Joel Libava
Let’s jump right in.
Should you trust franchise business reviews?
It’s a great question to ask yourself, especially if you’re smack dab in the middle of looking at franchise business opportunities, and you need factual answers before you plunk down a couple hundred thousand dollars. After all, you just want the truth, right?
In this specific instance, you need to know if the franchise company is legit, and you definitely need to know how much you can make a year as a franchise owner.
But are you getting the unvarnished truth from websites that focus on franchising reviews?
And does a website like Franchise Business Review “sort of act like the ‘Consumer Reports‘ for the franchise industry” as stated in this article on CNBC.com? Let’s find out.
It’s Easy To Get Basic Information On Franchise Business Opportunities
These days, access to the internet, along with a PC, Tablet or Smartphone is all takes needed to get basic information on franchises. Sometimes, you can even find the best franchises just by searching online.
In general, all you have to do is choose a high-quality franchise opportunity portal and start searching for information on franchises.
However, if you want to get real information on the franchise opportunities you’re potentially interested in-including franchise reviews by owners, you’ll need to go deep. And the internet, if used correctly, can help* you do just that.
*The internet is a tool. You can locate great sources of information if you know how to use it. For instance, you can find extremely detailed how-to’s on the internet.
Specific Information Is Harder To Find Online
In spite of that, it’s important to realize that the internet can’t get you some of the specific information you’ll need to have in order to make an intelligent yes or no decision on a particular franchise business opportunity. For that kind of information, you’ll need to go to the source. You’ll need to contact franchisees.
But what if a place existed where instead of calling franchisees, all you had to do was read what they had to say about the franchisor…and the opportunity?
Well, there is such a place. As a matter of fact, there are several places (on the internet) where franchisees write reviews of the franchise concept they own. And reviews of the franchisor.
How great is that?
Franchise Business Reviews: Should They Be Trusted?
Let me start off by sharing this important fact abut franchise review sites:
Companies that provide franchise reviews are not non-profit companies.
To put it another way, money changes hands. That fact alone begs this question: Are franchise business reviews by owners legitimate? And this one: How is the money changing hands?
Are Franchise Reviews By Owners?
In most cases, a franchise review company obtains franchising reviews by offering “participation” in the research/review process for free.
Note, the “reviews” are not offered to owners. To franchisees.
Instead, they’re offered to the franchisors. (Because that is where the money is changing hands)
In fact, franchisors are paying for reviews-although they’re not required to pay to get the results. Confused? I’ll attempt to explain.
About These Franchise Owner Reviews
To demonstrate what I mean about owner reviews, check out the following scenario.
A franchisor with 20 franchisees decides to have one of the franchise business review companies do a “research” study. And 12 franchisees agree to participate in it.
In this specific case, the study shows that 9 of the 12 franchisees surveyed are very, very unhappy. They’re not happy with the franchisor and they aren’t making a lot of money. Yuck! This leads to the next step.
Now at this point, the owner of the franchise review site offers to “consult” with the franchisor to help them have happier franchisees. Of course these consultations aren’t free. (How could they be?)
In a nutshell, if the franchisor pays for a review consultation, and a marketing program that follows.
What probably happens next is a new survey is put into motion (a few months later). The franchisees are questioned again, and in a perfect, (setup) world, more of the owners are happy.
Success! The franchisor is then offered a (paid) way to promote the fact that they have “satisfied” franchisees-and then those “reviews” will be published.
Note: I based that scenario on information I found online.
Since I don’t work for a franchise review company, I don’t know the exact methods they use to extract money from franchisors so they can publish the franchise reviews. But my instincts tell me I’m pretty darn close.
They’re Not Like Consumer Reports!
Furthermore, the companies that do these “reviews” are 100% not like “Consumer Reports.”
That’s because Consumer Reports’ revenue is generated by subscriptions. Consumers pay for printed magazines and/or online access to read their reviews.
But on a site like Franchise Business Review, consumers are free to download as many of these reviews as they want. Heck, I just downloaded one.
The franchise review I downloaded was for a business coaching franchise. On average, franchisees rated the opportunity a little over 4 out of 5. (5 being excellent) Not too shabby.
Except, I wrote a review of the same business coaching franchise opportunity, and it was ranked…well…maybe you should see for yourself.
Look
Finally, Consumer Reports does not encourage you to “contact one of these brands directly through their profile pages” like some of the franchise review sites do. Smells like marketing to me.
Franchising Reviews: Scenario #2
What if a franchisor agrees to have her franchisees called by a franchise review company for a research study, gets average-or better than average results, and decides not to pay for consulting, or any other services? What happens? Do the reviews get published?
