Veteran Franchisee Explains 3 Challenges Franchisees Face Today

Virginia Barbeque franchisee Ed Totanes recently helped me introduce franchising to a group of veterans in Washington, DC. Ed is a veteran who took advantage of the VetFran program, which helps veterans of the U.S. armed services buy franchises at a discount.

Challenges franchisees face

Ed said every franchisee (regardless of the type of business) is facing 3 primary challenges today:

1. Labor. Finding the right people is a challenge, in spite of high unemployment. Ed’s suggestion: Hire a veteran! If they’ve been through boot camp they’ve been trained and they know how to say, ‘Yes, Sir!’”
2. Money. Finding it, managing it and keeping it! “Cash is king,” Ed told the vets.
3. Marketing. Businesses don’t just develop, they have to be cultivated. You need a good marketing campaign. “That’s one of the reasons why I prefer a franchise,” he commented.

Advantage over civilians

Ed told the veterans that if they become franchisees they have an advantage over civilians. “The military teaches us to work hard and work as a team. Civilians don’t understand that,” he concluded.

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Whose Opinion Counts When You Interview Franchisees? 5 Steps To Help You Decide!

Got 3 minutes? View my new video about evaluating franchisee interviews.

As you do your homework to determine which franchise to buy (or if you should buy one at all), you’ll likely hear a variety of opinions and comments shared by existing franchisees. Your challenge now: Who to listen to?

Making sense of what franchisees say

Whose opinions count the most when you’re interviewing franchisees?

Here are 5 guidelines to help you interview franchisees and make sense of what they say:

1. All franchisees are not created equal. Some are better than others. A few are better than most. Interview the best!
2. Interview franchisees at all levels of the network so that you get the total story. But spend most of your time with the top performers and money makers. Ask the franchisor, other franchisees, and members of the Franchise Advisory Council for the names of these franchisees.
3. Get most of your information from franchisees who you admire. Even at the top, not all franchisees are created equal. It’s important to learn about their beliefs and lifestyles. The guy who makes the most money may not be the type of person you want to be!
4. Every franchise network has a bottom 25 percent — this is where franchisees end up when they don’t work the system, or they make other blunders that may be related to the franchisor’s inability to help them succeed. But probably not. Avoid spending too much time at the bottom — and while you do, expect to hear negative comments and whining.
5. Interview award winners, but keep in mind that they may not be franchisees you’d admire. And just because they won an award doesn’t mean they made a profit. Be sure to ask! Award winners are usually franchisees who implement the system — and that’s how you turn an opportunity into a business.

Who are you talking to?

When I served as CEO of HomeVestors, prospects would occasionally tell me they weren’t buying one of our franchises because of what they had heard from the existing franchisees. I would ask the prospect, “Which franchisees did you interview?” And most of the time, the franchisees were in the bottom 25 percent of our franchise network.

“What do you care what franchisees in the bottom 25 percent say about this business?” I’d ask the prospect. 

You can usually ignore the bottom performers 

Quite often, the prospect didn’t know who they were talking to! They were surprised to find out that they had interviewed the worst performers. Again, I’m not suggesting you ignore all the negative comments you hear from franchisees. But, unless you hear the negatives over and over again, I think you can ignore most comments from bottom performers.

If the best performers share the same negatives as the bottom performers, that’s worth exploring. Maybe there’s a deficiency that the franchisor needs to correct. 

Work your way to the top of the network

Unless you plan to end up in the bottom 25 percent of a franchise network, stay away from it! Listen to the franchisees at the top!

And by the way, that advice also works for existing franchisees. Watch who you’re talking to! Bottom performers aren’t going to help you rise to the top.

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Is Franchising Indentured Servitude?

Crazy Isabel called.

Normally, Isabel isn’t crazy, but this morning — whew! 

She wants to buy a franchise. Has a pretty good idea which type of franchise she wants to buy, and she has the money — at least most of the money that she’ll need for a start up in this particular industry.

She’s done some homework, with a little help from me, and she’s collected information from targeted franchise companies. 

Plans derailed?

But today, she’s crazy (I mean that in a nice way, of course) because she read something that will derail her plans to buy a franchise. “If this is true,” she shouted, “I’d rather take my chances and start a business on my own.” 

She was screaming at me today!

