Ready to Buy a Franchise? Not Until You’ve Interviewed Some of their Franchisees

 

Thinking about starting your own business by buying a franchise? The good news is there are a lot of people with pertinent information to share. And, as anyone of them would tell you, good preparation is key to success.

Your best resource bar none are the company’s current and, yes, former franchisees. They offer the best information on what it’s really like to run that business, and their perspective is so valuable because they’re most likely to give it to you straight. By contrast, when you call a franchisor, you may be talking to a salesperson on commission who will tell you only what will make his company look like a great deal.

So for a more accurate picture, talk to the franchisees, the more the better. Get a list of franchisees from the franchisors, which they are required by law to provide, and call to make an appointment. Each of these franchisees has stood where you are, and most will likely be happy to help. But respect their time!

What do you need to ask franchisees? A franchise coach can help you separate the wheat from the chaff, but you will want to ask about several critical aspects of their business.

Questions for Franchisees

Personal Journey

How did you choose this franchise? Did it match your particular area of expertise? What is your business background? How long have you been in the business?

Support

Are you satisfied with the level of ongoing support from the franchisor? Face it, without support, you’re a fish out of water. Support is a huge part of what your franchise fee is supposed to pay for. Plus, if you owe ongoing royalties to the franchise company, you want to make sure you’re getting something in return for your investment.

Training

Was the training you received substantial? Was it sufficient to prepare you for running this business? Was it thorough enough for someone with no industry experience?

Preparation

Has the actual business operation matched your expectations? What challenges should a new franchisee be ready to meet?

Happiness Quotient

What do you like the most about running your business? What do you like the least? Would you do it again, knowing what you know now? Why or why not?

Profitability

How long did it take you to reach break-even? Or are you on track to reach break-even? Does the franchise have the potential to earn the franchisee a six figure income? Approximately what percentage of your gross are you earning in profits?

Business Expenses

Approximately how much per year do you spend on advertising and marketing, rent/utilities, insurance, merchandise, other?

Franchisors’ Marketing

How would you rate the franchisor’s marketing programs and tools? Does this generate a significant proportion of your business?

Management

How difficult is it to find and manage employees? How are they compensated?

 

The bottom line: You want to know if the franchisee’s experience seems appealing, to see if this franchise’s process would work for you. Sometimes you may learn that what hasn’t worked out for the franchisee might actually work for you since you have a different package of experiences and skills. Or you might learn that, due to some recent staff turnover, the franchisor is no longer able to provide good support systems.

Important Pointers for Buying a Franchise

Youve got your mind set on what seems like the perfect franchise, and youre already dreaming about your future life as a successful business owner. Sound familiar? 

Before you get out your checkbook, you need to ask yourself if youre really prepared. Have you talked to:

          A franchise coach

          Franchise companies

          Franchisees

          An accountant

          A franchise attorney

Sound like a lot? Not when you consider the importance of this decision, the commitment of time and money. Because once you take the leap, you and your money are on the line. There will be no one else to pick up the slack when you feel like slinking away.

First, let me say that I think a franchise is a great way to get started in business. A good franchise has already perfected the business model, plus loads of support and training for the new business owner, including technology, staffing, sales, human resources and advertising. And this is not just a one time thing. A franchisors staff is there to help you at every step along the way.

Choosing a franchise that is right for you is the tricky part. The answers you need require research.

Choose a Coach

A franchise coach can give you a broad window into the world of franchising, which is far larger than you likely realize. The International Franchise Association estimates that there are more than 3,000 franchises across more than 75 industries. The good news is that most franchise coaches will not charge you any fee.  You can get expert help for free!

Contact Franchise Companies

As you start to narrow down your search to a sector and then select a few franchise companies that you think might be right for you, you need to learn the way these businesses work. Call the franchise company and ask them about their process and what is necessary to succeed in this business. Your goal is to figure out whether this process will work for you. 

Interview Franchisees

The franchisees once stood in your shoes, and they will want to help. The franchise company will give you a list that includes every one of their franchisees. Prepare a set of questions to ask each franchisee, and dont be shy. Just be cognizant of their time. You may need to make an appointment for your conversation. If you can do it in person, so much the better. Get a tour, and find out how their businesses are going. Are they making money?  Get specifics. How much? Does actual reality match up with what the franchise company told them. Where hasnt it worked out so well for them? Why? Would they do it again? What are their tips for success?

You should also talk to franchisees who have left the system. Youll find those names on the list from the franchise company. They may be harder to locate, but learning about how things might not go so well is extremely worth your while. Dont skip this step!

Consult an Accountant and Attorney

These specialized professionals will help you go through the Franchise Disclosure Document, which franchise companies are required to produce. Make sure the attorney specializes in franchising. The franchise agreement can be a couple hundred pages long. If the lawyer lacks experience with franchising, he or she may not know what to watch out for to ensure you are protected. You dont want to sign your name on any contracts without first consulting with a good franchise attorney and accountant.

And these are just the business questions. Stayed tuned for my next article on the personal questions that should be a part of your research.

