ENTREPRENUERIAL DISTRACTION: OR HOW TO ADD RISK TO A PERFECTLY GOOD BUSINESS

Bob McDevitt

Date

Oct 14, 2016

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Everyone in a franchise management role has seen it. A successful franchisee, doing a great job starts looking at the perceived greener grass and decides to open another franchise concept. Most franchise agreements allow a franchisee to open other concepts as long as they are non-competitive. Perhaps they shouldn’t.

This doesn’t work all that often. The franchisee frequently ends up being disappointed and the franchisor is unhappy.

As a franchisor it is aggravating when a franchisee is making money successfully executing your concept and has the opportunity to grow, but decides to invest their capital somewhere else. It’s especially frustrating when the capital in question was generated by your concept in the first place. What’s more, the existing business is almost always impacted by the reduced attention from the owner who is distracted by the new venture.

If you are a franchisee, the magic that is making your current franchise business (please link to industry page) a success may not be easily transferable. If you are doing well in your current franchise, chances are good that you did your homework and found the right business model for your talents, skills and financial situation. If you look around the franchise landscape, you will be looking at other concepts that may not be compatible with your talents: after all your current franchise agreement won’t allow you to look at anything that is directly competitive.

Now, obviously, there are times when looking outside the concept that worked for you, makes sense. The best reason to do that is if there is no room to grow. Nobody wants to be stymied. Other reasons include; the franchisor isn’t maintaining control and the brand is not performing, or there is a change in ownership that results in diminished prospects. In those cases there may be no choice. But remember, the second business is a distraction from the first one; the new business simply won’t have your undivided attention and resources. And there is another obstacle you’ll have the second time that you probably didn’t have the first, over-confidence. Having one success under your belt makes the next one tougher because it’s easy to think you can pull it off having figured it all out once before!

So if you’re thinking about another franchise concept (please link to investment level) without a darn good reason, think again. Your time is way more efficiently spent honing your skills on expanding a business you already know and into which you have already invested your time and talent, not to mention your capital. If you do have a darn good reason to move into another concept, make sure you have exhausted all the other possibilities, including buying out another franchisee within your existing business, or just sitting down with the franchisor and discussing alternative ways to expand. And by all means, if you conclude that there is no alternative but to move to another concept, do your homework again, like you were starting over. In a way, you are.

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