How To Buy a Franchise

Here’s How To Succeed In Franchising

Three years ago almost to the day, I introduced you to Rob and Misti Reed, a young Texas couple who had just purchased a Puroclean franchise. Since 1990, Puroclean has been a leader in the multi-billion-dollar franchise restoration industry. The company supports 300 offices in North America, and its franchisees provide fire and water damage restoration services, as well as biohazard cleanup services.

Misti and Rob Reed, Puroclean Franchisees

Just to be clear (and put you at ease), I have never worked for Puroclean, I have no personal interests in Puroclean, and (surprisingly) I don’t know anyone at Puroclean. You might have thought (as I had) that someone from Puroclean would have contacted me in 2009 when I wrote about the Reeds, but no one ever did! (That may be another story.)

Dad wanted information

I know about the Reeds because I know Misti’s father, who called me to find out what I knew about Puroclean. He said Misti and her husband had visited HowToBuyAFranchise.com, read some of my articles, and read my 92+ Questions to Ask Before You Invest in a Franchise. But now he was looking for more information before his daughter signed on the dotted line. However, this story has never been about Puroclean . . . my idea was to write a “slice of life” account about a young couple’s experience buying and operating a franchise business. At the time of my original article, I wrote:

For a blogger, it doesn’t get any better than knowing that someone visited your site, subscribed to your free blog, followed your suggestions, and found a deal they liked! I’m proud to have been a catalyst for this young couple, and I plan to follow their franchise journey, especially since I feel like I helped birth it.

What’s the update?

So how are the Reeds doing? I caught up with Misti to find out, and I asked her how she describes her business:

“We are an emergency service (2-hour response time, 24 hours a day),” she explained, “and have very specific and advanced training, which allows us to command a premium price for our service. We are a niche, specialty service that not many can perform. That all translates into added revenue.”

High and low points?

As good as that sounds, how’s it going? “What’s been the high point of your business career to date?” I asked. “What’s made you say, if anything, ‘This is why it’s worth owning a franchise?’”

“Probably the day we got a check that was more than any salary I’d ever earned!” Misti continued. “We still have those happy moments when we have multiple jobs going at once and Rob and I are able to leave town on vacation and know that everything will still go on without us.”

“And how about the low point? Did you ever have a day when you said, ‘I can’t take it anymore?’”

“Many days I said, ‘I’ve had enough!’, but I’m hoping that’s somewhat normal,” she said. “There haven’t really been any low points, more so just points of absolute exhaustion and frustration. When we had the first freeze in 2010, we worked 7 days straight in below freezing temps with 1 or 2 hours of sleep, and I didn’t know if I was going to make it. I remember breaking down in tears in someone’s attic at 2 a.m. and my tears froze on my eyelashes. I guess that’d be my low point. But we were making a ton of money! I was just tired.”

Is the business recession proof?

For my original story I had asked Misti, “Why Puroclean?” and she told me there were three reasons, the first of which was: A recession proof industry. So now I asked, “Have you discovered the business to be recession proof?”

She replied, “Like any business, we have our ups and downs financially, and there have been some franchise offices that closed (since we joined the network), but that’s not because of the industry. The restoration industry will always be here, and we’ll always be needed – that is, until people stop using toilets and washing machines, and there’s an end to natural disasters!”

One major advantage of the Reeds’ business is that primarily insurance companies, and not homeowners, pay them. “This means that we get paid our full invoice very timely. Due to the tough economic situation, some families don’t have the liquid funds to pay for significant property damage repairs, but insurance companies do!” She added, “That’s a great selling point when you’re comparing hundreds of franchises.”

More to come

As for the other two points that explain why she and her husband came to the conclusion to buy Puroclean . . . I’ll tell you about them (and other updates) in future articles. Meanwhile, I hope you won’t miss the main point of this story: The Reeds did their homework before they invested in a franchise, and that’s a principle reason for their success today!

