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

“Why are franchisors so specific and stringent?” she asked. “It seems they want to control everything!”

At last, Isabel (previous Isabel blogs are listed at the end of this article) is getting down to the nitty gritty about franchising, and the question she asked today was so important that I’m rushing to my blog to tell you about it.

Critical components of franchising

“I’m so glad you asked that question,” I told Isabel, “because it shows me that you are paying attention to what franchising is really all about, or at least you are noticing some critical components.”

So let’s get right to it: Franchisors are “specific” and “stringent” because they need to be, they should be, and they must be if they want to succeed as franchisors, which also means they want their franchisees to succeed.

Critics of franchising won’t like this

Now some critics would jump on that statement and eloquently and heatedly tell you that I’m wrong, that I’m just defending franchisors and franchising in general, and that franchisors are “specific” and “stringent” because they want to take your money and keep it after you fail without having to do battle in a courtroom.

God bless the critics: they keep us on our toes! Mostly they keep us thinking. Happily, on this point, they are wrong.

Willy nilly franchises do not succeed

In my 30-year career, working with more than 100 franchise companies, I’ve never seen a willy nilly franchise concept succeed. Furthermore, the franchisors with the greatest problems, and the weakest balance sheets, are most lenient with their franchisees.

Somehow, some way, some critics got the idea that franchising is a democracy, and that just because this is the United States of America, where freedom rings, you should be able to buy a franchise and do what you want with it.

Franchising, even in America, is not a democracy

Wrong!

Franchising is not a democracy and perhaps that’s the most important principle to understand about it. You cannot do things your way!

Period.

End of story.

It has nothing to do with freedom. Or rights. It’s business. It’s do-it-my-way or don’t-do-it-at-all business. And it’s protected by the United States of America, where freedom rings!

The franchisor sets the parameters

Fact is, if I create a franchise, so long as I don’t violate any laws of the land, I have the right to do it my way, and do it when I want, where I want, and with whom I want.

You don’t like that?

Not a problem for me. And not a problem for you, so long as you don’t buy my franchise! So long as I don’t allow you to buy my franchise.

Franchisors test the business and create a success system

However, if you’re going to join me as a franchisee, then I know how the business works best. I’ve tested it. I’ve improved it through the years. I’ve created a marketing plan, an operations plan, a sales plan, etc. I know what needs to be done, how much of it needs to be done, by whom and when, to make it all work.

I also know that if you deviate from any of my plans, it won’t work, or it won’t work as well. It won’t work for you and it won’t work for me.

Reasons why franchisors want franchising to succeed

As the franchisor, I want it to work. Why? Lots of reasons:

• I love money! And franchising is a great way for a franchisor to get fabulously wealthy.
• I love helping people. And in business, there’s no better means of doing so than to teach people how to succeed with a franchise.
• I’ve got a huge ego and I want the world to know me and my business. Fastest way to do that is via franchising.
• I want to change the world. There really are franchisors who are do-gooders.
• It’s a combination of all of the above!

At a minimum, I want it to work because if it stops working I’ve got to go do something else!

The goal is a satisfying and profitable business

And since all of this is important to me as a franchisor, I’m going to make sure that my franchisees do things my way, the way I know that’s necessary to build a satisfying and profitable business.

“Is that unreasonable?” I asked Isabel.

“No, but that doesn’t make me feel better about the franchise agreements that I’m reviewing,” she said.

“I understand,” I told her. “Let’s continue.” I really couldn’t do much about her feelings.

“You’ll wear this funny hat and this is what you’ll say to customers . . . “

As a franchisor, I’m going to be “specific” with franchisees:

• here’s when you must open the business
• here’s when you must close the business
• here’s where the business can be located
• here’s the list of items you can sell in the franchise
• here are the marketing materials you can use
• this is what you will say when you greet a customer
• here’s how you will dress every day in the business 
• . . . and so on

I’m specific not because I suffer from OCD (though I might, and what if I do?) but because I know this is how the business works! It’s how it works for me and how it will work for each of my franchisees.

Rigorously binding, exacting and constraining, that’s franchising

I’m going to be “stringent” as a franchisor for the same reasons that I’m going to be specific. Stringent as in “rigorously binding or exacting, compelling and constraining.”

“Can I interrupt?” asked Isabel.

