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Ratner Companies Interview
 May 10th, 2006Small Business 101: Buying Into a Franchise < United States > Interviewer : Interviewers Interviewees : Tom Fihe (Vice President of Franchising) If you are thinking about starting your own business, you probably have tons of questions about where to start. Get advice from Small Business 101 to learn more about the basics of entrepreneurship. Tom Fihe is the lead franchise planner and developer for Ratner Companies. Responsible for launching an area development approach to franchise agreements for Hair Cuttery, he has worked to develop a strategy for executing Hair Cuttery development throughout most of the United States. His primary duty is promoting the appeal of Hair Cuttery to potential investors. In addition to marketing the concept, Scott is responsible for developing an organizational design and culture that supports franchise potential. This includes providing project management of internal support services including real estate availability, store design and brand consistency. Could you break out the main differences between franchises and "regular" businesses from a financial perspective? Are there substantial built-in differences in profit margins, expenses, etc. between the two, or do the numbers more or less come out in the wash?
If I understand your question correctly, I would venture to say that it is slightly less expensive to open a franchise business than starting on your own for two reasons. First, the economies of scale that the franchisor arranges from product purchases, etc., benefit you. Secondly, the expertise that the franchisor offers in the start-up process can improve your efficiencies depending upon your past experience. One of the only differences in the financial models between a franchised business and an independent small business is that the franchisor is compensated by a royalty. The royalty, typically a percentage of net sales, often ranges from four to seven percent. http://www.washingtonpost.com/wp-dyn/content/d ... |