“I can’t find a job” is Not a Good Reason to Buy a Franchise

It’s not a good idea to buy a franchise because you can’t find a job. That’s like getting married because you don’t want to be single. These aren’t the best reasons. In either scenario things could work out for you, but they probably won’t.

You should buy a franchise only because it makes sense to do so. And making sense of franchising involves many hours of work spread across at least several weeks or months. It’s sort of like dating . . . it’s what you do until you fall in love and decide to get married. And while it’s a good idea to continue dating your spouse even after you get married, a franchise doesn’t demand romance. It just demands more work.

You like to work? Then you might like franchising.

Does it work for you?

Making sense of franchising does not begin with finding a franchise that you want to buy. That’s like getting married before you know if marriage makes sense for you. Is buying a franchise the right thing, or the best thing, for you to do?

Few people, it seems to me, spend enough time thinking about what it means to own a franchise. They think about the product or service the franchise offers, and how they might enjoy working in that industry. They think about what it would be like not to have a boss, and how they would enjoy building a business they owned. All of these are benefits that can be derived from franchising, but what about the act of franchising?

Good questions to ask

Before you marry yourself to a franchise concept, or at least while you’re thinking about making that long-term commitment, you really need to ask these questions:

“Can I do it? Can I be a franchisee?” To answer that, you have to ask and answer what it means to be a franchisee.

“Are we compatible? Does franchising make sense for me?” To answer that, you have to know what franchising requires.

“Do I want to do it?” You’ll know that answer after you answer the earlier questions and find an appealing franchise opportunity.

“If I found a job that I’d really love, a once in a lifetime type of job, would I still want to be a franchisee?” If you answer honestly, you’ll know what to do.

A job may be your preference

If what you really want is a job, and if you’re more compatible with being an employee than a franchisee, then don’t buy a franchise. Keep looking for that job. And if you enjoy being single, or you’d rather be single than married, or you can’t make a long-term commitment, or you could live without the benefits of marriage, then don’t get married!

United Franchise Group Sponsors A to Zs of Buying a Franchise

Join me for the A to Zs of Buying a Franchise at the International Franchise Expo in Washington, DC! This symposium is sponsored by United Franchise Group — meet members of UFG at the IFE!

You can also join me for the free workshop: How To Buy A “Hot” Franchise And Not Get Burned!

Looking forward to meeting with you in Washington, DC. The IFE is the most important annual meeting for prospective franchisees around the world.

Franchisor Can’t Tell You The Profile Of The Most Successful Franchisees? Keep Shopping!

First Franchisee: “I love our products, but I can’t stand our customers! They are extremely rude and demanding.”

Second Franchisee: “I bought this business so I wouldn’t have to go out and sell door to door. I want to stay behind this cash register and make it ring. And now you’re telling me the business doesn’t work that way?”

Those quotes are real quotes.

They came directly from franchisees.

Misfit franchisees who became disgruntled franchisees.

What went wrong?

In the first scenario, the franchisee was selling soups, salads and frozen desserts. I know the story because the franchisee had heard me speak about this particular business, and about the franchisor (who was my client), and he thought he’d like to own a franchise. He visited with the franchisor, he visited a store, he met franchisees, and he did everything he was supposed to do, or knew to do, to check out the opportunity. So what happened? Why was he so unhappy just six months into the venture?

I met the second franchisee after conducting some research for his franchisor. The franchisor had asked me to compare the business practices of the chain’s top franchisees to failing franchisees. How were they different? Mostly, the successful franchisees proactively generated their sales, while the failing franchisees sat in their stores and waited for customers who didn’t show up, or didn’t show up often enough.

It’s important to note that both of these businesses were good businesses.

Both of the franchisees were good franchisees.

Both franchisors were not good franchisors – one was a crook! – but that’s beside the point. The franchisees were not disgruntled because of the franchisors.

