Questions & Answers
Question: Does it make more sense to buy an existing franchise or to start one from scratch? Answer
You can buy an existing franchised business; however, it is not necessarily a short cut to success. Why is the business for sale? There is always a reason. If the business is broken, then you will have to ask ‘what will it take to fix it?’ You also need to ask, ‘Is it even fixable?’ If the business is successful but tired, you need to ask, ‘How expensive will it be to update it – equipment, signage, systems, …’ If the business is successful and in great condition, ‘What type of surcharge will you be paying to buy it and can you add value by growing it further?’ ‘If you buy the business, can you add value or is it maxed out?’ Franchised business are bought and sold all the time. It is not necessarily better – just different.
Question: What makes a good franchise? Answer
Franchising is all about systems. A great franchise is a franchise that has exceptional systems that can predictably reduce your business risk. It really does not matter if you have heard of the franchise systems before. All that matters is that the system has the proven ability to create success.
Question: How do I know if I am right for franchising? Answer
This is a very hard question. At the heart of franchising are systems to drive success. The hardest thing for many people is following the systems. Here is a simple test. If I hand you a hammer are you likely to -
A) Critique the hammer and hand it right back to me or
B) Ask where the nails are and what we are building?
Those who critique the hammer and hand it back are not cut out for franchising. They do not see a tool; they simply want to give their opinion and not take ownership. On the other hand, if you are looking for the nails and ready to start swinging, then franchise ownership could very well be for you. You do not care who designed, manufactured or distributed the hammer. You just want to start building something.
Question: What qualities do you think make a good franchisee?Answer
A good franchisee has the ability to both lead and follow. First, a franchisee must be the leader of their business. They must have the ability to set a vision, get buy in from their employees and stay focused on success. Every day they get out of bed knowing that the buck stops with them. At the same time, the franchisee needs to be willing to follow a proven, successful operation system. Big egos don’t always work in franchising. A franchisee needs to respect the fact that others have gone before them and value the accumulated knowledge found within the organization.
Question: What is a franchise consultant? Answer
A Franchise Consultant is professional that coaches a prospective franchisee as they identify and investigate franchise systems. A proven franchise consultant will have at least 5 years of practical franchising experience and would ideally have experience as both a franchisor and franchisee.
Question: With Franchise Consultants, what are the pros and const?Answer
The Pros of using a franchise consultant revolve around focus and time management. An expereinced franchise consultant will provide you with the coaching needed to quickly and proactively define what type of franchise would be best for you. They will also identify alternatives and support the prospective franchisee during the discovery process making sure that the each aspect of the business is fully explored.
Many people believe that the con to working with a franchise consultant is that they do not work with every franchise system created. Personally, I think that is a ‘pro’. There are thousands of franchise systems and some franchises are simply not worth looking at. The real ‘con’ when it comes to franchise consultants is the lack of consistency. There are no standards when it comes to experience or background. As a result, some franchise consultants are great and others are simply pitiful.
Question: How do I find a good consultant? What questions should I ask?Answer
First, the consultant should have a minimum of 5 years of practical franchising experience PRIOR to becoming a consultant.
Second, ask to see their bio. The consultant should have a proven track record of success in franchising and in related activities.
Third, Google their name. If it is a common name, Google the name along with the word ‘Franchise’. You should be able to find a lot of information on the consultant this way. By the way, the website that the consultant sets up to promote themselves does not count as information – that’s marketing.
Once you know that the person has the experience base to add value to your investigation, you need to make sure you like the person. Do you think the person will always have your best interest in mind? Can you speak openly and honestly with each other? Do you trust them?
Question: How does a consultant get paid?Answer
The service that a franchise consultant provides should be completely free to the prospective franchisee. A franchise consultant is similar to an executive recruiter or a buyer agent in a real estate transaction. They receive financial compensation from the ‘seller’ only if they are successful. The seller, in this case a franchisor, shares part of the franchise fee with the franchise consultant if a new franchise relationship is formed. There should be no cost, or obligation, to the prospective franchisee. In short, the Franchise Consultant only gets paid if they are able to find the right business for the right person.
Question: Advice for new franchisees to help them succeed?Answer
Remember what you are buying. It is on the first page of the franchise Agreement. You are buying ‘the right to use the franchisor’s operating system’. When you do your due diligence make sure the system works. A franchise system should predictably reduce your business risk. Make sure the system does that BEFORE joining the franchise system. Then, once you become a franchisee, follow the operating system. That is where the value lies. That is what you bought. So use it, learn it and follow it.
Question: What are the financial burdens of starting a franchise?Answer
There are definately are financial (and emotional) risks when you chose to invest in yourself. There is the chance you will not be a good business owner, you will not be willing to do what is necessary to be successful. At the same time, remember that most reliable road the true financial success is business ownership. The Millionaire Mind by Thomas Stanley shows the vast majority of financially successful people owned their own businesses. The real question is whether you trust yourself enough to invest in yourself. If so, then you are making the right financial investment.