Consulting

2 04, 2019

Why buy? Weigh everything in the franchise package

2019-04-03T15:52:51+00:00April 2nd, 2019|Tags: , , , , , |

Why buy? Weigh everything in the franchise package

by Geoff Batchelder

Should I purchase a franchise or go it alone with a business? This is a question every potential franchisee should think long and hard about—along with the franchises being considered—before deciding whether to buy.

Most of the potential franchise buyers I speak with think the answer is name recognition. While that’s something to be aware of, it’s not the most important benefit that a franchise can provide. Systems, training, support, and market development will often have a much bigger impact on your potential success than name recognition.

First, let’s talk about systems. Look for operational efficiencies that can speed your time to market, saving you money along the way and starting the flow of revenue in a time frame that you could not attain all by yourself. This benefit alone can offset the franchise fee.

Is there a “project launch” road map of steps to follow from the day you sign the franchise agreement to the day you hang out the open-for-business sign? This can be a huge benefit in helping you avoid costly, time-consuming mistakes.

Are there vendor arrangements in place? Often, the pricing received through a franchise offers a discount you could not get on your own.For instance, The Flying Locksmiths and WaveMAX Laundry have major purchasing discounts in place and pass the entire discounts through to the franchisee. Having these arrangements in place, rather than needing to line up your own suppliers, can be a huge time savings
even without a discount. How about service offerings that will benefit your customers? A call center to handle inbound calls and scheduling is a huge benefit for your customers and something you can’t provide on your own.

As for training, make sure you understand the topics to be covered. Assess the training. Once it’s completed, are you confident that you’ll possess the knowledge you need to be successful or on your way to success? Do different subject-matter experts deliver various parts of the training? Do you receive both classroom and on-the-job training?

Support may be even more important than training. Be sure to ask existing franchisees about support. After training ends, are the franchisees left on their own, or is there a steady stream of ongoing support and mentoring? Granted, different business models will require varied levels of support, so it’s not always an apples-to-apples comparison, but make sure the franchisees feel that they’re provided with all the support they need to continue growing their businesses and that any problems are dealt with on a timely basis.

quote

Finally, consider market development. How will you grow your business and beat the competition in your area? National advertising programs are not always the answer, and for many businesses, they don’t make sense. The business may be built on local networking and relationship-building. Maybe market development is accomplished through local advertising that’s targeted to specific demographics. Does the franchisor have any metrics in place to show what works? How do the existing franchisees feel about the market development programs?

If the franchise you are evaluating doesn’t have these benefits in place, you may want to check into alternatives.

GeoffBatchelderGeoff Batchelder has been a franchise consultant and franchise development expert for the last 10 years after spending 25 years focusing on business development in the high-tech industry. Contact him at 1-877-222-3722 or geoff@compassfranchisegroup.com, or visit www.compassfranchisegroup.com.

11 03, 2019

Q&A: Jessica Melendez on vetting franchisors

2019-03-12T10:55:11+00:00March 11th, 2019|Tags: , , , , , , , |

Woman on Phone

Q & A

Jessica Melendez on vetting franchisors

What are some important questions for a candidate to ask a franchisor?

Working as a broker, I put together a template of questions for my candidates to use when talking to franchisors. During the discovery process, most of those questions are answered, and my clients can check them off their lists. However, I insist that they get clear, in-depth answers on the following questions.

Regarding Training

  • What does your training program look like? What ongoing training do you offer?
  • Do you provide a mentor? For how long?
  • Do you assist in training my team?

Regarding Territory

  • What is my protected territory and how is it defined?
  • How many franchises have been awarded in my state? Have they all opened? If they haven’t, why not?
  • What are your plans to develop my state and how will that impact my franchise?

Regarding Cost

  • Can you give me a break down of all of the expenses associated with getting started?
  • How much additional capital will I need after I launch my franchise?
  • What goods or services do I have to purchase directly from you, the franchisor, and can I competitively shop for a better deal?
  • Is there a national advertising/marketing fund that I must contribute to?

Regarding Potential Earnings

  • What can I expect to earn if I join your franchise system, and does your franchise disclose this amount in your written materials?
  • Do you provide a pro-forma?
  • What is your average profit margin?
  • What is your average sales per month?

Regarding Franchisee History

  • How many franchisees have you added in the past year? How many have you lost?
  • How many franchised units have failed and why?
  • How have previous franchisee/franchisor disputes been settled?

What are some red flags to look out for?

