Things to consider before becoming a restaurant franchisee
What you should ask are often missed and sometimes a determining factor in why so many franchisees fail before they even get started.Why do people/businesses fail in this category? I believe it is because they haven’t sought proper counsel prior to taking their first step. Where should they seek counsel? One source would be those who are currently Franchisees, and have made the same mistakes (they may soon make) after they made the leap, as opposed to getting answers to questions prior to starting.
Another way to seek counsel/advice, is go directly to the Franchisors (whether you are seeking a franchise from them or not) and simply ask questions that will assist you in your decision making process. Questions like:
- In your experience what makes Franchisees successful/unsuccessful?
- As a Franchisor, what would your expectations of your franchisee be?
By asking questions, you can shorten the learning curve and possibly save hundreds of thousands, if not millions, of dollars. If individuals with an entrepreneurial heart, prior to investing their retirement plan (savings), would follow this simple but often overlooked recommendation it would provide them with a more stable and informed starting position. They would be able to come off of the starting block much more quickly and have the confidence and answers to lead them on the road to success.
I believe that what happens with a large percentage of entrepreneurial-minded people is that they see the opportunity and the ability to increase their personal income by owning their own business; and, in the excitement, never stop to consider the costs. These costs include not only the hows and the whys, but also the emotional and financial ramifications. By pausing to seek counsel, the individuals would be led to a greater path of success through learning from those parties/individuals that have had either successful or unsuccessful experiences.
Learning about the experiences from both a franchisee’s and franchisor’s perspective, prior to making the same mistakes (they experienced), may reduce the risk of financial loss, emotional stress, and pain that can accompany loss and failure. Many individuals ultimately end up buying a job by leveraging themselves with debt. This can ultimately lead to failure within the first 16 to 24 months.
We are now at point where you may be wondering what kind of questions you should be asking. This is where we begin our next step.
There are several questions to ask a Franchisor when you are considering the purchase of a franchise. Again I remind you that when asking these questions, you don’t necessarily have to be purchasing a franchise from this organization. This step is part one of your due diligence to acquire information prior to investing your hard-earned dollars and risking potential devastating losses. Seek out several successful organizations and begin asking questions.
The Top 5 Questions to ask when considering becoming a Franchisee:
- When working with franchisees, what is a common mistake your business partners made?
- What are 3 common traits that you see in franchisees that made them successful?
- When you receive a business plan from a prospective franchisee, what do you often find missing?
- As a Franchisor, what would you expect from me?
- As a Franchisee, what can I expect from you?
These sound like very important questions, however, I’ve franchised thousands of restaurants and the majority of those interested in franchising have never asked them. Don’t be one of those people. Ask questions before you begin.
Topics to be covered in next upcoming blogs:
- Answers to the Top 5 Questions.
- The difference between a one store franchisee versus a multi-store franchisee.
- Selecting an Operator when growing your franchise.
- Absentee owners
- How involved will you be, or need to be, in your new business? Inspect what you would expect.