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Service Based Franchising: What Franchisors Want

When you first consider franchising as a business model, one of the choices that arises is which type of business, in which sector, suits you best. One basic choice is to make is goods or service; another is retail or home-based.

In previous months, we've explored ways to find the sector, and the franchisor, most likely to give you the best chance of success. More recently, in the previous four weeks, we've discussed the attributes franchisors look for in franchise candidates in the retail sector and in the home-based sector. Here we apply the same lens to the services sector.

Let's begin with the similarities. All franchisors want candidates who follow the system, pay royalties on time, possess marketing skills and savvy, know how to run a business, show leadership and growth potential, are good communicators, and are expansion-minded, community-oriented, and willing to give back to the system. Franchisors look for these skills whether you choose a service, retail, B2B, or other concept.

They also look for someone able to balance their professional and personal lives (although for some, a willingness to work 60- to 80-hour weeks, at least for the first several months, can be a real plus); who moves easily between all the different roles demanded of a franchisee; and who believes in the product or service so strongly that they become a brand ambassador, even an evangelist.

(For a more detailed discussion of these traits and skills, see the previous four weeks.)

In the services sector, some of these issues can overlap. For example, you can have a home-based service business such as coaching done in the home; mobile dog-washing with a fleet of vehicles managed from the home; or financial advising where you both visit clients and work from home on research and reports. You also can have a retail-based service concept, such as a hair salon or oil change business, for example.

In other words, to make the optimal choice, you need to weigh and balance all the moving parts. Each choice has pros and cons, benefits and pitfalls. As noted in last week's article on home-based businesses, the pros includes a lower investment to start and a quicker path to positive cash flow, and the cons include lower earning potential, loneliness, and in inability to "turn it off" when it's family time. With each choice, there are tradeoffs to be made.

On the services side, a franchisor will want to know that you actually like serving people - whether you do it directly, or hire a staff to do it for you. In the latter case, you will need people skills to hire, train, manage, and retain staff, whether you're in the hair cutting, oil change, or pack-and-ship business.

You'll also want to pick a growing sector, one with a future in an expanding market segment. One such is senior care, which is one of the fastest-growing segments today and into the foreseeable future. The population of seniors in need of services, whether in their home or at a senior care facility, grows larger every year and will continue to expand in the coming decades, both in the United States and overseas. Opportunities in this sector run the gamut from home care and estate planning to medical care, from home remodeling to shopping for the home-bound or infirm.

Other service-based businesses include financial, business-to-business, maintenance (commercial and residential), technology and communications, children, pets, massage, fitness, and more.

One basic equation to consider in evaluating the services sector is this: customers are willing to trade money for time. The classic example is maid services: those with enough disposable income and busy, time-starved lives would rather spend the money to have a clean house and free up their time to spend with their family and friends.

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