“Of course you can. You’re the client!”

It’s so offensive, said Isabel

“What you just said, that binding, exacting, compelling crap, is what’s so offensive about franchising.”

“I understand,” I said. “And I agree. I don’t know that the word is ‘offensive’ but I understand. It’s controlling for sure, and most people, especially those who are entrepreneurial, don’t want to be controlled. But all I can tell you is that ‘stringent’ is absolutely necessary in franchising. In fact, if you find a franchisor that’s not stringent, run! That business is not going to work. Eventually it’s going to become a mish mash and not a franchise.”

Franchising thrives on uniformity

Remember, too, that a franchise stands for uniformity. If you go to McDonald’s, you know the drill, right down to how your food product of choice is going to taste! I haven’t eaten French Fries at McDonald’s for a year or more — I’m a McDonald’s patron only when my grandkids insist — but I remember how I love those French Fries. Haven’t had a chocolate milkshake at Burger King for several years (too fattening for me, I’m afraid) but I still crave one! I had a vanilla cone at Dairy Queen as recently as 72 hours ago, and if I get a chance, I’ll buy one again today, because I love that product (see My Secret Love Affair).

“What would happen, Isabel, if these products changed, or worse, what would happen if you visited your favorite franchise, but in this unit they did things their way?”

Different isn’t always satisfying

“You’d be disappointed if you didn’t get what you expected,” she said. ”I get the point, John.”  

“I’m glad, Izz. Because that’s why franchisors are specific and stringent. You can’t do things your way in a franchise. You’ve got to work the business the way the franchisor means it to be worked. That’s how you succeed in franchising.”

“But don’t some franchises fail?” Isabel asked.

Not all do it the franchisor’s way

“Absolutely,” I said. “And in the failures that I’ve seen, almost always they occurred because the franchisee didn’t follow the system and/or because the franchisor wasn’t specific and stringent. In other words, the franchisor let people do things their way. And that does not work.”

Isabel asked, “Should I expect every franchisor to be specific and stringent?”

“Yes,” I said. “But the keyword is ‘expect’. If you had asked, ‘Is every franchisor specific and stringent?’ I would have answered: Only the good franchisors!”

Only the good franchisors do it their way

You’ll find franchisors who are lenient, who do not invoke controls, who do not watch their franchisees, who do not train and follow up and support their franchisees — in fact, there are a lot of them! And some of them manage to succeed. Until there’s a crisis. Or until a group of franchisees decides to do battle with the franchisor — that franchisor is likely to lose because the franchisor permitted the franchisees to do things their way. They set the precedent for failure.

Is there a formula for success?

“Isabel, the best franchisors will tell you upfront that they have a formula for success and once they share it with you they will expect you to follow it to the T. If you have a problem with that — and many people do — do not buy a franchise.”

Isabel was uncharacteristically silent for a moment. Then she said, “You’ve given me a lot to think about, John. Thank you.”

“No, thank you, Isabel. You asked the perfect question, one that every franchise prospect needs to consider.”

Previous Isabel Blogs:

1. Is Franchising Indentured Servitude?
2. Figuring Out What You’ll Earn As A Franchisee Even When The Franchisor Doesn’t Tell You
3. Figuring OUt What You’ll Earn As A Franchisee Even When The Franchisor Doesn’t Tell You — Part II
4. The Franchisor Spelled It All Out And Isabel Was Furious! She Screamed: “Do They Think Franchisees Are Robots?”

Photo image by: fotographix.ca

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

I guess she hadn’t ever read a Franchise Disclosure Document until this week. And she wasn’t happy!

I’m talking about Isabel. Crazy Isabel! She’s back. (Previous Isabel articles are posted at the end of this blog).

The franchisor spelled it all out

“Everything is in the franchisor’s favor!” she screamed, like she had just come through a nightmare.

“They tell you everything you have to do! It’s all spelled out: When you have to work. How much you have to work. How much you have to produce. What you have to wear. Where you can operate the business. What you can sell. How you can advertise. Who you can sell the business to . . . does it ever end?”

And the problem is?

I said nothing for a moment, giving the air time to clear.

Finally, I dared to speak.

“Do you really want it to end, Isabel?

“What?” she snapped.

