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Are you facing life after layoff and looking for your next move? Over the past two decades, the hiring of ex-corporate executives as new franchisees has skyrocketed. As corporate layoffs become commonplace, franchisors have found a treasure trove of potential franchisees with extensive management experience. Many ex-executives also have significant capital available due to severance packages they’ve received or from their years of earning high salaries.
What to expect
For an ex-executive, there are aspects of being a franchisee you’ll need to take note of when planning your life after layoff. For one, in a franchise operation, you won’t necessarily have a large budget or deep bench of personnel on site to support you. You’ll need to make decisions much more rapidly and almost always without having complete information at your disposal. The risks of making a mistake may be much smaller in a financial sense, but they’re also far more personal, since it will be your own treasure at stake.
It’s essential to do your due diligence when investigating a franchise opportunity and understand clearly what your role will be as a franchisee in any particular system. Failure to do so could put your future as a content and successful franchisee at risk.
Standard franchise businesses
Your first decision in transitioning from corporate employee to franchisee will be whether to pursue a “standard” vs. “executive” franchise business. Both can be great, but they’re quite different in terms of the role you’ll play.
In a standard franchise business, you’ll be very involved in the daily operation of the unit. You can expect to spend a significant amount of time working at the physical location of the business and trying to increase business through marketing or sales. You’ll play a hands-on role. And you’ll probably work harder than you have in quite some time, especially during the first few years.
If you’re a former executive who’s tired of the bureaucracy and decision levels involved in a large company, a standard franchise can be quite exciting and rewarding. You’ll be able to control and drive the business and make decisions on every level. You’ll interact directly with your customers. The potential downside is that in addition to being the CEO, you’ll at times wear almost every other hat, from the janitor on up. Expect to get your hands dirty in this type of franchise.
Executive franchise businesses
In an executive franchise, you will have little interaction with customers, if any. In this type of franchise, you’ll hire a manager or other key employees to run the day-to-day business while you play a supervisory role and take on bigger-picture strategy and decisions.
Your role as owner of an executive franchise business will resemble the role you’re familiar with as a former executive. The downside is that if your subordinates don’t perform well, their failures will directly impact your bottom line. Ultimately, the buck stops with you.
Other factors to consider
Here are additional factors to consider when making your decision:
Employees. Some franchise businesses involve the hiring of a large number of minimum-wage employees. Others require fewer or more highly skilled employees. When assessing franchise opportunities, take into account the type of employee you can most effectively manage and work with.
Hours. Consider the high-volume times for the business, as you’ll likely need to be involved during those hours. For example, many retail franchise businesses do most of their volume during the evenings and weekends. If you’re accustomed to having your evenings and weekends free, this may be a big adjustment.
Operating margins. Starting any new business is going to involve making some mistakes and some businesses have a wider margin. Many of these franchises are in the service or sales sectors, though you can also find such opportunities in retail or food if you research carefully.
If you’re a displaced executive, the franchise industry represents a potentially great opportunity for your life after layoff. Be sure to determine what you want from a business and gather all the information you need to ensure the franchise you buy is the right one for you. An experienced FranChoice consultant can help you sort through the overwhelming number of opportunities in franchising.Read More