Starting a franchise?Better have a lot of capital backing.

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

Hotels- A Franchise Reps Home

Greetings from the road,

I wanted to comment about some of my favorite and least favorite hotels.
First, let me say that I stay in mid-priced hotels usually in the Intercontinental Hotels chain for work. For personal trips I have stayed at great hotels, but I will keep this to business.

My favorite two are a tie. First is the Holiday Inn Express in Hot Springs, AR and second place goes to Holiday Inn Express in Grand Prairie, TX. Both of these hotels go the extra mile. They are very hospitable, they have sacks of snacks and water waiting in the rooms for Priority members and they automatically upgrade you to a better room. Both have above average breakfasts, with additional hot food. Hot Springs has ham, (real ham), eggs, breakfast sandwiches, and much more. Of the 50 different hotels I have stayed at this year, they have the best free breakfast. They are also the only ones with free postcards and old towels that you can take and keep.

Some of my least favorite hotels are an old La Quinta in Irving, TX , Holiday Inn in Nashville, TN, and Holiday Inn of the Westbank in New Orleans. These hotels had outside doors, were old, dirty, and scary and I would never stay there again.

In Birmingham, AL I was given the wrong room number and was trying to get into the wrong room with my key. A man in the shower came to the door and told me he already had that room. In North Carolina, I was in a room and they gave a key to my room to someone that just checked in and the man came into the room. I don't know who scared who more.

I have several that are in between, but I will be commenting on these along with the franchise visits.

The idea of a franchise is more or less to give licenses to people who want to follow your business model and take advantage of the established processes to grow a business. If you go into Subway, you know what you are going to see on the menu. They aren't offering BBQ and steaks and offering to deliver it to your house. Same with any franchise, you go to the hotel, store, restaurant, etc, you know what you should expect. The problems is......human nature. The problem is........a franchisee thinks they are Donald Trump and they can change the business into what they think it should be. That's where the problems starts. It is kind of like finding the person of your dreams to marry. Your perfect, lets get married, now you need to change.

That's where I come in.

The Personality of a Franchise Rep

Greetings from a hotel near you,

If you don't have patience, sense of humor, and the ability to hold your tongue, you don't have what it takes to travel around the country visiting franchisees.

I visited two franchisees the other day that each had half of a large Southern city as their territories. The first franchisee I met with didn't have a clue. When I asked him how many new customers he wanted to add next year and what his plans were for marketing next year he said that he wanted to gain 50 customers next year. He only had 150 customers and needed 400 customers to break even. He was so under motivated that he was giving himself 14 months to get 50 customers! When I asked him what he was going to do for marketing, he said he had 1,000 postcards to send out and thought that was enough, which it wasn't. The fact that he had previously not been able to kept a job so his father gave him the money to buy the franchise was shinning through. He had no idea how much revenue he was bringing in per customer. We figured it out together and came up with around $200. He wasn't computer savy, so he was doing several things by hand that he should have been doing on the computer.
Then I went across town to visit the other franchisee. He had several marketing and business books on his desk. He was working on a new web site and blog to help market his business. Without looking he told me he was bringing in around $500 per customer. He had doubled his number of customers each of the last two years and planned to do it again. He had goals posted on the walls and progress charts. He did all of that with the same 24 hours a day that the other man had.
In one day, I saw two completely different pictures. One of someone that will be going out of business at some point in the not so distant future, and one who will be buying out the other franchisee at some point in the future. Both were comfortable in their present state and didn't want any help from me.
The next day I went to visit someone that had 14 customers and had just hired an employee to take care of these 14 customers, and was planning to cut a hole in the top of a van for ventilation......

Fran

The Beginning of the Craziness

Have you ever thought about buying a franchise, but you were afraid you just weren't smart enough to succeed? Well, you will enjoy reading about some of the crazy things franchisees do and thinking to yourself that if someone like that can run a business, I certainly can.
If you own a franchise and would like to hear the good, the bad, and the ugly about things that other franchisees are doing, this blog will be for you.
If you visit franchises and see the kind of things that I do day in and day out, this blog will be for you. I hope you will comment and add your own stories as we go along.
If you are a road warrior, you will enjoy the hotel, rental car, airplane experiences. If you have dreamed of being a road warrior, you will change your mind.
I won't be able to tell you exactly which franchise I represent, due to wanting to keep my job and not wanting to embarrass the franchisees that I visit and help, but I can tell you I travel all over the US and it is a service type franchise.
Please come with me on the "Alice in Wonderland" journey that is the life of a franchise representive.