Reap the Rewards: finding a franchise business that generates higher returns
Maria Walton| Franchise Manager | Mister Minit Franchise
Many people interested in becoming a franchise business owner become very adept at weighing up the pros and cons of different franchise systems. There are many things that motivate one to choose one franchise system over another. Some have better lifestyle options, while others provide more support. The degree of financial return, also stands out as a significant consideration. We caught up with Maria Walton, Franchise Manager of Mister Minit, a franchise business model that specialises in the services of shoes repairs, key cutting, engraving and watch servicing to talk about the importance of receiving a good level of financial rewards when looking for franchise opportunities.
As a potential franchisee, you will be becoming increasingly aware of the franchise opportunities that exist during your research. One of the most important aspects potential franchisees need to consider is the level of financial reward a franchise business system can offer.
One indicator of a healthy franchise system is good cash flow. For starters a franchise business must be able to generate cash so the business can easily pay off its short-term liabilities such as its lease, supplies and staffing.
It depends a little on the business model, but ideally, as in the case of Mister Minit franchisees, there should be positive cash flow from day one. Positive cash flow is important for the success of a franchise business because it allows the franchisee to reinvest back into the business. At the same time with the peace of mind of positive cash flow the franchisee can maintain their lifestyle and enjoy the financial rewards the franchise business has to offer.
When determining whether a certain franchise opportunity has the potential to be rewarding, you should be wary of a few things. Firstly, find out if the system has a track record of sustainability. Alarm bells should be ringing if the franchise business is experiencing delays in settling accounts with its suppliers. This is a sign that the franchise business experiences difficulties with their cash flow and working capital.
Secondly, if offered a Greenfield unit, make sure you do your research. Start by finding out what research the franchisor has already conducted on the territory and its local consumers. Find out what the range and average of store performance has been for similar existing locations.