professional servicesA lot of mid-career folks find that they’re interested in franchising, but the idea of owning a fast food restaurant just isn’t that appealing. It can be hard to go from working with experienced adult colleagues to working with teenagers and other adults who come from completely different backgrounds. Many business owners find it terribly lonely, especially if they filled many of their social needs through co-worker interaction. It can also give you a feeling of guilt if you’re not ready for it. It’s hard to own a business and see your employees having trouble making ends meet.

For those types of would-be franchisees, I like to recommend looking into professional services franchises. There are a number of franchises in marketing, business coaching, and tax preparation that offer opportunities to interact with either co-workers or other business owners. Instead of dealing with teenagers who can’t be bothered to put their smartphones down, you can enjoy interaction with other intelligent adults with whom you may have more in common.

Although many professional services franchises are home-based, they don’t always have to be. Even if you do opt for a home-based franchise, you’ll find that you form close relationships with many of your customers or clients. That’s especially true with something like a business coaching franchise where you become intimately familiar with other business owners like yourself, and you help them figure out the issues and trouble spots that are holding them back. Depending on the kind of challenge you’re looking for with your franchise, this may be more satisfying mentally, too (as opposed to figuring out how many styrofoam cups you need to order for the next two weeks, or how to handle burrito refunds).

I certainly don’t mean to talk down about food service franchises, retail franchises, or any other kind of franchise. They can make wonderful businesses, especially for franchisees with multiple units (or multi-unit expansion plans). However, I do think it’s important for each potential franchisee to envision what a typical day would be like. What challenges would you face in the course of your workday? Is that something you can handle over and over, year after year? Think carefully before you invest a large portion of your life savings. It’s important to build a business that fits who you are and where you’re going.

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Business EthicsI’ve seen a few articles lately about cases of franchisors getting rich while franchisees lose everything, over and over again. Maybe I’ve been in this business too long, but it always surprises me to see people so surprised. I hate to sound unsympathetic, but seriously, people – franchising would not be such a popular, successful business model if the big guys were taking on the same level of risk as the individual franchisees. Some of the nation’s biggest chains are franchised, and they have a lot of collective power. They’ve used that power to make sure that whatever happens, they’re almost definitely going to be alright.

So how does this work? Basically, the SBA backs a large portion of the loans given to new franchisees. If the franchisees can’t pay, the franchisor still (usually) gets the bulk of the money owed to them. Since so many are heavily loaded with up-front fees, it’s not hard to imagine a scenario where a company could make great money even if every single franchise location went out of business in under a year. Royalties are great if they happen, but they rarely make or break the franchisor, especially in a high-growth, super trendy industry (like frozen yogurt in recent years).

Who’s getting screwed over in all of this? Two groups of people – the taxpayers who fund the SBA’s poor oversight, and the individual franchisees whose lives are often ruined by their bad experience with a franchisor. I would never tell anyone NOT to invest in a franchise (though there are plenty of specific scenarios where I wouldn’t advise it). It’s just very important to be aware that access to SBA loans doesn’t mean your franchise investment has any kind of quality, and that your franchisor may have very little incentive to see you do well or help you if you’re struggling.

Want to read more about this conflict of interest? Bloomberg has a great article here. It’s good food for thought as you consider which franchise opportunity is right for you.

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newbieFranchising is a tough business, especially if you’re new to the industry and you only have the funds to give it one good shot. And frankly, that’s an awful lot of people. The typical new franchisee is a middle-aged person with some savings, but not enough to easily recover if the franchise doesn’t work out. On one hand, this does have its benefits. When you need something to work, you’re all in. There’s no doubt, you just move forward and do what needs to be done because that’s your only option. On the other hand, this kind of do-or-die situation creates a lot of irrational emotional responses, both before and after the purchase.

This article on Forbes does a great job of talking about the mistakes we see over and over again from new franchisees. Number 2 is one of the big ones: “Don’t buy a franchise to ‘be your own boss’ or ‘control your destiny’.” A lot of franchises and industry publications go on and on about being your own boss, but what they really want is a heavily invested store manager. When you buy into a franchise, you’re buying into someone else’s system, for better or for worse. If you want to call all the shots, you need to create your own business from scratch. Many people appreciate the guidance, but I always hate to see someone who has purchased a franchise in hopes of running things in their own way.

Number 5 is another big one – “Seek out franchisee complaints online”. I can’t second this enough. Not only do you need to look, but you need to go way beyond the first page of search engine results. There’s an entire field called “Online Reputation Management” where people are hired to use a variety of tactics to push negative things off the first few pages of search engine results. Given the value of each new franchise sold, franchisors have a very strong incentive to hire these firms to cover up bad reviews.  When you’re doing your research, check all the major industry sites and use a variety of search terms to hunt down those negative experiences. It might just save your retirement.

If you’re considering a franchise purchase, definitely read the entire article at Forbes and take it to heart. If you have any other tips for potential franchisees, feel free to leave them in the comments!

