If you're a franchise company executive, I hope so. You should be. You need to be. Franchise fees are important, for sure. But, so is your company's long-term success…
I'm about to share some proprietary information with you. I'm comfortable doing so because I've been a part of the blogging and social media space for several years now. Ready?
Ok, here goes;
Part of the franchise selection process that I've used ever since I became an independent franchise broker-consultant three years ago, involves an honest attempt to only work with franchise business offerings with executives that have the courage to turn down franchise candidates who don't fit in.
In other words, one of the ways that I've been vetting franchise concepts has to do with what I call "franchise integrity."
Franchise integrity involves making sure that the franchise industry as a whole keeps it's very own standards high.
Sometimes, franchise associations attempt to do so, but if you're tuned into the industry at all, you'll find that the major franchise associations are there for the franchisors, not the franchisees. It's a problem, and it's one of the reasons that I don't choose to belong to any of them.
Turning A Big, Fat Check Down
It takes a certain amount of courage to turn down a $30,000 check that's being written to you by a prospective franchisee. Actually, it takes a ton of courage.
That's part of my secret sauce. I look for franchisors that have the courage to turn down a prospective franchisee, and can prove it. Maybe they've done it in the past…but if not, they need to convince me that they will in the future, or I walk. I won't add them to my portfolio of franchise offerings.
A friend of mine, Mark Siebert just wrote of this subject over at www.franchise-chat.com;
"Perhaps the single biggest mistake made by novice franchisors is to sell franchises to candidates who are not truly qualified to run them."
Mark is the CEO of a major franchise development firm; he help folks franchise their businesses. He goes on;
"It's easy to understand why this mistake gets made. A new franchisor, who has spent perhaps $100,000 preparing to franchise, finally begins offering franchises. The low close rate typical of franchise sales, combined with the long sales cycle, makes it feel like that first franchise sale will never take place. Doubt creeps in. "Will I ever sell a franchise?" And then, a prospect that the franchisor knows is marginal indicates they want to sign the franchise agreement and pay their initial fee."
A gentle tip from The Franchise King®:
Do not buy a franchise until you know EXACTLY how to do thorough research.
Learn how here
If you have a few minutes, read the rest of Mark's fantastic franchise post, and then stop back for my "other" bit of proprietary information…
Time To Snitch. (On Myself)
My little segment of franchising has been going through a lot of changes. Most of them, negative. Franchise brokering is quickly becoming a commodity; almost anyone can set up shop, and call themselves a "franchise consultant." (Even folks with no more franchise experience than eating at a Subway franchise)
Franchise brokering franchises are still being formed. Lots of franchisors are using brokers. But, that's going to change.
Technology has made it a lot easier for folks to not only find more information out about franchising, but to choose and even research franchise business opportunities without the help of franchise brokers and consultants like myself.
I guess that it's partly my fault.
Then there's those damn reviews.
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So, What's My Next Move?
In the past several months, numerous franchise executives have contacted me with regard to franchise marketing. I've taken on a couple of clients, but I've been very selective. I'll be doing a bit more of this kind of work, and I'll be focusing on;
- Content Creation
- Blog Set-Up Services
- Franchise Social Media
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You're already on my email newsletter list, right?
Joel it would be extremely hard to turn down a $30,000 check. However, if you truly believe in your franchise model then you have to believe that your brand is worth far more than $30,000. The initial franchise fee is great but I believe the real financial reward in franchising a business is in creating a sustainable brand.
David,
You’re on the right track.
Here’s a question;
If you don’t sell another new franchise for 3 months, will you still be able to say no to someone who’s waving a $30,000 check in your face, but who just isn’t right for your new model?
The Franchise King®
Joel it sounds like you have a lot going on and after becoming a regular on your website I can’t say I’m shocked. I also can tell you as a franchisor that though it’s hard you have to say no to the franchisees. I’m young to the process but I do know my business and just last week I had to turn down a franchisee because my intuition told me that this perspective franchisee was not going to be successful within my franchise model. I also won’t tell you where this franchisee resides, but I will tell you that it was in a major market, and I can tell you the last thing I want is to have our first franchisee fail in a major city. In my eyes a decision like this could be detrimental for years to come in that market all because we chose to chase the ‘fast cash’ from the initial franchise fee.