Nothing like a good article on franchising to bring me out of a blogging hiatus that I anticipated would last at least another week. But thanks to the Small Business Trends site and franchise consultant Joel Libava, my rest is over.
The Franchise King posted on a Central Ohio restaurant franchise called Roosters that seeks experienced franchise operators rather than newbies that might not understand the industry. Like Joel, I agree it’s a good concept for a franchisor to target franchisees that have experience in the industry. Experienced operators are much more likely to be successful. We agree on that. We actually couldn’t agree more on that.
However, Joel doesn’t carry that logic forward when it comes to working in a franchise before buying one. Joel says he is often asked this common question:
“Joel, are there any franchise companies out there that will let me work with a local franchisee, to see if I like the business?”
And being the laid back guy he is (now don’t get me wrong, Joel is a well-intentioned guy who wrote a book on Franchise Research Steps), Joel responds with an emphatic "No!" He doesn’t recommend it because the franchisee won’t get the full story. After all, they don’t have any "skin in the game, so how could they possibly understand what the franchise business owner is going through? He more or less says that if you aren’t willing to go "all in" from the outset perhaps you should take it as a sign that you shouldn’t go into business for yourself. (Unfortunately too few people will heed this advice in my experience and take it as a personal challenge to go forward).
So it’s my view working in a franchise business BEFORE buying doesn’t make you a chicken! In fact, it may be the best due diligence any prospective franchisee could do. It’s the same reason why so many successful business owners were once employees of the business they ended up buying. It’s the same reason a successful franchise owner I know worked in retail for a year before buying a retail franchise. She wanted the experience. No, she NEEDED the experience before investing much of her life savings.
Now, it’s true that some prospective franchisees might not benefit from the experience. Some prospective franchisees have no business ever owning a franchise or any other kind of business. But to say all prospective franchisees shouldn’t avail themselves of the opportunity to work in a franchise system seems a bit bold in my opinion. As a franchisee and reader of this blog pointed out:
The most difficult information to obtain and verify is franchisee profitability. The profitability of the franchisor and the franchisees is not always related. Sometimes those selling franchises make money while the franchisees do not. And it is not always due to lack of due diligence on the part of the franchisee. It may be because of inaccurate information supplied by the seller or franchise support that was promised but never delivered.
Risk is inherent in any business venture. You are taking a chance and a leap of faith. But actually working in a franchise business before you buy may allow you to find out whether you want to stake your life savings on the opportunity. Taking a chance with maximum information is not random chance but a calculated risk – and that could make all the difference.
photo on flickr by ™bluhousworker and original photo by TedSher