Is ALL franchising bad?
I've been perusing these discussions for some time and am becoming totally turned off to the idea of franchising. I am a middle-aged person with good career management/sales skills, mainly in food service, retail and wholesale. Up until a few weeks ago, I thought some sort of simple food, coffee, etc. franchise would be my desire.
Now, I don't think I would touch a franchise with an eleven foot pole,
based upon what I read here. But a couple of questions before I make plans to start an independent business...
Are there ANY honest franchisors?
Are they ALL in it for the quick buck, with no regard for their franchisors success?
I understand that there are good and bad in everything, but I get the idea that franchising is simply a vast den of thieves.
Franchising can be good
Deecee asks, "Are there ANY honest franchisors?"
Yes. There are.
Deecee asks, "Are they ALL in it for the quick buck, with no regard for their franchisors success?"
No. Not at all. Before we get into specific answers, let's be clear on the terminology. Franchisor is the company that grants licenses to act in its name. Franchisees are the licensed stores that most folks buy. And franchising is the act of a franchisor granting a license to a franchisee.
Now which one are you now not interested in becoming - a franchisor or a franchisee?
View Franchising like finding a good man or woman
How long does it take to get to know someone? If you found a franchise your interested put it aside until you understand the FDD. Study the world of francising for at least a year. Talk to a franchise lawyer. Have him explain what the FDD implies.
Then work in your choice of francising for six months.
Take your time.
Understand numbers. The numbers is a substance of a business. (CPA)
Listen to your gut feelings. If it says no LISTEN.
There has to be good zors out there.
Of course there are honest franchisors
Just like there are honest politicians, pastors and police officers.
No really, as with all things, there are the extremes that get hyper-reported. The "get rich quick" folks get the most buzz because they upset so many. The "keep your head down, keep your nose clean, hard-working" folks, just blend in while earning a profit and helping the economy.
Before choosing any concept, always conduct proper franchise due diligence for any franchise business you are pursuing.
I've seen both
I am also middle aged sales executive considering franchising. I have had friends/colleagues over the years who have done quite well as franchisees, and others who have been burned badly. In general I would say you have to talk to many current franchisees - and as many former franchisees as are willing to talk to you (many signed confidentiality agreements when they left the system) - when considering a particular franchise opportunity. Also, google the franchisor and go at least 20 pages into the search looking for negative posts/reviews. Then do the same for the principals of the franchisor. One or two dissatisfied ex-franchisees is normal for any extablished franchisor, but an extensive pattern and numerous negative threads, listings of lawsuits, etc should certainly be a deal-breaker.
EVERY person considering a franchise should read The Franchise Fraud. Buy several other books about franchising, read them and take your time doing lots of internet searches. When you get excited about an opportunity, immediately start looking at the competitors in the same space to slow yourself down in the process.
Understand that every franchise agreement is a horrifically one-sided document in favor of the franchisor (who wrote it) and that courts in most states have been willing to enforce even the most unfair clauses of the agreements because you had the option to not sign it. Thus you need to make sure you have somehow learned a bit about how the Zor treats Zees looking to exit the system.
The great advice you will find on-line is almost unlimited. For example, look at the $$ generated by franchise fees versus the $$ generated by royalty fees for the Zee: is the Zee really in the business of selling widgets (or whatever), or is the Zee really in the business of selling franchises?
"I am also middle aged sales executive considering franchising."
Researching and talking to people only goes so far. What is really needed is some knowledge of the INDUSTRY that you are going into. It is amazing how people will liquidate their 401(k), mortgage their house, and borrow from relatives, to go into a BUSINESS that they know NOTHING about, on the basis of talking to people and Googling.
They won't take 6 mos. to work as an assistant manager or some such, before putting down more than a year's tuition at Harvard in franchise fee. The business won't be as simple as you think, the proven system won't be idiot proof, and two weeks' training won't be enough to teach you everything you need to know.
IMHO the single biggest factor in a Zee's success, is the industry-specific knowledge that the Zee has BEFORE they sign the agreement and pay the fee. Not that some folks with good luck don't manage to muddle through. But for example, my wife (our actual Zee) was a General Manager for various Zor stores for several years before buying her own stores. For those of you with executive experience in other industries, could she move into your VP's or CEO's office and with 2 weeks training be an effective exec? Maybe but doubtful, and that's what your chances are of randomly picking a business to OWN with 2 weeks' training.
I really think that franchising is an awesome opportunity for any business owner; it has the potential to really help your business flourish. Have you thought about looking into your opportunities with a qualified franchising consulting group?
They'd be able to work with you every step of the way and ensure that you have the connections you need to necessary franchising lawyers and the like. I recommend Upside Group - they're a team of experienced franchising professionals who will be able to keep you clear of fraud or negative franchisors.
Check them out at <a href="http://www.upsidegroup.biz">UpsideGroup.biz</a> for more information.
Best of luck!