You need to work. You’re in a hurry to make money. You’re running in circles trying to reach a decision. You’re leaning to one franchise concept because it’s a familiar name, you like the people, and franchise owners say they’re making money. But you have a nagging reservation: You don’t understand the business. It’s been explained several times. You just don’t get it. You’re feeling low. In a worst-case scenario, you figure that once you go through training it will reveal itself in an Aha! moment.
THAT WON’T HAPPEN. It’s time to walk away—before you ink franchise agreements and suffer as an owner. IF the franchisor can’t summarize the fundamentals of business, to your complete understanding in the first phone interview, politely, but quickly, bid adieu and move on. My TANNERISM #14 recommends: IF YOU DON’T UNDERSTAND A CONCEPT, DON’T DO IT.
Here’s what you need to know from the very beginning:
1) What is the premise of the business? Ask your franchise contact to complete this sentence: “We provide (product/service) that’s priced (pricing strategy) and positioned (promotion strategy) to (end users) through (distribution channels).
2) How does the business operate? Describe a typical day in the life of an owner. If I’m managing the business, who is doing the “work”? If I have questions or need help, give me specific names of people I can call or communicate with. CALL THEM. (As Ronald Reagan advised: Trust but verify.)
3) How will I make money? In your first contact with the franchisor, don’t ask: “How much money can I make?” The FTC frowns on franchise companies providing that information. You’ll have to pour through their Franchise Disclosure Document for the answer and ask franchise owners during your investigation process. But the franchisor CAN tell you what percent expenses to plan for—cost of goods, overhead, royalties, advertising, etc.
4) How will I get customers…and keep them? What specific marketing and outreach programs will WE—assumes owner and franchisor—engage in to acquire customers? Who pays for what? What “loyalty” programs are available?
THAT’S THE SUBSTANCE OF YOUR FIRST PHONE CALL. And, how your contact answers your questions will tell you a lot about the company you’re about to keep.