The franchisor got the blame

In fact, both franchisees were disgruntled because they were misfits in their businesses. Of course, they blamed the franchisor!

Come to think of it, perhaps they should have blamed the franchisor, though what good does that ever do?

But the franchisor could have done something more to prevent these misfits from getting into the franchise network. Had they done so, they would have prevented two failures, because both of these franchisees ultimately closed their doors. One filed bankruptcy.

The media sent the wrong message

And everyone lost. Even franchising suffered because in both cases these chains were in the news, unfavorably. The message was that franchising doesn’t work.

Of course, that’s nonsense.

Franchising works. It can be the best way for people to get into their own business. But only some people. And only some businesses. And only when the right people are aligned with the right businesses.

The outcomes could have been different

Both of the franchisees in this story could have succeeded . . . in different franchises!

The first franchisee should never have been in a business that sold products to retail customers. The franchisee had little patience for people. He was an intelligent person with a good work ethic, but he liked to work independently. In an environment suited for his personality, he would have succeeded.

The second franchisee should never have been in a business that required him to sell services to other businesses. He couldn’t do that. Didn’t want to do that. He could have succeeded in a franchise that sold products at the mall, for example, where advertising and location drove customer traffic.

So what happened?

Good people, good businesses, bad decisions

It’s the same thing that happens over and over in franchising. The franchisees bought the wrong franchises. . . . The franchisors sold to the wrong franchisees. . . . Good franchisees. . . . Good franchisors. . . . Good businesses.

Bad decisions!

And everyone lost.

The crazy thing is that it happens every day.

Protect yourself when you buy a franchise

If you’re going to buy a franchise, make certain you’re a fit for the specific business. Ask the franchisor: What’s the profile of your most successful franchisees?

By “successful,” of course, you mean profitable and satisfied. Franchisees who love what they’re doing. And franchisees who are not only producing high volumes, but taking money home. Lots of money! (if that’s how you measure success).

Signs of a good franchisor

A good franchisor knows that profile. A good franchisor has scientifically surveyed its franchisee population to produce that profile. A good franchisor matches a prospect’s profile to the profile of the top producing franchisees in the network – and only then sells a franchise.

Don’t let a franchisor sell you a business for which you’ll be a misfit. Get the “success profile” upfront. Match your profile to it. If it’s not a fit, keep looking for another franchise to buy!

Meet Franchisors That Agree

Many franchisors insist on profiling franchise candidates upfront. Most don’t, unfortunately. I’ve written about several who do at FranchiseCentral.com. You can also learn more about profiling at FranchiseNavigator.com.

Will McDonald’s Create A Smoothie Meltdown?

Uh oh. McDonald’s may be repeating a history lesson that the company first taught in the mid-1990s when it stole the frozen yogurt market almost overnight. Now the giant chain has turned to beverages, and most recently, to smoothies. Consequently, it may be a rough future for smoothie franchises.

Not so long ago there were more than 6,000 smoothie outlets in the USA generating $2-billion in annual sales. Consumers created a thriving smoothie industry, and during a 5-year period market demand increased by 80%. No wonder so many people wanted to buy a smoothie franchise!

Smoothies on every corner

But suddenly it’s a different story. In July, McDonald’s increased the number of places where a consumer can buy a smoothie by 12,000 units – twice the existing number! Surely McDonald’s advertising will help expand that $2-billion market, but will it be enough to support 18,000 plus units? Or has the smoothie industry become over-saturated?

As the story continues to unfold, I can’t help but recall what happened when McDonald’s entered the frozen yogurt industry.

Starting in the 1980s, it seemed that everyone wanted to buy a frozen yogurt franchise. They were relatively inexpensive to open, and easy (and even fun) to operate. A dozen franchisors quickly emerged to build the industry as health-conscious Americans frequently chose frozen yogurt for their dessert of choice.

