Just call 1-800-FOO-LISH!

Mr. Cohen made many good points in his post.  I believe his MAIN POINT was that I omitted Franchise Perfection from my ‘short list’ of possible organizations who may be interested in assisting you in the selection of a franchise.  This is evident by the contradictory nature of his posting and in his closing “Thanks for your Consideration”.  So for clarification, I’m going to touch on a few of the points which Mr. Cohen makes.  I’ll start by acknowledging that I’m sure Mr. Cohen and his organization would like to assist you in your franchise selection, as would many other individuals and organizations who earn their revenues from such efforts.

Mr. Cohen suggests that before making your decision you consider:

I agree wholeheartedly that these are considerations which you need to take into account, and intended to communicate this when I wrote:

• When launching any business – franchise or otherwise – the norm is to FIRST identify a need and then develop a methodology of economically and profitably fulfilling that need.
• …why are you limiting yourself and your location to a food concept…
• …I’d like to see you focus on market need, areas of interest, desired life style, return on investment etc…

Notice that I did not specifically say “Experiences” because the fact is that you’ve most likely never had experience in owning and operating a franchise concept of the franchisor(s) with whom you may be considering.  Sometimes, industry specific “Experience” can actually be a detriment to your success, and count against you by a prospective franchisor when weighing your qualifications for consideration.  It is however important that your “Experience” align itself with the skill set necessary for success.  Ultimately you are trying to position yourself so that you ‘work on the business not in the business.  I have ZERO experience as a short order cook, however I have tons of experience in the operational aspects of operating a business and consider myself to have what I refer to as DEW (a Desire to Grow, an Eagerness to Learn and a Willingness to be taught) therefore I believe that I could successfully own and operate a fast food franchise.

Continuing down Mr. Cohen’s list in order:

1. Don’t rely on just “national averages” they are skewed based on income and demographics. Someone from the city may eat out 5 times or more a week and the average person in a small town may eat out 3 times a week which combined average 4 times a week. Try and research state or local statistics.
   I agree, and it should be obvious to us all that the more geographically relevant the data being used, the more beneficial such data will be.  However in order to gain “local” statistics you will most likely need to conduct your own market study.  An effort that may be worthwhile, but somewhat premature at this stage of consideration.
2. Before investigating in any business or franchise please consider your investment range. Why even consider a business (unless you are conducting research) if you don’t meet the minimum financial requirements.
   Okay, this sounds good and was addressed in my post with: “…and then develop a methodology of economically and profitably fulfilling that need.”  Key word being ‘economically’.  I’m currently in the market to purchase a new vehicle.  I’ve decided that I’m going to purchase an automobile, but have not yet decided on a make and model.  I’d really like to have a Ferrari F430 and even if the $180,000 price tag didn’t deter me, the actual cost of ownership including such things as depreciation, financing, Insurance, State Fees, Fuel, Maintenance, Repairs etc… most likely would.  My point is quite simply this First you decide I want a business, then you decide on a type of business and then you decide on which business within that type you can afford to acquire and develop.
3. Each franchise opportunity or business is different there is no such thing as an average ROI of 8% - 10%.
   Bovine Defecation!  There is an average for anything consisting of 2 or more.  Now there is no such thing as a guaranteed ROI, however every Standard Industrial Classification has associated with it an AVERAGE ROI.  When looking at a P&L statement every line item has associated with it a percentage.  My accountant can tell me when any line item like office supplies or gross profit or net profit begins to climb above or falls below the generally accepted averages.  If you can not predict a ROI greater than what would have been earned on the investment then why invest money in something other than a passbook savings account, CD or treasury note?
4. Looking at a list of restaurants in the area does not constitute sufficient market research to determine which food segments are adequately served or underserved. Regional taste and demographics play a major role in local consumer choices. Traffic/customer counts are the old fashioned and proven way of estimating gross sales.
   Bat Guano!  It was not my suggestion that looking at a list of restaurants constituted “Sufficient Market Research” however it certainly is a starting point.  When you see a genre begin to exceed the saturation point of what can reasonably be supported in a profitable manner it must send up a RED FLAG.  Within a given market, there are only so many dollars being spent on a product category.  In order to be successful you must be able to take market share, create a market, serve an un-served market or expand the market.  When I look at the average expenditures on commercially prepared chicken and the potential competition currently serving the Lebanon market, (i.e. Lee’s and KFC) I do not see room for Church’s or Popeye’s or even Chick-fill-A.  However I might consider a Fazoli’s or Amato’s being that no Italian is represented on the list or perhaps a Bar-B-Q for the same reason.  Additionally Amato’s and most of the Bar-B-Q concepts offer catering options which could help to expand your market.
5. Take a look at the local demographics for fun visit www.epodunk.com  and see for instance the median household income in Lebanon is about 50% of the national average. The median household income based on the 2000 census in Kentucky is $33,642 while it is $21,860 in city of Lebanon substantially less.
   Yes, sorta kinda.  Household income should be considered to a point.  So let’s rule out Ruth’s Chris in part because of household income and in part because it’s not a place you eat once a week unless you’re Mr. BlueMauMau, and therefore the lower population doesn’t support it.  However, the cost of living in New York City is more than 400% greater than that of Lebanon, but both profitably support such establishments as McDonalds, Burger King etc….  The real key indicator becomes ‘Disposable Income’.  We both know the cost of living in Lebanon is much lower than in other parts of the state and country.
6. When you find an opportunity that is interesting to you and meets your interests and financial situation take a look at the franchisees or locations and determine which ones mirror similar demographics of Lebanon.
   Sounds familiar, I believe I’ve provided this same advice before.  However, without a pre-conceived concept in mind I’d encourage that you evaluate opportunities that are doing well in markets similar to Lebanon and then see which of those are the most appealing to you.
   For instance just because My Daddy’s Cheesecake is popular in Cape Girardeau , MO does not mean it will be successful in Lebanon.
   Nor does it mean that it will not.  No two markets are going to be identical.  Nor was I pushing My Daddy’s Cheesecake.  However, it is an up and coming concept, near you.  Low cost of entry, multiple revenue streams, un-served market, and provides for the ‘Sweet Tooth’ which was indicated that Lebanon needs.
7. The median Household income in Cape Girardeau , MO is  $32,452 compared to $21,860 in Lebanon. The estimated Population of Cape Giradeau is 35,741 seven times the population of Lebanon.
   Relevance?  NYC is a Gazillion times that of Lebanon yet still supports similar concepts.  It all comes down to a need in the market which is or isn’t being adequately served.

