If Franchising Is Your Backup Plan, Please Go With Your Other Plan! Get A Job!

I’m afraid the remnants of the recession and sustained unemployment will lead people down a path similar to the one this subscriber told me that he may take. Without revealing his name, he wrote:

“I am between careers. I was laid off in January from a 27 year engineering career. I’m trying to juggle two possibilities at one time . . .” (1) interviewing for jobs “when they do come up” and (2) looking at franchise opportunities.

Franchising as the backup plan

“I am continuing to research franchises as, frankly, a backup plan. . . I’d definitely like to get your opinion . . . .” He went on to say that he’d like my opinion once he “identifies that franchising is the right path” for him and when he’s ready to look at specific opportunities.

He concluded, “I’m currently working with a local office of (a franchise brokerage).”

My take on this

The saving grace is that the subscriber acknowledged that he has to determine that franchising is the right path for him. I trust he’ll do that before he invests in a franchise.

But if he doesn’t find a job in another 90 days, or more, it may be easy for him to make the decision to go with his “backup plan.” Suddenly, he’ll decide (perhaps with some outside pressure, i.e. a spouse, a broker, hungry children, friends, etc.) that franchising is for him. Forget that it was once a “backup plan” — it’s now the plan because, seemingly, there’s no other option.

It’s probably a mistake

And I think that will be a mistake.

If your “backup plan” is franchising, that’s probably not going to work. If it’s not your passion to own a business, it’s not going to work. It’s too difficult to own a business. There are so many decisions, challenges, transitions, pitfalls — if it’s not your passion to tackle these issues head on, don’t do it.

Bottom line: Franchising never makes a good “backup plan.”

Franchise misfits

Unfortunately, we’re likely to see a lot of misfits in franchising as a result of the current economic crisis. People have their backs to the wall financially. When their unemployment runs out and they’ve used up their savings — what are they to do?

Lots of folks who have a vested interest will tell them to “Buy a franchise!”

That spells disaster for them and for franchising. It won’t help franchising when these reluctant buyers, who never really wanted to own a franchise, fail and return to corporate America in a couple of years when jobs are again plentiful. The aftermath of failures and disappointments will further damage franchising’s reputation.

I could be wrong. Hope I’m wrong. But history tends to repeat itself!

Photo image by: cesarastudillo

Promises, Promises — And It Seems Only The Franchisee Is Forced Into Making Them

“They’re telling me that I’ve got to make all these promises to them. I have to operate the business according to their expectations, and in return they’re promising to do very little for me. How does that make sense?”

Isabel is back!

Yep, it’s Isabel again. On a rampage again, too. I love it when she’s angry because she pushes me right to the edge. Much better than dealing with a client who is afraid to challenge the franchisor; afraid to ask difficult questions.

All those promises

Isabel had just read Item 9 — Franchisee’s Obligations — in the Franchise Disclosure Document (FDD) given to her by a franchisor. “It’s several pages long!” she complained. “They not only tell me when I have to open and close the business, but what I have to wear, how I have to act, how much advertising money I have to spend, and the volume that they expect me to produce every year! Not only that, they put restrictions on the products and services that I can sell!” (The latter referring to Item 8 of the FDD).

Isabel didn’t think it was fair. Especially not after reading Item 11 — Franchisor’s Assistance. “That section is about a paragraph long,” she shouted. “They don’t promise to do much of anything for me, but they certainly plan to keep me busy and keep my hands tied, too.”

“Not funny,” she admonished

When I laughed at her last comment Isabel didn’t appreciate it. “It’s not funny, John. I’m so close to buying this franchise, but I don’t understand why they are making it so lopsided. Don’t they want me to become a franchisee?”

I apologized, but then I got right to the point to give Isabel her money’s worth.

Getting the straight scoop early

“Look,” I said, “would you rather they tell you what’s expected of you after you buy the franchise?”

“Of course not,” she said. “I want to know upfront what’s expected of me.”

“Well then, that’s what you got,” I continued. “They told you what you’re expected to do. And they expect these things of you — hopefully — because they know these requirements will help you build a successful business. I say ‘hopefully’ Isabel because not all franchises are created equal. Some of them don’t know what they’re doing. It’s your job to select one that does know what they’re doing. In which case, they won’t have you jumping through hoops just for something to do.”

Franchisor doesn’t promise much

“Well from what I can judge,” she shot back, “they don’t do much. This franchisor doesn’t make any promises other than to train me and provide support and a few other things. However, when I talked to them about Item 11 they told me they’ll actually do more than they promise. I don’t know if I believe them.”

“I don’t blame you,” I said. “However, look at it from their point of view. If they make promises that they can’t keep — even through no fault of their own — what’s likely to happen?”

“They’ll get sued,” she said.

Under promise, over deliver

“Exactly! . . . Remember, once you’re a franchisee it’s important to them to keep you happy. But until then, it’s better to promise a little and then deliver a lot. ”

“Yea, well that’s what they told me they’ll do. But when I told them I want it in writing, they said that’s not going to happen.”

“It won’t,” I continued. “They’re not going to change their FDD just for you. But Isabel, I think you’re making too much of this.”

“How so?” she wondered, now in her cordial voice.

Do your homework

“Well, it’s no different than what we’ve talked about in the past. You don’t take anything the franchisor says at face value. You owe it to yourself to validate it. And how do you do that?”

“Ask the franchisees!”

“Very good,” I said. “You’re a terrific student.”

“So when I interview franchisees I’m going to ask them if the franchisor does more than they promise in Item 11. And I’m going to ask them if they think Item 9 expects too much of franchisees.”

It’s a business transaction

“Great! Good questions. You’re right on track, Iz. This is a business transaction. The FDD isn’t intended to make you feel warm and fuzzy. It’s the cold facts from the franchisor’s point of view. It’s your job now to find out if their point of view satisfies your expectations and your idea of what owning and operating a franchise is all about. If it doesn’t make sense, you’re still in control. No one is going to force you to buy the franchise.”

“Thank you,” she said. “I’ll let you know what I discover.”

No doubt she will . . . and boisterously, too!

Read Previous Isabel Blogs

Is Franchising Indentured Servitude?

Figuring Out What You’ll Earn As A Franchisee Even When The Franchisor Doesn’t Tell You

Figuring Out What You’ll Earn As A Franchisee Even When The Franchisor Doesn’t Tell You — Part II

The Franchisor Spelled It All Out And Isabel Was Furious! She Screamed: “Do They Think Franchisees Are Robots?”

Why You Can’t Have It ‘Your Way’ When You Buy A Franchise. Get This: It’s Not A Democracy!

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Photo image by: Robert Snache – Spirithands.net