Frozen yogurt for a buck

I was fortunate to land the best of the frozen yogurt franchisors as a client (and served briefly as the head of marketing) and helped the company expand internationally. But the fun came to a sudden halt when McDonald’s, overnight, installed frozen yogurt machines in 10,000 stores!

Now, instead of paying $3 or more for a serving of quality frozen yogurt (in ICBIY’s case, the product was shipped frozen to every store – no powders, no mixes), consumers could buy a cone of frozen yogurt at McDonald’s for a buck.

Ouch!

Set aside the dispute about whether or not the McDonald’s product was really frozen yogurt. The mom and dad that used to take the kids to McDonald’s for dinner and then afterwards to ICBIY (or TCBY, or any number of other outlets) for dessert suddenly saw the opportunity to save a chunk of money. The kids seemed just as happy with McDonald’s frozen yogurt – even if it only came in vanilla, and without toppings – and mom and dad enjoyed the savings. So what if McDonald’s lowfat frozen yogurt wasn’t the real thing (with live, active cultures)? The consumer said it was good enough!

The end of the frozen yogurt franchise

And that’s when all the frozen yogurt franchises started cleaning their spigots for a final time. The market now belonged to McDonald’s.

Jim Amos, who served as president of ICBIY in the mid-1990s, remembers it as the “great yogurt meltdown.” After joining the company in the late 1980s to sell franchises domestically, Jim discovered a beckoning international market. It wasn’t long before ICBIY’s founders recognized his leadership skills and turned the company over to him and his capable leadership team. And during several years of dramatic growth, no one even thought about McDonald’s entering the scene. (Or maybe they did and preferred not to!)

“When McDonald’s began offering frozen yogurt,” Amos remembers, “the result was essentially commoditizing the product and dis-intermediating any system that was a higher priced destination based on the quality of their offering, such as I Can’t Believe It’s Yogurt.” Jim and cohorts predicted that consumers would not pass up a McDonald’s to go to a “destination” that sold a higher priced product for what was perceived to be essentially the same product. Not even if the destination sold its product in a variety of flavors!

“The result was almost immediate and it accelerated very quickly,” Amost recalls.

Most of the franchise networks would not survive – not only did their store sales decline, but they could no longer sell new franchises. Some, including ICBIY, were sold to private equity or synergistic buyers.

Will McDonald’s repeat history?

So is there a lesson here for smoothie franchises?

“There is little question that if McDonald’s wants to intermediate almost any segment they can do so based on the number of access points they have and the amount of marketing support and PR that can be levied,” says Amos, now CEO of Tasti D-Lite, which is expanding via franchising and sells “guilt free” frozen dairy desserts in more than a hundred flavors. “Further, the segment is already vulnerable as a single product purveyor and (smoothie companies are) adding line extensions to off-set same store sales declines.”

Time will tell if there will be the “great smoothie meltdown.” Meanwhile, customers seem to like McDonald’s newest line extension, even though it comes in only two flavors. Customer Darnell Richard told USA Today that he used to stop at a convenience store to quench his late-night thirsts, but now he buys smoothies at McDonald’s. “It’s a buck cheaper,” he said, “and it tastes better.”

And after all, consumers’ opinions – and 12,000 plus McDonald’s – ultimately make or break a market. As well as create meltdowns.

My personal opinion . . . I’m a frequent smoothie consumer who has rarely stopped at a McDonald’s in the last 25 years (since I had small children), but I’ve already enjoyed a half dozen McDonald’s Smoothies in the last month! My wife, too! I don’t like that they’re not made with real fruit (they’re made from a mix), but they’re better than good enough. And yeah, cheaper, too.

How Do You Avoid Double Talk When Interviewing Existing Franchisees?

One of the most important steps in the due diligence process of buying a franchise is to interview existing franchisees. I recommend that you interview as many as possible and that you visit at least one and spend at least part of a day exploring the franchise opportunity. After working in a franchise for a day, or a weekend, you might decide it’s not really for you!