She read on some Web site that franchising is little more than “indentured servitude.” While talking to me — screaming at me, really — she said I should have told her that she’d be nothing more than a “slave” as a franchisee.

“Why didn’t you tell me that?” she demanded to know. 

Uh . . . because I don’t believe it’s true.

Good enough?

I didn’t think so.

Here’s my take on the issue

Here’s what I told Isabel and what I will tell you if you ask the same question:

Don’t insult the slaves. They had no choice. In addition, don’t confuse slavery with indentured servitude. They mean different things. And you, my dear Isabel, you have a choice that neither slaves nor servants were afforded. No one is forcing you to buy a franchise. And if you do buy a franchise, no one is forcing you to buy this one or that one. You — and only you — get to choose. 

Want to hang up?

So if you’re going to continue talking crazy, it’s time we end our relationship!

She didn’t hang up, so I continued:

Furthermore, if you have even an inkling that it’s indentured servitude, then why would you bother buying a franchise? Forget it. Keep your job. I’m sure you have lots more freedom working for your employer! (Yes, that was sarcastic).

Franchising has limitations

And let me add this. I’ve owned several franchises. I enjoyed each experience, though some were more profitable than others (and some of the franchisors were better than others). Never once did I think of myself as a servant, but rather, I was in control of my destiny and in control of my operations to the extent the franchise agreement permitted me to be.

And since I knew, and agreed to, the boundaries of the franchise agreement, I had no issues with the franchisor’s controls. If you think those controls will be a problem for you, Isabel, then move along, stay away from franchising, it’s not for you. Don’t try to make it something that it’s not! (Watch this video now.)

Be careful of who you talk to!

Finally, Isabel, pay attention to who you’re talking to — or in this case, what you’re reading and who wrote it. Of all the successful franchisees I know — multi-millionaires included — I don’t know of one that would compare their franchise to indentured servitude. On the other hand, I understand why a failed franchisee would make that comparison. They gotta blame their failure on someone or something, and it’s surely not going to be the person they see when they look in a mirror.

Beware of some franchisors: the bad ones

Okay, I apologize for that last statement, because, in fact, there are bad franchisors who take advantage of their franchisees. They lie to them. They mislead them. They control them. They even try turning them into indentured servants.

But Isabel, all you’ve got to do is your homework and you’ll uncover the bad franchises before you ever make your commitment.

. . . When we finished talking she had settled down and had returned to the lovely, sensible Isabel that I’ve known now for several months. She’s off this week looking for earnings claims. I’ll let you know when she checks in with me again! 

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Three Reasons Why You’re Buying A Franchise

Say what you want, but these three reasons are behind your desire to buy a franchise:

1. You want to belong to something that’s larger than you, i.e. a network of successful franchisees. It’s admirable.
2. You want to be led by someone larger than you, i.e. a franchise coach, and other successful franchisees. It’s different.
3. You seek relationships with like-minded successful people, i.e. you want to operate a franchise just like they do. It’s admirable and different.

Emotion drives buying decisions

I’m not making up these reasons to have something for my blog. I’ve studied the process for more than 30 years. As I’ve researched articles and books, I’ve asked countless franchisees, “Why did you decide to buy that franchise?” As the former CEO of a major franchise company, I listened carefully to franchisees who told me what triggered their buying decisions. The reasons almost always were based on observations that fed into their emotions.

“When I saw the Bible on your desk, I knew this was the right franchise for me,” more than one franchisee told me. Fortunately, I don’t keep a Bible on my desk for show. I read it. But that’s no reason for anyone to buy a franchise.

Experts agree with these reasons

Recently, I reached out to an expert on this topic to get his thoughts about the reasons why people buy franchises. Fred Berni is the founder of Dynamic Performance Systems, a Canadian-based company that helps franchisors select the best franchise candidates using personality profiling. He told me, “I agree (people buy franchises because) they want to belong to something larger than them, and they want to be led.” As for seeking relationships, he continued, “It would be a big factor in their decision, but not the primary motivator. They want to perceive themselves as entrepreneurs, but are uncomfortable with actually being one. They ‘need’ the support that a franchise gives. There’s a good reason for the expression, ‘in business for yourself, but not by yourself.’”

People buy emotionally first, logically second

Even that expression taps into emotional drivers. It works because people buy emotionally first — logically second. And that’s what gets so many franchisees into trouble!

