Get in on a ground-floor opportunity
Oh, boy! I can be a part of something new. It’ll be hot—everybody will want in. I can help them grow. If these thoughts have crossed your mind as you evaluate franchises, STOP. You’re buying for all the wrong reasons. You’re not going to work for a Silicon Valley start up. You’re not investing in a headline-grabbing IPO. You need to turn your thinking upside down. Franchising is all about buying a product or service that’s in demand, a proven business model with happy franchisees, where you can build equity and exit having earned financial security. This notion of “ground-floor opportunity” is like trying to reach a 205-yard par three over water with a wedge. You might as well just throw a range ball into the water and head to the 19th hole because you’re going into the drink. I have a Tannerisms (#4) for you to consider: “Make sure the franchise you’re looking to buy isn’t working out of a trailer with a 40-watt bulb hung from the ceiling.” The sales pitch may look good on the website; it may sound good from the development manager; and, the lone franchise owner you’re able to reach (the founder’s father in law and benefactor) has only great things to say, but until you mystery shop a store, visit the home office and talk to at least five franchisees, TEMPER YOUR ENTHUSIASM. You should be looking at franchise businesses with a critical eye, and asking tough questions. You don’t want ground floor, you want a skyscraper: a business with a solid foundation, layers of thriving owners and a sturdy infrastructure to support them. If you’re thinking young, NO, go for gray. In franchising, experience trumps youthful energy and ambition. It’s YOU who brings the energy and ambition to build YOUR business, not the franchisors. It’s not your investment to help the franchisor grow; it’s your investment in them to help you grow. So don’t touch those hot franchises. Every entrepreneur will want one. The market will become saturated. Customers will cool to the product. And, where will you be? OUT IN THE COLD. Stick to the tried and true. It may not be sexy. But, your P&L will sure look attractive at the end of each month. And, that’s all I’m going to say.