No time to be sympathetic

I knew she expected me to be sympathetic — or at least hoped so. But come on. Really? We’re talking about franchising.

Business.

Money.

Risk.

This is serious stuff.

No one is forced to become a franchisee

“I said, ‘do you really want it to end?’” and I gave her no time to answer because, frankly, I didn’t care and I needed to make a point.

“Look, it’s called a franchise. It means: license. It means someone is going to license you to operate their business in a specific manner for a specific period of time, and possibly in a specific location. They’re going to license you the opportunity to use their brand, their trade dress, their marketing plan — you’re going to represent them, Isabel. And they have the right to tell you what you will and won’t do. Because they grant the license!”

You can always do it on your own

“But I want to be able to make decisions. . . .”

I cut her off.

“They know what’s needed to operate their business successfully. And if they don’t, then why are you talking to them? . . . We can assume, Isabel, that you don’t know how to operate their business successfully or — you’d go do it! . . . You can’t! Or you won’t! Or you don’t want to!

This isn’t about your right to make decisions

“Meanwhile, they don’t want to license people who are going to make decisions and take the chance those decisions will turn into costly mistakes . . . and then into failures. They don’t want failures . . . they want successes, and it’s a huge challenge for them to find people who will be successful — even when they have spelled it all out for them!”

I paused even though I didn’t want to. But I remembered that Isabel is the client and while I can get as excited as she can get about these issues, I didn’t want her to think that I was a raving nutcase, simply spewing franchisor gunk.

Why do you want to make decisions?

“Do I get to make any decisions as a franchisee?” she asked.

“Izz,” I started again, calmly this time, “do you really want to make decisions? Is that your goal? To make decisions?”

“No, of course not. My goal is to be a successful franchisee, operating a business that I find — in your words — both satisfying and profitable.”

Better that the franchisor make all the decisions for you

“Very good,” I said. “You’re a terrific student. So why are you hung up on making decisions? In fact, why aren’t you looking for the franchisor to make all the important decisions for you, assuring you of your success?”

“Because I don’t want to be a robot. I want to participate in the business. I want to make it mine,” she said, starting to get excited again.

Review basic franchise facts again

“I don’t want you to be a robot, either. Neither does the franchisor. But Isabel, let’s just get down to the basics. You don’t know how to build a satisfying and profitable business — at least not the type of business that you’re looking for. Is that fair to say?”

“Yes, that’s fair. If I knew how, I’d go do it on my own,” she said.

The franchisor invents the wheel

“Very good. . . . Meanwhile, there’s a franchisor who has figured it out, or at least claims to have figured it out. They’ve already built the business. They’ve made mistakes. They’ve lost money. They’ve invented the wheel. They’ve recruited and trained franchisees, some of whom are doing very well. So far so good?”

“Yes,” she said, “that’s all true. I think they’re a good franchisor, too. I like them.”

The franchisee spins the wheel

“And I bet they love their business. In fact, they love it so much that they want to protect it. They don’t want to trash it. They don’t want start-ups that quickly fizzle into failures. They want franchisees who will succeed. And they’ve learned that they need to spell it out, they need to teach and train and support the franchisees and show them what to do, when to do it, who to do it with, etc., in order for the franchisees to succeed.”

“I get it,” she said. “But it seems so oppressive.”

Success or oppression?

“Well, it may be. But if it’s also successful, you may be able to live with the oppression, if it’s really oppressive, and I don’t know that it is. The most successful franchisees I know never tell me that they feel oppressed! But they do feel grateful that the franchisor figured it all out for them, made and paid for the mistakes in advance of them, and gave them a Cheat Sheet, so to speak, that helped them make good decisions — the decisions that eventually led to their success and satisfaction.”

Suddenly it was quiet again. Isabel was letting it sink in.

Are they all like this?

“Are all franchise agreements like this?” she asked. “Do they all spell out what the franchisee must do?”

“Only the good ones,” I told her. “I would not encourage you to buy a franchise if they only gave you part of the formula for success. . . . And again, Izz, I’ve got to go back to this point: Maybe it’s not for you. Maybe you don’t really want to be a franchisee as much as you want to be a business owner who makes her own decisions, win or lose. That’s what you need to think about. . . .

