My consulting firm, Franchise Marketing Systems helps businesses become franchise models. Over the past several years, I have purchased franchises as part of my work in the industry. It has been interesting to say the least to see the other side of the relationship as a franchisee. Buying a franchise can be a confusing, scary and enormously time consuming process. All of this many times leads to bad decision making as people skip steps and tend to jump into something that maybe wasn’t the best business decision to begin with. The irony of it all is that franchising is by nature a business model that helps entrepreneurs and investors avoid unnecessary risk and skip the learning curve through a proven and validated business model. The buying process provides many of the same benefits just by the simple fact that the franchise legal process requires certain disclosures and information to be presented to a franchisee prior to their making a buying decision. So what can you do in researching your franchise investment to help avoid the pitfalls of a bad investment and find the shining star of an investment you’ve been looking for?
First, do your research. Good business people take their time. Haven’t you heard the saying that Warren Buffett had about his investing strategies, “Someone’s sitting in the shade today because someone planted a tree a long time ago.” It’s always nice to read things that rich people have said and sound so obvious when you hear them, but the idea here is to look at your franchise investment process as a long term decision. This needs to be planned out, thought through and really understood before you should take action. Do market research, search the industry detail and information to know who is out there and what the consumer market looks like for your potential product or service. If you are going into Tax Preparation as a potential franchise, understand the major players and who is good at what so you know where your brand will fit and what your value proposition would be to the market.
Second, know your rights as a franchisee. The beauty of the franchise investment is that the information is all there for you. Franchise investment law is overseen by the Federal Trade Commission and other state governing bodies, California is the Department of Business Oversight, New York is the New York Department of Law and etc. These governing bodies require that certain information is available to you as a buyer through a Franchise Disclosure Document and that the FDD is reviewed by that particular state’s administrators before the franchise may be offered to people in that market. This means in some cases that the franchise documentation is available through several of the state regulator’s websites and also that the FDD should have been reviewed by the state agency where the franchise is being considered for purchase.
Third, take the FDD to a qualified franchise consultant or franchise attorney to review the document with you and actually provide feedback as to what the franchise offering means to you. Knowing the business and how to read the franchise literature will help you do your analysis. The FDD contains information that relates to other franchisees who are both in the system and who have failed as franchisees. It also will contain information related to the fee structure, initial investment and background on the organizations behind the franchise model.
Fourth, make calls to people who are both in the franchise system and who have failed in the franchise system. There is no excuse! Having conversations….or even meetings with people who have already walked in your footsteps will provide you with the most accurate picture of this franchise investment possible. With the information you have now, you should be able to map out a business model and create a picture of what this franchise is capable of.
For more information on how to buy a franchise, contact Christopher Conner with Franchise Marketing Systems
Chris.Conner@FMSFranchise.com
Franchise Marketing Systems will be sponsoring the September 2016 Franchise Expo held in Atlanta on 9/24 and 9/25. The Atlanta franchise show is one of the countries strongest small market shows and will be this fall’s largest franchise marketing event. The Atlanta franchise show consistently draws a large volume of franchise buyers to the event primarily from the Southeastern United States. In developing effective franchise marketing campaigns, Tradeshows have always been a key aspect to any franchise development model and in today’s technology driven marketplace maybe even more so than ever before.
I am a small business owner, Conner and Associates, LLC, DBA Franchise Marketing Systems, based in Atlanta, GA. I fight the same fight you do every day of every week of every month. Sometimes it seems like all odds are against you being successful and you just can’t do anything right. Government regulations don’t seem to help the small business owner much, more so they favor the big corporations with money for lobbyists. Money is tough to come by as lenders look at small businesses as being higher risk in most cases. All that being said, I wouldn’t change a thing and love every minute of being a small business owner. My business, Franchise Marketing Systems has been fortunate to experience growth every year we’ve been in business. We have definitely had our set backs and trip ups along the way, but in the end, it has been exciting and is exciting to see your hard work come to fruition.
I have spent the past 15 years working with brands who want to franchise their business and grow a brand through the franchise expansion model. Our firm, Franchise Marketing Systems works primarily with start up franchisors and brands who have not offered or sold a franchise in the past, sometimes with mid-sized or mature brands who are in need of additional support for growth. In the several hundred times that I have supported a company going through this process, there are some similar traits to the businesses that really make it in the franchise model and those that don’t.
Businesses that turn to franchising as a way to expand their brand into new markets generally have a significant learning curve they must overcome as they learn how to manage the responsibilities of franchising and franchise expansion. A new franchisor is like a new business owner who is learning the ways, processes and steps they must take to deal with customers, overcome obstacles and effectively grow the business. What’s new about franchising to most business owners is the responsibility that comes with scaled growth and opening new locations in new markets with the addition of Franchisees in the fold. With the never-ending expansion of technology in all aspects of business and life, franchising certainly has seen it’s reliance on technology and systems increase exponentially as well. Perhaps in franchising more than most businesses, technology has taken on a new meaning as to how critical good tech is to the successful growth of a franchise.
Franchise Marketing Systems will be exhibiting at the Dallas, TX franchise exposition on 5/14 and 5/15/2016. The Dallas franchise show is expected to be a strong showing as the Dallas market is considered to be one of the strongest in the U.S. for franchise industry growth and expansion across a variety of franchise fields. The show is put on by the National Franchise and Business Opportunities Show group who conducts 15-20 shows per year throughout the U.S. and Canada.
If you have started a business before that has failed, you certainly know what the feeling is like. Your rent payment seems like it comes every week and your customer’s payments get smaller in amounts and longer to collect every month. When a business is at that teetering point and will either fall into oblivion or rise through it to success, it’s easy to lose your nerve as a business owner and maybe throw in the towel on your business venture entirely. Franchisees go through this learning curve when they are working in their franchise business during the first several months of operation. Many franchisees purchased a franchise due to the fact they had never operated a business before and they wanted coaching, support and guidance that can come through a franchise model, so this sense of anxiety may be at all time highs for many new franchisees during these initial months of business.
We’ve all heard the continued praise for senior care and the market segment that seems to grow with no limit to it’s potential. It makes sense after all with the explosive baby boomer population entering their late 60’s and 70’s who will all be needing some form of care in the next 10 years. With longer lifespans, that means a customer for 10,20 or 30 years and an infrastructure that is racing to keep up with the coming demand.