Emotions lead people to buy the “hot franchise” — a term frequently used by people searching for franchise opportunities. But when it’s time to actually operate the franchise successfully — profitably — they realize they can’t, or they don’t want to, or they can’t afford to, or that the product or service really isn’t something they’d like to sell. And that’s when it all falls apart. If only they had paid attention to the logic before they signed the franchise agreement. But that’s not human nature.

Fooling yourself as to why you’re buying won’t work

If you’re buying a franchise, don’t try to fool yourself. It’ll catch up with you and you’ll end up on the wrong side of the business. You can’t deny your emotions. You’re going to buy what appeals to you — regardless of the reason.

Maybe it’s because, as Fred Berni says, you want to see yourself as an entrepreneur. It’s a prideful thing to be an entrepreneur! America, we’re told, was built by entrepreneurs and thrives because of entrepreneurs. The richest people in the country are entrepreneurs. (It’s just a hunch, but if we take a second look, we might discover the poorest people include many who were also entrepreneurs).

People buy to be admired; to be different

You want to be an entrepreneur because you, too, want to be admired (like the guy who drives a Rolls Royce), or you want to be different (like the guy who drives the Hummer), but if you fall short of performing successfully as an entrepreneur, you’ve got a serious problem.

So go ahead, buy the “hot franchise,” but do yourself a favor. Justify it first. Figure out what it will take to be “admired” and “different” before you buy the franchise. ‘Cause as much as he may want to, and as good as he may be at leading you, the guy with the Bible on the desk in the CEO’s office isn’t showing up on site and operating your franchise for you!

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Why Are You Buying A Franchise? . . . Really?

“You don’t need to invest all that money to get into the pizza business,” the advisor told his client/friend. “You make the greatest pizza I’ve ever tasted. Far better than anything those franchises offer. You don’t need to pay them all that money upfront, and then — my God — you’ve got to pay them nearly ten percent of your revenue for the rest of your life. Don’t buy a franchise!”

Expect to hear that advice

I invented the above scenario, but it’s real nonetheless. Franchise prospects almost always hear something similar to it. If it’s not about pizza it’s about cookies or chicken or services of all kinds. These passionate commentaries are often shared by accountants, lawyers, family members, or friends — people who mean well, but don’t always understand the real story.

If you’re thinking about buying a franchise, chances are you have met, or you will meet, one of these “advisors.” And when you do, make sure they understand the real story behind why you are buying a franchise. Even better, make sure you understand why you’re really buying a franchise. It doesn’t matter much what the “advisors” think, although I can understand why you’d like them to be on your side — you may need their help, financially and otherwise.

Understanding why people buy franchises

So what is the real story? Why do people buy franchises?

Because, look, there’s some truth to that fictionalized scenario I posed earlier. Some people can indeed make or provide better products and services than some franchises serve up. So who needs a franchise? If you can bake, fry, grill, make something — anything — better than what the marketplace offers today — if you can provide a better service — why do you need to buy a franchise?

Several good reasons, and here’s the first

In a word, I’ll tell you why: marketing.

One of my favorite cousins in Ohio made the greatest pizza ever. You got a whiff of her pizza baking and you thought you were in Italy. One bite and it was over. Never again would you buy pizza from anyone else.

So why did her business fail?

Miss this and your business fails

Because she didn’t know how to market her pizza. It was the world’s greatest pizza, no doubt about it, but she didn’t know how to sell it. She didn’t have a brand. No presence. No home delivery. No knowledge of how many slices of pepperoni to put on a large pie and make a profit upon selling it. Didn’t know where to advertise. Or how. . . . There were countless other issues all related to the operations of the business. Ingredients, recipes, how to mix it, fix it, bake it, serve it — no problems there. She just couldn’t market it!

How much better off she would have been had she just bought a franchise!

Know what you know

So when your “advisor” tells you that you make the greatest whatever, or you provide a better service, you can accept the compliment for what it’s worth. And even though it’s true, if you know that you don’t know how to market your product or service, then that’s why you’re buying a franchise. It’s what you know that matters.

Your accountant, your lawyer, your family members, your best friend — they do not know! You do. Tell your accountant to give you financial advice, not business advice. Tell your lawyer to give you legal advice, not business advice. And tell your family and friends — nicely, of course — to keep their advice (unless they are successful business owners).    