  • Corporate takeovers: Pay close attention to item 20 of the FDD, which will give you information on the number of franchises transferred, canceled, or terminated; as well as the number of franchises that have not been renewed by the franchisor or have been reacquired by the franchisor. Corporate takeovers or terminations are red flags—possibly indicating there are failures due to training and support or infrastructure.
  • Resales: Are resales being sold at their prime for big profit? Or, are they selling to unload their business due to losses or no growth?
  • Unhappy franchisees: Another red flag would be several unhappy franchisees during validation calls. If you’re making validation calls and discover several unhappy validators, talk to the franchisor and see how he responds. Are they weak owners, or is the franchisor failing them?

How should you prepare for a Discovery Day?

Going through the buying process in its entirety is the best way to prepare for Discovery Day. By the time it arrives, you should have made your validation calls, reviewed the FDD to completion, had calls with the franchisor, and reviewed all materials/webinars provided. Discovery Day should be the day you meet the executive staff and see how they operate firsthand. At this point, you want to see if the brand and culture are a fit for you.

Discovery Day is also a good time to ask final questions regarding the FDD or validations, discuss attorney review and offerings, finalize territory maps, and ask about next steps. Take care of the following before you arrive to make your trip more efficient:

  • Confirm travel arrangements.
  • Arrive a day early, as most Discovery Days start first thing in the morning.
  • Ask about dress code—some franchisors prefer business casual.
  • Ask for an agenda.
  • Ask if you need to bring anything with you, such as financial information.
  • Prepare a list of final questions.

Jessica Melendez

A trainer and mentor for FranServe, Inc., the world’s largest franchise consulting firm, and the CEO of WestStar Franchise Group, Jessica Melendez coaches and educates prospective franchise owners and helps them find businesses that align with their personal and professional ambitions. As a franchisor and president of Dryer Vent Squad, Melendez has first-hand experience in all aspects of franchising, which makes her an excellent resource for prospective franchisees. Contact Melendez at 915-202-8272, email Jessica@weststarfranchisegroup.com, or visit https://www.weststarfranchisegroup.com.

11 03, 2019

Tough Road Ahead

2019-03-12T10:59:58+00:00March 11th, 2019|Tags: , , , , , |

Man Looking Down Road

Tough Road Ahead

This antique car restorer didn’t let a bad credit score detour his plans.

by Diana Capirano
Certified Franchise Consultant

Like other Detroit natives, Anthony, a client of mine, worked at Ford Motor Company. Anthony, like prior generations of employees, had viewed positions at companies like Ford as secure, with a path to retirement. For 25 years, he felt his job was his safety net, but like many of you reading this magazine, he also aspired to own his own business through franchising.

On bad days, Anthony was committed to quitting, but he rationalized there were still goods days where he was content with stable pay, growing retirement savings, and a large pension—Middle America’s dream. Conflicted, he began an on-line franchise search, and in October 2016, one fateful click connected him to me.

Anthony shared his success as a prototype engine technologist and engineering tech for Ford, as well as his passion to restore classic and antique cars. He expressed a desire not only for “financial freedom,” but also the freedom that comes from owning your own business. He wanted a schedule with more time for family and hobbies. After years of designing and restoring cars, Anthony made a brave decision to re-engineer his life and his future.

Bumpy Road Ahead
Anthony’s story is not unique, but it’s highly inspirational. Along with mounting stressors at work, Anthony was caring for elderly parents in poor health, and he had just gone through a very ugly divorce. As a result of a damaging divorce settlement, his credit score plummeted more than 200 points to 560. Ouch! I knew that this would immediately disqualify him with franchisors and it would be impossible to secure a loan. Terrible credit is the “kiss of death” in our world, and his plans for an SBA loan were immediately crushed.

Certainly, this is not the first time I met someone with a disqualifying credit score, but it was the most impactful. Anthony never came off of the throttle. (For those who don’t yet know me, I’m a car enthusiast so pardon the metaphors). Anyhow, my client, a self-proclaimed pessimist and cynic suddenly became fueled with conviction and positivity. His original fears and doubts were now powered with purpose and focus to overcome this major bump in the road. For many, this would have been their jumping off point—a point of acceptance and giving up. Anthony’s innate problem-solving skills now defined his personal strength as he kicked into high gear.

Improving his credit to the targeted 700 score would not be easy, nor would it happen overnight. Still motivated to begin research for some great franchises, he began with the end in mind—freedom. He enlisted a credit-repair company and throughout the next 22 months, Anthony worked resolutely on building back his credit.

