For multi-unit owners, planning an exit strategy is something to consider long before investing in that first unit or concept. What are your long-term goals? Would you like to sell in five years? Ten? Pass the business to a family member? Make a clean break, or keep your hand in? Is trading your cash flow for a lump sum the best way to go? What about seller's remorse?
Being a big fish always helps, especially in a big pond. But big fish still have problems-or opportunities as the more optimistic prefer to call them. And it certainly helps to have a positive outlook when you become an area developer. Topping the list of problems/opportunities are the usual items: location, hiring and retention, financing, etc.-but magnified by the number of units, as well as the number of concepts operating under one umbrella. Area Developer magazine asked four successful "Big Fish" to weigh in on what's tipping their scales as 2005 approaches.
I call it the 10-10-10 rule. You spend $10,000 on your building, FFE and advertising to attract a customer. In 10 seconds, you drive her away with a bad service experience. And you wait 10 years for another chance to win her back. Service success, or failure, is predictive of your future sales and profitability. A terrific Harvard Business Review article explains the business economics in detail and I'll tell how you can get that article at the end of this column.
Franchisors are always looking for ways to boost cash flow and build greater trust with franchisees. One way to help accomplish those goals is to offer an effective purchasing program.