All,
Working with franchisees can be very time consuming. I apologize for the long time between posts.
We all know the economy is tanking and it will probably be 5-10 years before it is completely back to where it was. Tough times brings both opportunity and risk. Warren Buffet says "Be greedy when others are fearful, and fearful when others are greedy." Are you in a position to be greedy? There are plenty that are fearful.
As far as franchising, I think that being under capitalized is one of the biggest mistakes I see and hear about. When someone is looking at buying a franchise, they are told that they need at least a year of income set aside because it will take time to see a profit. I would make them have two years of income put away. Two years plus enough money to market through both the first and second years.
If you tell the person that is trying to sell you a franchise that you do have a years worth of money to fall back on, is that sitting in an account ready or would you have to sell a house or cash in a 401K? What if you suddenly you are up-side-down on your house like 50% of the people in America? What if your 401K is suddenly worth 40% less? THIS JUST HAPPENED!!!!! To lots of people.
Please don't tell me that you borrowed on the equity of your 401K to buy your business or to live on, and now that is gone.
Be very careful if you are thinking about starting a business. I would definately look at buying a failing business that has been running for awhile, but has been mismanaged or the people have to leave for personal reasons. A brand new business or brand new location - no way. Everyone is hanging on to their money tight and buying few new things.
Fran Rep
Showing posts with label Franchise buyer help. Show all posts
Showing posts with label Franchise buyer help. Show all posts
Monday, October 20, 2008
Sunday, February 10, 2008
Franchise-From the words Freedom and Liberty
Even Franchise Field Reps need to rest now and then. For the week-end, I wanted to post this comment a former franchise corporate employee left me. It is so well written, and had so much insight, I didn't want it burried in the comments. Keep those great comments comming. Fran
Dear Fran:
I’m glad you liked my comments. I’m betting that a smart chic like you already knows that the word “franchise” originates from the Anglo-French, meaning freedom and liberty. Alas, what so few prospective franchisees don’t know is that in today’s world, freedom (as we know it) has nothing do with owning a franchise.
Owning a business will always seem like a slam dunk to the drones longing to escape from Cubicle Ville. But running a business is the tricky, three-point shot reserved for those in the big leagues. Let’s abandon logic for the moment and suppose someone is already business-savvy. What are the prerequisite skills needed to make it in Franchise Land?
Here is one that you will hear ad nauseam: “You should have a strong desire to succeed while being your own boss.” More importantly, you should understand that you are NOT going to reinvent the wheel when you purchase a Wonder-Rama franchise. Billions were served because “people love consistency.” Do not go boldly forth into Franchise Land thinking you can change the formula with a bright new idea. Uniformity rules.
Do not dream of owning a McRoyalbucks franchise only to be appalled by the idea that a steady diet of fat-laden junk food will have your customers on the fast track to a triple bypass. The corporate office will not take kindly to your adding tofu to the menu unless they think of it first.
Running a franchise is NOT for the free-spirited, independent-minded, innovative entrepreneur. It is however, ideal for people who want to bust their butt following a proven method for making a tidy profit, who will agree to follow the corporate party line and who will cheerfully pay a royalty for the privilege of riding on the coattails of a nationally-recognized brand.
So what do you need to do before deciding to buy a one-way ticket to Franchise Land? (That’s right, one way. Beware the non-compete clause).
Step Number 1. You need to look at the whole idea with a jaundiced eye. Don’t behave as if you are on a first date with someone from Baywatch. Remind yourself that the buxom models probably have implants and the hunky lifeguard may be on steroids.
Start by reading the October 10th, 2006 issue of Forbes “Ten Reasons Not to Buy a Franchise.” If you cannot find this article online, forgetaboutit.
If the salient points of this article do make you run for the exits, you can proceed to the next step.
Step Number 2. Caveat Emptor! I didn’t take Latin, but even I know what this means. Unfortunately, too few franchisees do their homework. I took part in presentations to prospective franchisees and was amazed at how little they bothered to ask while they had the chance. Most of the prospects seemed as if they were in a hypnotic trance while being shown around the corporate HQ. Maybe it was the non-stop whirl of canned presentations, the plastic-smile- razzle-dazzle or the Ambien-laced coffee. Something got to them.
Do some detective work before you plunk down grandma’s Mutual of Omaha money. If the company is publicly owned, ask for an annual report. It might a good idea to know how to read that annual report. Do you know what to look for? Do you know what you are looking at? If, like me, you can’t make heads or tails out of a spreadsheet, make sure you have a business partner who can. Or, if you flunked out of the London School of Economics, go to Google and type in “How to Read an Annual Report.” Otherwise, go back to your cubicle where you belong. You have no business running a business.
Dear Fran:
I’m glad you liked my comments. I’m betting that a smart chic like you already knows that the word “franchise” originates from the Anglo-French, meaning freedom and liberty. Alas, what so few prospective franchisees don’t know is that in today’s world, freedom (as we know it) has nothing do with owning a franchise.
Owning a business will always seem like a slam dunk to the drones longing to escape from Cubicle Ville. But running a business is the tricky, three-point shot reserved for those in the big leagues. Let’s abandon logic for the moment and suppose someone is already business-savvy. What are the prerequisite skills needed to make it in Franchise Land?
Here is one that you will hear ad nauseam: “You should have a strong desire to succeed while being your own boss.” More importantly, you should understand that you are NOT going to reinvent the wheel when you purchase a Wonder-Rama franchise. Billions were served because “people love consistency.” Do not go boldly forth into Franchise Land thinking you can change the formula with a bright new idea. Uniformity rules.
Do not dream of owning a McRoyalbucks franchise only to be appalled by the idea that a steady diet of fat-laden junk food will have your customers on the fast track to a triple bypass. The corporate office will not take kindly to your adding tofu to the menu unless they think of it first.
Running a franchise is NOT for the free-spirited, independent-minded, innovative entrepreneur. It is however, ideal for people who want to bust their butt following a proven method for making a tidy profit, who will agree to follow the corporate party line and who will cheerfully pay a royalty for the privilege of riding on the coattails of a nationally-recognized brand.
So what do you need to do before deciding to buy a one-way ticket to Franchise Land? (That’s right, one way. Beware the non-compete clause).
Step Number 1. You need to look at the whole idea with a jaundiced eye. Don’t behave as if you are on a first date with someone from Baywatch. Remind yourself that the buxom models probably have implants and the hunky lifeguard may be on steroids.
Start by reading the October 10th, 2006 issue of Forbes “Ten Reasons Not to Buy a Franchise.” If you cannot find this article online, forgetaboutit.
If the salient points of this article do make you run for the exits, you can proceed to the next step.
Step Number 2. Caveat Emptor! I didn’t take Latin, but even I know what this means. Unfortunately, too few franchisees do their homework. I took part in presentations to prospective franchisees and was amazed at how little they bothered to ask while they had the chance. Most of the prospects seemed as if they were in a hypnotic trance while being shown around the corporate HQ. Maybe it was the non-stop whirl of canned presentations, the plastic-smile- razzle-dazzle or the Ambien-laced coffee. Something got to them.
Do some detective work before you plunk down grandma’s Mutual of Omaha money. If the company is publicly owned, ask for an annual report. It might a good idea to know how to read that annual report. Do you know what to look for? Do you know what you are looking at? If, like me, you can’t make heads or tails out of a spreadsheet, make sure you have a business partner who can. Or, if you flunked out of the London School of Economics, go to Google and type in “How to Read an Annual Report.” Otherwise, go back to your cubicle where you belong. You have no business running a business.
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