A financing option often overlooked that is...
Many people mistakenly believe that franchisees are entrepreneurs, and that you have to be entrepreneurial to buy a franchise. But if you ask franchisors what they look for in a franchisee, the last thing they want is an entrepreneur.
Because entrepreneurs reinvent the wheel, they look to see what’s not working, and they figure out how to make it work. Good franchisors have already created the wheel. They know what works, and how to make it work, and they seek franchisees that will follow their lead.
So does that mean that if you are the entrepreneurial type that you should not buy a franchise? No, but if you do, here are several guidelines to help you succeed.
- Don’t try to “fix” the franchise. When you buy a franchise you are buying a business operating system, and that’s what’s valuable in franchising. The franchisor develops and maintains the system and the franchisees implement the system. If you see something that could improve the system, by all means tell the franchisor, but don’t make changes on your own. You could end up violating your franchise agreement and losing your franchise rights.
- Learn how to implement the system. Franchisors generally invest heavily in training programs to teach franchisees how to implement the operating system. These programs may last for a few days or a few weeks, depending on the complexity of the system. The word “training” bores entrepreneurs. They would rather “explore,” but part of a franchisor’s job is to prevent exploration and provide a documented plan of action for implementing the system. Remember, exploration costs money and part of the reason you buy a franchise is to conserve your money. The franchisee’s job is never to invent the system; it’s to follow the system. But you can’t follow it if you don’t know how. The entrepreneur who spends his time exploring may run out of money without ever implementing the system.
- Focus on your franchise. Most franchises require an operator’s full-time attention, yet entrepreneurs tend to think they can “add” a franchise to their existing business. To them, it’s just one more ball in the air to juggle. But it doesn’t work that way. Franchisors want a franchisee’s full-time attention. An entrepreneur may be able to “add” a franchise, but doing so requires assigning a full-time operator to implement the franchise system.
- Walk before you run. You wouldn’t be an entrepreneur if you didn’t want to operate multiple businesses, but once again it’s important to learn how to implement the system before you open multiple units. In franchising, it’s possible to open multiple units of the same brand, but franchisors want to see a franchisee succeed in one unit before opening a second or a tenth! In franchising, it’s also possible to open multiple units of different brands, especially if the same franchisor owns the brands, but if multiple franchisors are involved, you can expect some resistance. The best advice here is to prove yourself in one brand first . . . walk before you run!
- Trust the franchisor. Franchisors are entrepreneurs; they create businesses from scratch. They sometimes spend millions of dollars inventing their systems, overcoming multiple failures until they get it right. When it comes to operating their business, franchisors – just like entrepreneurs – tend to trust themselves and no one else. Meanwhile, franchisees are expected to trust their franchisors. As an entrepreneur, you’ll have to tame your independence and trust the franchisor. After all, the franchisor knows the system better than you do – at least when you’re just getting started – so put down your guard and trust.
It’s not easy for an entrepreneur to buy a franchise and succeed because a franchise is supposed to take the exploration out of business. There’s no opportunity in franchising to reinvent the wheel. It’s a matter of trusting someone else, the franchisor, to teach you the ropes and lead you to success. If you would rather do the leading yourself, don’t buy a franchise. But if you can curb your natural tendencies, at least until you prove yourself as a franchisee, you may be able to build a multiple brand, multiple unit franchise empire spanning the USA or even the globe!