Open Anonymous Forum for Unbiased Discussion About Franchises
Posted by judesteed on February 6, 2009 under Wing Zone | 
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In researching both successful and unsuccessful franchises, I came across the most recent list of the 25 worst franchises in the US according to SBA loan failure rates. (blue mau mau Jan 24, 2009). Ranking from the worst to merely “bad,” 40% of the top failing franchises were Read more of this article »
Posted by admin on January 6, 2009 under Articles | Be the First to Comment
If you’d like to work in a system where you and 100’s of others work for the benefit of the community, but no one benefits nearly as much as the dictator franchisor then franchising is for you. Having been in a franchise system where this became obviously true after just a few short months, it must be said Read more of this article »
Posted by admin on January 15, 2008 under Articles | Read the First Comment
Easy answer: It’s Both!
If you’re considering a franchise purchase, you’re considering whether you want to make running your own business your job. That may sound obvious, but if you’ve never run your own business you may think that it isn’t a job, its an investment or a ticket to riches, or many other things. It most certainly is however, a job, and its a job that is almost guaranteed to take more of your time than traditional employment ever would. Working for yourself is, and should be more work than working for someone else.
That is why you can’t take the idea of purchasing a franchise or any business lightly. You will need to put your heart into the business, and therefore it has to be something you love to do. If you’re in the market to make a large investment of your time and money you will burn yourself out if the reason for investment is to just make money. Money is a motivator to only a small extent. If money was the top motivator in the world, then Yugo Cars would still be around. Things like, status, prestige, power, freedom, community, charity, and much more are often a stronger motivator, and a much longer term motivator.
Whether its a job or an investment in business you’re looking for the same holds true. Look for something you love, because when you realize its something you don’t, money won’t motivate you during the lean times because there won’t be any.
Posted by admin on January 7, 2008 under Articles | Be the First to Comment
When you’re looking into franchising, it may cross your mind to ask the question of whether you’d be better off putting that money into the stock market instead. Lets have a chat about it. Which one will have the better ROI or return on investment? If it doesn’t cross your mind before you buy a franchise, it will afterwards.
When you invest in the stock market we expect a return of 10-20%. Based on an optimistic attitude that we can beat the market and the average annual return over a very long period of time. Note: This is nothing more than an educated guess. You can of course do better or worse as with any investment. For the scope of this article though, we invested $100,000.00 and a year later we have $115,000.00 (15% return), which we earned by passively buying a stock and letting it sit.
When you invest in a franchise, we battle much harder to try and find an educated guess about what the return (ROI) is going to be, due to there being little to no regulation and oversight of the industry as compared to stock investment. Irregardless we can look at what the return would need to be in order to make it a better investment than stocks and let you choose for yourself whether the franchise you’re evaluating can meet the goal.
When you examine a franchise, there is an oft overlooked ROI killer. You cannot look at the return without factoring in your time. Comparing an active investment to a passive investment is a bit like apples to oranges, until you monetize your own particular hourly wage. This number can be very personal and can change dramatically from person to person. Look at it like this, if you are going to spend 40 hours a week managing your new franchise, the dollar to dollar return on your initial investment needs to be 100-200% higher than a passive investment, because your time is worth something.
Therefore, we’d need to earn $30,000 to $50,000 year over year on our initial $100,000 investment to make it just an even investment with stocks. To be a better investment you need to go even higher.
Boiling it down to basics, you have to see that when you buy a stock you’re trusting that CEO or President to run that company according to your goal of earning 10-15%. When you’re buy a franchise you’re trusting yourself to meet those goals. So it’s time for some honest thinking.
When you are ready to invest, think and truly ask yourself. Can you do it 50-100% better than the CEO of multi-billion dollar companies. As when it comes down to the bottom line, you’re starting a business yourself (albeit controlled by a franchisor) making a major investment in time and money and betting that the franchisor you’re trusting and yourself combined are going to be able to do it better than an executive at publicly traded XYZ company. Hey XYZ company would never have gotten to be the big company it is, if someone didn’t take the risk to say they were better than the people doing it already.
Posted by admin on December 9, 2007 under Articles | Be the First to Comment
The biggest question on your mind, if you’re considering the purchase of a franchise should be, “What do I get for the money I’m sending out?”. No, I mean it. You really need to stop, quantify and put a value on, “What You are Being Sold”. Take a step back forget for a moment that you really like the idea, forget that you want to work for yourself, forget everything you’ve been told about the franchise. Now ask two questions.
1. Did you know the name of this franchise before you considered the purchase, and do you know what emotion that name draws from people?
2. How many other people have bought into this franchise, are there enough people, where as a group, you can collectively purchase national advertising?
Only if, the answer to those two questions is a resounding YES, is this company worth further consideration.
Why? Read on…
The number one reason is simply because… If you have what it takes to run a successful business, then you will be successful with or without a franchise. Qualities like, risk taker, persistence, perserverance, dedication, and a love for what you do are absolute musts, no matter what. Do you have these qualities? It’s time to be honest with yourself, before you write any large franchise fee checks. No franchise system, is going to give you these qualities, and no franchise system is going to be successful for people who don’t have these qualities.
So you do have these qualities? Well then…
There are only two things that make your franchise fee and monthly royalties worth a dime. Brand name recognition, and collective national advertising. If these don’t already exist for the company you’re considering then you will be paying for the chance that some day these might exist. If these don’t already exist, then what your franchise broker is telling you, about it being a proven system, is a lie. If it was a proven system, these things would already exist.
Take it slow. Really spend time doing a lot of research on any franchise you’re considering. The best thing to do is to call current franchisees of the franchise you’re considering and ask, “If you had it to do again, would you?”. Then wait six months to a year and call them back and ask them the same question again. If they have the same answer, then and only then is it worth considering further. Research and find owners yourself, do not take a list from the franchise to call. That list is edited to include only the people they want you talking to.
Further… do not, listen to anything the franchise broker has to say. Not a single word. This franchise broker does not own or run a location. This franchise broker does not know anything about the business except, what might convince you to buy it. This franchise broker will mislead you no matter how honest he/she comes across. Just remember this franchise broker’s livelihood and family’s well being depends on selling this franchise to you. It does not matter how honest someone is, this fact will trump that in the end.
