Tag Archives: Buy a Franchise

Does A “Mutually Beneficial Relationship” Appeal To You When Buying A Franchise?

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How do you feel about a franchisor that promises you a “mutually beneficial relationship”? Does it make you feel (choose only one):

  1. Warm, Fuzzy & Can’t Wait To Invest
  2. Ambivalent: What’s the franchisor really promising?
  3. Turned Off Because It’s Not Good Enough

If you selected “C”, I’m with you!

Franchise investments are expensive — many require your life savings, plus your signature on a note for money that you will owe even if your franchise fails, and your legally binding commitment to pay the franchisor even if your franchise falters or fails — so I’ll pass on anything that’s “mutually beneficial.” In fact, does that even sound like it’s “mutually beneficial”?

Instead, I want a franchisor who’s going to do everything possible to make my franchise business successful. Even more, I want a franchisor who has proven time after time that he or she knows how to turn franchisees into success stories, even in the worst of circumstances.

I know a franchisor will not and should not promise to make me a success, but I want the franchisor’s word for doing everything possible to help me. Beyond that, I want proof that the franchisor knows how to help me succeed. I don’t expect miracles — I’ll deliver on my end by meeting the franchisor’s requirements — but please, save the “mutually beneficial relationship” hype. That might attract neophyte franchise investors, but not me!

Am I asking for too much? You tell me.

 

8 Ways Franchise Brokers Can Help You Buy A Franchise

Working with a franchise broker can help you make a better choice when you buy a franchise.

Buying a franchise may be your most expensive investment ever, after buying a house. And like buying a house, you’ve got to spend a lot of time looking, comparing, evaluating and thinking about which franchise to buy, and most of us aren’t comfortable doing all that work on our own. When it comes to buying a house, we call a real estate broker or agent to guide us through the journey and to help us ultimately make the right purchase. In franchising, many buyers rely on franchise brokers, and here are reasons why a broker might be right for you.
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  1. Franchise brokers are educators. Well, truly, they are sales people, but good sales people know to be educators first. Brokers can teach you about franchising, including legal considerations, trends, financing, and the realities of franchise ownership. Good franchise brokers can answer your questions about franchising and guide you through the selection process, ultimately helping you to discover an opportunity that makes sense for you.
  2. Franchise brokers are good listeners. By listening to their clients’ needs and expectations, brokers can keep their clients’ interests in mind at all times. Listening allows the broker to do a thorough job of educating clients about the pros and cons of franchising, and about the potential of a particular franchise opportunity. If you say you don’t like working in an office, or you want to work from home, or you’d rather not work with other people, the broker should lead you to opportunities that satisfy your desires.
  3. Franchise brokers can reduce your risks. There are always risks in any business, but brokers can help you avoid many of the risks. Brokers, for example, will shy away from representing bad franchisors, thus saving you from that experience. Brokers can help you assess franchise opportunities to find those that meet your needs and expectations.
  4. Franchise brokers prepare you for a meeting with the franchisor. Almost every franchise company sponsors a Discovery Day, which is actually a sales event disguised as an information event. Remember, franchisors are sales people, too! A broker will help you prepare for the Discovery Day by thinking about the questions you need to ask and knowing whom to meet when you visit the franchisor.
  5. Franchise brokers help you prepare to meet and question franchisees. As a franchise prospect, you’ll want to meet people who are already operating the business you’re thinking about buying. The broker may know existing franchisees whose backgrounds are similar to yours, so you’ll feel comfortable talking to them. Just be sure the broker doesn’t keep you from talking to any franchisee of your choice. There are likely some “bad” franchisees and franchisors and brokers would prefer you avoid them, but they may have information that you need to hear. Good brokers aren’t going to get in your way of investigating the franchise opportunity.
  6. Franchise brokers understand the franchise documents. Do you know how to read a Franchise Disclosure Document or a Franchise Agreement? Probably not. Good brokers do. Before representing a franchise brand, brokers study the franchisor’s documents and can explain them to prospects. This will save you considerable time and confusion.
  7. Franchise brokers “sell” you to the franchisor. This is especially helpful when the franchise you want to buy is “hot” or in demand. Why would a franchisor consider you when there are so many other applicants for the same franchise? Similarly, let’s say your application doesn’t look so great on paper, but the broker knows you’re a good fit for the franchise. Franchisors listen to their brokers because they trust them. Brokers can quickly identify appropriate prospects for the franchisor’s business.
  8. Franchise broker fees are (usually) free. The franchisor pays the broker a generous (and well deserved) commission upon the sale of a franchise, so brokers do not take fees from buyers. However, some brokers may charge an education fee, or an assessment fee for a personality tool. However, most good brokers will not charge a fee.

Working with a franchise broker, like working with a Realtor®, can save you time and money, and will usually lead you to buy a franchise that meets your expectations. You should check out the broker in advance – work only with experienced brokers who can provide you with a variety of client testimonials – and you may do so through the International Franchise Association.

 

 

Understand That Franchising Is Not For Everyone; It May Not Be For You!

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Franchising works for everyone!
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Even though it’s wrong, it’s easy to get the idea that franchising works for everyone because the media say so. Newspapers, magazines, television news shows, websites, and other forms of media love a good franchise success story, and so do viewers, readers and visitors.

Know the Facts

What’s not to like? Franchising is one of the best ways to start and develop a successful business in America, or almost any place in the world. But this fact remains: Franchising is not for everyone, and it may not be for you!

People think that because it’s a franchise, someone else runs the business for you. Someone else (i.e. the franchisor) makes the decisions, builds the business, hires the people, attracts the customers, sells the products and services, and even collects the revenues, making sure to pay you, the franchisee, a profit. But it doesn’t work that way.