It’s a good reason, but not all franchises provide it

Marketing know-how is a very good reason to buy a franchise. . . . providing, of course, that you buy into a franchise that knows how to market and how to teach its franchisees to market! (Sadly, many do not).

Marketing isn’t the only reason for buying a franchise. More reasons are coming in future blogs!

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Franchisee: Are You Legally Obligated To Succeed When You Buy A Franchise?

What happens if you buy a franchise and—God forbid—you fail and shut down the business? Are you legally obligated to succeed?

You are if the franchise agreement says you are. What’s worse, you may be required to pay fees even after you’ve failed!  

What does the expectation of success mean?

Franchisors sell franchises with the expectation that the franchisee will succeed. Makes sense, doesn’t it? But let’s take a look at what that really means to both the franchisor and the franchisee.

Most franchisors can sell only a limited number of franchises in a given territory, i.e. the United States. Let’s just say the franchisor can sell 1,000 franchises in all of the USA. Once all 1,000 units are sold, the franchisor has nothing left to sell in the states. Yes, there are foreign territories to conquer, but that doesn’t matter. The franchisor has only a limited number of units to sell in the states and the franchisor’s domestic financial model is based on the anticipated performance of those units alone. 

The real value is not the sale of one franchise

So let’s say you buy one of those units. The franchisor now has one less unit to sell. And while there’s value in the sale,  i.e. you will pay the franchisor an upfront franchise fee, the real value is in the royalty stream that the unit is expected to produce year after year for the franchisor.

After covering sales commissions, marketing and legal fees, franchise fees are commonly re-invested in franchisees. The fees are used to reimburse the franchisor for the cost of training the new franchisee and providing initial support. While a $50,000 franchise fee looks like a big chunk of money—and it is—it may not include even a dollar of profit to the franchisor.

Royalties produce long-term profits

The franchisor’s profit is in the royalties, and the franchisor hopes to collect those royalties for years. In fact, the franchise agreement likely states that you are obligated to pay the royalties for a minimum number of years, commonly five to ten years, or the length of the franchise agreement.

Through the process of training you and helping you open your unit for business, the franchisor may only break-even, or could even lose money. The franchisor knowingly takes that risk because if you operate the unit successfully for at least five to ten years the royalty stream will produce tens of thousands of dollars, a good chunk of it profit to the franchisor. 

A failed franchise hurts the franchisor

Of course, if things don’t go well, you and the franchisor both lose money. The franchisor’s losses include money that was not recovered from initially training and supporting you, plus the loss of royalty dollars that your unit failed to produce. A closed unit also reduces the amount of operating dollars available to the franchisor to cover ongoing costs, and while it adds another unit to the franchisor’s sales inventory, it may impede the franchisor’s ability to sell franchises because prospective franchisees will become aware of the failure. 

Franchisee losses may be more than obvious

Your losses include all the money that you invested, including the franchise fee and all the start-up costs, such as payments to the landlord, professional advisors and suppliers. And unfortunately, your losses may not end when you shut down your business. 

Closing your unit may be a breach of the franchise agreement and may trigger the payment of liquidated damages. After taking the unit off the market and selling it to you, the franchisor expected you to succeed. Now that you’ve failed, and breached the contract, the franchisor may hold you responsible for ongoing fees, such as monthly royalties and advertising dollars, and for royalties dollars that were anticipated from your unit. These fees—along with other obligations that you may owe to a landlord, the equipment leasing company, the Yellow Pages, etc.—may amount to tens of thousands of dollars, burying you in a deeper financial hole.

By selling the business—even at a discounted price—you may be able to curtail these obligations, but that, too, depends on the franchise agreement and, of course, the successful sale of the business. There may not be a market for your failed unit, even at a steep discount. 

Be sure you understand the franchise agreement

No one buys a franchise with the idea that they’re going to fail, but failures occur. That’s why it’s important to review the details of a franchise agreement before you make a commitment to the franchisor. The best way to understand the agreement is to consult with a franchise attorney. The attorney may, in fact, be able to help you negotiate a better agreement, one that does not obligate you to liquidated damages, or at least holds the penalties for failure to a minimum.

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Like It Or Not: Franchising Comes With No Guarantees. Accept It Before You Buy!

One thing you need to understand before you buy a franchise: It never, ever comes with guarantees.

Do you know of any business methodology that does?

