The online version of my free franchise quiz went live in November of 2006. Since then, over 5000 people (prospective franchise owners) have taken my free franchise quiz. The results really are alarming.
I decided to put together the 19 question quiz because I felt it was badly needed. Way too many of the people (who were coming to me for tips and advice on buying a franchise) were wrong for franchise ownership. They were too entrepreneurial and/or were not fond of following rules*-ones set by others. That alarmed me-but not as much as the stuff I learned from personally scoring 5000+ franchise quizzes.
*Rules…created by the franchisor, are what makes a franchise business thrive. Rules also help the franchise brand remain consistent system-wide. It’s the rules that enable the Burger King Whopper® sandwich to look and taste the same in all of their locations all across the country.
If you’re thinking about buying a franchise someday, the first thing you need do is find out if you would make a good candidate to own one. In other words, you need to find out if you are a fit for a franchise-type business. Don’t just buy a franchise because “everything has been setup for me already.” And, you should definitely not buy a franchise because you heard that it’s safer than buying or starting an independent business. This post debunks the supposed higher success rates for franchise businesses.
A Quick Note About Technology And Why I Don’t Use It Sometimes
Technology advances during the last 20 years have been amazing. Out of this world. A sight to behold. I do use a lot of technology to run my business.
But sometimes, technology is not the answer. Especially when it involves the mindset (and the human) behind the purchase of a franchise business opportunity.
Buying a franchise is a big deal. I don’t take it lightly. I try to make sure my clients-and the readers of this blog and the other online and offline publications I contribute franchise-related content to don’t either. That’s why the only technology I use with regards to my franchise quiz is the platform (Survey Monkey) it’s hosted on.
Translation: I personally score every quiz. Is it time-consuming? Yes. 5000 quizzes is a lot of quizzes to score. You see, I don’t want (or trust) a software program to do it. As I said, buying a franchise is a big deal. Humans need to get involved early on in the process.
I’m alarmed by the answers some of the 5000+ people who have taken my free franchise quiz gave when asked these two questions.
The Alarming Answer From Question #16
Approximately 20% of the prospective franchise owners who took my quiz chose “No, I don’t think I’ll need one.”
Really? Today’s franchise buyers don’t think they need to write a business plan for their franchise business? Wait until my friend, Tim Berry* gets wind of this. He’s going to freak out!
Work With The Franchise King®
*Tim Berry co-developed the #1 selling business plan software in the world. He’s wicked-smart, and he knows small business. He’s also a great, giving guy. Tim was kind enough to contribute some of his business plan wisdom for my book, Become A Franchise Owner! This:
Out in the real world, your franchise business plan is a tool that helps you manage better to control your own destiny. It lives mainly on your computer, not as a document. It helps you keep track of strategy, priorities, goals, specific steps, tasks, responsibilities, and of course basic business numbers. It’s the first step in planning process, which is regular plan review so you can track progress, highlight the unexpected, and manage change. It’s about the relationships between different parts of the business, who’s responsible for what, and when; and what you need to change as you go along. Think of planning process as steering, regular small course changes to keep you on route to your desired destination.
The key points in your franchise business plan are your review schedule, your list of assumptions, your strategy summary, your major milestones with dates and names and budgets, and your basic numbers including projected sales, cost of sales, gross margin, expenses, profit and loss, and cash flow.
About the franchise business plan for a bank:
When a bank asks for a business plan, the bank wants a document that’s a convenient summary of the key points of the business. That includes highlights like what you sell, into what markets, through what channels, with what sales and marketing strategies. Also who’s in charge of this business, and what experience the people in the team have.
But most of all, with a business plan for a bank, they are looking for stability, reliability, and responsibility. They want to see a good credit history, both business and personal, and assets to cover loans and reduce risks.
Don’t confuse the document for the bank with your real business plan. The real plan lives on your computer and you update it regularly, because it helps you manage better. The document you give to the bank is a snapshot of what the plan was on the day that document was printed, plus some dressing – descriptions of the team, the history, the product, the market, and so on – as a courtesy to the banker, helpful descriptions of your business.
(Thank you Tim!)
If you’re on the hunt for a franchise-so you can be your own boss, are you convinced (or starting to be convinced) you need to put together a formal business plan?
And, if so, are you prepared to cover these 9 components?
1. Executive Summary
2. Company Overview
3. Products and Services
4. Target Market
5. Marketing and Sales Plan
6. Milestones and Metrics
7. Management Team
8. Financial Plan
Writing a formal business plan, (the right way) involves some work. But, it’s totally worth it as it will improve your chances of getting your small business loan approved by a lender.
