Is franchising right for you?

Franchising - Arrows Hit in Red Mark Target.

Franchising - Arrows Hit in Red Mark Target.

Are you bored of life in the office cubicle? Do you yearn to break free and venture out on your own? Many Malaysians working in employment often dream of owning their own business and look at buying into a franchise as a quicker and less risky way to get into the game. With a franchise, all you have to do is pay the franchise fee and the franchisor will set you up with a new business – so simple right?

But before you sign on the dotted line, be sure that you do your homework and fit the franchise business mould as not everyone is suited to be a franchisee.

Alex Butt

Alex Butt

Alex Butt Wai Choon, a former regional general manager at Microsoft turned “master franchisee” (far left in pic), said one of the key criteria to becoming a successful franchisee is the willingness and ability to follow a system. If you are the fiercely independent sort who is brimming with ideas and can’t wait to try them out or resent other people telling you what to do, then maybe franchising may not be the right fit for you.

“Compliancy is important,” said Butt in a recent interview with Business Circle. “Lack of compliancy is one of the top reasons franchisees fail as they don’t follow the system and start tweaking it instead.”

But that is not saying the franchisee can leave his brain at home. Butt said that ideally, the franchisee should be able to follow instructions but at the same time be able to improvise and innovate.

Signarama PJ

Signarama PJ

Butt holds the regional master franchise license for US-based sign and advertising materials provider Signarama which now has a presence in Malaysia (pic – its shop located along Jalan Kemajuan, Petaling Jaya), Singapore, Thailand, Indonesia and the Philippines. He said that it is crucial that potential franchisees develop selling and networking skills, especially if the business is a service oriented one.

“You need to be able to go out there and participate in the community and promote your brand,” he said.

Butt also cautioned those who think that buying a franchise means that they will be able to run the business on auto-pilot from day one as owners will still need to be hands-on, especially during the initial period.

“Delegating the operations at the start-up stage is one of the reasons franchise holders are put at risk,” he noted.

New entrants into the business world also need to brace themselves for challenges and have adequate working capital at their disposal, preferably at least six months, in order to avoid making short-sighted decisions.

Butt said many people want to turn their interests into a business but may not be good at other critical aspects of business such as selling and marketing.

He said that the initial three years are typically difficult which cause many to quit their business and go back to their jobs.

“A lot of people are just pursuing a romantic dream,” he said. “They do not focus on the operations side of business.”

The franchise model in this sense can be the right option for those who may not have the knowledge to run a business operation as the franchisor is expected to provide the necessary training and support to help sustain a business over the long term.

The modular and scalable nature of franchising also makes expansion a relatively straightforward affair once you have secured the first outlet and made it successful.

What franchising cannot teach you however is the will to survive and thrive.

“You must be able to do whatever it takes to survive,” said Butt. “You need perseverance and resilience.”

Butt noted that those who come from the corporate world might miss all the perks and administrative support they used to enjoy such as drivers and human resource departments.

“I experienced that,” he shared. “But once you are successful in your business, you can get all those back.”

Butt seen here with Bill Gates during his Microsoft days.Butt seen here with Bill Gates during his Microsoft days.Butt seen here with Bill Gates during his Microsoft days.

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