 

© Dan Citrenbaum 2014

 

Dan Citrenbaum is a franchise coach and consultant to entrepreneurs, who helps people achieve their dreams as small business owners. He has a proven track record helping people select and buy a franchise or existing business. Contact Dan at dcitrenbaum@gmail.com or at 215 367-5349 and view his company website at www.entrepreneuroption.com

Shopping for a Franchise? — Stay Away from the Next New Craze!

Cupcakes are all the rage these days in franchising, and while they make a pretty window, their long-term appeal may be fleeting. Frozen yogurt is also making a strong comeback after almost disappearing some years ago. But it doesn’t take much to saturate the market, and you know it’s a fad when it fizzles out fast.

What’s hot and what’s not may be a typical headline on a fashion spread, but you probably want to stay away from fads when it comes to franchises. Sort of like the flavor of the month, when folks get tired of it, they stop buying.

A better focus is to pinpoint what people need. After all, people are not likely to buy specialty cupcakes on a regular basis or continue buying frozen yogurt when the weather turns cold, which are just a couple of reasons why these businesses tend to come and go as often as the weather changes.

Some of the best opportunities are with franchises in well-established markets where the field may already be crowded. But there’s a lot to be said for the tried and true. After all, savvy buyers choose the economic sectors with consistent growth.

When starting a new business, your goal is to capitalize on long-term economic trends — as opposed to the flashy fad. Case in point: the International Franchise Association projects business and commercial and residential services will be the fastest growing sector of the franchise business in 2014.

The specific areas we like include health care, temporary staffing and other service businesses.

Solid Trends for Franchises

Health Care

The health care industry has experienced good growth in recent years, and, as the baby boomers start to retire, the prospects for the future may even be better. You can find franchises that specialize in modifying homes for seniors, as well as supplying home health care aides.

Temporary Staffing

As many companies cut jobs as a result of the Great Recession and a slow growing economy, they now rely more on temporary or contract workers. So the demand for temporary staffing services is on the rise with no clear end in sight.

Service Businesses

A panoply of service businesses are thriving, particularly ones that tend to be recession resistant, not easily outsourced overseas or conducted over the internet. Examples include firms that conduct workplace drug and alcohol testing, mandated by the government for some industries, and companies specializing in the restoration of water damaged homes, since disasters, like floods or broken pipes, regularly occur without regard to our economic cycle.

While you don’t want to be seduced by the latest fad, you do want to anticipate future trends in the American economy. A strong business idea fulfills a deep-seated market need, which, as we know, some people may have not yet realized. Who would ever have guessed 20 years ago that Americans would now be so addicted to their espresso drinks!

 

Dan Citrenbaum is a franchise coach and consultant to entrepreneurs, who helps people achieve their dreams as small business owners. He has a proven track record helping people select and buy a franchise or existing business. Contact Dan at dcitrenbaum@gmail.com or at (215) 367-5349 and view his company website at www.entrepreneuroption.com.

 

© Dan Citrenbaum 2014

Sick and tired of your job? Try our Entrepreneur’s Checklist

If you’re one of the 90 percent of Americans employed full time by someone else, chances are you’re not feeling much satisfaction at work. Some of you are stuck with a boss who makes your lives miserable, while others may be merely bored or vastly under appreciated.

Only 30 percent of Americans are actively engaged in their jobs, according to a recent Gallup report, State of the American Workplace. Not only does being unhappy at work lead to a whole range of obvious complaints, it can also take a toll on your health, the survey reported.

One way to improve your situation is to strike out on your own. So how do you know if you’ve got what it takes to run your own business?

Just like most things in life, what separates the whizzes from the also rans is preparation. Do your research, write a realistic business plan, raise sufficient capital and your odds for success go way up.

Even before you pinpoint your business, you’ll need to start by asking yourself key questions to determine whether you’re ready to leave a sure paycheck for the chance to take charge of your career for life.

Entrepreneur’s Checklist

Support from your family

When undertaking such a major life change, it’s critical you have your family behind your decision to give up your job to follow your dream. As you may go through a financial fallow period, their support can help you persevere.

Commitment and dedication to making your business succeed

You’ve heard the phrase: You’ve gotta want it more than anything else. Or how about: Hungry for success. The point is you have to believe in yourself even when faced by setbacks. Sometimes that means aggressively courting clients or revising your business plan. Surround yourself with critical support, including a good attorney, accountant and business coach.

Sufficient capitalization or willingness to take on debt

While you will likely need to finance some of your startup costs, you should have sufficient resources set aside to get you through the startup period until revenue begins to exceed costs and the profits start rolling in.

Management Skills

If this is one of your strengths, bravo, but if not, you may need to investigate what it takes to manage employees. If you choose a franchise, you’ll get ongoing training to help you learn the art of hiring, retaining and getting the most out of your workers. Alternatively, you could purchase one of the many franchises that do not have any employees other than the owner.

Marketing

How do you see yourself getting customers? The answer to this question will dictate which businesses best suit your style. If you’re an expert at networking, you’ll likely find it easy to develop a clientele. For those who prefer that customers find them, either due to a good location or national advertising campaign, you might want to try a retail operation.

