Alignment

The first step in making a successful franchise investment is to determine whether the business model is a good fit for you. This can be determined by looking for alignment in three key areas: your personal and financial goals, your skill set, and the franchise offering. If there is alignment in these areas, you will be in a better position for success.

Essentially, there are three types of franchise business models, each with different assets and liabilities. They vary in terms of time commitment, start-up and operating costs, required level of industry knowledge, scalability, and personal freedoms. It’s best to start by closely examining what you want from a business and how you envision your ideal role.

Looking at the varying business types, there are some clearly defined roles a franchisee takes depending on the type of business model. An owner/operator model requires more of your time and is an immediate career change and income replacement; you work in the business. A semi-absentee business model relies on managers to run the day-to-day operations. The franchisee works on the business rather than in the business, allowing you up to maintain a separate career. This model is a long-term investment rather than a total income replacement. An executive business model takes a completely hands-off approach, requiring more operation costs but minimal time commitment.

After considering which business models are in alignment with the role you would like to take, you should do a gap analysis. Is your skill set complementary to the business model and vice versa? If you are becoming an owner/operator, you would need to have the skills that business requires. For example, if you were looking at a restaurant franchise, you would need to know how to operate the restaurant. Conversely, in a management led structure, industry knowledge is not necessary, as your role is to manage the people who have the knowledge and experience. An example of this would be a hair salon: you do not need to know how to cut hair personally, and instead hire and manage trained stylists who do.

Your gap analysis should compare your skill set with the business structure and support systems offered by the franchisor. Do they fill in where your skills are lacking? If you do not excel in people skills, a business model which relies on managing people, such as semi-absentee, would not be an ideal fit. A good franchisor will provide business best practices and support, which will fill in knowledge gaps. Though this only helps if your skills are in alignment with what is required from your role in the business.

Alignment should also be present with your goals for business growth. Is scaling your business a priority? Some business models are better designed for scaling than others. An owner/operator model will limit your ability to do this beyond your personal capacity, whereas semi-absentee and executive models give you more freedom to scale. It is important to have clarity on your goals and whether the business model you are considering can get you there.

Last, but not least, you should make sure there is alignment with your personal values and the values of the brand you are considering. How comfortable are you with the mission and vision of the company? For example, if there is a “people first” mentality, but you would rather work with numbers, then you and the company may not be well matched. Looking at the company’s values and culture will also give you an idea of what will be expected from you and what you can expect from them. This is a key element in maintaining a healthy franchisee/franchisor relationship and is a pillar of business success.

Looking for alignment in these outlined areas will allow you to better position yourself to make a more informed decision. When alignment occurs in these areas, it is an indicator the business model is a good fit for your personal and financial goals, which in turn can translate into greater business success.

For more information on the Sport Clips offering and whether it is in alignment with your goals, let’s continue the conversation here.

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