So you’ve decided to join a franchise group, but you’re not sure which one is for you? You’ve looked at so many that you’re starting to go crazy trying to decide which of them look like the best opportunity. Black is now white and grey is now the only color that seems to make sense.
SO…… what IS the best group to be part of?
Well as a franchise consultant of over 25 years, I reckon I would have this question asked of me at last a half dozen times a week. ‘You’ve been in this game a long time, which ones are the best to be part of, what should I buy, why should I buy, and what makes them good?’
Well there are a few things that make a franchise group special. And in a short and concise fashion I will try and give you what I see as being the real reasons you should join a franchise group.
First and foremost, does your potential franchisor have vision?
As you move from opportunity to opportunity take a look at the group and ask yourself this simple question, does the managing director, franchisor or CEO of the group know what the group looks like when it grows up. Because without their vision it will be difficult for you to have any vision in your business as you will not be able to grow with them.
Here are some key things to look for that will help you establish if your potential franchisor has vision:
- Do they have a one, two, five, and ten year business plan?
- Do they have an exit plan for the business i.e. do they know what THEY are going to do when they want to get out of the business? And how will that exit affect you, should you still be part of the group at that time.
- Do they have a structure or a template for YOU to use to help you create the same business plans for your new franchise and have they talked to you about your lifecycle as a franchisee in the business?
- Have they asked what YOUR drivers are, what you want to be when you grow up and how they are going to help you achieve that?
- Do they talk like the group is going to be a force in the category and do you believe they can deliver on their promises of business development in the months and years to come? (And don’t be fooled sometimes business development does not necessarily mean more outlets, simply better outlets in the system.)
Does your potential franchisor have leadership?
It’s an age-old fact; people join companies and leave leaders. Poor leadership is the Achilles heel in any business, and there is a fine line between a leader that truly leads and one that threatens everyone to follow them.
There are some tell-tale signs that will show the real leaders.
- Look at how the franchisor, managing director or CEO conducts themselves with their staff. Does the staff have a solid culture of caring for each other, for the business, for the shareholders and for their customers? After all, YOU are about to become the customer in their eyes. Will they treat you with respect, while all the while offering you direction and the development you would like to see as an individual and a businessperson?
- Are the current franchisees following the leader? This is easy to spot, as solid leadership will mean that they are all following the system, and they believe in it. Do you feel like they are all disciples of the business and feel like ‘were all in this together’ because ultimately at the end of the day you need be able to sit in a room and look at all of your fellow franchisees and say to yourself, ‘yes these guys are protectors of the brand and followers of the faith.’ Or you may as well all be independents as your brand value is out the window.
- Do you feel comfortable that as the leader of the business the decisions he or she will be making daily will be the best for the business, and for your business?
Do you REALLY want to be doing that all day?
It’s a bit of a romance really. You see a business that you really, really, really believe you can make a bunch of money out of, mainly because you’ve heard about a guy or girl that has, ‘made a killing out of it,’ and human nature kicks in and says, ‘yeah I can do that, I can be in that picture, I can see myself making that kind of money.’
But at the end of the day, there is no use being a dog washing franchise if you don’t like animals, or a fast food franchise if you have no affinity with cooking or preparing food. Or if you have a bad back or knees then you certainly won’t be good on your feet all day in a retail franchise.
It’s just simply not a fit.
So don’t try and put square pegs in round holes and look for something you think you could and would like to do 8 hours a day, 6 or 7 days a week, 50 weeks of the year.
If you are in it just for the money you are already in a bad space because as soon as the money is not there (and there could well be times that you’ll hit a lean patch for some reason) then you will become the franchisee from hell and cause both your business and that of your franchisors a lot of financial heartache as you focus on the negatives and not the positives.
Love what you do and your customers will love you. The money is a bi-product of your passion for the business.
If it is to be IT’S UP TO ME.
It’s a classic question. ‘How much can I make out of this franchise?’
We’ll the first hurdle here is that your potential franchisor is not really able to offer you any financial projections, they have not run your new business and in fact in many cases your new business does not even exist yet. What they can give you is historical figures from other franchisees in the system and let YOU make your decisions on what it’s going to be worth to you.
Now of course you’re going to look at the best performing franchise and think to yourself, ‘sure I can do that,’ but the question you need to ask yourself is are you prepared to work as hard at it as that successful franchisee and follow the system as diligently as that franchisee and be as consistent as that franchisee?… If not then expect your outcome, and your figures to be different.
The franchising model provides a great support system for your business but at the end of the day, it’s like any small business really. It’s HARD WORK, and the harder you work it the better your returns will be. Simple as that!
“Ok so that’s great but how do I put that all together and make the RIGHT decision when selecting my franchise group.”
Grab a piece of paper, and do a simple SWOT analysis on the franchisor and on your potential business. This will help you see the Strengths, Weaknesses, Opportunities and Threats, and it gives you an easy measuring stick on all the franchise systems you are about to take a look at.
Now that sounds really simple doesn’t it? But there are some rules you need to follow when constructing your analysis.
- Be objective and take the emotion out of the analysis. You’ve already asked yourself the question, ‘Will I love what I do in the business?’ so you can tick the emotional box. Now focus on the business of the business and treat this process as a business transaction. No emotion, just deal with the facts Jack!
- Take your time. Make sure you’ve done a detailed analysis on each of the opportunities you’re looking at and don’t cut any corners. It’s a big thing you are about to do, so give it the respect to make sure you’ve looked under every rock.
- Get some advisors involved in the process, your accountant, your solicitor or attorney and maybe an external consultant for another objective professional and qualified opinion. Don’t rely on family and friends to help you with this process. In many cases their opinions will be based on the romance of you being in that business rather than a true perspective of your financial future. After all, it’s not their money and the only interest they have is an emotional one in you.
- Dial in your spouse or life partner. They’re coming for the ride too – even if they are not going to work in the business, they need to be on board.
- Write a draft business plan before you sign up for the ride. This will help you get all of the above in perspective and put your thoughts in order so you are clear on what it is you want, from your business, your future, and your life.
Research proves that a small business working under the umbrella of a franchise system has more chance of survival than a small business working on its own.
Franchising works, no doubt about that. Just take your time to work out which of them will work best for YOU! Good luck!
About Troy Hazard: I am the founder/owner of 12 businesses over the last 25 years, current CEO of Troy Hazard International, author of the book Future-Proofing Your Business, and the former Global President of the Entrepreneurs’ Organization. I have been a franchisee twice and a franchisor while consulting with over 300 brands in 6 countries. You can find me on Twitter @TroyHazard. You can book me to speak at your event by contacting us or calling 214-536-6666.