Franchisors are usually eager to encourage prospects to speak to franchisees and sometimes they will attempt to direct the process, even though that’s technically against the law. A franchisor can’t tell you who not to talk to. That doesn’t mean the franchisor won’t try to influence who you talk to.

Who should you interview?

When you receive the Franchise Disclosure Document, you’re armed with a list of existing and past franchisees and you should contact them randomly as well as purposely. For example, you might call every 10th franchisee, and in addition, you might find out which franchisees are similar to you in both background, skills, and size of market, and purposely interview them.

My list of 92+ Questions To Ask Before You Invest In A Franchise will be helpful to you . . . it’s been downloaded (or mailed) to countless thousands of franchise prospects through the years, and distributed at many expos, too.

Ask the same questions of all franchisees

It’s a good idea to ask the same questions of all the franchisees you interview — you’re not going to ask 92+ questions, but there will be at least half a dozen that you’d want to ask each franchisee. For example: Given the chance to buy the franchise again, would you do so?

Expect to get double talk

In spite of your best intentions and planning, you’re going to get some double talk from franchisees. Experts like Jeff Johnson at the Franchise Research Institute refer to it as “false positives” and “false negatives.”

It’s difficult to avoid double talk.

Franchisees often suspect that their franchisor is paying attention to what they say to prospective franchisees. Franchisors have been known to ask prospects, “Who told you that?” when prospects report that they heard something negative about the franchise or the franchisor. If a franchisee thinks their feedback will get back to the franchisor, they’re not likely to tell the truth, especially if the truth is negative. if they think there will be consequences for telling the truth, they’ll respond to a question with a “false positive.” Instead of telling it the way it is, they’ll fudge a bit to say that something is “pretty good” or “okay” when it’s actually not.

Perceived competition produces double talk

On the other hand, some franchisees want to avoid what they perceive to be competition from other franchisees. So when a prospect calls a franchisee in Detroit, for example, and the franchisee thinks the prospect wants to open a unit in a nearby market, the franchisee is likely to respond with “false negatives” about the franchise opportunity. They’ll do everything they can to dissuade another franchise from opening in their territory.

You really can’t do much about the double talk, except interview more than just a couple of existing franchisees. When franchise prospects tell me that they talked to one or two franchisees it always makes me nervous because they’re limiting their ability to get to the truth. If you studiously interview multiple franchisees, i.e. a dozen, and you track their answers to your specific questions, you can improve your chances of cutting through the double talk.

One way to avoid the double talk

Jeff Johnson will tell you that you can avoid the double talk by investing in a world-class franchise company. And he knows who they are because he’s identified them after surveying their franchisees. His survey includes almost two dozen questions that will filter out the double talk and get to the truth about a franchise opportunity.

Unfortunately, most franchise companies have not submitted to Johnson’s survey. Many are fearful of what their franchisees would report. But there are currently 21 franchises that have won the designation of certified world-class company. Now that’s not reason enough for you to buy one. You should buy one only after you’ve done your due diligence and determined the franchise company makes sense for you. If it comes with Johnson’s world-class designation, you can feel that much more confident that you’ve avoided the double talk.

. . . I addressed these issues in greater detail at the Behind The Numbers blog, posted on the site of the Franchise Research Institute.

Five Questions You Should Ask Franchisors About Financing; A Franchisor That Isn’t Involved In Financing Probably Isn’t Selling Franchises!

As you continue your search for a franchise to buy, one important aspect may be financing. Whether or not you get that financing may depend on your prospective franchisor! Of course, you’ve got to qualify for the financing, but today, franchisors can help expedite loan approvals for their prospective and existing franchisees. Unfortunately, only a few franchisors seem to understand the new role franchisors must play in franchise financing, so while you’re shopping for a franchise, you must now ask what the franchisor is doing to help line up financing. Lenders now expect franchisors to get involved in the lending process; a requirement that wasn’t the case just a couple of years ago.

