- Since 7-Eleven is rolling out a franchise package for RM250,000 aimed at young millennials, we asked 3 entrepreneurs what they thought about franchising versus starting their own business.
- They were overall positive about young entrepreneurs doing so, as it does help solve a lot of the typical entrepreneurial headaches.
- However, it is important to understand exactly what being a franchisee is like, who they’re franchising from, and if they can deliver on expectations.
Jan Wong from OpenMinds ResourcesJan Wong has been featured on Forbes 30 Under 30 list, for his work on running OpenMinds Resources—a business dedicated to helping businesses figure out and winning the social media game. Jan has a positive opinion on this move by 7-Eleven in the middle of the convenience store trend. On top of appealing to a rising younger audience, “This could be a good countermeasure to 7-Eleven’s increasing competition in Malaysia that is overshadowing their once prominent presence in the market”. He also lists out many of the common headaches solved when you take a franchise, versus running your own business. “One of the main advantages of running a franchise business is that you have eliminated most of the business-related startup risks. You will be owning a business with a proven or tested track record, with systems, processes, resource, and logistics headaches sorted out; in most cases, it even eliminates the need for branding and marketing work as the franchisor will be doing that on your behalf.”
“In short, buying a franchise gives you a shortcut to starting up somewhat, but it is still not a guaranteed success as the operational efficiency, management and up-keeping is still required of you.”In fact, Jan revealed that he has considered how he might franchise OpenMinds in the future, though he hasn’t quite figured out how the model applies to them now. That being said, Jan is “not a fan of running a franchise business simply because I prefer figuring out those details on my own”.
Stephanie Ping from WorqWorq is a coworking space located in Glo Damansara with a mission of changing the way people work together. Worq came into the market during the rise of co-working spaces in Malaysia, and has since created a space that is both a community and an events space, and a space for small businesses to work in. “Some people think running a franchise business is easier than rolling out your own operations but that is not the case. It can be equally as complex and definitely requires just as much work albeit of a different nature,” said Stephanie. She thinks that franchising is a different business model, and enticing more franchisees requires a structure of incentive, the right support, and of course, proceeds.
“The long-term sustainability depends on the partnership with your franchiser so I would suggest finding one you have confidence in. You will just have to evaluate which option gives you the highest chance of success.”“If you run your own business, you get a lot of autonomy but you also have to figure out a lot of the setup. You may make mistakes and it could have a lot of growing pains.” “However, if you buy franchising rights from an established brand, and if it is a good franchise, they would have presumably worked out many aspects of the business so you are not building from ground zero. You also get the goodwill from the brand and marketing would be a joint effort with the franchiser.” “However, there will be aspects to work on such as the structure of the franchise, the amount of support, the number of restrictions, the due diligence on whether you think it is a good franchise and so on.”
Jef Ong from FlexiroamFlexiroam is a prepaid international mobile roaming service provider that allows consumers to use their existing numbers during travel. It has built its presence through a slew of strategic partnerships and thoughtful expansion, leading to 800,000 subscribers and partnerships with more than 100 travel agencies. Jef serves as managing director. “From a business strategy perspective, I think is a smart move for 7-Eleven as this will allow them to expand to have more outlets through this business model,” said Jef. Despite not running his own business, Jef sees their benefits. “Franchise business is a great business model. It reduces the risk for franchisee substantially and helps them to speed-track many aspects of the business—marketing, training, systems etc.” “However, my personal opinion is that young entrepreneurs (in their 20s) should take more risk and get into a business that is bound to face many challenges.”
“It is through mistakes and challenges that new innovations are born. I also advisesthe franchisees to seek advice from other franchisees before committing into it so that they get better insights. There are some key factors to consider such as location, proximity to another franchisee outlet, target markets etc.”In fact, Jef thinks that they have something similar (but not a franchise) for airport outlets. “To date, we have about 29 airport outlets across Asia, Europe and Latin America that sells our product. Yes, we do have plans to move into franchise model for our airport retail in the future.”
###There you have it. While these three entrepreneurs chose to delve into the world of running their own business, they still have a positive impression of franchising, and with the right mindset and understanding of what becoming a franchisee entails, deciding to run a franchise can be a positive experience. It’s a great way to dip your toes into the business world before deciding to run a business from scratch too. Of course, this does depend on who the franchiser is, because as Stephanie said, a bad franchiser can really break an otherwise good business.