Reasons why you should buy a franchise

“I thought we had covered that ground — the fact that a franchisor has the absolute right to decide what franchisees will do, when and with whom, and all the rest of it . . . and the franchisee’s job is to listen and respond and follow — never to re-invent the wheel. . . . If you think you can’t do that, or don’t want to do that, if you think that turns you into a robot, if it’s oppression, for cryin’ out loud, then do not buy a franchise.”

“I understand,” she said. “I do want to be a franchisee. I realize I don’t have the answers and I don’t have enough money to make costly mistakes.”

Only the franchisor’s reality counts

“But you may not be willing to trade off your reality for the franchisor’s reality. And Isabel,” I concluded, “the franchisor’s reality is the only reality that counts in franchising. Think about it . . . and we’ll talk again . . . if you’re still willing.”

“Of course I am,” she said. “You don’t scare me!”

For More Franchising With Isabel Blogs, Read:

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

Photo image by: striatic

If You Don’t Want Or Need A Safety Net, You Don’t Want Or Need To Buy A Franchise

“So, maybe you don’t really want a safety net, Isabel.”

She’s back! (The previous Isabel post will lead you to even earlier posts that chronicle her buying journey as a prospective franchisee). And once more, she’s not ecstatic. 

“Am I giving up my soul?”

“I don’t want to give up my soul,” she said. “I just want to own and operate my own successful business.”

Oh boy. Here we go again, I thought, back to the indentured servitude nonsense, when I first started chronicling Isabel’s adventures. 

“We’re not going there again,” I said. “I know you’re the client, but we’re not going there again.”

“No, no, I agree,” she assured me. “This isn’t about that. This is about my ability to make decisions relative to how I operate my business. Can we talk about that?”

Franchising always includes controls

“Certainly we can,” I said, “but don’t expect too much. You’re talking about buying a franchise, Isabel. By definition there will be controls. Controls mean limitations.”

“But there are some things that I just want to do my way, at least once in a while. I want to test my ideas! What if I come up with the next greatest product for the franchise, something they wouldn’t have thought of without me?”

Controls are limiting to franchisors, too

“That’s a risk the franchisor is willing to take,” I explained. “People think only franchisees take the risks in franchising. Franchisors do, too, but in different ways. Their controls sometimes limit their ability to expand and grow and develop new products and services, but that’s a risk they are willing to take. You’ve got to take that risk, too, or don’t buy a franchise.”

“But it shouldn’t be that way,” she protested. “I’m a reasonable person, in spite of my excited personality. I have ideas. If it’s a good idea, I don’t plan to keep it to myself. I’ll share it with the franchise. I just want to be able to test my ideas.”

Do it your way, test your ideas

“Then start your own business!”

“I can’t do that,” she said. “First, I don’t have the money, and you know that.”

Uh-oh.

Suddenly that excited personality was kicking into gear and I was going to take the brunt of it. Rather than tell her to “Go get the money!” which is what an entrepreneur would do, I bit my tongue. Plus, she’d need a lot more than just start-up money if she intended to “test” her ideas.

Testing ideas is a risk

It’s in the testing that businesses fail. It costs money to test ideas! That’s why franchisors don’t want franchisees to do it. Franchisees only have so much money, and they generally don’t like to raise more money. They need to invest their money wisely as they open and build their businesses. Investing it in tests isn’t always wise, and in fact, usually doesn’t work out.

That’s why there are controls!

But rather than explain all that now, I calmly said to Isabel, “This isn’t my fault. I’m not forcing you to buy a franchise or even to start a business. So before you get too excited, let’s stay grounded. Is there a second reason why you can’t start your own business?”

Franchising also comes with know-how

“Yes,” she said. “I don’t know how. I know I don’t have all the answers to the issues that I’ll face in starting up my own business. I don’t know enough about location, for example. I don’t know how to deal with landlords. I need some equipment and I don’t know what to buy without someone’s guidance. I don’t know enough about marketing, and I’ve never really liked to sell. That’s why I’m interested in a franchise. They’ll help me with all of that.”

It’s called a safety net

“Indeed, a good one will. That’s the safety net they throw out to their franchisees. They provide training, guidance, support, know-how, along with a brand name! But not everyone wants a safety net, Isabel, because it also comes with a price. Controls! Some people are bent on doing it themselves. If you’re one of them, please don’t buy a franchise. Get off this merry-go-round of shopping for a franchise. Save yourself the aggravation.”

