Retail Franchising 101: How to Take Advantage of ... - Shopify

Retail franchising is the method of opening a single store under the umbrella of an established name, branding, trademark, and product line. Emailaddress Password Yourstorename Createyourstore OpensinanewwindowOpensanexternalsiteOpensanexternalsiteinanewwindow Home OpenaRetailStore RetailFranchising101:HowtoTakeAdvantageofFranchiseOpportunities Whenitcomestoretailentrepreneurship,thereareseveralwaystoopenabusiness.Youcanlaunchyourownsoleproprietorship—whetherit’sanecommerceshoporbrick-and-mortarstore—andhavecompleteindependencebutlittlesupport. Oryoucantakeadvantageofoneofdozensoffranchiseopportunitiesandhavethepowerofanexistingbrandbehindyou. Retailfranchisingisthemethodofopeningasinglestore undertheumbrellaofanestablished name,branding,trademark,andproductline. Franchisebusinessesareallaroundusandareoftenthebrandsweshopatandtrustthemost. Comparedtostartingasoleproprietorship,openingafranchisecomeswithadifferentsetofrules,expectations,andskills.Inthisguide,we’llexplainhowretailfranchiseswork,exploresomeprosandconsofoperatingthistypeofretailbusiness,andprovidesomebasicstepstogettingstarted. Keepreadingtolearn: Whatisretailfranchising? Retailfranchisingbenefits Howtogetstarted Whatisretailfranchising? Retailfranchisingisamodelforexpandingabusinessanddistributinggoodsandservicesthroughalicensingrelationship. Afranchisee(you,orthelocationowner)paysaninitialfeeandongoingroyaltiestoafranchisor(thebrandor“corporate”)touseanexistingcompany’strademark,logo,andsystemofbusiness,aswellastherighttosellitsproductsandhaveconstantsupportfromthefranchisor. Intermsofentrepreneurship,franchisingistheopportunitytoworkforyourselfbutnotbyyourself. Thereare twomainformsoffranchising: Productandtradenamefranchising,whereafranchisorsellsorlicensestherighttouseaparticularcompanynameortrademark Businessformatfranchising,wherethefranchisorprovidesafullrangeofservicesandsupporttothefranchiseesuchasbusinessprocesses,inventoryordering,andmore Oftentimes,franchisebusinessesuseahybridmodelincorporatingboththeseforms. Thebenefitsofstartingafranchise Launchinga retailbusinessistoughandnotforthefaintofheart.Retailentrepreneursmustcomeupwiththebusinessidea,writethebusinessplan,secureinvestors,sourceproducts,findalocation,hireemployeesandspreadthewordthroughmarketing,advertising,andsocialmedia. There’salsoachancethatasinglemisstepcouldcausetheentirebusinesstofail.Startingabusiness alwaysinvolvessomelevelofrisk. Thisisn’ttosaythatopeningafranchisedoesn’tcomewithitsownrisks,butoneofthebenefitsofopeningafranchiseratherthanasoleproprietorshipisthehigherchanceofsuccess.Accordingto Franchising.com,herearesomeotherbenefitstoopeningaretailfranchise: Openthebusinessfaster Launchingafranchiseismuchfasterthanopeningasoleproprietorshipbusiness.AccordingtoAllBusiness,newfranchisestakearoundtwoand12monthstolaunch,dependingonthetypeofbusiness. Soleproprietorshipbusinesses,however,cantakeanywherefromacoupleofmonthstowelloverayear.AnarticleintheHoustonChronicleadvisesthatbusinessownersshouldstartplanningnolessthanayearbeforetheirproposedlaunchdate. Startsellingin-personwithShopify ShopifyPOSistheeasiestwaytounifyyoursaleschannelsandsellbothonlineandin-person.Haveallthetoolsyouneedtomanageyourbusiness,markettocustomers,andselleverywhereinoneeasy-to-understandbackoffice. EmailaddressStartfreetrial