Impressively, one franchisor has tackled this issue by appointing a senior executive to build relationships with lenders. John Teat is the managing director of franchise finance for Primrose Schools. I recently interviewed him for the Texas Franchise Leadership Tele-Forum. Here’s what he recommends that franchisors do. Find out how well your franchisor meets these criteria!

1. Today, franchisor/lender relationships are absolutely critical. While it’s location, location, location in real estate, it’s relationship, relationship, relationship in franchise financing. It’s who you know, and the franchisor that doesn’t have a network of bank and lender relationships isn’t in a position to help franchisees get funding. . . . Who are the franchisor’s lenders?
2. The franchisor should set up an initial meeting with the lender and plan to ask questions about the lender and the bank. Learn about the lender’s credit culture. What’s their “put thru” system like? Lenders are impressed by franchisors who want to know about their needs. . . . What can the franchisor tell you about lenders who will consider your application for funding?
3. Franchisors must ask for the lender’s assistance. Create a team spirit with the lender and work collaboratively to put together a funding plan for your brand. Get the lender involved in your business! Invite the lender to your office; to your conferences. . . . Can the franchisor introduce you to lenders?
4. Once the franchisor has a program in place with a lender, it’s important to send the lender only prospective franchisees and existing franchisees that meet the criteria for the program! The worst thing the franchisor can do now is to send the lender a candidate that doesn’t qualify. . . . What are the criteria for qualification? Has the franchisor explained them to you?
5. Franchisors must stay on top of the “put thru” system with the lender. Remain involved. The lender will look to the franchisor for help. . . . What can you expect the franchisor to do to help facilitate this process for you?

Loan Or Lease? You May Need Both To Buy A Franchise; It’s Important To Know Your Options

Adapted from Help Your Banker Say Yes! What franchisors and franchisees need to know to get financing today, by John P. Hayes, Ph.D. with Geoff Seiber.

If you’re investing in a franchise that includes equipment, such as a POS system, or fryers and ovens for the kitchen, or if you need a vehicle, such as a van or panel truck, you may be well advised to lease rather than to take out a loan. Leasing equipment is the equivalent of “renting” the equipment, which means that you won’t take money from your working capital to buy the equipment. With a lease, you set up a monthly payment, and at the end of the lease you can acquire the equipment, or upgrade it and roll the package into another lease.

The advantages of a lease include:

• Preserve your working capital. Nowadays it’s important to keep cash on hand rather than use it to buy items that could be leased.
• Claim a tax benefit. Section 179 of the U.S. Internal Revenue Service Code allows you to write off a percentage of a monthly lease payment. The law frequently changes, so it’s important to consult with a tax advisor before claiming this benefit.
• FICO requirements are usually lower for leasing.
• There are no prepayment penalties.
• You can choose the terms: 24 to 60 months.
• If you’re “corporate worthy” (you’ve been in business at least five years) you may not have to sign a personal guarantee.
• If you own an existing business and you’re opening a second unit of that business, you may be able to use the first business to guarantee the lease, and you won’t have to sign a personal guarantee.
• Closing costs are minimal: almost always less than $500.

There are few disadvantages to a lease, although no one will argue that if you’ve got the money, and can afford to spend it, then it’s less expensive to buy products outright and save the interest. Few people are in that economic situation, however.

Securing a lease may be faster than securing a loan – especially if you’re leasing an equipment package, software, a POS system, or a vehicle that’s recommended by a franchisor that’s well known to the lender. But you will still need to provide personal financial information and provide a variety of documents to the lender.

Join This Coleman Webinar:
The New Normal For Franchise Financing

Wednesday, March 17, 2pm ET. Join Bob Coleman, John Hayes, Geoff Seiber and Bob Rodi to learn more about how you can get the funding you need now to buy a franchise. Register at Coleman Publishing.

