For almost 40 years people have been telling me why they want to buy and start franchises. These reasons include:
- To become my own boss
- To work for myself
- To escape a boring job
- To replace a job I lost
- To build financial independence
- To launch a family empire
- To work with my family
They’re all good reasons. But are they the best reasons?
I don’t think so.
In fact, in all of these years, during which time I’ve met and interviewed thousands of franchisees in a couple of dozen countries, I’ve only heard the best reason one time. Just once!
It came from an unassuming couple in the United States. As is usually the case, I found them, they didn’t find me. In other words, they weren’t looking for publicity, which made them all the more interesting to me. At the time, I was writing an article about franchise re-sales, and I wanted to speak to franchisees that had recently decided to sell their franchise, probably because they were ready to retire, or to invest in a different type of business.
So when I found franchisees Rich and Sonja Heaton, a married couple in South Carolina, and I asked them why they had started their franchise, their answer stunned me. It was the best reason of all. They said:
“To sell it!”
Rarely had I ever met franchisees who thought so far ahead. In this case, 14 years ahead.
In 2001, the Heatons had invested $150,000 in a small-town sign-making franchise. However, neither the type of business nor even the market – it was less than 9,000 people! – concerned them all that much. In fact, one of the reasons they were able to buy the franchise for the price they paid was because few other franchisees thought the market was big enough, so investors shied away from it.
But the Heatons were very specific about what they wanted to do, and they knew that the location really didn’t matter. Every business in that town, and every business for miles around, needed signage. But again, it could have been waffles or carpet cleaning! The Heatons, within reason, didn’t much care about what they sold. It was only important that they could re-sell the business for big bucks.
“People don’t seem to set up their businesses to re-sell them,” Sonja explained to me one afternoon. “But that was our purpose for going into business, and for buying a franchise.”
Is there a better reason?
Sure, it makes sense to be your own boss, to build financial independence, to launch a business that you can keep in your family, and to escape the day-to-day rut of a j-o-b. But the real payoff for starting a franchise is to sell it – and sell it for big bucks!
Many franchisees – maybe most – are too busy buying a franchise, then starting it, then operating it, to think much about the end game. What are they going to do with their franchise when they don’t want it anymore, or they can’t operate it anymore?
Critics of franchising say you’ve got to be careful not to get stuck with a franchise that you can’t sell, but that’s mostly a scare tactic. There’s little truth to their claims that franchises can’t be re-sold. Almost every franchise can be re-sold, whenever the franchisee wants to sell it, but only if the franchisee has created something worth selling!
And there’s the problem. Franchisees are often so busy working in their businesses that they rarely ever stop to think about their next move. Some franchisees struggle to make ends meet, and others are simply too busy meeting the daily demands of the business – and often having a good time – that they never stop to think, “When are we going to sell this business? And what are we going to get for it?”
To the Heatons’ credit, they knew those answers before buying the franchise.
Prior to looking at franchise brands, they had worked in the jewelry business and in a convenience store, but they had never owned a business. They had no experience making signs, but that’s the franchise they decided to buy.
As Rich told me, “It didn’t matter what we bought. We knew that we wanted to be the best that we could be in whatever business we bought, and we knew that if we maintained our profitability, owned our own facility, and developed the brand, that combination would eventually attract a buyer when we were ready to sell.”
Because of their small territory, it wasn’t easy to find a sign-making franchisor that would sell them a business. Eventually, the Heatons discovered Signarama, based in West Palm Beach, FL. “Their franchise system, and their support, is unbelievable,” says Sonja. “I tell people all the time that I would go back and open another Signarama versus doing it on our own because they nurtured and supported us all these years.”
After 14 years of developing their brand, and being their best, the Heatons decided it was time to attract a buyer. Once they put the word out that their business was for sale, the buyer came along just as the Heatons knew he would.
Oh, he came along with $2-million as well!
When the Heatons sold their franchise, they were the least surprised of everyone they knew, but that’s not to say they weren’t grateful. It was more a matter of having done all they could in the sign-making business, but they weren’t necessarily finished with franchising. They told me they’d take some time to enjoy themselves, and then decide if they wanted to be their best all over again in another kind of franchise.
And whatever that next franchise might be, you can be sure they’d start it knowing that the best reason to do so was to sell it!
In retrospect, the Heatons did what every franchisor hopes their franchisees will do. No, not sell the business, but do their best to develop the brand. That’s the key to success in franchising. The problem is that some people are not prepared to do their best, and in other cases, where people aren’t a good fit for franchising, their best will never be enough.
If you know you’re a good fit for franchising, and you’ve got the skills that will be required by the franchise of your choice, then all you need is the right reason for starting the business. Start it to sell it, and in the process all the other reasons listed above will come true.