Over many months, he met with six franchises and he was transparent about his situation. Wanting to stay in his comfort zone (automotive), I convinced him to break out of that boundary to view other models. Most franchisors will not even engage a client with poor credit, but as they “looked under the hood,” they saw Anthony’s desire, determination, and drive—all qualities needed for a successful franchisee.

Anthony’s next key obstacle was adapting an employer’s mindset. After all, he had been an employee his entire life and a union worker for 25 years. Anxiety set in. Transitioning from receiving a guaranteed paycheck to being an employer who cut paychecks was worrisome.

By finding the right model with FISH Window Cleaning, he realized that a recurring revenue structure would create a more predictable income. Anthony became confident and excited for the freedom of a limitless paycheck. Here’s the best part…days after Anthony returned home from Discovery Day, he received an email that his credit score had reached 700. Finally, after all of that hard work, he was granted his loan and signed his franchise agreement with FISH Window Cleaning.

I hope Anthony’s story inspires you to take a path less followed. Anthony achieved his end goal—freedom, and in my opinion, his journey not only restored his credit, but also his credibility. He emerged just like one of his painstakingly restored cars—a total “classic!”

Diana Capirano, CFC, has an expansive career which includes corporate and franchise sales and development, marketing and operations, merger and acquisitions, structuring and  negotiations as well as business ownership. As a highly-respected consultant and mentor, Diana espouses a profound commitment to help prospective business owners and investors understand and navigate the process of deciding on a franchise business. Contact Diana at 941-999-0095, email diana@focusfranchise.com, or visit http://www.focusfranchise.com.

11 03, 2019

With Age Comes Wisdom

2019-03-12T11:04:05+00:00March 11th, 2019|Tags: , , , , , |

Mature Couple

With Age Comes Wisdom

Why 50-somethings are at the perfect age for business ownership.

by Diana Capirano
Certified Franchise Consultant

Franchising is great for people of all ages, but men and women at mid-life are prime candidates for these opportunities. The 50-something life experience brings great value to business and the entire franchise system. If you’re not yet 50, keep reading—one day you will be and it comes sooner than you think.

One of the coolest things about franchising is that there is no age discrimination, but 50-somethings are prime candidates because often the kids are out of the house and they can focus on their own wants and goals. Even retirees are getting in on the action as business models are conducive to semi-absenteeism and allow a very flexible lifestyle balance. AARP and social security are just added bonuses.

As a franchise consultant, I help clients realize that along with business acumen, life experiences—personal and professional—are of huge value to franchisors. Stored applied knowledge, emotional intelligence, and transferrable skills from other careers can make a big difference in owning a business.

At age 50, you have better clarity as to what is missing in your life. Maturation somehow brings us to, “there must be more to my life than this.” The mindset shifts from what can we do for our employer to what value owning a business brings to us. We desire a higher form of our mid-life selves.

Statistically, the highest rate of entrepreneurship in the U.S. has been among 55 to 64-year old’s, and people older than 55 are twice as likely to launch successful new companies than those in the 20-to-34 age group. So it’s a misconception to think that only young people are risktakers and wildly innovative. Next time you think you’re past your prime, get inspired by Ray Croc (McDonald’s), Charles Flint (IBM), Bill Porter (E*Trade), and Bernie Marcus (Home Depot). Didn’t anyone tell you that 50 is the new 30?

WHY 50-PLUS WORKS

Although franchise models can be plug and play, the 50-plus age group has more to offer than you might think. Here are a few great perks that come with life experience.

Broad and deep life experience: Having had a wide range of experiences in the past, will help you handle new situations and relate to a broad group of people now.

Diversified knowledge and skills: People over 50 often have understanding in sales, operations, finance, training, and mentoring others. This builds confidence and flexibility.

Networks: The ability to leverage established professional networks can accelerate growth and provide recruitment opportunities.

Past failures: Likelihood of previous failures provides learning opportunities. It tends to make us less risk adverse and more motivated to succeed.

Accessibility: Now even retirement plans can be used to fund the business.

Diana Capirano, CFC, has an expansive career which includes corporate and franchise sales and development, marketing and operations, merger and acquisitions, structuring and negotiations as well as business ownership. As a highly-respected consultant and mentor, Diana espouses a profound commitment to help prospective business owners and investors understand and navigate the process of deciding on a franchise business. Contact Diana at 941-999-0095, email diana@focusfranchise.com, or visit http://www.focusfranchise.com.