Who Creates Successful Franchises?

Franchising requires an active, thinking person (i.e. a franchisee) who can make decisions and who has the ability (with the franchisor’s training, ongoing support and guidance) to build and operate a business. It is never an autopilot business, although it’s not the same as starting an independent business from scratch. Independents do not get the training and guidance of a franchisor, and in most cases, it’s the training and guidance that produces successful franchisees who in turn produce successful businesses.

3 Reasons Franchising May Not Work For You

It sounds easy, and many franchisors and franchisees make it look easy, but there are good reasons why franchising may not work for you. Here are a few of those reasons for your consideration:

  1. You’re not in control. If you’ve got to be in control, don’t become a franchisee. While you do control many of the variables in your business, you do not ultimately contralto he business. The franchisor does. If you can’t follow directions, franchising is not for you.
  2. It’s not a democracy. You’re one of many in a franchise. You may get a vote, but you may get out-voted. And even if you’re in the majority, you may not get things your way because it’s not a democracy. It’s the franchisor’s business; and the franchisor must make decisions for the good of the entire franchise network, not just you, and not just the people who think like you.
  3. You can’t always do it your way. Got some unique product you’d like to sell in your franchise? You’re not allowed. Want to set your own opening/closing hours? You’re not allowed. Want to change the colors of the company logo? You’re not allowed. Get the idea? You will do most things the franchisor’s way, and not necessarily your way.

Did you notice that all three issues are related to the same theme? Control! Franchising works because first and foremost, good franchisors know how to build a successful business, and they know how to teach and guide franchisees to replicate their success. Franchising doesn’t work when franchisees are allowed to do what they want, when they want . . . so if you’re the type of person who must maintain control, then you must avoid franchising. It won’t work for you!

Understanding your personality, and matching it to a franchisor’s operating system and philosophy, is one good way to protect yourself before you invest in a franchise. And that’s why I lead all of my coaching students to the Franchise Navigator, a free assessment that tells you if franchising will work for you, and advises you as to the types of franchises that make sense for you. I am an affiliate of the Franchise Navigator, and if you invest in a franchise that the Franchise Navigator recommends to you, I will receive a commission.

 

What should you expect from a franchise company? Consider my 10 points.

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There are many reasons why people buy franchises, and of the dozens of franchises that open for business every day worldwide, there are many reasons why some of those new franchises do not live up to their owners’ expectations.

If you’d like to protect yourself from becoming a disappointed (possibly even a disgruntled) franchisee, it’s important to know what you expect of a franchise company before acquiring a franchise. So here’s a list of 10 items that you should investigate before you invest your money.

  1. Financially Sound. Will the franchisor be around in a year or three? It makes me nervous when a franchisor has to sell franchises just to meet the overhead.
  2. Leadership. Who’s behind the curtain at the franchisor? If the founder is still running the business, what happens when he/she decides to retire? Or dies? Does leadership actually exist within the company?
  3. Culture and Values. Has the franchisor actually created a team of disciplined and ethical people to develop the franchise? What’s the culture, what are the values, and do they meet your expectations?
  4. Five Year Plan. Where’s this company going? How’s it going to compete in the future? What’s the role for franchisees five to ten years from now?
  5. Return on Investment. If you invest $250,000, including your own cash and some borrowed money (which you must pay back), when will your investment pay off?
  6. Operating System. Few things are more important than the franchisor’s system for conducting business. Does the company have a good system?
  7. Training & Support. You’re going to need to know how to build the business and it won’t happen overnight. Does the franchisor actually provide skilled people who know how to train and support you?
  8. Brand Name Awareness. Will people know the name of your business and what it does? Is the franchisor investing in the brand?
  9. Attraction. What is it about the business that will attract customers? Will anything? What attracts you? Is it enough to keep you and customer attracted long term?
  10. Investment in Franchisees. What’s the company do with your franchise fee? Is it re-invested in you? Ongoing, does the company invest in its franchisees?

You’ll find insights (but not necessarily real answers) to all of these issues and many others when you read the franchisor’s disclosure document. You’ll need to do some investigating to get the real answers. To help you do the investigating, I’ve written Buy “Hot” Franchises Without Getting Burned, and 101 Questions to Ask Before You Invest in a Franchise.

Before you invest in a franchise, make sure you know what to expect. Otherwise, you’re likely to be disappointed.

7 Fun Things to Do at the International Franchise Expo

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 Headed to the International Franchise Expo at the Javits Center in New York City June 19-21? If so, here are some unusual ways to spend your visit:
  • Find out what it’s like to be part of an Apex Fun Run with tents, flags and cones, along with video streaming (Booth 1014).
  • Get in on free brain training demonstrations every 30 minutes at Learning Rx. See how long it takes you to break a mental sweat (Booth 1036).
  • Ever thought of eating pizza in a cone? Probably not, but now you can. Check out Kono Pizza’s full kitchen setup with menu boards, counter/prep area, and proprietary oven (Booth 922).
  • Got a spot on your carpet at home and you just can’t get rid of it? Chem-Dry wants you to test their World Famous Professional Spot Remover. It’s a natural cleaning product designed to destroy the bond between stains and carpet fibers. Better yet, here’s an example of how franchisees use a product to generate added income! (Booth 704).
  • Maui Wowi’s Ka’anapali Cart will introduce you to fresh Hawaiian coffee, as well as fresh, gluten-free, all-natural smoothies.
  • Young Engineers will host mini challenges at their booth so that you can get hands on with the various “edutainment” offered by franchisees. Can you win a prize?
  • Snap your selfie with a tricked-out Camaro as Line-X Protective Coatings.