How Do Franchises Work? An Introduction to Franchising

May 31, 2022

Are you wondering how do franchises work? Creative Colors International can walk you through the basics so you have a firm understanding of the franchise process.

Franchising allows entrepreneurs to open a business with a road map to profitability. As part of the deal, franchisees get the right to use the company’s brand and trademarks. The parent company also agrees to provide ample training and support to help the business owner succeed. The franchise industry is on track to end the year with more than 792,000 establishments, the International Franchise Association reported. Despite taking a hit in 2020 from the fallout of the pandemic, franchise businesses quickly rebounded. Franchising is forecast to employ 8.5 million people by year-end and generate $826.6 billion.

Franchise opportunities exist for a variety of different budgets. Home-office-based franchises can be opened for as little as $10,000, while a high-profile franchise like a car rental location may cost up to $12 million. Although franchising is synonymous with fast food, there are opportunities in a variety of industries, including automobile, restoration, home services, and healthcare. CCI is a franchise industry leader in leather and vinyl repair. Our technicians restore products to like-new condition by eliminating rips, tears, burns, scratching, and fading.

Benefits of Franchising
Franchising lets you be in business for yourself, but not by yourself. Having the training and tools to succeed requires a substantial initial investment, and some people may balk at the rules and regulations franchisees must follow. If you are wondering if franchising is the right choice, take a look at some of the advantages of franchising.

  • Low Failure Rate. Starting a business from scratch is a risky venture. Nearly half of all small businesses fail after the first five years. As a franchisee, you get to increase your chances of success by operating a business with a proven track record and concrete evidence there is a high demand for your products and services. Every franchisor is required to file a franchise disclosure document, which helps give potential business owners an idea of how long it will take to achieve franchise profitability, as well as their earnings potential.

CCI has a long history of helping entrepreneurs navigate business ownership. The restoration franchise launched its first mobile van in 1980 and has at l 150+ mobile repair units providing service to customers across the country.

  • Easy to Finance. One of the hurdles new business owners need to tackle is finding funding to finance their new venture. Opting to open a business with a proven success rate and established financial projections increases the likelihood of receiving enough funding to get your location up and running. Many franchisors also have partnerships with lenders to help streamline the financing process.

It costs between $86,980 and $102,410 to become a CCI business owner. CCI partners with Guidant Financial to help its franchise owners secure funding. Guidant’s Audeo™ Plan allows clients to purchase a franchise using retirement funds without being subject to taxes or penalties. The mobile franchise also has relationships with leasing companies to help lower van costs and reduce fleet administrative costs for additional savings.

  • Established Customer Base. Having brand recognition allows your reputation to precede itself. Many franchisors also establish national accounts, so their franchisees already have customers in the pipeline, allowing them to ramp up sales from day one.  CCI has approved national and regional vendor accounts with top restaurant chains and furniture companies to help its franchisees secure customers on day one.
  • Training.  Franchisors offer comprehensive training programs to make sure entrepreneurs have the tools they need to serve customers. Training enables franchisees to gain a foothold in an unfamiliar industry.  CCI owners do not need experience in the leather repair industry to thrive. New CCI owners take part in a three-week training program at the company’s corporate headquarters. During the training, they learn proprietary restoration techniques as well as sales and managerial skills they will need to get their franchise on the road to profitability. A CCI field representative also spends one week with every new franchise owner when they launch to help them build traction and secure accounts.
  • Built-In Support. Most franchisors provide ongoing training and support to help business owners down the road.  CCI introduces new products and services at regional meetings and an annual conference. The company also helps franchise owners with difficult repairs by phone and an online support center.
  • Marketing Guidance. To keep its brand messaging consistent, franchisors create a marketing plan to help franchise owners drum up business.  CCI helps raise brand awareness by providing its franchisees with a variety of marketing materials, including print ads, pamphlets, fliers, and more. Many CCI franchisees rely on their vans to serve as mobile advertisements for their services.

Conducting Franchise Discovery

Now that you understand the advantages of franchising, here’s what to expect as you begin the exploration process.

Gather Information. In addition to connecting with a franchise business consultant, prospective franchisees need to take a hard look at the company’s FDD. The FDD offers detailed information about the company, including financial results. If a brand sparks your interest, taking time to explore the FDD will give you the insight to help make a decision.

CCI’s franchise business consultants can answer questions about the business to help you make an informed decision about your future.

Make a Plan. If you are considering opening a franchise, it’s important to develop a detailed business plan to make sure the brand achieves your goals. The plan should include the management structure, financial analysis, and marketing strategy.

CCI encourages potential franchisees to rely on their peer network for guidance as they create a solid strategy to succeed.

Discovery. Discovery Days are an essential step in the decision-making process for franchisees. Most companies encourage prospective franchisees to spend a few days at their corporate office to get a taste of the company’s culture and values. During this time, they get to meet the team of people who provide support to new business owners and engage with other franchisees to learn about their experience. Part of the visit typically includes a site visit to see a franchise in action. Discovery Days are also a time when the franchisors can evaluate candidates.

CCI re-started in-person Discovery Days to allow potential partners to learn about the company. They took the Discovery Days process virtual after the outbreak of the pandemic to safely connect with entrepreneurs from a distance.

Connect With CCI
Now that you’ve had an introduction to franchising and understand how franchises work, it’s time to start exploring your options. If you are ready to learn more about franchise opportunities in the leather repair industry, click here to request franchise information and connect with one of CCI’s franchise business consultants.