Want To Be a Franchisee? Don’t Be Anything Like Me

I would not be a good candidate for a franchise opportunity. Here’s one huge reason why:

I am rather outspoken. Probably too outspoken to be part of a franchise system. Let me give you an example.

My late father, Jerry Libava was one of the original members of a certain franchise brokerage group. When I was downsized (canned) from a automotive franchise management position in 2001, I joined my father in his franchise consulting firm, which at the time was called International Franchise Development. He was a “member” (a franchisee) of this national franchise consultancy brokerage group, and I became a franchisee also. Dad was one of the original members of this franchise brokerage. A little background:

This franchise brokerage group was set up much like a franchise. Members had to take training classes, pay into a marketing fund, and pay royalties on the deals they closed. A deal, in industry speak, is the successful placement of a franchise candidate into a franchise concept. The franchise companies paid finder’s fees to the members of our group that did deals. No problem. I did deals.

Even though the president of this brokerage group refused to call this group a “franchise,” the members pretty much knew it was a franchise. My dad always said it was a franchise, and he was usually right. Anyway, certain things were brought forth to the group occasionally for a vote, and I participated. Arguments were common, but the one topic that got everyone riled up the most was the marketing budget. In 2002 the Internet was really taking off, and prospective franchise candidates were using the Internet more and more for franchise research. Several companies were developing Web sites to attract these franchise prospects, and would approach groups like ours to offer a pay-per-lead program. Here was how the program worked:

  • Somebody (a lead) would find one of these franchise directories online, be curious enough about one or two specific franchise concepts to want more information, and would fill out a form on the site, requesting contact. Voila! A lead.
  • This lead would then be sent to the franchise company’s e-mail box or fax machine, whereby the franchise rep would follow up with this prospective franchise owner and start the sales process.
  • The franchise company (or, in our case, a franchise brokerage) would be charged for every lead.
  • In the case of our group, these leads would be sent out to the offices that were in the geographic area of the prospective franchise candidate.

Here is where it gets ugly. Every member of our group was going to be charged the same set amount of money every month for these leads. Some of us felt it was unfair. Unfair in the sense that the folks that had offices in places like New Jersey, with 7 million people in their backyard, would be getting a lot more leads than a place like Columbus, Ohio, where about 1 million people resided in their territory. Not only would the New Jerseyoffice get a lot more leads, they would be paying the same monthly marketing fee that the Columbus, Ohio office would be paying. That seemed fair, right?

I used Columbus, Ohio in the above example, but my territory, Cleveland, Ohio, was the one that I become rather outspoken about. I argued for three years about this inequitable situation, and I was the loudest. Group members generally felt the same way that I did, but I was the one that wouldn’t give up. In the end, I ended up leaving, and went out on my own (a decision that I am quite happy about).

So now I do my own thing. I make my own rules. I don’t pay any royalties. I get to let my creative juices flow. I get to choose which franchise companies I want to work with. I am not franchise material. I don’t follow the crowd. I follow rules, most of the time, but when they are stupid, or inequitable, I argue to change them, and I argue hard. That generally doesn’t work in a franchise situation.

No franchise company should want me as a franchisee. The really good ones would know that Joel Libava is not franchise material early on. And they would not take my money…

Joel Libava is a Cleveland, Ohio, franchise consultant, marketer, and franchise industry blogger. His many projects can be found at www.JoelLibava.com

His eBook, The Essential Steps To Researching a Franchise Opportunity, can be found here.