How Do I Find And Choose A Good Franchise Business Opportunity
What does it take to strike at gold with a franchise?
Fred Deluca, a 17 year old boy from Brooklyn was looking for a business to start. While trying to earn money for college to become a medical doctor, he stumbled into a business opportunity. With just a $1,000 loan from a friend, Dr. Peter Buck, in 1965 he patched together his first sandwich shop in Bridgeport, Connecticut that would become a franchise business opportunity.
The very first day DeLuca opened his doors, he had spent the better part of it out behind the building doing the tedious work of cutting vegetables with a three dollar knife on an old sheet of plywood. “There’s nothing in that store that would pass muster today,” he mentioned looking back fondly on his beginnings.
From that one store called Pete’s Super Submarines, Deluca eventually changed the business’ name to Subway Restaurants.
Sound familiar?
Over forty years later Deluca has transitioned this small store into a colossal company with nearly 28,000 franchises in 86 countries including former socialist and communist countries like Russia. Subway produces over $9 billion in annual sales.
The way that a franchise works is that a franchiser like Deluca gives permission for the proven methods and trademarks of their businesses to franchisees for a fee in return and also a percentage of the monthly sales. Franchising is a business model used in more than 70 industries like TCBY, McDonalds, Mrs. Fields, ReMax and Starbucks. The contractual agreements will usually last between five to twenty years, with any premature terminations of contracts leading to serious consequences for the franchisee
There are many franchise business opportunities that you can look at out there and it can become overwhelming to figure out. The two factors that can help you in determining what support will you receive and direction the business is going into.
Deluca and his ownership are very motivated and have exceeded their own expectations because of how focused they are on their lofty goals and laid out plans. He said, “I say to [new development agents], ‘Ok, you must become the biggest fast-food chain in your country,”
Subway is able to duplicate their process because they make it so easy that even people with little business experience and new to the United States can operate and manage the store well. They provide thorough corporate help with training and marketing assistance to help new franchisees and gives them a foundation for success that they would make it hard not to succeed.
Businesses for which franchises work well like Subway have these characteristics that you should keep your eyes open to:
- a good track record of profitability
- built around a unique concept
- have broad geographic appeal
- relatively easy to operate
- inexpensive to operate
- easy to duplicate
Other determining factors you should figure out include competition and the demand for the product in the market. It is important to find out the reputation of the company and if it is an established business.
Subway is so well branded thanks to the Jared commercials and also critically acclaimed by peers. Subway won an unprecedented 15 times in 20 years as the number one franchise opportunity for Entrepreneur magazine.
“Our job in the next five years is to build an international infrastructure,” says DeLuca. “And that’s done one store, one person at a time.”
Deluca understands the significance of the customer and listening to what they want instead of trying to tell them or guess what they desire. This is important for any franchise business that you make sure they are providing value.
Subway does a great job of empowering franchisees by letting them have a level of power to their business and trusting that they would get a better idea of their customer’s pulse instead of corporate heads. For instance, two slots are kept open on each store’s menu board for individual franchisee creations.
The brilliance of this is that Subway can now go to nontraditional locations as they have done with over 6,000 Subway Restaurants. You will find them in random places such as Wal-Mart stores, medical facilities, convenience stores, high schools, and universities.
One of the biggest hurdles of a franchise business is the capital investment you will need. Often with franchises that are more secure , financial institutions will be more willing to offer you financial support when you are working under the blanket of a proven brand.
For Subway they have pretty cheap initial franchising expenses that will change based on a store’s market location and how big it is. Usually it will range from around $94,000 to $223,000 which is a lot lower than their competition.
Deluca wanted to make it affordable for immigrants and give lower income families an opportunity that they would not have other wise. That is why franchisees also get corporate financing and benefit from Subway’s food relationships and other necessary supplies.
I would suggest that you get an accountant to study the financial needs of the business that you are interested in. Make sure that they provide you with a disclosure statement because this will discuss your financial obligations you will have for the business.
If you are having trouble it might be worth your time to get a broker if you are interested in a specific franchise, but it is too expensive for you leveraging capabilities. The broker is obviously going to charge a fee for his services, but you should do it because of the money you will save down the road. Just make sure that you have checked the broker’s credentials and credibility before making a decision.
If you are methodical about this process then you are going to do well and make sure that you have support from financial and legal services if necessary for your small business opportunity. It then will come down to making sure that you have a strong brand with solid direction like Subway. With the right support you can have a lot of success and maybe people will be writing blog posts about you some day.
This is as much your blog as it is mine and now the blog is yours.
Let me ask you what is your single most important question about a franchise business opportunity?
What brought you to Write To Right?
What would you want to see more of on this site about franchise business opportunities that would excite you, but you can’t find?
This is your chance to make this site better one comment at a time. Feel comfortable to express your inner feelings and don’t hold anything back!
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Filed Under Franchise Business Opportunities, Starting A Business |
Tagged With business-model, empowering franchisees, Franchise Business Opportunities, franchise training and marketing assistance, franchiser, franchising, Fred Deluca, individual franchisee creations, little business experience, number one franchise opportunity, premature terminations of franchise contracts, reputation of the company, subway restaurants
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I love the Subway story! It’s really hard to pick the winners, and there are so many franchises out there. I think personal interest is a big part of making any business work. Franchising still involves hard work especially in the beginning, and you’re more likely to stick it out if you’re doing something you enjoy to begin with.
Keep up the good work!
Subway is a good franchise model. It really goes to show that with a little hard work and determination you can own your own business and make it successful.
Keep them coming,
Franchising Opportunities
I also prefer getting a franchise rather than starting a business from scratch. Franchises traditionally have a higher success rate compared to a new one.
Good story, it bring a good point. It does involve alot of hardwork, but in the end it is all worth it.
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