Franchising ~ research offers ~ Carefully
Your exposure to franchising is a good thing. There are more successful franchises in the marketplace today than ever. Trick is to discover the good ones Vs the losers. Not all franchises turn out to be a successful venture and you need to investigate carefully.
Yes, I’ve been there, both good and bad. My first franchise was in the temporary help and full time placement business. Nothing was wrong with the franchise and the franchisor was a good guy. However, my board of directors were investors without a clue about the business.
Two weeks at the home office. A big set of operating manuals [tells you how to "do it"]. Now, back to the big city to begin operating the franchised business. Does that sound about normal so far? Very much in line with the majority of franchise offerings.
However, I must tell you there was a missing link we failed to realize. Many franchises have national recognition i.e. McDonald’s; Wendy’s; Manpower; Kelly; and hundreds more. Sometimes that can also be a negative to your success if the public is lukewarm about your service and/or product.
Our new franchise had NO national or local recognition in the marketplace. Not a good thing but we hoped we could overcome being an unknown name and quickly get recognized in our area with advertising and personal network through our staff and contacts by sales team.
Home office in Rockford, IL was doing great, making lots of placements and profit too. It seemed so quick and easy for the placement consultants to connect with the companies in their area. Being in business for several years made a huge difference but it just felt like some connection was extradinary with the local buyers of staffing services, placement too. Human Resources in the big firms were on board with the owner and manager to the extreme.
How could this be? Why wasn’t it working for us in our city? I want you to know where the hidden assets are in some franchised operations. Regardless of the type franchise, there are often things in particular that you need to research and seek out in your due diligence BEFORE buying the franchise.
Personally interview the owner, then the manager as well as the most successful consultant. Doing a good job is one thing. Smarts is helpful too. Be sure to ask about the HISTORY of the people working in the business. What is their network? Work history? Family connections? Deep pockets?
Most sales executives are going to tell you how wonderful the franchise offering is and it may be absolutely true and worth every penny of the asking price. Monthly fees may be fine and competitive. So far, it’s right on target for what we think is a great opportunity in our local business community.
In summary, here’s what I discovered AFTER the purchase of the franchise. The Manager at the home office had been President of the Personnel Association in Rockford, IL. He had been a big firm Human Resources Executive and was well respected as a professional. His integrity, trustworthiness, great personality and friendships with other HR pros came together as a highly valued asset to the franchisor.
Obviously, not every franchisee is a former HR professional. Not a requirement but ”connections” in every business is an important consideration before you buy a franchise. Fortunately, we were successful with our franchise because our staff had a few valuable connections too.
My point in sharing this story with you is to highlight the hidden assets. Nothing will prove to be more valuable to your success than your employees, investors and management staff. It’s important in your due diligence to know WHO ~ WHAT ~ HOW ~ WHY ~ in advance of making an investment in a franchise. Do NOT let any salesperson RUSH your decision regardless of their persuasive tactics.
Call me BEFORE you buy a franchise. I’ve owned several in my business career and will gladly share my best insight into your due diligence process. Nothing is worse than a bad decision involving your money and your future career path. Buying a franchise is like buying a boat… history says you have 2 best days, the day you buy the boat and the day you sell the boat. Something to think about.