Systems make franchises work

Franchising isn’t a business. It’s a method of distributing products and services. The method is defined and supported by a system. How well the franchise will perform depends first and foremost on the quality of the system.

Franchisees make systems work

The next most importance factor is the franchisee’s desire, ability and willingness to follow the system. A quality system in the hands of a dedicated franchisee usually spells success.

But there are no guarantees

However, there are other issues that must be considered when you buy a franchise–issues that you cannot control:

1. The economy. Had we only known in 2006 what we’d face in 2008 and 2009 — most of us–franchisors and franchisees–would have made different decisions about our franchises.
2. The market. Interests and demands change. Suddenly, there’s no market for your product or service.
3. Changes at the corporate office. The new management team isn’t nearly as good as the old management team–they manage, but they don’t lead. The new ownership isn’t nearly as vested in the franchisees as was the founder–they make promises and don’t deliver. When changes occur at the corporate office, they may negatively impact your business, or at least your relationship with the franchisor.

Any one or a combination of these issues can turn a thriving, satisfying, profit-producing franchise (or business) into a disaster.

Can you accept this risk?

That’s a risk you must be prepared to accept before you buy a franchise.

If you can’t or don’t want to, here’s my best advice–and I suggest you take it: Keep your job! . . . Or get one. A job may not be satisfying and it may not pay enough money — but if you’ve got one, or can get one, it’s safer than buying and operating a franchise.

Most of you who are reading this blog won’t be sidelined by this advice. You’re not going to keep your job or get another one. You’ve done that and it didn’t work. You’re going to buy a franchise–but now you know that risk is inherent in the methodology.

Accept it!

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Franchisees: Just Churning Businesses Or Are They Turning Out Profits?

Franchisors in the United States are required by federal law to tell prospective franchisees how many franchises they sold and retained from year to year. That’s good information for anyone who wants to buy a franchise. But it’s not enough information to help you determine if the franchisees are operating profitably. And that’s what you really want to know.

You might assume that because the franchise company shows more franchises in its network this year than it had last year that the franchisees are making money, and you could assume they’re profitable. But you could be mistaken. And if so, the franchisor doesn’t have to tell you otherwise. It’s only after you invest your money, open your business, and operate it for several months that you find out no one is making any money!

Are you thinking: That no good franchisor? Well, not so fast.

Franchisors don’t always know

Crazy as it sounds, franchisors don’t always know if their franchisees are operating profitably. Yes, they should know, but they’re not required by law to know. And, while they won’t admit it, some may not want to know, especially if it’s a new concept that has yet to catch on, or if the upfront costs are so expensive that it takes a year or longer just to break-even. The franchisor may be content so long as the franchises continue to sell, which they will if it’s the “hottest,” “trendiest,” “sexiest,” or some other useless “est” that catches the eye and the checkbook of people who buy franchise opportunities.

Franchisees don’t always know

Crazy as it sounds, franchisees don’t always know if they’re operating profitably, either. They’re busy! They’ve got a business to run, customers to tend to, employees to train, vendors to talk to, a franchisor to satisfy . . . they’ll wait for their CPA to tell them if they made money. Meanwhile, they’re getting by, paying the bills, paying the landlord, paying the employees, and paying themselves what they can, but never enough to feel that it’s worthwhile.

Now, those franchisees who know they are profitable, well, some may not want their franchisor to know for fear the franchisor will increase royalties, or impose additional fees. Or worse: Tell the IRS!

And those who know they’re not profitable, some of them don’t want the franchisor to know for fear of losing their franchise license. If they can keep their license, they figure they’ll eventually turn a profit; otherwise they may at least be able to sell the business at a loss.

Franchisees don’t always tell all

For all these reasons and others, franchisees don’t always tell the franchisor everything!

Besides, franchisee profit or loss is ultimately the business of the franchisees, not the franchisor. Granted, good franchisors understand that if franchisees aren’t profitable the franchisor won’t be profitable–for long. But not every franchisor is a good franchisor.

That’s why it’s the business of the prospective franchisee to find out if franchises are just churning, or actually turning out profits.

Some franchisors volunteer profit information

Recent U.S. franchise laws have made it easier for a prospective franchisee to learn about the financial performance of a franchise company. Franchisors can voluntarily release this information in their Franchise Disclosure Document (FDD), which they must give at no cost to prospective franchisees. However, the majority of franchisors choose not to voluntarily release this information, and for many reasons, some of them, in fact, good reasons (which I’ll discuss at another time).

