A Franchisee's Glee-Fee-Me-Free-See-We Stages

Les:

Thank you for the reply post which I can relate to.  Your post is exactly right!  As I stated previously I teach that: The Purpose of a Business is to Attract - Retain & Grow Customers.

THE FIRST KEY to creating a successful franchise (business) that I teach to Franchisees, is that the TOP LINE (Gross Sales) HAS ABSOLUTELY NOTHING to do with the BOTTOM LINE.  We all know of many successful businesses with SIGNIFICANT Gross Sales who go bankrupt.

I'll paraphrase your words to how I teach the exact same point.  The way to accelerate your departure from business is to lose a small amount on each transaction, and then do a whole bunch of those losing transactions.  You can not make achieve proftiability by losing money in larger volumes.

To drive this point home in a way that many small business owners can relate to, I tell them something that my Grandfather told me when I was about 15 or 16  "If you can't manage a $100 you can't manage a million dollars".  Same thing here if you can't manage a small profit on each individual transaction, you'll never realize the profit you want from many transactions.

Very good post Les, and you are right, increasing Gross Sales just simply to increase Gross Sales, does push more money to the Franchisor, and does not in and of itself increase retained earnings of the Zee, and may infact have a negative impact on cash flow.  As I also teach CASH FLOW IS KING.  One will go out of business because of poor cash flow long before lack of profit.  Cash Flow is the life blood of the business.

Believe & Succeed,DaleFranSynergy, Inc.Synergizing Franchising 1 Franchisee at a time!www.fransynergyinc.comwww.fransynergyinc.com

True, corporations and the like are merely limited liability vehicles with the sole purpose of accumulating capital; however, attributing the whole of an entity's sole purpose and design to the people and culture behind a corporation is a bit disingenuous. Granted, business is not an atmosphere for the meek; however, to lable franchisors carte blanche as ruthless, corporate hoods that subsist solely on the savings and work of franchisees is an unfair assessment. It is a business.

The bottom line is that not all business succeed. Franchisors likely have an obligation to "assist" a franchisee in succeeding because it is in their best interests as well; however, fundamentally, the franchisee is primarily responsible for their own success, assuming that the premise of the franchised business is sound. Typically, franchisees are responsible for locating a viable location, for doing the foot-work for local marketing, etc. The franchisor should advise and provide guidance because it has a concept that has already been proven (i.e. McDonalds, Taco Bell, Ace Hardware).

It seems that the problems that exist between most franchisees and franchisors deal not with the business concept itself, but areas that are tangential to the business concept itself, such as franchisor policies such as permitting encroachment, antagonistic relationships with franchisee advisory councils, which I think that regardless if you pro-franchisor or pro-franchisee, we can agree is not condusive to a long term beneficial relationship.

Franchisees should be allowed to meet and discuss mutual concerns and present them to the Franchisor. Franchisees should be protected from a store opening 5 feet or a block away. However, absent these genuine concerns (and there are more but I didn't list them), to assail franchising in general and as a whole is unfair.

The franchisor came up with a concept that works, and in return for allowing a franchisee to join that concept, there are monetary obligations required. That is business. That is capitalism. It doesn't even have to be fair; however, it should be, and generally is, disclosed to the prospect. A McDonald's might cost a million to join. That is the price. You don't have to become a McDonald's franchisee. To state subsequent to the signing that the terms are unfair, for the most part, is naive. If you do not understand the terms and you did not get an attorney and accountant to advise you on the risks and benefits, then you should bear the costs. The concept of due diligence appears to be frequently glossed over. Enough with the coddling and let's assume some responsibility ourselves.

Les:

Thank you for the reply post which I can relate to.  Your post is exactly right!  As I stated previously I teach that: The Purpose of a Business is to Attract - Retain & Grow Customers.

THE FIRST KEY to creating a successful franchise (business) that I teach to Franchisees, is that the TOP LINE (Gross Sales) HAS ABSOLUTELY NOTHING to do with the BOTTOM LINE.  We all know of many successful businesses with SIGNIFICANT Gross Sales who go bankrupt.

I'll paraphrase your words to how I teach the exact same point.  The way to accelerate your departure from business is to lose a small amount on each transaction, and then do a whole bunch of those losing transactions.  You can not make achieve proftiability by losing money in larger volumes.

To drive this point home in a way that many small business owners can relate to, I tell them something that my Grandfather told me when I was about 15 or 16  "If you can't manage a $100 you can't manage a million dollars".  Same thing here if you can't manage a small profit on each individual transaction, you'll never realize the profit you want from many transactions.

Very good post Les, and you are right, increasing Gross Sales just simply to increase Gross Sales, does push more money to the Franchisor, and does not in and of itself increase retained earnings of the Zee, and may infact have a negative impact on cash flow.  As I also teach CASH FLOW IS KING.  One will go out of business because of poor cash flow long before lack of profit.  Cash Flow is the life blood of the business.

Believe & Succeed,DaleFranSynergy, Inc.Synergizing Franchising 1 Franchisee at a time!www.fransynergyinc.comwww.fransynergyinc.com