8 03, 2019

The Art of Matchmaking

2019-03-12T11:34:53+00:00March 8th, 2019|Tags: , , , , , |

cupid

The Art of Matchmaking

by Jessica Melendez
Certified Franchise Consultant

Not all perfect matches are about couples in love. The franchise industry has its own set of Cupids, otherwise known as franchise consultants, and they, too, are skilled in the art of matchmaking. How can you tell if you’re working with a quality franchise consultant? Just like a good life partner, you want a good listener, someone who puts your needs first, and knows what’s important to you. Here are a few signs that your consultant is a good one.

She gauges your seriousness.
Are you all-in or just exploring? You want a professional who is savvy enough to detect—and help you decide—if franchise ownership is for you.

She asks questions and listens to answers.
Once a franchise consultant has been enlisted to find the right match for a client, she should be focused on what her client is really looking to do. A good consultant will get to know her client on three levels: First, the personal level. What are the client’s personal objectives? More time with family? Less travel? Work from home? It’s important for the consultant to pay close attention here, because a client could be revealing his true motivation for business ownership.

Next, the consultant should inquire about professional goals. What is the client trying to achieve in his next business? Maybe he’s tired of answering to others and wants to be his own boss. Maybe he wants to build something to leave to his kids. Maybe he wants to diversify his portfolio. Professional ambitions are telling of what a client wants now and in the future.

The third level is financial. A thorough consultant wants to discover what the client wants to obtain financially. A six-figure income? A cash business? Scalability? The consultant also needs to understand what a client can financially qualify for and how comfortable he is with risk. A decent franchise consultant wouldn’t want a client to fall in love with a concept that’s not in his budget.

She has connections.
A quality franchise consultant will represent several franchise brands and—once armed with information about her client—can start matchmaking. The consultant will present options for the client to review, so he can decide who he would like to get to know further. A consultant should never be afraid to throw in a wild card to expand a client’s options.

She leads the client through the process.
Once a connection is made, the client has to decide if the match is right for him. How does he do it? Research. A quality consultant will encourage the client to research the brand and to get to the know the potential franchisor before signing on the dotted line.

A consultant will also suggest that the client speaks to other owners to validate the brand and get a first-person account of what the client should expect as a franchisee. And just like with Cupid, if the courtship goes well, then a union is made.

Jessica Melendez

A trainer and mentor for FranServe, Inc., the world’s largest franchise consulting firm, and the CEO of WestStar Franchise Group, Jessica Melendez coaches and educates prospective franchise owners and helps them find businesses that align with their personal and professional ambitions. As a franchisor and president of Dryer Vent Squad, Melendez has first-hand experience in all aspects of franchising, which makes her an excellent resource for prospective franchisees. Contact Melendez at 915-202-8272, email Jessica@weststarfranchisegroup.com, or visit https://www.weststarfranchisegroup.com.

4 03, 2019

Strategizing Validation

2019-03-12T11:40:50+00:00March 4th, 2019|Tags: , , , , |

Man on Phone

Strategizing Validation

Get the inside scoop from other franchisees before you make your final decision

by Diana Capirano
Certified Franchise Consultant

My clients hear me say it all the time, “Validation is where the rubber meets the road!” The validation process—when you talk to other franchisees about their real-life experiences inside the franchise—is an important part of the franchise buying process. In fact, the opinions of other franchisees can make or break your decision. This is where you hear how it really is from other franchisees—and when you can determine if similar experiences will work for you. The FTC limits how much the franchisor has to reveal, so you can talk to current owners about any omissions. Inside information from current owners is vital. So how do you make the most of it? Here, we give you five steps to help you make the most of the process.

Step 1-Identify your Targets
Make sure you talk to both top performers and low performers—at least two of each. This gives you a good sampling. Ask about franchise support, training, and the future vision of the franchise.

Include startups, those businesses that have launched within 18 months. This will help you validate start-up costs and track to break even. You’ll even be able to ballpark initial training costs, as it’s still fresh in start-up minds. Also, talk to people at the end of a franchise agreement. Will they renew? What differences have they observed, and how adaptable has the franchisor been to changes in the competitive landscape.
Talk to those closest to you in terms of location and those with similar demographic profiles. It can give a good indication of your target market and may become more relevant in businesses driven by local economies.

Step 2-Develop your Tool
Create a list of questions and include those that the franchisor was not “permitted” to answer. Use a list supplied by your consultant as a guide and add your own questions. Ask clarifying questions as part of a free-flowing conversation, not just a simple Q and A. You want detail. Organize your questions by category, such as financial performance, marketing, support, onboarding, and so on.

