It occurred to us that you may wonder if we know anything about dealing with a franchise or a franchisor. The answer is YES we do! As a matter of fact, between my business partner and us, we have owned more than enough franchises to earn a PhD. in business.
My first franchise was in the Staffing business, temporary help and full-time placement of job candidates. Some know the business as a Temporary Help Service and a Personnel Agency. Fortunately, our service fees were always paid by the employer, not the employee, except in unusual circumstances or national company policy of our client.
It was a great service for us but the FRANCHISOR went bankrupt and out of business. If we had done a better job of doing our due diligence, in the beginning, it may have turned out better for us and our investors when the franchisor went belly-up.
When any business runs out of money [cash] whether a franchisor or one of the franchisees, or simply a start up business, it means the end is near. Usually, the franchisees follow closely behind because there is no longer any leadership.
Fortunately, a national firm offered me a Manager’s position, so I left the firm before the franchisor went belly-up along with many of the franchisees. Beware that risk is part of every business. Unless you have a “sugar-daddy” or rich uncle, be sure that you have a money fund large enough to support your start up. Always more than you expect.
There are many reasons that a business is successful, especially a “people” business where connections with buyers is paramount. For example, belonging to the local Personnel Association; the Chamber of Commerce; and more.
In our city we were NOT allowed to be a member of the Personnel Association which meant no interactions with the obvious buyers of personnel services, i.e. temporary help and full-time employees.
Every business start-up has a few challenges. Your PEOPLE are key to your success in almost every situation dealing with clients, getting new clients, finding qualified staff in all areas is very important to your success.
Some franchisors have a national reputation, i.e. McDonalds; Wendy’s; Electrolux; Mary Kay and many others. Some are MLM [Multi-Level Marketing] companies with known products/services. Your best decision is most likely a BRANDED product.
Our 2nd franchise was a steakhouse restaurant business…. this is where women take home steaks hidden in their upper body parts and men stuff them in their pants.
Another challenge is the pro-forma of the franchisor. What I’m really saying to you is….. you need the best lawyer and accountant on YOUR team to run the numbers before you invest your hard earned money.
Even after you do your due diligence you can still face unknown competition and/or expertise from other franchised competitors in the area. Make it standard procedure to visit every competitor within 5 miles or more of your location.
Our 3rd franchise was in the weight loss Diet Center business.
Our 4th franchise was a Computer Training Center.
Hopefully, there are no more hidden franchises somewhere. My point in telling you this about our experiences is to get your attention. Truth is….. we ran a successful business and made a good income against many challenges or we would not have lasted for 25 years to sell out to a national firm that wanted our company.
Much of what I write about is not to discourage you at all. It’s primarily to get your attention so you can avoid a few mistakes, deal with the others, and survive as we did.
A final word….. our last 25 years in business was not a franchise. A national employer for whom I had worked for 4-1/2 years fired me as a Regional Manager because…. greed had overtaken their business “smarts”. Very simple….. they could eliminate my salary, bonus, car expenses, travel and add it to THEIR bottom line profits.
SURPRISE….. we started a new company and 97%+ of our clients stayed with us in the new firm and in 6 months my “OLD” employer, the Dot Girls Division of The Dictaphone Corporation, was gone from our city. GOD is GOOD ALL the TIME!
I feel satisfied after raednig that one.