So what do you do if the franchisor won’t provide you with the information you need to determine if the franchises are just churning, or if they’re actually turning out profits? 

Good relationships lead to better information

How about: Don’t buy the franchise!

That’s probably not what you wanted to hear. So how about: Develop a relationship with at least one franchisee who will help you get the information. Two to three franchisees are even better!

Chances are pretty good that if you don’t know me and I call you by phone and ask, “How much money are you making?” you probably won’t tell me. Even if I tell you I’m hoping to buy a franchise, like the one you own, you probably won’t reveal too much information by phone. You might spend some time talking to me, answering questions in generalities, but when I get down to profit and loss issues, and I want details, you’re probably going to politely stall that conversation–“Gee, I don’t know, my accountant takes care of all that”–and get off the phone as soon as possible.

But if I make an appointment to visit you, or I offer to buy you breakfast, you’re likely to be more receptive. Once we meet and you see that I’m a serious prospect and that I’m asking good questions, you may be open to a second meeting at which you, and/or your accountant, will share profit and loss information with me.

And that’s how you get the information you need.

Be careful: you may need more info

Even then, it may not be enough information. It could be the franchisee you met with got lucky and made a profit in spite of himself. Or he invested more money than you can invest. Or he had more help. Or a better location. Or the franchisor gave her a once-in-a-lifetime deal.

So when you meet with franchisees, make sure you are comparing apples to apples. “If I open in this kind of a location, and I invest this much money, and given that I have this particular background, and I’m willing to follow the operating system, as you have done . . . do you see any reason, Ms. Franchisee, why I can’t succeed like you?”

Remember: One franchisee’s experience still may not be enough for you to make a good decision. You may need to repeat this scenario a couple of times until you’re confident that this particular franchise is the right one for you and your money. 

I know it’s time consuming. But there are no other good choices. You must be willing to invest the time. And if you’re going to invest thousands of dollars, possibly your life savings, isn’t it worth the time? 

One last point: There are many franchisees who are just churning, without even knowing it, putting in time until they have to sell at a loss or close their business. And they’re in nearly every franchise network–even the good, brand-name networks. At the same time, profit-generating franchisees abound. I can’t tell you they are in every franchise network, or that they are in the network you’d like to join, but you will find them if you ask. 

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Ask The “Happy Questions” Before You Buy A Franchise

What will make you happy?

I really like that question, because I like to be happy. Doesn’t everyone?

It’s a simple question, which may explain why so many people don’t ask and answer it before they buy a franchise. Maybe it’s too simplistic?

Can franchisees be happy?

Or maybe people don’t think you can be happy and own a franchise–so they buy one anyway? Maybe they believe that the only way to control their destiny, and their financial future, is through business ownership, and they buy a franchise because they can afford to–and it doesn’t matter so much that they won’t be happy if at least they’ll be rich!

I don’t know why people don’t ask and answer the question before investing in a franchise, but if I were the Franchise Czar, I’d make it a law!

Franchise Law #1: Answer the Happy Questions or you can’t buy a franchise!

Silly, I know.

Happiness is in knowing

But is it any less silly to buy a franchise and not know if owning and operating it will make you happy?

And believe me, lots of people do it that way. For most of my franchise career, I have participated in multiple franchisee conventions annually. And these are not always happy events.

Lots of franchisees gather for a convention, they come to learn about the franchisor’s vision for the future, to sit in on workshops and training sessions, to meet vendors, and (especially) to mingle with other franchisees. It’s in the mingling where the real convention occurs. That’s when you recognize the unhappiness.

Some franchisees are really happy

In the mingling, whether it’s in the hallways, or over a private dinner, or in a late-night poker game (franchisees are always up for gambling because, well, franchising is a bit of a gamble), that’s when it becomes obvious who’s happy, really happy, and who’s not.

Some franchisees will say they’re happy because they know it’s important to keep a positive attitude and they’re hoping that by pretending to be happy some day they actually will be happy!

Seeking Happyville

Others aren’t happy, but are working hard to get to Happyville. They come to conventions to soak up the positive vibes, figuring that eventually they’ll get happy, too. They know that happy is more than a state-of-mind, and they just have to figure out how to put together the pieces of the franchise puzzle so that they can be happy.