Step 3-Build Rapport
Learn about the franchisee and share your background to frame your questions. The higher objective is determining if this is a good fit for everyone. Take a few minutes at the beginning to encourage open-ended, engaged, and candid dialogue. Make it conversational. Focus on the difference between objective and subjective answers. Ask anything and don’t be shy—franchisees went through this same process and know the value. If anything was deemed a negative, ask these questions: Is the franchisor aware? What is the plan to address this? Remember: You are being evaluated as well.

Step 4-Take Notes
Hopefully you will be inundated with great feedback, but document who said what in case you want to circle back for further clarification.

As you organize your information, ask yourself what was most meaningful? Did anything surprise you? What were common themes, both positive and negative. A few other questions to ask yourself:

  • Can I see myself working with these owners? Will they be a support to me?
  • What made others successful or unsuccessful? Will the same apply to me?
  • Overall, do I feel better and encouraged? Or, do I feel leery and concerned?

Step 5-Share Findings
Share your feedback with your consultant and franchisor. Do they seem surprised by anything you’ve uncovered? A great franchisor should not be surprised about anything coming out of validation, but he should be willing to explain or clarify points if necessary.

Jessica Melendez

Diana Capirano, CFC, has an expansive career which includes corporate and franchise sales and development, marketing and operations, merger and acquisitions, structuring and  negotiations as well as business ownership. As a highly-respected consultant and mentor, Diana espouses a profound commitment to help prospective business owners and investors understand and navigate the process of deciding on a franchise business. Contact Diana at 941-999-0095, email diana@focusfranchise.com, or visit http://www.focusfranchise.com.

2 03, 2019

Step out of your comfort zone

2019-03-12T11:45:37+00:00March 2nd, 2019|Tags: , , , , , |

stairway to the sky

Step out of your comfort zone

by Jessica Melendez
Certified Franchise Consultant

I have often compared a franchise consultant to a psychologist because both professionals observe, interpret, and record the client’s objectives and desired outcomes. While working as a franchise consultant, I have come across clients who say what they want and what they don’t want. But then as I start to uncover their true objectives and desired outcomes, what they originally told me doesn’t match up.

For instance: A couple of years ago, I worked with a client who planned to invest in a franchise while he kept his corporate job. He wanted nothing to do with restaurants or a brand-new franchise. Along the way, he also told me that St. Louis was changing and he felt it was ready for something innovative. He wanted to be at the forefront of an industry or product in his market. He also wanted to buy multiples to make an impact and build an empire. As we continued our conversation, he said he had a passion for health and fitness.

At the time, FranServe added the new brand Rush Bowls. Rush Bowls is a concept that targets the on-the-go health-food industry in a unique way. Rush Bowls restaurants serve flash-frozen, thickly liquefied fruit that is topped with other healthy ingredients—a meal replacement in a bowl. Because Rush Bowls was an emerging brand, it had only two franchisees at the time. St. Louis was wide open for development, and the company’s concept was the innovative product my client sought in an industry he was passionate about.

Despite my client telling me he didn’t want to be in the restaurant business or be a part of a new franchise, Rush Bowls had everything else: the ability to build an empire while keeping his job and a concept currently missing from his market. When I presented this option to him, I issued a disclaimer outlining the two negatives, the things he specifically said he didn’t want, but I also suggested he keep an open mind about this brand. Lo and behold, what he thought he didn’t want was the very thing he ended up with. The pros to this brand ultimately ended up prevailing over the things he perceived as undesirable.

This client is the perfect example of why you need to look beyond your comfort zone. He was receptive enough to step outside the box and look at something that would have never occurred to him. By doing that, he ended up with exactly what he wanted. He is the proud owner of three Rush Bowls in St. Louis and may develop a total of seven to 10.

Sometimes an open mind and a willingness to leave your comfort zone can pay big dividends.

Jessica MelendezA trainer and mentor for FranServe, Inc., the world’s largest franchise consulting firm, and the CEO of WestStar Franchise Group, Jessica Melendez coaches and educates prospective franchise owners and helps them find businesses that align with their personal and professional ambitions. As a franchisor and president of Dryer Vent Squad, Melendez has first-hand experience in all aspects of franchising, which makes her an excellent resource for prospective franchisees. Contact Melendez at 915-202-8272, email Jessica@weststarfranchisegroup.com, or visit https://www.weststarfranchisegroup.com.