President / baaci.biz ...

If a prospective franchisee does not have the funds to invest in the franchise of his or her choosing, there are at least a couple of options they might want to consider. One option to settling for ?buying the best job you can afford? is partnering with someone or seeking out an investor. However, with regards to buying a job, this is something that prospective franchisees really need to be clear on. Are they investing into a business so that they will have a job or are they searching to invest in a true business opportunity? If Franchise Consultants are not asking this question from the onset, they really should be? A true business opportunity will eventually allow the franchisee to become an absentee or at least a passive owner thereby freeing up their time to pursue other business opportunities while still generating income from their franchise investment. If it is determined that the client really wants a business and not a job, then the Franchise Consultant can rule out franchise opportunities that require the client to be an owner operator. This is why it is important to know the degree of involvement your client intends to have in the business both short term and long term. A much better service can be provided and a lot of time can be saved.

Congrats on the New Gig ...

Good for you, Joel. Saw the news on Sean's site. Looking forward to your posts, which I will cheerfully blast from time to time!

To Tom/Landscaping ...

Hi Tom,
There are a lot of ways to identify ideal prospects. You may have to however, spend some of your marketing money to just get the word out, and see who is attracted to your offering. That would be a great start.
Joel Libava ...

How to Market Our Franchise Opportunity ...

We have spent the past two years perfecting our franchise offering. It is in the retail landscape materials field. We are stuck on how to identify our best franchise prospects and similarly stuck on how to reach them. Any ideas? Thanks for any help you can give us.

President ...

As an entrepreneur, I find it comforting to know that my success or failure has more to do with MY actions rather than the actions of others. Look at all of the good, hardworking people that were hurt in the Enron scandal. It is my view, that if one truly seeks to find "True Employment Security", one should seek the path of self employment. In a general sense, every business must realize a profit from each person it employs. That profit may be in the form of real dollars (i.e., Sales, Marketing, etc.) or increase efficiencies (i.e., support personnel, Managers, etc.) or prevention of the loss of dollars (i.e., security, etc.). What this ultimately means for the employee is that he is offering his services at a discount to the employer for the benefit of not having to kill something and drag it home. Consider a sales position. If a salesman works on a 33% commission of Gross Profit which is very enticing to a salesman, he is giving up 67% of the profit to the company for which he sells. Of course the company then deploys that 67% to cover Fixed Costs (i.e., rent, support personnel & overhead costs, etc.) while keeping a percentage as net profit. All this is well and good and is how business operates across the land. I ask all of you that are employees or have been employees to consider how many thousands of dollars are being or have been squandered away by your employer companies. From my vantage point, it would be disconcerting to give my all to a company and have it evaporate from the corporate world due to the actions of others, regardless of their intent. I challenge people each day to find out areas in which they excel, and then to move in that direction. While finding that "quality" franchise will create a positive, new found lifestyle, the greatest benefits occur in a very personal way. If you are truly "in your element", you will find that you become a better spouse, parent, friend and citizen. In essence, you become a better you.

Fitness Together Franchise Corp.

Mike, I could not agree more with you that for a franchisor to be successful in the growth of their franchise the franchisor must have field experience not blackboard experience. I believe that personal hands on experience with a business model is 100x more effective in teaching new franchisees how to be successful at running their franchise than just principle and theory from getting an MBA. Most people who come out of grad school with an MBA and has had no practical business experience have no right telling a person who is the hard working entreprenuer on the front lines how to run their business day to day when they have never done it themselves. I'm a master franchisor for Fitness Together and Elements Therapeutic Massage in NY. I personally have owend three Fitness Together's and understand the in's and out's of the business model and do not have an MBA myself but have thought about getting one to help further my corporate career. Thanks, Scott Thompson ...

Great Blog!

Thanks for the great information on franchising.

How do you know when to franchise?

I've had quite a few business associates encouraging me to franchise my retail business. How do you really know if that's a good idea? Is there a profit sign-post? Or?

Franchising ...

Thanks for the information. I am trying to self-educate on the franchising topic. Basically, I'm trying to decide on the advantages and disadvantages of franchising. Unfortunately, most of the information I read about franchising is a bit complex. Keep posting. Business owners like me could use valuable information such as this.

Nice Information ...

I just want to thank you for posting this information. Even though I have an established business, I find there is so much to education oneself about as a small business owner. Once again, thank you for sharing such educational material.

Franchising ...

Nice read. I'm wondering, with franchising, should an investor/business person consider a minimum population before starting towards or establishing itself as a franchise?

resorce for selling a franchise OR buying ...

Hello, My friend has a company that can help people buy and sell franchises all over the country. http://www.sovereigninvestment.com ...