FYI: If you’re not applying for a small business loan, you still need to put together a business plan. It’s your starting point for your franchise business. It makes your short-term goals easier to see. It makes everything measurable. And, you can adjust it as you go…as your franchise business revs up. (With LivePlan)
One more thing: To the folks that answered the question with, “Maybe, if it’s proven to me that I really need to take the time to do one,” I hope Tim proved it to you.
“Planning is bringing the future into the present so that you can do something about it now.”
The Alarming Answer From My Free Franchise Quiz-Question #18
I don’t get it. It’s alarming.
15% of the people who took my free quiz answered question #18 with “they’ll do it alone….that they can handle it.”
To put their answer into perspective, that means approximately 750 people have been (or will be) set loose onto the franchise opportunity market with no safety net. They’ll only have their brains and their,”experience” to rely on.
All the experience they have investing $200,000 into a franchise business.
You’re darn right I’m being sarcastic.
Who in their right mind would undertake something of this magnitude by themselves? Someone with a huge ego? A multi-millionaire* with not as much to lose?
*I’ve got news for you; the multi-millionaires I’ve worked with (I’ve worked 1-on-1 with plenty of them) never made a quick, “let’s just go for it” decision on the purchase of a franchise. Except this one. She was a real peach. She was ready to “go for it” if she could have had things done her way.
If you’re thinking about buying a franchise someday, please don’t do it alone.
Your high intelligence…your (beneficial) real-life in-the-trenches business experience…doesn’t really matter if you’ve never purchased a franchise business before. One or two mistakes could end up costing you a lot of money…money that could take years to earn back. What? You still don’t believe me? Maybe I need to share what happened to Joe, a former franchisee of Quiznos Subs, so you can see exactly what I mean…so you can understand what a mistake or two can lead to.
“I was a guy with a net worth in 2006 of over $500k, perfect credit, a good job in the medical field, a good passive income from some rental property. I lived on my 80+ acres farm in my own home. I was also engaged to get married. I was taken in by (sandwich franchise) Quiznos’ lies about the wonders of being your own boss and how much success I could have. How stupid I feel now. This settlement is just a drop in the bucket to me. I understand that I will get a check in the mail for seventeen hundred dollars…. and it will be delivered to my mom’s house, because that is where I now live. My home, farm, rental property, credit rating and fiancé are all gone after my bankruptcy last year. Fortunately I was able to go back to my job and I’m getting back on my feet and doing well at repairing the damage, but it will take a long time.”
Joe’s a guy who only left a comment on a blog post. I don’t know if Joe worked with a franchise professional as he was investigating Quiznos-and maybe a few other franchise opportunities or not. My guess is he didn’t.
I wonder, how many of the 750 people (who took my quiz and said they’d be doing it alone) are franchise owners now. Successful franchise owners. I guess I’ll never* know.
*I do occasionally get emails and calls from people who want me to help them “get out of their franchise contracts,” because they’re losing so much money. Maybe some of them are people who who took my franchise quiz and answered that they were going to do it alone. It sucks that I can’t help* them out of their jam.
*I can generally only help people (you?) before they buy a franchise-not after. After is too late.
Working With Professionals
I’m a franchise professional. Go here for an explanation of what I do. Of course I’d like it if you worked with me. That’s because I know I can help you get where you want to go-as I have with countless others. (It’s also how I make my living) I also know that you don’t really know me. This may be the first you’ve heard of me. I understand your skepticism. I’m a pretty skeptical guy myself. It takes me a while to trust someone. With that in mind, I’m going to let you off the hook. Here goes.
If you don’t end up working with me, please make a commitment (right now) to work with someone who knows franchising. Someone who will look out for you. But, before I let you totally off the hook, I’m offering…
The Two Things You Must Do Before You Buy A Franchise:
When it comes to buying a franchise, there are two things you must do:
1. You need to learn all about about franchising
There are lots of moving parts in franchising, today. Things aren’t as simple as they once were. There are lots of things you need to learn about the business, so you can leverage the best things about the franchise business model…and make money. I have a way for you to learn about franchising. An easy way. Wait until you see what I’m offering.
2. You need to make sure you haven’t missed something before you sign a 10-year franchise contract
That’s right: Most franchise contracts (agreements) are 10 years in length. Once you’re in you’re in. There’s no turning back. There’s no grace period. There’s certainly no 100% money-back guarantee! That’s why it behooves you to cover all your bases before you sign your franchise agreement and before you send the franchisor your check.