Do Ex-Execs Make Good Franchisees?

Turn your recent layoff into a chance to succeed.

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Just about the most significant trends in franchising in the last 15 years may be the emergence of ex-corporate executives as new franchisees. This trend began in earnest with the downsizing of the first ’90s, and has continued steadily–corporate layoffs of white-collar workers have grown to be a means of life in large companies.

This is really exciting for franchisors, as the pool of potential franchisees is not only larger–it also includes many people who have extensive management experience. Several prospective franchisees likewise have significant capital available because of severance packages or just via years of getting high salaries (read " Executive Decision ").

Yet from your own perspective, there are particular dynamics to be a franchisee you ought to know of. Your experience as a franchisee owning a small business is going to be light years from the world to be an executive in a lot of money 100 company.

If you are an ex-executive considering learning to be a franchisee, recognize that, in a franchise operation, you will not have large budgets and staff personnel to aid you. You must make decisions a lot more rapidly and more often than not with no complete information available. The risks of earning a mistake could be much smaller in a financial sense, but they’re also a lot more personal, since it’s your own treasure that’s on the line.

It’s essential that you communicate well together with your franchisor and understand clearly what your role will be as a franchisee. Failure to take action could seriously jeopardize the probability of you being happy and successful as a franchisee.

Your first decision to make the transition between corporate employee and franchisee is whether you will want "standard" or an "executive" franchise business. Both could be great, but they’re quite different with regard to the role you’ll play.

In a typical franchise business, you will be very mixed up in daily operation of the machine. You will probably spend a significant period of time working at the physical located area of the business or trying to improve business through marketing or sales. This is much a hands-on role, and you will probably work harder than you have in quite a while, especially through the first couple of years.

The typical franchise could be very exciting and rewarding if you are an executive who’s sick and tired of all of the bureaucracy, committees and decision levels involved with a large corporation. Thus giving you the capability to personally control and drive the business enterprise and make decisions on every level, and on an instantaneous basis. You may also interact with your visitors and know from first-hand experience why is the money register ring. The downside is that not only is it the CEO of such a business, you need to take on potentially almost every other role, from the janitor on up. Be prepared to get the hands dirty in this sort of franchise.

Within an executive franchise, your role is a lot more indirect–you sort out others to operate a vehicle the success of the operation and will often have hardly any, if any, interaction with customers. In this sort of franchise, typically managers or other key employees actually run the business enterprise operations, when you supervise the managers and key employees.

The benefit of an executive franchise business is that it is tailored to match the organization experience you’re acquainted with. It feels comfortable, because it’s how you’re used to attempting to achieve results. The downside is that, just as in corporate America, if your subordinates don’t perform, the duty ultimately rests with you (and in cases like this, failure includes a very personal financial impact).

There is no right or wrong answer concerning which kind of franchise is most beneficial for you. That is a personal choice predicated on your own desire, but it is rather essential that you understand the distinction and the role you’ll play in virtually any business you select (read " The Golden Ticket ").

Various other factors you should think about when coming up with your decision include:

  • The kind of employees you need to use. Some franchise businesses feature many minimum-wage employees; others have fewer or more skilled employees. Consider the types of employees you can most effectively manage and use in choosing a franchise that’ll match well for you personally.
  • The hours you need to work. You have to be mixed up in business through the high-volume periods. Many retail franchise businesses do the majority of their volume through the evenings and weekends, yet you could be used to presenting your evenings and weekends free. That is an essential point you should resolve–otherwise, you will most probably experience a lot of anxiety after the excitement of the brand new business wears off.
  • The franchise’s prospect of bigger than normal operating margins. Such companies are simply more forgiving of mistakes and, despite whatever success you’re used to presenting, starting any home based business will probably involve making some mistakes. Several potentially higher margin franchises are in the service or sales sectors, if you may also find such opportunities in retail or food in the event that you research carefully.

If you are a displaced executive, take heart: The franchise industry represents an excellent potential opportunity. The trick to making the transition a positive and successful one is to determine what you would like from a business also to gather all the details you must ensure the franchise you get may be the right one for you personally. If you do this, you have to be well on the way to an improved and more rewarding life.