Franchising ...

Interesting post. I was hoping you would get a little more detailed about franchising. Like for example, how does a small home based business enter into franchising? I didn't think this was possible.

Financial Information from Franchisors ...

I can understand this issue from both sides of the argument. Prospective franchisees want to know how much they'll make, of course. But success depends on individual drive, experience, working capital, etc. As a Business Coach, I work with all types of people. I wholeheartedly support the concept of franchising. It?s not for everyone, but it is ideal for quite a few folks. However, even the most successful franchises will not make claims to prospective buyers for fear of being sued--quite a legitimate fear. There are few franchise-buyers who, after failing at a business, will look honestly in the mirror; instead, the fingers start point vigorously?and more often than not they are pointed at the franchisor. Here?s an example: I knew a first-time entrepreneur who decided to purchase a franchise. He had a great education, excellent business experience, and solid working capital. But as everyone knows, pedigrees do not predict entrepreneurial success. This individual bought a popular and successful restaurant franchise. However, he began to stray from their ?system?. For instance, he saw advertising as an expense rather than an investment. In the interest of frugality, he pulled back and then stopped altogether. The lack of advertising affected performance, which created anxiety for the owner who then became more and more risk adverse in other crucial areas. After a while, the compounded mistakes result in him closing the doors. Advertising was just one of his problems. On an overall basis, he simply did not execute as well as he needed to. The bottom line is that franchisors cannot predict performance. Corporate expatriates who enjoyed successful careers can become paralyzed when they go out on their own. At the same time, an enthusiastic entrepreneur with no college degree can break all records. At the end of the day, ANY startup--even a franchise--is a risk. The onus is on the entrepreneur to do his/her due diligence and be honest with themselves about whether they can genuinely succeed given all the variables. Even if franchisors offered claims to buyers, they would be utterly worthless since success or failure lies in the hands of the entrepreneur.

wonderful website ...

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Franchise Due Diligence ...

Yours is a good question, Tim. So, let me delve a little deeper. First, when comparing ?franchise due diligence? to due diligence on an existing business, the process used in the former is most certainly industry specific. When I referred to ?due diligence? I followed with a broad definition of its intent. Specifically, due diligence should be used to determine ?whether or not the franchise is worth buying and a "good fit" with one's personality and abilities (financial and otherwise).? In other words, one needs to decide whether or not the franchisor has developed a quality, repeatable ?system? for your start-up. This is a very different investigation than one performed on an existing independent business. (But, I would further stand on the same statement even if the franchise to be purchased is already in operation. Why? Because you can?t change it.) Second, if one believes the franchise offers a ?quality? system, then one must be properly ?trained? to use it.



Now, with regard to ?other? industries, unlike a franchise, once you buy a business it is yours to tinker with or change in anyway you see fit. Naturally, in franchising you run things the way the franchisor dictates or you will find yourself in default. Second, with regard to training, not often do you find an established, professional teaching program when purchasing an independent business (as opposed to a franchise), so how could one determine what they will be taught other than a promise made by the seller? (And certainly no training is going to take place before the purchase is made.) All good franchise consultants will insist on researching these issues.



Hope this helps.

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Short But sweet ...

Nice wee article, shame that the font changes half way though though! regards Peter ...

The reason why Franchisors don't publish earnings claims ...

The reason why Franchisors don't publish earnings claims isn't because they aren't proud of their franchisees' performance, but more likely because of the possible legal ramifications of doing so. There are a lot of legitimate companies that do go through the immense amount of work to file an Item 19, which allows you to give earnings claims legally, but they still don't use them in their promotions or even in their UFOC. Likewise, there are a lot of scams out there that are quick to give an earnings claim because they don't care about litigation and probably plan on shutting down their operations in a year or two, with your money lost in the shuffle. Rather than focus on earnings claims, pay more attention to the history and growth strategy of the company. The franchisors that have been around for decades and are growing market presence are the ones you can bet are getting and keeping happy franchisees, while staying out of court. Also, take any opportunity you can to talk with existing franchisees, whether it is face-to-face at an event, or on the phone. If you have one in your area, cold-call. Whether or not the franchisees are profitable, they will not have a problem telling you all about their experience.

No Specifity to Franchising Industry ...

Your two most integral tenets to the franchising industry, Mr. Bibby, are due dilligence in decision making and training. But, aren't these equally as important in any business venture in any industry of commerce? What makes these common denonominators specifically more important to your industry?

You make a good point.

You made a very sound point in your blog about financing. I found that it was better to wait five years before starting up my franchise, and first get my personal finances in order. Thinking things through logically and waiting all that time and doing my homework really paid off. Otherwise I would have been both pushing and ripping the envelope.