Withfranchises,abusinessmodelisalreadyinplaceandfranchisorslikelyhavetheirownguidesforfranchiseestofollow.Ifyou’relookingtoopenabusinessquickly,afranchisecouldbethewaytogo. Receivetrainingandteamsupport Thefranchiseeandtheemployeestheyhirecanrelyontried-and-truetrainingandongoingsupport. Franchisingisateameffort,sofranchisorsknowthatinorderfortheircompanyandbrandtomaintainasolidreputation,it’simportanttoensurethatalloftheirfranchisestoresoperateaccordingtoacertainstandard.Mostfranchisorshavefieldsupportrepresentativesthathelpfranchiseesobtaintrainingbeyondoperational,technical,andfinancialaspectstorunthebusiness. Thismightincludehowtohireandmanageemployeesaswellashowtobuildcommunityrelationships.Don’tbeshyaboutaskingforhelpfromyourfranchisor.They’retheretonotonlyhelpyoufixrookiemistakes,buttoavoidthemalltogether. Afterall,yoursuccessistheirsuccess. Receiveassistancewhenscoutinglocations Scoutingoutaretaillocation canbeoneofthetrickiestpartsofretail.Youwantanareathatofferssomehealthycompetitionbutisn’tover-saturatedwithsimilarbusinesses. Youmayneedtotakeintoconsiderationhowmuchpedestriantrafficaneighborhoodattracts,andperhapsthebiggestconcerniswhattherentcostsareinagivenarea. Often,establishedfranchiseswillprovideassistanceinfindinganoptimalsite.Afterall,they’vealreadydonetheirresearchandhaveaproventrackrecordofwhatareasworkbestfortheirbusiness. Gainbrandrecognition Youlaunchanewretailbusinessandknowyouofferagreatproduct,buthowdoesthepublicknow?Ittakesyearsforentrepreneurstobuildupareputationandasolidcustomerbase,butafranchisebusinessalreadyhasone.Openingafranchisecomeswiththesellingpowerofaknownbrand. So,whenpotentialcustomersseeyournewfranchiselocation,theyalreadyhaveanawarenessofthebrandandproductsandknowexactlywhattoexpect. Benefitfromgrouppurchasingpower Anotherbenefitthatmightnotbeasobvioustobusinessownersisthelowercostsassociatedwithgrouppurchasing. Franchisesrequirealloftheirstorestosellthesameorsimilarproducts,andtheonlywayforthemtoguaranteethatistoenablealloftheirfranchiseestopurchasefromthesamelot. Grouppurchasingpowercandrasticallyreducewarehousecostsbecauseyourcompanyisabletobuy100,000unitsratherthan100.Forexample,theaveragecoffeeshopownermightpurchasecoffeecupsforaround.40perunit,whileacoffeeshopthat’spartofafranchisemaysourcethesamecoffeecupforaslowas.10perunitthankstogrouppurchasingpower. Nearlyallmajorfranchises,includingMcDonalds,Dunkin’Donuts,andDickey’sBarbecuePit,offertheirfranchiseesgrouppurchasingbenefits. Benefitfromregionalandnationaladvertising Smallretailbusinessesoftengaincustomersthroughwordofmouth,socialmedia,perhapswiththehelpofbloggersandsocialinfluencers,andiftheycanaffordit,advertisementsinlocalnewspapersandmagazines. Gettingthewordoutaboutyourbusinesscanbecostly,butbeingpartofafranchisebusinessmeansbenefitingfromregionalandnationaladvertisingcampaigns. Onthelocallevel,franchisorsmighthelpdeveloplocalmarketingprogramsthroughacooperativemarketingfund,wherefranchiseescan“buyin”usingtheirowngrossincome. Thismightincludesalesanddealsthatareonlyavailableatstoreswithinanarea,orspecialeventsthattakeplaceatspecificlocations.Whilenationaladvertisingincreasesbrandawareness,localmarketingdrivescustomersdirectlytoyourbusiness. Receivepeersupport