Cash Flow Potentials

Can you achieve success, revenue and profit through a Personal Franchise?

Yes—and the range of options might surprise you. How about the $50 billion-plus haircutting industry? Franchised barber shops and salons require a relatively low initial investment and can provide solid cash flow relatively quickly. And even in a recession, people get their hair cut. But there are some that you can run with an even lower cost of entry that will also allow you to learn how to run a business.

Did you know there are franchises you can run from home? We call them Personal Franchises...

So, are we talking about a Merry Maids type franchise that you pay $50,000 for and run around cleaning rooms all day long?

No!

A personal franchise generally means a home-based business, tailored to an individual’s personal strengths, allowing them to use their core competencies.  They range in price from a very  low cost of entry to about $1,000 on the higher end.  In technical terms a personal franchise is a business with a legal and commercial relationship between the owner of a product or service with a trademark, service mark, trade name, or advertising symbol and an individual or group wishing to use that identification. A personal franchise business can be run from a home, dorm, RV or other place of residence.
Each Personal Franchise business (franchise) has been authorized by a parent company (franchisor) to sell their goods and/or services within a given set of parameters. The company defines the method of conducting business between the two parties. Some structures are much defined and others are more liberal. Generally, a personal franchise sells goods or services supplied by the company. This relationship is regulated by FTC laws.

The popularity of the Personal Franchise business model has to do with the ease in becoming a business owner. Independent, non-franchise businesses have a much higher likelihood of failure within their first year than true Personal Franchises. One of the most compelling reasons is that, in a Personal Franchise operation, the company and business team provides business expertise (marketing and advertising plans, management guidance, financing assistance, administrative support and training) that otherwise would not be available to businesses starting from scratch. The Personal Franchise brings to the relationship entrepreneurial spirit and drive, which may not be enough to keep a business afloat if the franchisee lacks significant business knowledge.

This allows the franchise to operate by different methods or in different types of locations giving individuals a great deal of flexibility. They can be operated through the home, in RV’s, college dorms, office building or work-live spaces that are now becoming popular. If used properly while living and working – you can deduct many expenses that might not have been deductible.

Because a personal franchise outsources the sales and marketing functions to the franchisor, many of the Personal Franchise opportunities use a proven compensation model from the direct sales industry. The two main compensation models used are:
Direct Sales (Single Level Marketing) - Compensation is based on one's own personal sales activities. Individuals cannot take on other distributors. Income comes from commissions on personal sales or bonuses.

Multi Level Sales or Marketing (MLM) - Compensation is based on one's own personal sales activities and from other distributors they are supporting or have enrolled. Income comes from commission on personal sales, sales from their distributors and/or bonuses.

What makes a personal franchise unique is -  HOW the business is setup, run and operated. For example, can you run the business as a separate entity?

Many of the traditional people using these models didn’t run their business as a business, selling product to customers, but rather spend their time trying to “get others” into selling their products. Many have been unintentionally educated to become very annoying in the process.

"I haven’t seen you in a long time or let me tell you about an incredible ground-level business opportunity," and you are invited to a house or to lunch for "a discussion." Funny enough, you feel an intuition that there is some hidden agenda or deception. Then came out the white board…but all you wanted to do is see them again.

How can the business be operated? Can you purchase your Personal Franchise as a legal entity – corporation or LLC? Do you have the rights to will it, sell it or freely transfer it? If not, it might not be a Personal Franchise. Franchises take effort and work, there is no free lunch. Did you ever see a coffee shop open with no marketing, no cash outlay? The benefits of most personal franchises are the low cost of entry with the potential high rate of return. For little money ($500 - $1,000) you can have the starting of a personal franchise with the potential to make an above average rate of return ($1,000 - $2,500) a month in a relatively short amount of time.

A Little History of Franchising

Finding the right business or personal franchise can be tricky. First starting with an already-established business that can be bought through a contract can be easier then starting on your own. Especially if you can use a low cost of entry business to both learn how to be an entrepreneur and make money without a taking on a lot of risk.

So what is franchising and a Personal Franchise? Can I tell you a little story?

Many people have heard about the McDonald's story and its founder Ray Kroc. Although their contribution to franchising is monumental, the history of franchising dates much further back.

The extensive “pub” network in the United Kingdom may be the oldest franchise system in the world. During the Roman occupation of Britain, the major supplier of food, drink, and accommodations for the traveler was the Church Religious beliefs of the time dictated that two days food and lodging be supplied free to any traveler. Abuses of these privileges resulted in the growth of commercial enterprises around 740—750
By 957 King Edgar decided there were too many ale houses and decreed a limit of one per village As a part of that decree some common standards were instituted. The business format required a standard measure limited quantities and a prohibition of sales to priests. A monitoring system was established and fines levied against violators Franchising was born....

The population steadily grew, and evolving consumer and economic realities forced consolidation of the industry. The national brewers recognized a need to secure market share. Publicans grappled with the difficulty of keeping pace with fast moving events and the ever-increasing demands of various kinds. More and more pub owners allied with brewers. By the early nine-teenth century half of all alehouses were tied by some form of agreement. The House of Commons Committee on Public Breweries in 1818 noted that tied houses were of much higher order than free houses ~ Franchising was here to stay!

Franchising in the United States began in the 1840s and continues to grow today. Two distinct types of franchises have developed. The first product franchising was created by makers of complex durable goods who found existing wholesalers either unwilling or unable to market their products These manufacturers built their own distribution systems and created franchise systems as alternatives to the high cost of company-owned outlets The second type, business franchising, was created in 1950s when it became evident that the outlet itself could be a vehicle for entrepreneurial activity.

Over the years franchising has been much maligned as anything from a pyramid scheme to just another form of employment. However, the criticism is seldom warranted. Some of the confusion exists because franchises come in many forms.

Now we are not talking about starting a business that you pay $50,000 for and end up cleaning rooms or $100,000 to work in the back cooking donuts. Did you know there are franchises or businesses you can run from your home? Well there is and we might have the perfect one for you!

But you need to do some due diligence. We can't tell you how many people jump into an opportunity in the HOPEs of making money. It seems that money stays just out of reach. That changes when you have a reason or a passion for the product or service.

So how do you do due dilagence? Well we have attached a spreadsheet that explains all of that and more. It gives you the tools to start the process of understanding which business is right for you. We made it easy and simple so you can analyze the company, the industry, the competition and the compensation.

For more information about Personal Franchises and how to build them with a partnership with others using the Power of Three, check out our past articles, our video's and go through our process of finding your passion, finding a Personal Franchise that matches that passion and a coach to guide you through the process.

Cash Flow Potentials is the most respected source of independent personal franchise information also highlighting the top franchise opportunities in the marketplace.