I have no idea.
Maybe they do-to keep things honest (or honest in appearance).
Then again, maybe they don’t get published. (I wonder who decides-and how it’s decided)
In the final analysis, there are more questions than answers when it comes to franchise review websites, their legitimacy, and the reviews that are published on them.
My Thoughts On The Business Of Reviewing Franchises
First off, I think you’ll agree that legitimate franchise reviews should never involve money changing hands between the franchise company being reviewed and either the writer or the owner of the website where the review is published.
Secondly, I’m not a big believer in charts, spreadsheets, or rows and rows of numbers being presented as part of a franchise review. Why?
Because in most cases, all of the things I just mentioned tend to take aspiring franchise owners to places they don’t need to go. The end result?
Prospective franchise buyers (you?) focus so much on the details…https://www.thefranchiseking.com/reason-you-want-to-own-a-franchisethe numbers, they forget why they wanted to become their own boss in the first place. Want to know what happens next?
They don’t end up buying a franchise, because they forgot to ask the right questions…of themselves and the franchisees they talked to.
Franchise News Update From The FTC About ‘Reviews’
Recently, the U.S. Federal Trade Commission put out a request for public comments concerning, “Websites or other organizations or devices that purportedly provide independent reviews or opinions of products or services but are in fact created and controlled by the companies offering the products or services.”
With that in mind, I know of (at least) one review website that would be seriously affected if new guidance comes out requiring more complete and honest disclosures underneath all of the positive reviews written by franchisees. Even if they have good lawyers.
My Advice On Franchise Numbers
My advice is don’t only make it about the numbers. Or about some of the other minute details that seem important now, but won’t matter when you’re a franchisee.
That being said, the numbers are important. Just don’t spend the majority of your research time looking at them over and over again.
Instead, get on the phone and call a lot of franchisees. That way, you’ll get to know the human side of the business. The things they experience day in and day out as business owners.
Plus, you’ll want to ask them what they think of the franchise company, and if they’d buy the franchise again.
Please Consider The Source
When you’re reading reviews of franchises you may want to own, it’s crucial to consider the source.
For instance, was the review written by someone with years of experience in the franchise industry?
Or was the review written by a “writer?”
More specifically, was it penned by someone who’s paid to write reviews, but doesn’t have real-life franchise experience. Haven’t thought of that, have you?
Read Franchise Reviews From The Franchise King
Where Are The Franchise Reviews Are Published
Another thing you need to look at is the background information of the website the reviews are published on.
For instance, read the About Page so you can determine who owns it. And find out How the website makes money?
In addition, you need to be able to quickly see the required online disclosures. They can’t be hidden. And if they are hidden, or worse, they don’t exist, it’s a huge red flag.
Finally, when it comes to some of these websites, this may be the biggest red flag of all:
When you can’t find reviews of franchise brands that have several franchisees who say they’re unhappy with their franchisor.
Wait, Joel! Are You Insinuating That Lots Of Franchise Business Reviews Are Just Another Form of Franchise Marketing!
Yes I am!
Unfortunately for you, determining which franchise business reviews were obtained and published as part of a paid franchise marketing* program, and which ones were not, is almost impossible.
*Don’t kid yourself; franchise reviews (or franchise “grades”) aren’t being published by franchise review companies who wish to better the franchise model and/or to better the franchise industry. Instead…
They’re being done as part of a paid franchise marketing program.
Scratch that: The franchise reviews/research you see on websites that have names in their titles like:
- Franchise Business Reviews
- Franchise Rankings
- Franchise Grades
Are basically franchise marketing websites.
So now you know that some of the franchise business review companies make their money from franchisors.
And as an added bonus for these companies, some of them try to make money from would-be franchise owners by offering free* franchise consultations? You’ll see these words on their websites.
*If you need to know what a “free” franchise consultation really is-in most cases, you need to read this article.
And here’s a radio interview of me talking about franchise reviews.
Where Real Franchise Information Comes From
For the most part, the real franchise business information…the type of information you need to have in order to make an informed decision on buying a franchise, comes (directly) from the franchisees.
But do you really want to “read” reviews from franchisees that are published because the franchisor paid for them as part of a marketing program to find new franchisees?
Or…
Do you want to talk to franchisees personally to get their reviews? (Without franchise marketing money getting in the way.)
If so, you need to use this guide to learn exactly how to get franchisees to tell you everything about the franchisor, their businesses and their profits and expenses.
Ok?
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