Tag Archives: hot franchise

Your Mistakes Will Cost More Than You Think

When you start your own independent (non-franchised) business, your mistakes will be more costly than you imagined. In fact, your mistakes will probably put you out of business.

I’m not writing this to scare you away from starting a business without a franchisor; I’m writing it because it’s factual . . . and scary.

Do indie businesses survive?
Have you looked at the statistics? How many independent start-up businesses survive in the USA? Rather than take my word for it do some research, or better yet, just ask a local business banker!

Of course, the more entrepreneurial you are, the more likely you are to say that you can avoid the mistakes, and maybe you can. However, the statistics say otherwise. Most independent startups fail.

Why mistakes occur
Many people think certain businesses are easy to start and operate. Let’s take pizza for example. Many people can make a “good” pizza? My Italian grandmother made the greatest pizza in the world, so it’s no surprise that many of my cousins can make great pizzas, too.

In fact, when people tasted my cousin Mary’s pizza, they told her that she needed to go into business. And she did! Mary and her entrepreneurial husband (also an Italian) opened a couple of pizza shops, and in a matter of years were dead broke.

How could that be? They made a “great” pizza.

Can you sell what you make?
I’ll tell you how. They knew how to make pizza; they didn’t know how to market and sell pizza. Franchising’s saving grace is that it knows how to distribute (sell) products and services.

It is simple to open a pizza shop. You get a good location, buy the equipment, bring in the supplies, get a recipe, put up a sign, do some marketing and . . . voila! . . . you’ve got a thriving business.

No, you don’t. You’ve got a money-sucking business, unless you avoid the mistakes.

What do customers want?
Mary’s first mistake was believing that consumers want a “great” or even “good” pizza. They don’t. Just look at what they buy everyday!

Mary thought she could build her business by advertising in the newspaper. Wrong. The pizza franchises would have saved her from that mistake.

Mary also thought she could build her business without delivery. Wrong. The pizza franchises would have saved her from that mistake, too.

Too many mistakes
There were numerous other mistakes . . . Mary didn’t know how many slices of pepperoni to place on a large pizza and still keep it profitable . . . and the pizza franchises would have saved her from that mistake as well.

After so many mistakes, Mary and her husband lost their business and much more.

It’s easy to make these mistakes . . . Mary and her husband had no idea they were making them. They would have done anything to avoid them . . . except buy a franchise. Because a franchise would not have allowed Mary to sell her “great” pizza.

Should you buy a franchise?
Look, you need to make some tough decisions before you start a business. What’s important to you? Your way? Or a franchisor’s way? Keep in mind that the franchisor may not sell what you consider to be a “great” or even “good” product – if that’s important, find another franchisor, or avoid franchising.

Of this you can be sure: If you buy a reputable franchise (and they’re not all reputable) the franchisor’s training will save you from making too many costly mistakes. You’re still going to make mistakes, but in a franchise, the mistakes probably won’t put you out of business. Ask your banker how many of his or her franchisee clients fail? It’s one of the reasons why bankers love franchising.

In fact, even though they won’t tell you, the bankers know you are going to make mistakes when you start an independent business, and even though you’ve accounted for mistakes in your business plan and cash flow estimates, the bankers know better. Your mistakes are going to cost more than you think.

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


Franchising works for everyone!
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.


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

 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.