I’m sure Mr. Cohen would love to hook you up with one of the 15 Franchise Concepts listed on his website.  I’m sure one of them is exactly what Lebanon needs!  I’m sure that the other 4,985 franchisors represent concepts which would never work in Lebanon, KY.  I doubt Mr. Cohen has ever broken bread in Lebanon, celebrated in the infield on derby day, set foot on blue grass, or tasted My Daddy’s Cheesecake.

When investing in a franchise there is a lot to consider.  Never invest in a franchise or anything based on a short posting on a bulletin board, this one or any other.  When making an investment one must consider the amount of data which is necessary to make an informed, educated decision.  When investing in a pizza for lunch, not a lot of consideration is necessary, you might want to consider:

• Do I like pizza?; Am I in the mood for pizza?; What kind of pizza do I like?;
• Can I afford to eat pizza for lunch?
• Does the pizza establishment which I’m considering have a reputation for cleanliness, good quality and a fair value?
• Can I get in and out in the time frame allotted for my lunch?

These considerations will be made in subliminal manner in the subconscious of your mind without a great deal of thought or effort.  After all, if you get a bad slice of pizza, blow your lunch budget or run out of time, it’s no life changing event.  However if you’re considering the investment into the ownership and or establishment of a pizza business obviously there are many more factors which one would consider.  More than can be posted in a single response on a bulletin board.  In fact there are 100’s of books written on how to select and invest in a franchise and 100’s on owning and investing in business in general.  One might be wise to read them all, however after having done so you’d most likely be too old and too confused by the varying opinions to invest in anything. 

Should you decide to retain the services of a franchise broker or consultant, you would be wise to spend as much time in the selection of your advisor as you’ll ultimately spend on the selection of the right franchise concept for you and your market.  Brokers can save you a lot of time, energy and effort.  They are familiar with various concepts, and the requirements of those concepts.  However, most brokers only make money if you purchase a franchise.  So when selecting a broker find one that has a real interest in you, and who is looking to create a relationship beyond the purchase of a single unit. 

One of the reasons I tossed out the names of FranNet and FranChoice, besides their obvious stature in the industry had to do with the fact that they have representation in Kentucky.  There are many other organizations which can also assist you in your efforts, even without actually being in Kentucky.  I included FranSynergy in the list because of the obvious, and because our approach is very different.  We work with prospective franchisees because we hope that once becoming a franchisee that they’ll choose to become a FranSynergy client and utilize our bundled business solution in the growth and development of their franchise.  We work some clients on a retained basis, and are paid by the client.  Therefore we can provided non-biased opinions and recommendations which often mean telling the prospective franchisee that they are not a good franchise candidate or that they need additional operating capital or that a concept is not viable in a specific market.  At other times after getting to know a prospective franchisee we will recommend that they contact a franchise broker for further assistance.  We then match them to brokers who have the right mix of franchise concepts in their portfolio.

What I was trying to communicate to you, and I believe Mr. Cohen was as well and any franchise professional would communicate is that one most consider a lot of information when selecting and investing in a franchise.  If there were, I’d have simply read your original post:

And responded with.  Absolutely, call Foods-R-Us at 1-800-FOO-LISH and send them a check for $30,000 and put another $350,000 into an operating fund and go on a 6 month vacation to the Bahamas’.  When you get back you’ll have an operating unit which will provide the income and security you need to make all of your dreams and goals a reality.

Believe & Succeed,

Franny,