Tag Archives: trendy franchise

Franchise & Business Owners: Don’t Worry About Passion

Notice that no where does it say passion equates success in anything.

“Your passion for your business is most critical because it will drive your eventual success.”

So said an “expert”.

Who comes up with this stuff? It reminds me of the “expert” who said that most businesses fail for lack of cash flow. Huh? Most businesses fail because the business operators had no clue (no system) about how to operate the business successfully. They had plenty of money, but they ran out because they didn’t know how to invest it.

But I bet they had loads of passion?

And what did that get them? A huge financial loss and the despair that follows.

First thing prospective franchisees and others who plan to start a business should know is to avoid and ignore the “experts”. At least some of them. Instead, seek the advice of people who actually worked in the trenches, who built businesses, who failed a time or two, who made a payroll over and over again, and who understand the basics of how to succeed in a business.

And understand that passion can lead to success . . . or failure. 

Early in my entrepreneurial career, I rented a small office from a guy who owned an insurance agency. Every so often as he was leaving the office at about 6 p.m. he would stop by and say, “If you continue working this hard for another year or two, you’re going to be a great success.”

I know he meant well; I know he was merely encouraging me, but he was clueless.

You may have loads of passion for what you want to do in your business, and you may work 7 days a week at it, but here’s the most important point: If you don’t know what you are doing, and why, and how to do it over and over again, you are not going to succeed. Work your tail off, tell everyone how passionately you love your business, your products, your service, but don’t for a moment think any of that bull translates to financial success.

You want to succeed? Buy a system for success. Or develop a system for success. Of course, there too, you must be careful because all systems are not created equal.

By the way, I’ve identified 12 successful systems in my forthcoming ebook: 12 Amazing Franchise Opportunities for 2015. You can still get a free copy just for asking (look at the top of the screen). 

Are You Talking To The “Best” Or The “Worst” Franchisees?

Best worst franchises

Be careful about who you talk to when you interview franchisees.

“After talking to your franchisees, I’ve decided this isn’t the right business for me.”

As a former franchisor, I occasionally heard that statement from prospective franchisees, and I always asked, “Who did you talk to?”

Sometimes the prospective franchisee wouldn’t say for fear that I might use the information against the franchisees, but often times I persuaded them to name names.

Why talk to the worst franchisees?

Then I would glance at my list of franchisees rank ordered from Best to Worst. The “best” were the franchisees that produced the highest numbers (and most money) monthly, and the “worst” were the struggling franchisees.

If they had talked to the “worst” franchisees, I would say, “Do you think it’s a good idea to make a decision based on information gathered from the worst franchisees in our network?”

 

Who are your best franchises

“The franchisees you spoke to are ranked in the bottom third of our network. I doubt that they can give you an objective review of our franchise. If you had spoken to our ‘best’ franchisees, do you think you might have come to a different conclusion?”

Of course the answer was always “Yes,” followed by, “Who are your best franchisees?”

Why didn’t you ask that question earlier?

You might be wondering why I didn’t give them the list of our best franchisees from the get-go. I didn’t because it might have been misconstrued. Franchisors must be careful not to appear as though they are “leading” a prospective franchisee. If I told you the names of my best franchisees, and you never talked to the worst franchisees, you might later accuse me of stacking the deck to convince you to buy a franchise.

However, had you asked me for the names of my best franchisees, I would have told you. Most prospective franchisees don’t know to ask that question – or, for that matter, most of the other questions that should be asked before buying a franchise.

You might even argue that talking to the best franchisees only makes sense. Yes, it does, because they are the franchisees that know what they’re doing. They are the franchisees that know how to operate the business successfully. The worst franchisees – and every franchisor has them – are looking for that “mutually beneficial relationship” that some franchisors promise!

By the way, you’ll find all the key questions to ask before buying a franchise in 101 Questions to Ask Before You Invest in a Franchise.

 

These 3+ Reasons Will Motivate Franchisors To Negotiate With You

motivate franchisorNot so long ago, the Franchise Disclosure Document (FDD) was called the Uniform Franchise Offering Circular, and the word “uniform” was often used by franchisors to discourage negotiations with prospective franchisees.

“It’s a uniform offering,” the franchisors would say, “and we’re required to offer the same opportunity to every prospective franchisee.”

There’s always wiggle room

Yes, that’s essentially true, but in business there’s always some “wiggle” room. Essentially, every prospective franchisee is offered the same opportunity, but that doesn’t mean every franchisee gets the same deal. In more than 30 years of working with franchisors, I’ve never known one that did not occasionally negotiate – but always for a good reason.

Sometimes, negotiating is good business sense. For example, if you can bring value to the franchisor, you’ve got an advantage over other franchisees. All new franchisees bring value to a franchisor, but an experienced franchisee, i.e. someone who has operated competitive businesses for 20 years, or a franchisee who brings built-in business, i.e. royalty flow, to the franchisor – well, those are different scenarios that just might tempt a franchisor to negotiate.

Wanted: Proven Operators

Let’s say you’ve owned multiple franchise units in the past, and you’re a proven operator. You’re the type of prospect every franchisor wants to claim as a franchisee. In fact, the franchisor is wondering, “What’s it going to take to get this prospect to sign our franchise agreement?” Go ahead, tell the franchisor what it’s going to take!

Wanted: New Business

Say you’re converting your 10-year established business to a franchise brand and you’ll bring 1,000 new customers to the franchisor. That’s worth something! No harm in asking the franchisor what it’s worth!

Wanted: The Very First Franchisee

Another example: You’re considering buying a franchise that has no or only a few franchisees. In this case, the franchisor may need you more than you need the franchisor. You can be sure the franchisor is going to negotiate, especially if you’ve got all the business attributes that the franchisor seeks.

Contrary to what many people believe (and some say), negotiations occur every day in franchise sales. But they don’t occur without justification. And even then, some deal points will not be negotiated because the franchisor wants to keep the terms uniform among the franchisees. Otherwise, it’s difficult for a franchisor to explain why Franchisee A pays a 5% royalty and Franchisee B pays a 6% royalty. If there’s the slightest opportunity for Franchisee B to claim “discrimination” the franchisor is facing a lawsuit.

Show the franchisor a good reason

There’s never harm in asking a franchisor to negotiate. Territory, training, support, fees, and other points are open for discussion, depending on the circumstances. Franchisors are not going to refuse to sell you a franchise just because you asked to negotiate.

Franchisors negotiate for value

If you can demonstrate value for the franchisor, you may be able to negotiate successfully with the franchisor.