The American dream of entrepreneurship has never been more prevalent. Perhaps accelerated by the pandemic, more and more are considering business ownership. Fueled by a desire to be your own boss and create better job security, there is an increasing number of Americans looking into franchising. As a new franchisee, you would be in good company as there are currently more than 785,000 franchises in the U.S., which contribute almost $500 billion to the economy.
Whenever you invest in a business opportunity there is always a risk. However, the risk is greatly minimized when investing in a franchise that operates a proven business model showing solid profit margins. Plus, the franchisor is motivated for you to do well, not only because of the name and reputation on the line, but when you as the franchisee achieves success, so does everyone involved.
For those who are considering the concept of franchising, here are 10 things to keep in mind.
1. Have Realistic Expectations
Experts agree that in order to enjoy success in franchising, it is important to choose your business carefully and maintain a long-term view. You can level set those grandiose expectations of an immediate fortune. Like any big venture, this will require hard work and discipline. While it’s unlikely you will become a millionaire overnight, franchising offers you an opportunity to build long-term financial success, stability, and freedom through a proven business model.
There are many brands out there to choose from and several solid opportunities. Often, the bigger the brand name, the bigger the price. That is not the case when it comes to franchising with AAMCO. Along with the attractive investment characteristics such as low investment, sustainable profit margins, and industry-leading training and support, we are an iconic American brand that’s been a household name for more than 50 years thanks to our great reputation as total car care specialists.
2. Understand the Costs and Fees
The best way to understand the ins and outs of a franchising opportunity is to look at their FDD, or Franchise Disclosure Document. This report provides prospective franchisees with information about the brand, the franchise system, and the agreements they will need to sign so that they can make an informed decision. It outlines the company’s financial expectations as well as the costs you can expect. As a prospective partner in the franchise, you will want to understand all the required fees, including the initial franchise fee, set-up costs such as necessary equipment along with licenses and permits, plus any on-going fees such as advertising and royalties. These fees provide you the use of the brand name and all the recognition, knowledge, and expertise that comes with a traditional franchise model.
At AAMCO, we are very transparent about our fees. The total investment in a new AAMCO franchise ranges from $223,600 to $330,500. This figure includes a $39,500 initial franchise fee, as well as the estimated costs for equipment, training, leasing a property, and other items.
3. Funding
There are two key points to understand about funding. First, make sure you set a personal budget and stick with it. You do not want to begin your business venture outside your means. Franchisors will typically require proof of financial records. At AAMCO, we ask Franchise candidates to have a minimum of $60,000 in liquid capital and a net worth of at least $250,000 to get started.
Secondly, one of the advantages of franchising versus building an independent business is that lenders are more inclined to approve loans due to the success of the brand and the viability of its business model. Franchise companies also assist with third party lenders.
The decision to open an AAMCO franchise is a major investment, which is why we offer several financing options that make it possible for us to partner with the most passionate owners in the industry.
4. Brand Recognition
As a franchisee you are paying for the right to use the brand name and all the related benefits, such as built-in recognition and customer trust that you can then build on yourself. You just want to closely examine the company’s annual appreciation. In the end, you are looking for steady, long-term growth to make your investment worthwhile.
5. Marketing
Marketing is essential to the success of your business. You grow through continual promotion of the brand. Franchisors typically have an advertising plan ready to roll out with each new location, so as a franchisee, you benefit greatly from the market testing that is part of the business model. Most franchisees can piggy-back off national campaigns. You will want to make sure there is a plan in place and on-going advertising campaigns and support available.
6. Support and Training
Part of the benefit of being a new franchisee includes the guidance and expertise of the franchisor. You need to examine the training programs available at each franchise you are researching. Make sure you are given guidance throughout your start-up, plus, have access to continuing, expert support and on-going training. A good sign is a franchisor constantly keeping franchisees apprised of the latest trends.
As the automotive industry becomes more complex, AAMCO has made a significant investment in creating a state-of-the-art education and training center, AAMCO University. Franchise owners and their technicians work with our expert instructors in more than 300 courses, ranging from basic shop safety to master-level diagnostics, transmission rebuilding, and electric and hybrid vehicle repair. These modules are offered in classroom, online, and interactive settings. Additionally, we train our new franchisees on customer care, key performance indicators, growth strategies, quality control, leadership and how to utilize business networks. That support continues even after your AAMCO Center has opened.
You will also be introduced to the business and operations training programs, service team recruitment, ongoing coaching and development, marketing and PR support, and other opportunities to help you reach your goals
7. Current Franchisees
Consider this a job interview. Ask questions to the franchisor and then take it a step further and talk with other franchisees. Hear what they have to say and learn from their experiences. They can provide a wealth of valuable insight. See if current franchisees are getting the support they need and if they’re seeing their desired profit margins.
At AAMCO, we want you to talk to our franchise owners. No one can give you better information than those who already are in the AAMCO franchise family. Ask them about their ownership story and get a clearer picture of the day-to-day operations of one of our stores.
8. Location, Location, Location
Let’s say you are looking to open a franchise in your city. You need to make certain the franchise is available to open a location in the area you desire for your business. Some franchises define their territories to ensure franchise locations are not competing for the same business, but most will make any location restrictions clear before you are too deep into the discovery process.
Find out if the franchisor will provide assistance with everything from initial site selection through your grand opening. At AAMCO, we walk you through the process of site selection and preparation for new locations.
9. Rules and Expectations
There are guidelines all franchisees will need to understand and follow. Every franchise has a business model and system in place for the benefit of the brand and the franchisees. The business model is likely what attracted you to the franchise and led you to invest in the first place, so sticking to the overall framework of the system – such as ownership style, pricing, or marketing – can be vital to your sustained success.
10. Contract
Both parties are committing to this business partnership. There is a contract which obligates you to a multi-year arrangement. This is a significant under-taking, be sure you’ve done all your homework and the required terms are acceptable to you.
Best Franchises to Own
As you pare down your options, it’s also a good idea to take a look at the best franchises to own. You will want to examine those industries that are recession-proof. Meaning, despite a possible downturn in the economy, you are a franchisee of a vital and necessary industry.
Being in an essential business like the automotive industry means AAMCO will always be in demand. As people hang on to their cars longer, there is an increasing need for aftermarket care, and that’s what we provide. But that doesn’t mean you, personally, have to be a car care expert.
For example, at AAMCO, we don’t require our franchisees to have a background in automotive repair. We want to partner with reliable and dedicated entrepreneurs who are committed to taking care of their customers, their staff, and the brand. We want them to bring their business instincts into the daily operations, allowing expert technicians to maximize their potential. Once the decision is made to become a franchise owner with AAMCO, we provide a tremendous amount of coaching and training to prepare our owners to be successful in their new business.
If it sounds like franchising is a good fit for you and you want to partner with a company that’s been a trusted industry leader for half a century, request info to find out more about taking that next step to business ownership with AAMCO.
Comments are closed