Dear WOUNDED: : I've been thinking about buying a franchise. Is it worth the time and trouble to talk to existing franchise holders? And if yes, what should I ask?
ANSWER: Your e-mail reminded me of a 35-year old pastor who insisted to his flock that it was possible to walk on water if you only had enough faith. This Darwin Award winner picked a major estuary for his demonstration. Hint: If you want to walk on water it usually helps to be able to swim. Unfortunately, this pastor couldn't and he drowned.
I realize that faith is a very powerful force in most people's lives. But it's also important to realize, unfortunately too late for that pastor, that faith also has its limitations. The same applies to researching franchises, you've got to go beyond faith to find out if the investment is worth making before you sign on the dotted line. I've listed three do's and one don't below for exploring franchises. For more, check out Seid and Thomas' book "Franchising for Dummies" (Wiley, 2006).
DO ask for a long list of franchisees. Most of us spend more time checking to see if there are any dents or scratches in a rental car than we do kicking the tires of a franchise we are thinking about buying.
The best source for information -- existing franchise holders, existing customers and people who aren't currently customers who should be customers. Most franchisors will help to identify the first two groups for you to talk to. But push for a long list of names, so you don't just get people who push the company line but those with a more objective view.
DO ask how long it took to become profitable. Franchisers are fond of talking about the bazillions of dollars that franchisees are making. But the key question for you is how long it took them to achieve profitability. This is very important because each month that the business isn't profitable will require you to pump more money into it.
DO ask about their biggest mistakes. Everyone makes mistakes. Nothing can save you time, pain and money more than learning from others' mistakes (so you don't have to make the same ones). The problem is that most people are reticent about asking about other people's mistakes. One strategy is to hold off asking until you've built rapport with them, so it might take a number of meetings before you get to the key information you're looking for.
DON'T feel embarrassed. Asking a lot of probing questions isn't what most people would consider a fun way to pass the time. But you've got to get beyond that hesitancy so you can unearth as much information about the reality of the franchise as possible. Although I've not been burned by a bad franchise decision, I've got a bunch of relatives and friends who have been.
Follow these tips and your new business won't struggle to stay afloat. It will thrive.
Thought for the Week
"The time to repair the roof is when the sun is shining." -- President John F. Kennedy
List of the Week
Wasting away … Amount of time people admit to wasting at work
- No time wasted, 26 percent
- Less than one hour, 25 percent
- One hour, 29 percent
- Two hours, 11 percent
- Three hours, 3 percent
- Four hours or more, 4 percent
Bob Rosner is a best-selling author, speaker and internationally syndicated columnist. He'd love to hear your thoughts on this topic, especially if you have better ideas than he does. His books include "The Boss's Survival Guide" and "Gray Matters: The Work place Survival Guide." Send your questions or comments to him via: email@example.com.
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