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shrinking-middle-classIt’s hard to read the news lately without hearing something about the demise of the middle class. Even though it’s been that way for a while, we’re only beginning to see the serious effects it’s having on the business world. This article in the NY Times discussing how businesses of all types are seeing increasing success at the high end and low end, with a decline in businesses and products that target the middle class.

What does this mean for potential franchisees? It means you need to know your local area and figure out which audience you need to be serving. Although franchises that target the upper class are not as common, there are many that target low-income audiences, and this may be the way to go as more and more people are squeezed out of the middle class. If you want to target upper class buyers, consider service franchises that cater to the needs of busy and successful people. Think dog grooming, personal concierge services, and things of that nature. High-end schools and daycares are another popular service for wealthy individuals.

If you don’t already own a franchise, you’re lucky because you can take this trend data and keep it in mind while you’re deciding how to move forward. But what if you already own a franchise? Are you totally screwed if you’re currently running a typical middle class burger franchise location? Although the article might lead you to believe the answer is yes, that’s not necessarily the case. If you’re suffering from a drop in customers due to economic trends, consider what you can do to make your restaurant or business more appealing to customers who are tightening their belts. Do you have a happy hour you can play up? What about specials that would make it easier and more affordable to take the entire family out on a budget?  Often, parents avoid eating out because of the cost of kids’ meals that go uneaten, but if you can offer smaller portions or discounts in that area, you might be able to get them in the door so they’ll pay full price on their own meals.

If things continue in the direction they’re currently moving, nearly every business will have some serious adjustments to make. Readers, what’s your take on the subject? Do you think the middle class will continue to disappear? Have you made adjustments to your business to better target the upper or lower classes? Will you do so in the future? Let us know in the coments!

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Although SportClips isn’t exactly a NEW franchise opportunity, it’s a fresh take on an often bland category. The typical hair salon franchise aims for the low-cost market without specializing much beyond that. The end result is that many of them end up blending together, having no strong branding or identity.

SportClips is an interesting entry to the hair salon category because they have specifically chosen to cater to men and boys who enjoy a sporty atmosphere. Even though women tend to purchase more expensive salon services, men and boys have to go more frequently to maintain a clean-cut look. By creating an atmosphere that’s more comfortable and inviting to men, they can lock in a large and loyal local customer base.

For investors considering a hair salon franchise, SportClips may be just what a competitive market demands.

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1. AdviCoach– AdviCoach helps small to mid-sized business owners fulfill their dreams.

2. Best in Class Education Franchise– Best in Class Education gives top-of-the-line education from quality instructors and offer a fully customizable approach.

3. Brain Balance Achievement Centers– Brain Balance Achievement Centers offer their unique Brain Balance Program® in 54 locations.

4. E-Path Advisors Franchise Consulting– E-PATH Advisors offer franchise business ideas and advice to serious potential business owners.

5. Fast Fix Jewelry and Watch Repairs– Fast Fix serves jewelry and watch repairs needs.

6. Fetch Pet Care Franchise– Offers professional and reliable dog walking, pet sitting, cat visits, boarding, and other pet care services.

7. Foodie Kids Cooking Franchise– Offers a drop-in cooking activity center, a birthday party destination, and a children’s kitchen gift store.

8. HydroDog Mobile Grooming– HydroDog offers dog grooming services which come fully equipped with the essential tools to wash, clip and groom your dog.

9. Lavida Massage– LaVida Massage is a gender health and wellness center offering affordable therapeutic services for the whole family.

10. Mathnasium Learning Centers– Mathnasium is a math tutoring center dedicated to teaching math to kids.

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A lot of potential franchisees wonder what it is that franchise consultants do for them. Do you need one? Can you make a successful investment without one? The answers are “no” and “yes”. You don’t HAVE to have a franchise consultant, but it can definitely help you avoid a lot of potential problems and save a ton of time. You absolutely can make a good investment without help, but when you’re investing what may very well be your life savings, wouldn’t it be nice to have a second opinion?

So what’s the process like? Most franchise consultants use a process that’s something like this one:

  • Initial Consultation – Where you discuss your goals, budget, and timeline.
  • Franchise Matching – Where a consultant makes recommendations based on what you discussed in the initial consultation.
  • Introductions – Where you’re introduced to contacts at the franchises that most interest you.
  • Franchise Document Review – In this phase, you’ll get help reviewing disclosure documents that franchise systems are required to provide.
  • Current Franchisee Interviews – Here, you’ll talk with current franchisees to validate claims made by the franchise system.
  • Discovery Day – This phase involves a visit to corporate headquarters to meet the corporate team and get a little more information before taking the plunge.
  • Agreement & Purchase – In this stage, you’ll sign final documents, make payment, and set up your business.

When it’s all said and done, you’ll be the proud owner of a new franchise business. It’s not necessarily so linear for everyone, though. You might uncover information you don’t like at any stage before the final agreement, and at that point you might have to go back a few steps and pursue a new opportunity.

 

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