“You mean save you from my excited personality, don’t you!”

I enjoy this fringe benefit

“I didn’t say that. I enjoy your excited personality. I consider it a fringe benefit to my fee!”

She laughed.

“Look, Isabel, don’t beat yourself up on this issue,” I continued. “Either you should or you shouldn’t buy a franchise. I don’t expect you to make that decision overnight, but eventually you have to. There’s nothing wrong with saying you want to do it on your own. It just creates a different set of issues for you. And, there won’t be a safety net. So think about that and . . .”

Do you want a safety net?

We’ll catch up again with Isabel in the near future. Meanwhile, a safety net may or may not be for you. If you don’t need one or want one, then you don’t need or want to buy a franchise.

Because a good franchisor always provides a safety net and insists on doing so!

You’ll Also Enjoy Reading:

Find A Franchise System That Helps You Capture & Keep The “Right” Customers. Nothing More Important Now! 

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

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

Photo image by: divemasterking2000

“Daddy’s Got Money!” . . . Bad For You. Worse For Franchisor. Ugly For Daddy. But Happy Graduation!

Watch my new video on evaluating franchise opportunities.

On several occasions while I was the CEO of HomeVestors, and on on many occasions in the last 30 years while advising people who buy franchises, someone was buying a franchise using “Daddy’s money.”

Most of the time it wasn’t a good idea. Lots of times these deals occurred right about the time of college graduation. 

He doesn’t want to teach after all

“My son,” a dad told me not long ago in my office at HomeVestors, “is about to graduate from college and he doesn’t really want to be a teacher after all. I think real estate investing makes a lot of sense . . . [at least it did at the time] . . . and so we’re here to buy him a franchise.”

Dad just wanted to help his kid

While Daddy talked, I watched Son, and in this particular meeting, Son demonstrated all the signs of fear and disinterest. Clearly, this was Daddy’s idea and not Son’s. Quite often it happens that way. Dad (or Mom) wants Son or Daughter to achieve success and they are willing to invest money to “help” them.  

It happens the other way, too. It’s Son or Daughter who’s eager to buy a franchise, and they need their parent’s money. 

A trip abroad might be a better gift

My advice: Proceed with caution! Investing in a business may seem like the ultimate graduation gift for your child, but it may turn into a financial and family disaster.

Can I tell you of any success stories where a parent put up money for a son or daughter to buy a franchise?

Many kids do succeed in franchising

Absolutely. Lots of them! Especially of parent and child working together. It’s very common in franchising, and many companies can brag about these stories.

But no one talks about the failures . . . and there are many of them, too. No one talks about them because the deal was bad for the kid who lost money and probably self-esteem; bad for the franchisor who had to work through the issues related to a failing and ultimately failed franchise; and ugly for Daddy because he thought he was doing a good thing and instead lost his money and possibly alienated his child and other family members, too. 

Here’s how franchising works best

Franchising works best when the buyer/operator uses his or her own money, or at least shares responsibility for the money. It also works best when the operator really wants to be the operator and understands what that means. The kid who graduates from college and realizes he doesn’t want to teach after all, isn’t necessarily ready to run a franchise. At least it should be his or her idea!

7 steps that could help you and your kid

If you’re considering putting up money to buy a franchise for your child, here are 7 steps to consider:

1. Ask your child to sell you on why he or she should own and operate the franchise. What’s the motivation? How deep runs the desire? How great the commitment? I know it’s your kid, but be objective! What’s the chance of success? You don’t want your kid to fail any more than your kid wants to fail. 
2. Require a business plan, which you will approve. If running a business is your expertise, it’s okay to help your child create the business plan. Seek other assistance. Local colleges offer courses on creating business plans. Get your accountant involved.
3. Require a payback plan. Charge interest for your money. The Bank of Mom & Dad expects to be paid back. Require to see how you’re going to recover your investment, profitably.
4. Tell your child to go to work for a franchisee. It may be for only a week or three, but getting experience in a franchise unit could prove helpful. Your child may decide, “I don’t really like retail,” or “I don’t think I want to be in the food business,” or, “I didn’t realize how tiring it is to be in a truck most of the day.” This experience may at least help them decide the type of business they want to own and operate.
5. Request an endorsement from a franchisee. Tell your child, “Convince one of the existing franchisees that you’re the type of person who will succeed at this business and ask them to write you a letter of recommendation.” Make sure the franchisee has achieved success in the business! A franchise operated by a parent/child combo would be ideal for this assignment. 
6. Attend Discovery Day. The franchisor most likely conducts free orientations where prospects learn more about the franchise. Go along and participate in this experience. You and your child will learn the details related to operating the business and you’ll be able to assess the likelihood of your child succeeding at this business. It may be difficult, but you need to be especially objective now.
7. If you agree to make the investment, look after the business. Take a seat on your son’s or daughter’s advisory board. Monitor decisions and progress. 

