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(This exchange is much longer than normal, but
if you are looking for a franchise, you need to read
every word.)
Nick,
I recently went through an evaluation with a franchise
placement company and they concluded that my best
franchise opportunity exists within something I
have little or no interest - a retail shop. I feel
that I have to have an interest in a business in
order to be successful. However, the placement expert
says otherwise. He says that I have to demonstrate
leadership and place the right people within the
business for me to succeed. Who is right?
Adam
Adam,
Not only are you right, you
are 100% right, and this "expert" needs
to go back to "expert school." First, no one
but you should decide which business best fits you,
your personality and needs . Second, to make
matters worse in this case, the "expert"
argues with you after you express discomfort. Run
like hell from that kind of help.
Most franchise consultants offering
"free" services to help us find the right business
can make life pretty confusing because their focus
is really on selling an opportunity that pays a
commission, while all the time making us feel that
our needs are being met. Nothing is free,
and under this arrangement, the consultant has established
relationships with certain franchisors that have
agreed to pay a commission when a sale is made.
Now, the process might work for quality
franchisors that use such agents to identify the
right franchisees for their program, but the same
process can be terribly unfair for inexperienced
prospects that do not understand the dynamics.
(As an aside, when people ask
for my help, they are surprised when I tell them
there is a fee for my services. But, when I explain
reality, most serious buyers want a consultant who
is truly working for them and not a business opportunity
seller. The cost of a franchise goes way beyond
the "total initial investment" quoted in the UFOC
when you consider time, emotion, money, and especially
the cost of a bad decision. Be sure that you are
#1 in the equation. There are exceptions to the
rule, but not for first time buyers of single units.)
There are numerous ways to conduct
due diligence on franchise opportunities and they
range from questioning franchisees to spending a
few days immersed in the franchisor's business.
Good franchise companies welcome your examination
(if you are a qualified, serious candidate) and
you will be made to feel comfortable as you search
for answers to your questions. However, if you are
side-stepped during the due diligence phase, you
have most likely found a hole in the offering and
this is the sign of a less than high quality opportunity.
Returning for a moment to the
idea of using a consultant, I think that they can
provide great insight concerning the industry in
general, if they have adequate experience to actually
know their subject, so ask about their background,
their experience and the length of time they have
been in the business. Also, choose a consultant
with a logical "screening mechanism" that
helps you reach logical conclusions about your options.
(There are nearly 100 segments
such as pizza, printing, dry cleaning, etc., and
you need to narrow your options or you will turn
your search into a life long hobby of considering
what entrepreneurial life "might be like."
I wrote the Focus Program for Emerging Entrepreneurs
for just that purpose - see www.emerging-entrepreneurs.com.)
Take all the legitimate guidance
you can find, but make sure YOU like the deal as
much as the consultant or seller of the deal likes
it. You, not anyone else, will live with the final
decision.
Here's the bottom line.
If you use a franchise consultant, use
one who has YOUR "best interests" at heart. I am
essentially alone on this stand, but I believe in
what I say.
Good luck,
Nick
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