The most important aspects of any business you will buy are the USP (Unique Selling Proposition) and the Unique Promise you will offer your customer. Successful development of these two concepts fuel most business successes.
For example, for McDonalds (from their website):
USP: McDonald’s brand mission is to be our customers’ favorite place and way to eat and drink.
Unique Promise: Our worldwide operations are aligned around a global strategy called the Plan to Win, which center on an exceptional customer experience – People, Products, Place, Price and Promotion.
Whatever business you may buy, you will need to put a USP and a Unique Promise around the products and services you’ll offer to customers.
But, as in the McDonald’s example, franchises, rather than independent businesses, are more apt to have this developed into a core mission, a set of values and a vision statement that resonates with the public. It’s likely that the USP and Unique Promise were honed over the years as they powered the success of the franchise.
In choosing a franchise opportunity, assess the USP and Unique Promise being made by the Franchisor. The USP may be the brand name and the franchise’s marketing strength or it may be a business formula and how it’s implemented. Headquarters may require tight control of operating practices and the prices you charge or you may have the flexibility to adapt to local conditions.
Often the price of entry to the franchise is the USP. In turn, that price will determine how long it takes to get a return on your investment and when you begin to take profits.
Here are a few factors that can help you analyze the USP and the Unique Promise of a franchise:
- How is the franchise formula and business operation different from competitor’s? Does the franchise business offer different products, lower prices or better service or are these factors essentially the same? This is especially important to determine in established business sectors.
- Is the brand name a high premium in the cost of the franchise and is it the USP that will bring customers to you as opposed to competitors? Will the brand support the higher cost of the franchise?
- Price is very frequently presented as the key USP, especially if the franchise formula is offered by many others. Not only will the initial investment determine how much cash you need (or must borrow), but ongoing royalties, advertising fees and required product costs are all important to consider in defining the Unique Selling Proposition of a franchise. Can you compare the choices you have regarding how much each franchise costs you on an ongoing basis?
- Buying a franchise is not a one-time event. It is an ongoing business partnership. What is the Unique Promise the franchisor makes regarding the business relationship, guidance and assistance over time? Is the franchisor’s view of the business in sync with yours?
It’s important to consider how well you’ll get along with the franchisor. Is the Promise one of trustworthiness, a friendly relationship of mutual respect and the willingness to coordinate business goals? The best way to determine this is through a one-on-one meeting with the top person prior to joining the franchise. Take that time to learn about each other’s vision for the business. It’s your “chemistry test” for how you’ll get along. Most franchise agreements are for several years.
Franchises are a unique American invention that has spread throughout the world. It’s typically American to admire the process and results of a well-run business. Franchising is a short-cut and risk-reducer for people who want to be in business for themselves. It’s a way to build an asset that can be sold or passed on to family. With so many good choices it pays to carefully analyze the options from many different angles. Viewing the opportunity in the same way that a consumer would assess the value of a product will help you make the right choice.