Qualified Remodeler helps independent remodeling firms to survive, become more professional and more profitable by providing must-have business information, namely best business practices, new product information and timely design ideas.
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Pro: A well-run franchise system listens to franchisees, learns from their experiences and uses that information to develop a set of best practices to help owners deal with challenges. A new franchisee is thereby able to learn from the mistakes that have been made by everyone who has been part of the franchise system. Tere will always be potholes when you are running a business. A franchise company helps you spot those potholes in advance so you can avoid them — or at least be ready for the jolt. Con: Royalties. You will be paying some form of royal- ties. Typically it's a percentage of revenue; in some types of franchise systems, the amount you pay the corporate ofce is built into the price of supplies you order from the franchisor. Either way, these payments support the organization that works to make life easier for franchisees. Pro: Franchisees should be able to enjoy a larger proft margin that exceeds royalties. Franchisors typically help franchisees generate better proft margins. Pro: Improved proft margins, strong business systems, solid recordkeeping and ongoing support typically help franchisees sell their businesses at a higher price than independent businesses. Pro: Well-run franchise systems ofer a strong marketing system that allow you to determine the number of leads you need to generate based on your sales goals, and they also have strategies for generating the highest quality leads. Most remodelers don't have a true marketing system. Tey engage in marketing on an ad hoc basis and have a hard time determining ROI on their marketing investments. HOW FRANCHISE BUSINESS MODELS VARY Tere are two types of business models within franchising: product-distribution franchises and business-format fran- chises. A franchisor in a product-distribution franchise acts as manufacturer and supplier, and the franchisees sell the product. In this business model the franchisor typically doesn't charge a royalty on revenue. Instead, the franchisor generates more from the franchisees through product sales, and they often require franchisees to pur- chase a minimum number of units. Several remodeling franchise systems operate on this model, which is similar to a supplier-dealer business arrangement. Tey typically ofer small business owners limited sales support. Business-format franchising, the business model used by DreamMaker Bath & Kitchen, is quite diferent. hen I speak to remodelers and they learn that I lead a remodeling fran- chise, among the frst questions they often ask me is this: "Why would anyone give up some of what they earn? Why pay royalties on all the work I am doing?" It's a good question. Te answer is that being part of a well-run franchise system carries advantages that can help owners grow their busi- nesses, improve earnings and proft margins — helping you earn far more than what you pay in royalties. Tere are two types of people who join a franchise. First, there are people who want to avoid fumbling through every possible mistake a start-up business can make and who value the guidance franchises ofer. Second, there are people who've already had success building a large company and who understand a successful business relies on well-defned systems for accomplishing goals, and they don't want to have to reinvent the wheel again. However, not all franchise companies are the same, and not all franchisees perform at the same level. Before you join a franchise system, it's important to evaluate both the company and yourself. PROS AND CONS OF FRANCHISING Here are some pros and cons you should consider before de- ciding to invest with a franchise. Con: Franchises use common practices and business systems in order to generate results. Tis can be a negative for many en- trepreneurs (some fercely independent) who don't want to change the way they do business and aren't interested in someone else leading them to replace or add new systems, or tweak the way they've been doing things. Following systems is key to getting the best return on your invest- ment as a franchise owner. What Is a Franchise and Who Would Buy One? By Doug Dwyer, president and chief stewarding officer of DreamMaker Bath & Kitchen W 34 May 2015 QR QualifiedRemodeler.com | ForResidentialPros.com PROFITS: Franchise and Dealer Opportunities