According to business author Michael Gerber, 84% of all independent businesses fail before their 10-year anniversary, so why go it alone? Join Precision Tune Auto Care today and be in business for yourself, but not by yourself.
Frequently Asked Questions (FAQs) about franchising.
Before you go any further, are you sure franchising is the answer for you? Tune in to learn more about franchising and the automotive industry.
What is franchising?
What is business-format franchising?
What are the major growth areas for business-format franchising?
What should I consider before buying a franchise?
If I want to buy a franchise, what should I do to get started?
Would I make a successful franchisee?
Explain the success rate for franchised businesses?
How can I be sure I won’t lose money?
What are the current franchising trends?
Q: What is franchising?
A: Franchising is a method of distributing products or services. At least two levels of people are involved in the franchise system: (1) the franchisor, who lends his trademark or trade name and a business system; and (2) the franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor's name and system. Technically, the contract binding the two parties is the "franchise," but that term is often used to mean the actual business that the franchisee operates.
Top of page
Q: What is business-format franchising?
A: Precision Tune Auto Care is an example of business-format franchising, in which the franchisor prescribes for the franchisee a complete plan, or format, for managing and operating the establishment. The plan provides step-by-step procedures for major aspects of the business. The major advantage of buying a business-format franchise is that the system, the means for distributing goods and/or services, has been developed, tested and associated with the trademark. As a result, rapid expansion of a successful retail concept can often occur more quickly than through company-owned expansion.
Sales by business-format franchisors continued to increase steadily throughout the early 1990s. Some analysts indicate that sales through franchised establishments have grown faster than the gross domestic product. Retail sales from franchise businesses have been said to account for 15% of the U.S. gross domestic product. Although there is no really good recent data on the extent of franchising in the U.S., most analysts have stated that business-format franchising accounts for approximately 27% of all franchising sales, 68% of all franchise establishments and 74% of employees of franchised businesses.
Top of page
Q: What are the major growth areas for business-format franchising?
A: As the economy becomes more service and technologically oriented, more women enter the workforce and a larger percentage of the population grows older, growth areas in franchising are responding to these changes. The industry categories in franchising that are expected to continue to experience rapid growth are service-related fields like the automotive industry, including automotive repairs and services such as quick-lube and tune-up.
While it is important to consider industry growth before investing in a franchise, it is more important to analyze an individual franchise company's track record, keeping in mind that quick growth does not always spell success. A franchise organization that grows too quickly might not have a service team in place to support all of the units properly. Overall, long range trends indicate a steady, solid growth in business format franchising. Some will fall by the wayside, as is natural with any business, but others may well be the "household name" franchise success stories of tomorrow.
Top of page
Q: What should I consider before buying a franchise?
A: Among the points which the International Franchise Association (IFA) recommends for investigation are:
- the type of experience required in the franchised business;
- the cost to get into the franchise;
- how much you're going to pay for the continuing right to operate the business;
- if there are any products or services you must buy from the franchisor and how and by whom they are supplied;
- the terms and conditions under which the franchise relationship can be terminated or renewed, and how many franchisees have left the system during the past few years.
Top of page
Q: If I want to buy a franchise, what should I do to get started?
A: Please visit the Getting Started section to learn more about how to get started today and join the Precision Tune Auto Care family.
Top of page
Q: Would I make a successful franchisee?
A: A successful franchisee should be suited to the industry of which he or she is a part, to the particular franchise company and to the franchise system generally. Important questions to ask yourself include:
- Am I suited to the industry physically and by experience, education, learning capacity, temperament and financial ability?
- What type of work is most appealing to me? Am I prepared to work hard and take financial risks?
- Do my advisors, family and friends think I am adaptable and trainable?
- How do I react to controls?
- Am I a "loner", resenting authority and restraints, or can I accept guidance and direction happily?
- If I prefer to act as a passive investor in the franchise, will the company accept this?
- How do I personally feel about the company's image, products and services?
The right answers to these types of questions help determine your potential success as a franchisee.
Top of page
Q: Explain the success rate for franchised businesses?
A: Success is a subjective term. A September and October 1997 Gallup Organization study on franchise owner’s and attitudes towards their franchise experience revealed that more than nine out of ten franchise owners stated that they considered their franchise to be somewhat or very successful. Two of three respondents said that they would not have been successful if they tried to open the same business on their own.
The franchising system is designed to provide a formula for operating a successful business. Unavoidable business mistakes have been worked out of the system through experience and the franchisor is available to assist when new challenges arise. The Small Business Administration says most businesses fail from lack of management skills. With a franchised business, your franchisor should be eager to help you overcome problems. Your hard work and the franchisor's expertise spell a strong partnership.
Top of page
Q: How can I be sure I won’t lose money?
A: No one can be 100% sure. Although many franchisees are satisfied, successful business people, some do suffer financial losses. That is why you must be especially wary of any company which "guarantees" profit or certain success. If you hear a claim about a company that sounds too good to be true, it probably is. Investigation of all earnings claims made by a franchisor is especially important. But regardless of earnings claims, you must recognize that your success can come only through hard work. Success or failure ultimately depends on you.
Top of page
Q: What are there current trends in franchising?
A: Among the most important trends in franchising today are the internationalization of franchising, the emergence of women and minorities in franchising and the increased use of technology. All of these have profound and positive effects on franchising and make it an even more dynamic method of doing business today.
Visit www.franchise.org for more franchising facts from the International Franchise Association (IFA), of which Precision Tune Auto Care is associated.
Top of page
Want to learn more? Contact us!
Page 3 - Next