Sound too much like being a parent?

If these ideas seem too restrictive for you or your child, think twice about what you’re doing! Because there’s a pretty good chance that if you don’t take these restrictive measures, this “gift” isn’t going to work out!   

You’re taking a greater risk when you put up the money for someone else to own and operate a business. So protect your money. More importantly: Protect your kid!

Watch This Video!

Also Read:

Whose Opinion Counts When You Interview Franchisees?

Photo image by: CarbonNYC

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

Ecstatic Isabel called!

It’s been about ten days since I last heard from her (see Is Franchising Indentured Servitude?) and she couldn’t have been happier!

How much money?

“I know how much money I’ll be able to make as a franchisee even though the franchisor didn’t tell me — well the franchisor sorta told me,” she said into the phone without taking a breath.

“Wait a minute, Isabel. Either the franchisor told you or the franchisor didn’t tell you. Which is it?” I wanted to know, wondering if a franchise sales person had pulled the old back-of-a-napkin trick by jotting down a number that really doesn’t mean anything, but appears to be a nice annual income. “Does the franchisor’s disclosure document include a financial performance representation, or earnings claim? It would have been under Item 19 of the Franchise Disclosure Document (FDD).”

No to the legit financial info

“No. No earnings claim,” she snapped. “This stuffy franchisor doesn’t include any financial information under Item 19.”

“But you’re saying the franchisor ‘sorta’ told you how much money you can make if you buy the franchise,” I continued. “That could be a serious violation of the federal franchise laws. I just want you to realize what you’re . . . .”

It’s a different story in franchising

She cut me off, “Come on, doc. You know that’s not how it works. These franchisors put the information out there. You just have to be smart enough to get it. And I am!”

There’s no doubt that Isabel is smart, but I don’t agree with her generalization about how things work in franchising. At the same time, I’m not naive. Some franchisors disclose information that they should not disclose. Some franchisors break the laws. And as I’ve said many times: All franchisors are not created equal.

Backing out the numbers

I was running low on time and patience so I said, “Please don’t make me work so hard, Isabel! How did you find out how much money you can make as a franchisee?”

“My accountant helped me,” she explained. “The franchisor’s financial statement (which is included in the FDD) shows how much royalty revenue the franchisor collected last year. I divided the number of franchisees into that sum and got the average royalty paid per franchisee. Then it was easy! I divided the average royalty payment by the royalty percentage, which is 6%, and that gave me the average franchisee’s gross revenue. And that’s what I needed to know. With help from some franchisees and the franchisor, I figured out the monthly costs. And based on the numbers, I can pay myself a six-figure income. Not right away, but eventually. That’s where I want to be financially. So I’m thrilled!”

Not everything may be what it seems

I am, too! Thrilled to be coaching such a serious student of franchising. But there are a few problems with Isabel’s analysis!

Maybe you’re a serious student of franchising, too, and you already know what the problems are? If so, I’d like to hear from you. 

Meanwhile, look for Part II of this blog in a day or so. Until then, do not buy a franchise based on Isabel’s story!

Register now for free tele-seminar

. . . Register immediately for my free franchise tele-seminar: How To Buy A “Hot” Franchise And Not Get Burned!  Date is May 6 and you can subscribe while slots are still available . . . you’ll love the fantastic give-away. Read about it here.  

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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.

Register now for free tele-seminar

. . . Register immediately for my free franchise tele-seminar: How To Buy A “Hot” Franchise And Not Get Burned!  Date is May 6 and you can subscribe while slots are still available . . . you’ll love the fantastic give-away. Read about it here.  

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!

Photo image by: Flattop