The Franchise King®

Ex-Franchisee Shares Her Biggest Blunders

365::112 - whoops.

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

This is a guest post from Nicole Franchise. She’s an ex-franchisee of a major food franchise. For obvious reasons, she’s not using her real name, and she’s also decided to keep the name of the franchise she invested in to herself. For obvious reasons.

Five years ago we wanted a shot at The American Dream to have our own business. We decided a franchise. We bought our franchise after our first meeting with the two representatives from the franchise company. We honestly believed everything these franchisers were telling us and even believed we could do it better. We were not objective with the economy – the costs – the budget – and we were not realistic to what we could really profit from a small franchise business.  I think it’s hard to be objective when you are right in the middle – it’s important to have an impartial viewpoint telling you all the things you don’t want to hear because I can assure you will be glad you did.

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Most franchisers, (not all-but majority) are concerned about their bottom dollar, not yours. You have to keep this in mind through the whole process.  We allowed our franchiser to guide us into so much debt. This was MY debt they were creating and it became my biggest downfall before I could even open my doors. As we went through the opening process, my build-out became more and more expensive with each phase. An office space should have never been approved for a restaurant franchise business. Converting an office into a restaurant immediately put me off the budget charts. At this time, the franchiser still keeps telling me I would be fine once I opened my doors! Wow, I couldn’t wait to open so the money would start coming in!

The biggest mistake I made was negotiating the lease for my new dream franchise business too early in the process.

I was naive and believed almost every faucet of my franchise business. I believed I found a great location especially when it was approved by this Big Franchise Real Estate department – I thought I must have done a great job – they approved it!! I was eager to sign the lease and negotiated a 4 month NO RENT! Again, I thought wow I’m doing so well, the Real Estate department approved the lease!! Don’t ever sign a lease for a “predicted” opening day – NEVER. The 4 months free went in a blink of an eye and we starting paying rent on an empty space for 9 months before we actually opened.



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The next phase consisted of purchasing the equipment & inventory.

Of course I relied on my franchisor to help me with this part. The equipment package for our store was bought only through their approved vendors. I now realize this meant they needed to secure their vendors the business instead of ensuring the franchisee stayed within a reasonable budget. At this point my equipment package should have been decreased and used equipment should have been purchased. My franchiser created an equipment package that added over $100k to my increasing debt. In the end, I had a $350k SBA loan, which a small ice cream store could never, and would never support. I was set up to fail before I even opened my doors and I never realized it until 4 years later.

End.

The Franchise King, Joel Libava, is trying to convince me to write another post. He thinks that it would be really helpful to his readers and email subscribers. I’ll see.

Do you have any questions for Nicole? Use the comment section below to ask them… Blogdash

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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.

Joel is Highly Principled
There are many people in the franchise business who claim to to be experts in the field. Unfortunately many of them lack both knowledge and integrity. Joel, however, is without question one of the most qualified and principled people I know, in or out of his industry."
- Greg Reynolds, Retired Outplacement Counselor
"Many receive advice, only the wise profit from it."
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