Wouldn’t it have been easier to ask the Happy Questions before investing? So that there’s nothing to figure out?

I think so.

Ask the Happy Questions

Wouldn’t it make sense to take the time to do the homework and ask all the right questions before investing your life savings in a business that might not make you happy?

This is so easy . . . and yet, so many franchisees struggle through the misery of operating their businesses.

Why?

It’s because they didn’t ask and answer the right questions, beginning with the Happy Questions.

Don’t make that mistake.

Ask these questions:

• What will I enjoy selling? (By the way, if you think you can be a franchisee and not sell something, please keep your job).
• How much do I need to earn to be happy? (Buy a franchise that can provide at least that much income).
• What work environment will make me happy? (Do you want a business that’s in a mall or strip center? Food or no food? Stationery or mobile? Want to work from home?)
• What work conditions will make me happy? (Do you want to call on businesses to sell them your product/service, or do you want the buyers coming to you? Employees or no employees? Full-time or part-time? Do you want to work ‘in’ or ‘on’ the business?)
• What kind of work relationships make me happy? (Even if you don’t hire employees, you’ll at least have to relate to vendors and your franchisor. How do you like the director of training, for example? How about the field support supervisor? How about the franchisor’s CEO?)

Asking questions is up to you

Those are the kinds of questions a Franchise Czar should insist that you ask and answer . . . and those are just a few! (If you don’t have my free report: 92+ Questions To Ask Before You Invest In A Franchise, just say so and I’ll get it to you).

Of course, there’s no such thing as a Franchise Czar, so you’ve got to take responsibility for asking these and other questions. 

Insure your success

By doing so, you can insure your long-term success as a franchisee. Because here’s something else you need to know: There really are happy franchisees. I’ve interviewed them through the years. I know who they are. And I’m happy to share their stories with you through this Web site, through my books and recordings, and live presentations.

You can buy a franchise and be happy. Just ask!

Photo Image by: Capture Queen

You’re Buying A Franchise? First Question To Answer Is: Why?

Why do you want to buy a franchise?

Even before you begin your online search to find a franchise of your liking, or before you click on that tweet that promises to lead to the American Dream, or you step foot into a franchise expo, the very first question to ponder and answer is: Why?

People buy franchises for many different reasons, and sometimes the reasons just aren’t very good.

“My boss is an idiot” sounds like a good reason

For example, I frequently talk to people who say they’re buying a franchise because:

• “I’m tired of making money for other people. It’s time I do it for myself” or
• “Because I lost my job and I don’t know when I’ll find another one. With the way things are going, I might lose that one, too. So I’m buying a franchise to protect myself.” or
• “My boss is an idiot! I’m tired of him controlling me. I want to be in control!”

Those are answers, but they’re not good answers. They are emotional reactions to situations; not justifications for investing tens of thousands of dollars to buy a business that will–at least for a while–control your life.

Emotional reaction can be mistaken for a good reason

Emotions are great motivators, but when we react to them we sometimes end up worse off than we had anticipated. Divorce makes my point. As do bank repossessions. And Ponzi schemes! Franchises are not Ponzis, but the consequences can be just as devastating if your reasons for buying a franchise aren’t realistic.

Some questions to help you dig deeper

So dig deeper. Come up with several rational explanations for your decision. Here are 10+ questions that will help you answer the Why question:

1. What do hope to gain by owning a franchise?
2. What motivates you? Making money? Providing a value service or product?
3. Are you looking for a job replacement?
4. Are you planning to make a career of your business?
5. Do you think a franchise is a replacement for a paycheck?
6. Do you expect the franchise to generate long-term wealth?
7. Do you see yourself buying and selling the franchise, like a stock?
8. What makes you believe that you can operate your own business?
9. When times are tough, what will motivate you to persist so that your franchise doesn’t fail?
10. If the franchise fails, what then?

Building your business will be challenging

While there are no right or wrong answers to these questions, or to the Why question, it’s nonetheless important that you understand why you’re buying a franchise before you do so. Starting, operating and building a satisfying and profitable business is likely to be one of the most difficult challenges of your life. Maybe the most difficult. So don’t skip this question!

Why is just the beginning

And once you answer Why, it will be easier to answer What.

Yep, Why is just the beginning of my interrogation. But hey, you want to make a wise choice when you buy a franchise, don’t you?

Photo by: Dave Hamster