The Franchise King® | Learn How To Become A Franchisee

7 Things That Franchise Buyer’s Want (Part 7)

(In Part 6, I discussed what today’s franchise buyer’s want-and expect.; Transparency fransparency. I encouraged franchise executives and salespeople to be more open to sharing the positives and negatives of their particular brands.)

We’ve rounded 3rd, and are coming home now. (This is the final part of this 7-part series.)

(This post may contain affiliate links. Please read my disclosure policy).

So what is the final thing that franchise buyer’s want, when they’re looking into becoming franchise owners? It’s something that’s not always that easy to provide, if you’re the franchisor. It’s

Equity

I’ve worked with hundreds of would-be franchise owners. About half of them mention “building some equity,” as one of their goals as a franchise owner. But, can your specific franchise concept give them that opportunity?

I feel that most of the 3,000 + franchise concepts do provide a natural opportunity for building equity.

Here’s some specific examples of the types of franchise concepts that are positioned well to do just that;

  • Hair salons (Multi-unit )
  • Food (QSR)
  • Personal/Professional services
  • Retail

If we dig a little deeper into those examples, you’ll see what I mean.

  1. I’ve placed several of my candidates into Great Clips hair salons. Great Clips provides the opportunity to build a multi-unit operation. When my folks want to exit their businesses, they should be able to sell their 4, 5, or even 10-store businesses into a “package deal.” They’ve been able to build equity.
  2. If a candidate happens to be attracted to the extremely popular Quick Service Restaurant sector of franchising, they may become the franchisee of a high volume single-unit franchise, or expand to become a multi-unit franchise owner. Both types of franchisees have equity building businesses. They have a location, equipment, and $ales. (Maybe a brand, too)
  3. Lawn care is one type of personal service. Owning a Spring-Green franchise offers equity building opportunities, too. Franchisees build multi-vehicle businesses in their protected territories, and may be able to enjoy a high yearly customer retention rate..a residual income. That’s a huge selling point for prospective business buyer’s. Again, equity.
  4. I helped Mike Burzminski find a great franchise to buy, a few years ago. (A great franchise fit for him, based on what he said he wanted in a business, and what he wanted his role to be as the owner.) Batteries Plus is a retail business, (with opportunities for commercial business to business sales and services, too) that provides batteries of all shapes and sizes to the market. Mike now has 3 stores. He’s building equity, too.

There are some franchise types in which it’s rather difficult to build equity. Since I haven’t slammed any coaching type franchises for a couple of months, (at least) I feel that it’s only fitting that I do so now.

Coaching franchises like the ones mentioned in this franchise post, just may be the best example of franchise models that don’t really provide too many opportunities for serious equity building.

The typical investment for a coaching type of franchise (in which you, as the franchisee,”coach” business execs and small business owners to better profits etc.) is under $100k. There’s no inventory, very little overhead, and no employees.



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When it’s time to exit the franchise, what do you have to sell? Nothing.

The only way to build equity in pretty much any type of business consulting franchise, is to become the Master Franchise Owner. Here’s what a Master Franchise is.

When I present my seminars on franchise ownership, I always discuss equity. I ask folks if they would rather be the buyer or the seller of a small business.

Then I ask them if they feel that they could ever “sell” their jobs.

That’s the difference between working for someone, and working for yourself. You can sell your business. You can’t sell your job.

If you’re not offering a chance for your franchisees to build equity in their businesses, you may be missing on a great additional selling point. If you’re franchise niche typically doesn’t provide any opportunities to do so, maybe you can think up a way to change the business model a little. A little tweak may do it.

Be the change.

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joel libava

I'm The Franchise King®, Joel Libava. I help prospective franchise owners avoid bank account emptying mistakes.
For 23 years, I’ve been showing people how to make smart, informed decisions on franchises to buy, and I can help you, too!
P.S. I'm not a franchise consultant/broker.

Straightforward Advice
Joel, thank you for taking the time to speak with me yesterday. It was refreshing to finally speak with someone in franchising who dishes out straightforward, candid advice. You provided me with some insightful ideas that I'm giving a good deal of thought and consideration to. I look forward to speaking with you on our next consultation call."
- John Timmins, Columbia, South Carolina
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