchises because they want to be entrepreneurial but without actually taking the risks of an entrepreneur. All of these are 'emotional' rather than 'logical' reasons, and they often lead to failed businesses.
For every wrong reason for buying a franchise, there's a logical, right reason. Here are three reasons:
Do it for the money!
1. Buy a franchise to build a profitable business. Plan to invest money to eventually earn more money. While the 'hottest' brand in America or Europe may appeal (emotionally) to you, step back and (logically) do some analysis. Be sure the brand makes sense for Kuwait. Is there a market for the brand? Are there any barriers, i.e. government regulations, importing restrictions, product costs, etc. to developing the business? Once developed, will the business attract potential buyers who will pay generously to acquire products or services from you?
2. Buy a franchise because you are compatible with franchising. People like franchising because it appears to be entrepreneurial, again, emotional. However, real entrepreneurs - people who freely make all of their own decisions about how to build, promote, and operate a business - are not attracted to franchising because it comes with too many restrictions.
Understand the restrictions
As a franchisee, you will not have the authority to make all the decisions about your business. The franchisor makes many decisions for you, such as where and when you can build a new location, and from whom you may purchase materials and supplies. Even the content of your Web site will be controlled by the franchisor.
As an entrepreneur, you have the right to make any decision you want. As a franchisee, you are restricted to following the franchisor's directions. To that, many people say, "Hooray!" They're satisfied being quasi-entrepreneurial, and that makes them compatible with franchising. The question is, are you?
Build a bigger business, faster
Third reason is to buy a franchise in order to accelerate your business plan. When you don't have to figure out every nuance of a business, including what to sell, how to sell it, and how to capture and keep a customer base, you can build a business faster. Since the franchisor has already figured out most of the nuances, you can concentrate on creating and implementing a development plan. A good franchisor will help you create that plan.
And that's yet another reason for buying a franchise: Gaining the trust and support of a (often) larger company that wants you to succeed. How do you find that company? We will discuss that business matter in a future edition of this column.
Dr. John P. Hayes, a professor at Gulf University for Science & Technology (GUST) in Kuwait, is a 30-year franchise veteran who coaches franchisors and franchisees. He's worked with more than 100 franchise concepts. Got a question for him? Send it to: questions@hayesworldwide.com.
Monday,14 March 2011
By : Dr. John P. Hayes
KUWAIT: People (and companies) buy franchises for many different reasons, and unfortunately, often for the wrong reasons. For example, it's not a good idea to buy a franchise to replace a job, but many people do so. Others buy a franchise because their friends or competitors did so, and they don't want to be left out. Others buy franchises because they want to be entrepreneurial but without actually taking the risks of an entrepreneur. All of these are 'emotional' rather than 'logical' reasons, and they often lead to failed businesses.
For every wrong reason for buying a franchise, there's a logical, right reason. Here are three reasons:
Do it for the money!
1. Buy a franchise to build a profitable business. Plan to invest money to eventually earn more money. While the 'hottest' brand in America or Europe may appeal (emotionally) to you, step back and (logically) do some analysis. Be sure the brand makes sense for Kuwait. Is there a market for the brand? Are there any barriers, i.e. government regulations, importing restrictions, product costs, etc. to developing the business? Once developed, will the business attract potential buyers who will pay generously to acquire products or services from you?
2. Buy a franchise because you are compatible with franchising. People like franchising because it appears to be entrepreneurial, again, emotional. However, real entrepreneurs - people who freely make all of their own decisions about how to build, promote, and operate a business - are not attracted to franchising because it comes with too many restrictions.
Understand the restrictions
As a franchisee, you will not have the authority to make all the decisions about your business. The franchisor makes many decisions for you, such as where and when you can build a new location, and from whom you may purchase materials and supplies. Even the content of your Web site will be controlled by the franchisor.
As an entrepreneur, you have the right to make any decision you want. As a franchisee, you are restricted to following the franchisor's directions. To that, many people say, "Hooray!" They're satisfied being quasi-entrepreneurial, and that makes them compatible with franchising. The question is, are you?
Build a bigger business, faster
Third reason is to buy a franchise in order to accelerate your business plan. When you don't have to figure out every nuance of a business, including what to sell, how to sell it, and how to capture and keep a customer base, you can build a business faster. Since the franchisor has already figured out most of the nuances, you can concentrate on creating and implementing a development plan. A good franchisor will help you create that plan.
And that's yet another reason for buying a franchise: Gaining the trust and support of a (often) larger company that wants you to succeed. How do you find that company? We will discuss that business matter in a future edition of this column.
Dr. John P. Hayes, a professor at Gulf University for Science & Technology (GUST) in Kuwait, is a 30-year franchise veteran who coaches franchisors and franchisees. He's worked with more than 100 franchise concepts. Got a question for him? Send it to: questions@hayesworldwide.com.
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