Desire to develop your own or follow someone else’s system

You may be well suited to a franchise if you like the idea of following a system that’s been perfected over time and working well for franchisees around the country. Or you may prefer to control every aspect of your business and make your own unique contribution to the marketplace.

Tolerance for Risk

Even in today’s job market where a steady job is no sure thing, starting your own business requires you to be comfortable with risk. If you believe in your vision and have the moxy to push through the learning phase, you greatly improve your odds.

If you’ve checked most of the items above and you’re ready to move forward, we recommend you consult a coach to help you decide on a business that suits your skills and experience.

Once you turn the tables and occupy the boss’s chair yourself, don’t forget you still want to make your employees feel valued, help develop their strengths so they, too, can feel satisfied and engaged at work. After all, you’ve already walked in those shoes. And happier employees can go a long way toward helping you make your business a success.

 

Ready to make your dream of becoming an entrepreneur come true?

Get your free evaluation today!

 

Contact Dan Citrenbaum to help you create the career youve always wanted. Dan brings years of experience helping people select and buy a franchise or existing business. You can reach Dan at dcitrenbaum@gmail.com or at (484)278-4589.

 

© Dan Citrenbaum 2014

How A Laid-off Comcast Business Manager Made it Big with a Franchise

When Bryant Greene was laid off from his job as a Comcast business manager at the start of the Great Recession, he knew it would be tough, but, still young in his late 30s, he had a lot of confidence that his resume, including an MBA, would help him land on his feet. Six months later, he was discouraged by his lack of success in the job market.

As the recession raged on in July 2009, he headed off to a “diversity job fair/pink slip party,” where he noticed Comcast had the largest booth and a long line of would-be employees. Then he turned around to hear the question: “Have you ever thought of owning your own business?”

“Who would start a business in the middle of a recession,” replied Greene, of Philadelphia.

But Greene hit it off with the franchise coach, who introduced Greene to four different franchises, two in senior care — an industry to which he felt a personal connection as a result of his close relationships with all of his grandparents, including two great grandmas.

What Greene went through over the next 12 months shows how a great set of skills, perseverance and hard-headedness, plus old-fashioned grit paired with the right business can turn a hopeless situation into a big win. Proof positive: In five short years, Greene went from “Have I made a mistake?” to “2015 Franchisee of the Year.”

As Greene recounts, he liked the idea of a business that helped senior citizens gain the services they needed to help them stay in their homes.

After a thorough investigation, Greene chose the Always Best Care franchise, which specializes in placing non-medical health care workers in homes and is currently in the process of adding skilled home health care.

But Greene was short on funds. After a 15-minute phone call with the CEO “turned magical” and stretched into 90 minutes, Greene said, the company found a creative way for him to get started with a lower upfront investment.

At about the same time, Greene got a job offer from a media company at a level “a couple of steps below where he was laid off.” Nervous about being without an income, he took it, figuring he could start building his franchise business with the help of a close friend, Tony Belardino, and paternal Aunt Valerie Crumble (who both worked for free in the beginning).

As a single man with a teenage daughter whom he wanted to help put through college, he was motivated to work hard. And because he lived alone, working 24-7 wasn’t a problem, he said.

He started his job in March 2010, bought the franchise in May 2010 and opened up for business on July 15, 2010.

To say things moved slowly with Always Best Care would be an understatement. By the end of December 2010, he had only two clients.

Much of his time at his day job Greene spent “cutting heads,” and when he was done, he found himself laid off, as well, in January 2011.

Things grew worse as he started having difficult conversations with the executives at Always Best Care, who wrote him a Performance Improvement Plan or PIP, to help him get on track.

Talk about demoralizing, but instead of bailing out, Greene recalled, “I poured myself into Always Best Care.”

To help drum up sales, Greene thought of getting involved with the Medicaid Waiver program that helps senior citizens get home care services to avoid moving to a more costly nursing home. Even though it offered a comparatively low reimbursement rate, Greene figured he could make up for the loss with greater volume.

At the start, he got the toughest cases, he said, but they took every one, and, before long, Greene started turning things around.

By 2013, Greene moved full-time into the CEO role of his business, and now the company operates five offices with an administrative team of more than 50 people and more than 1,000 clients.

But Greene has not abandoned the qualities that helped him succeed. All hiring is driven by a culture of caring so that every senior citizen gets the best care possible.

“If they’re not the kind of person who you would send to your grandmother’s home, we don’t hire them,” he said.

Now with 13 territories in and around Philadelphia and in Wilmington, Del., Greene does a regular feature on the radio and is actively giving back by supporting local organizations.

Living proof of the old cliche, “quitters never win,” Greene exemplifies the value of choosing the right new business, allowing him to leverage his skills to achieve success.

Ready to make your dream of becoming an entrepreneur come true?

Get your free evaluation today!

Contact Dan Citrenbaum to help you create the career you’ve always wanted. As a franchise coach, Dan brings years of experience helping people select and buy a franchise or existing business. You can reach Dan at dcitrenbaum@gmail.com or at (484) 278-4589.

© Dan Citrenbaum 2015