Former Franchisor: “No Heart? . . . They Can’t Succeed. . . . Help Them Out Of Your Franchise.”

He doesn’t want to be identified — he’s the founder of one of the most profitable restaurant chains in the world — and he doesn’t even have to think about the answer to this question:

Why is it that some franchisees do well, while other franchisees in the same brand fail?

“Heart” he answered.

By my look he could tell that I was waiting for some elaboration.

Some elaboration, please?

“Heart” he said again, a little louder.

“Okay. . . . what about heart?”

“They have it or they don’t,” he said. “Most don’t.”

Again I waited. For a guy with so much experience, he didn’t seem to have much to say. At least not much to say on this topic, even though he said he wanted to talk about it. He wanted to help people save themselves from failure in franchising.

I took a drink of my coffee. He drank more of his.

Can you predict ‘heart’?

I decided to take another approach: “How do you spot the people who have heart?”

“You can’t,” he said.

I stared.

He added, “Nine out of ten people talk about it, but they can’t deliver.”

Another drink of coffee. He was loosening up now!

Those with ‘heart’ don’t whine

“You don’t know which franchisees have heart until things really get tough and they don’t give up. If they cry and whine and blame other people, you’ve got your answer. There’s not much chance those franchisees will ever succeed, and you’d be wise to help them out of the system. I hate to be crude, but if they dump their (crap) all over you, they’re going to fail.”

There you have it: The secret to a franchisee’s success from a guy who actually knows.

Do you have heart?

It’s another way of asking: Do you have passion?

Remember, my subject said most people don’t have it. Are you sure you do?

It would be good to be sure before you invest in a franchise. Because it takes heart to succeed!

eBook Coming Soon:

Help Your Banker Say Yes! How you can secure financing to buy a franchise. Reserve your personal copy now!

Franchise Companies Tire Of Sluggish Economy: Expect More To Provide Financing In 2010

One of the nation’s premier franchise companies has decided not to wait for the economy to recover to begin selling more franchises. Money Mailer is taking matters into its own hands with a revolutionary finance program that will allow qualified candidates to join the franchise network for a mere four-figure investment!

How many more franchisors will take this same approach? Dozens! Particularly if they want to start selling franchises again in record numbers. If you’re planning to buy a franchise in the next several months, you may benefit from a similar finance program.

Record sales in 2009

Franchise financing isn’t anything new — The Dwyer Group has provided it for several decades, which is part of the reason the company will sell more than 300 franchises in 2009. But now more franchise companies will provide financing because they’re tired of slow-growth and dependence upon the U.S. Government to kick the economy back into gear.

Jaws fell open

Jenkins championed the finance program at Money Mailer and was thrilled when the company announced it at a franchisee convention earlier this month. “When our franchisees heard about it, I’d say there were about 300 jaws that fell open. We’re all very excited about it.”

Excited because he anticipates the company’s lead flow to multiply times four. In less than a week after the finance package was announced, Jenkins said he had received more referrals from existing franchisees than he normally gets in a year! Once the public learns about the program, inquiries will skyrocket.

A $7,500 down payment

While a Money Mailer license costs $37,500, qualified candidates will now be able to join the franchise company with a $7,500 down payment. Money Mailer will finance the balance and not require payments from the franchisee for two full years. The company will also provide a “launch package” that includes $20,000 in production credits paid to the new franchisee in the first year.

Until the economic downturn, franchise candidates frequently used a home equity line of credit to finance a Money Mailer franchise, but that option ended many months ago. “We had to control this situation (the lack of financing) to ensure our growth,” Jenkins explains, “and our management team decided to put this finance program in place. It will make a dramatic difference in 2010.”

Indeed it will, just as similar packages will make huge differences for other franchise companies providing they are bold enough, and financially stable enough, to provide financing to their qualified candidates.

eBook Coming Soon:

Help Your Banker Say Yes! How you can secure financing to buy a franchise. Reserve your personal copy now!