Perhapsthebiggestbenefittoopeningafranchiseishavinganetworkoffellowfranchiseesthatcanprovideadviceandmoralsupport.Becauseyou’realloperatingunderthesamebrand,thesuccessofonefranchiseehelpsbenefittherestofitspeers.You’llknoweachotherthroughthecompanynetwork,maybeseeeachotheratannualconference,andwon’tfeelasmuchlikeyou’redoingitalone. Forfranchisors,thelistofbenefitsmaynotbeaslong,butfranchisingyourbusinessdoescomewithsomerewards.Forone,franchisingmakesexpandingyourbusinessandbrandmuchfasterthandoingitalone.You’reusingotherpeople’smoney,time,andefforttoexpandmorerapidly,growingbrandrecognition,revenue,andthenumberofproductsyoucansell.Also,startupfeesandongoingroyaltieshelpfundheadquartercosts,thehiringandtrainingofnewemployees,andlarge-scaleadvertisingcampaigns. Howtogetstartedwithretailfranchising Similartostartinganyretailbusiness,thefirstthingisthinkingaboutwhattypeofcompanyyouwanttoown.Isitafast-foodoperationorasmalldrycleaningshop?Doyouwanttosellclothingandshoes,orperhapsyourexpertiseisinfurnitureandappliances?Realizingwhereyourtalents,interests,andskillslieisthefirstitemtoconsider. You’llalsowanttocarefullystudywhattypesofbusinessesareindemandintheareawhereyoureside.Sure,youmightwanttoopenafrozenyogurtshop,butifit’scoldandrainyformostoftheyear,asouporhotsandwichbusinessmightbesmarter. Costisperhapsthemostvitalitemtothinkabout.Howmuchdoyoureallyhavetoinvest?Isit$5,000,$50,000,or$500,000?Dependingonthesizeandscopeoftheestablishedretailfranchise,youmaynotbeabletoaffordtheinitialfranchisingcostsoflicensingcertainbrands. Othercoststhatareimportanttoconsiderincludethefollowing: Legalfeesforgoingoverthebusinesspaperworkandactuallybuyingalicensedbrand Buildingoutastore,includingfurniture,lighting,electricity,cashregisters,phoneandInternetcosts,insurance,andequipment Purchasingyourinventory Hiringemployees Payingforrent Outdoorandindoorstoresignage Anumberofwebsitesofferdatabasesofcompaniesthatofferfranchiseopportunities.Thisisagoodplacetogetstartedifyou’rejuststartingtobrainstormthetypeofbusinessyouwanttoopen. Manyofthewebsitesoffercriticalinformationsuchastherequiredfinancialinvestmentandbasicoperatingcosts,aswellasthesizeofthefranchise,itshistory,andwhatcategoryofretailitfitsinto. Herearesomewebsitestogetyoustartedonyoursearch: Franchising.com BetheBoss CanadaFranchiseOpportunities LookforaFranchise CanadaFranchiseAssociation YoucanalsocheckoutindividualwebsitesoflargecorporationsthathavefranchisesandreadtheirfranchiseinquiryorFAQpagestohelpyougaininsightintothecompany.Connectingwithyourlocalgroupofentrepreneursandtalkingtobusinessownersthathavetakenthefranchisingrouteisalsohelpful. Isretailfranchisingrightforyou? Retailfranchisingprovidesentrepreneurstheexperienceofowningabusinesswithoutsomeofthemistakesstartupsoftenmake.Byusingaprovensystemofoperations,yourbusinessismuchmoreestablishedrightoffthebatandyoucanrelyonsupportandadvicefromthefranchisorandotherfranchiseestohelpyouthroughtoughtimes. Forthosewhoenjoytheindependenceofentrepreneurshipbutthriveonbeingateamplayer,retailfranchisingcanbeatrulyrewardingexperience. GetstartedwithShopifyPOS OnlyShopifygivesyouallthetoolsyouneedtomanageyourbusiness,markettocustomers,andselleverywhereinoneplace.Unifyin-storeandonlinesalestoday. EmailaddressStartfreetrial Abouttheauthor AllieDecker AllieDeckerisaSeniorContentMarketingManageratShopify.Whenshe'snotwriting,youcanfindherreading,traveling,playingthepiano,orrewatchingSchitt'sCreek. Email Pinterest Facebook Twitter LinkedIn Topics: OpenaRetailStore GrowyourretailbusinessGetexclusivebehind-the-scenesmerchantstories,industrytrends,andtipsforcreatingstandoutbrick-and-mortarexperiences.EmailaddressSubscribe Nocharge.Unsubscribeanytime. Thanksforsubscribing. You’llstartreceivingfreetipsandresourcessoon. 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