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    0 Replies Latest reply on Mar 31, 2009 5:27 PM by eWineAdvisor

    Franchise or not?

    eWineAdvisor Newbie
      I have been a Franchisor from startup to launch in two seperate businesses in two different industries. One franchise business sold 120 franchise's in its first 6 months and sold off, the other has 1300 franchisees and is still selling. I understand what it takes to make a successful franchise business and more importantly I know what kind of person it takes to be successful in business.

      Here is the kicker. It takes a certain type of individual to go into business for themselves in the first place. Generally once you have made the choice to stop making your boss rich and start making yourself rich, the first step is understanding how much money you have to invest into your new business, what opportunities are out there, and which of the opportunities are you the most comfortable with. I am shocked to find people who are sick of their job and then go out and get into a business that they hate equally as much.

      RULE 1. Get into a business that you enjoy and hopefully are passionate about. I don't care if its cutting pet hair or running a restaurant. You are going to be far happier making money in something that you enjoy than a business that you hate, no matter how much money you make.

      RULE 2. Don't buy a Job. Many people fall into the trap of buying a franchise business that is really a 100 hour a week job in some retail store in a strip mall. THINK!!! You just left a job you can't stand, don't buy another. Does the business give you freedom or are you required to operate from a retail store front? Retails Businesses are expensive to operate and hours are days, nights, weekends and holidays. Do you have to hire employees? 9 out of 10 businesses biggest complaint - EMPLOYEES. High employee turn over and constant personality issues between employees

      RULE 3. Anyone who can be successful in a franchise, can be successful on their own. It takes the exact same skill set, energy and time. The difference at the end of the day is that in a franchise, you are going to pay someone up front and every month thereafter to show you what you could learrn on your own with a little research. This is a new world where everything is online, have a question at 50 different web sites and get the answer, hire a consultant, go to work for someone int he field that you want to get ito and learn from them.

      Conclusion - Once you have decided to go out on your own, regardless of a buying a franchise or starting your own business, you have already completed the hardest step. Now look at all of your options, line up your interests and Don't get emotional. The biggest mistake is getting yourself all excited about the opportunity and not doing your research. SLOW DOWN! Look at everything twice, look at everything from the view of the worst case scenario and ask those questions.

      *Franchise Pit Falls </strongFranchise Fees: paying someone else for the right to go into business. <br />
      Royalty Fees: Paying someone else every month for the right to go into business
      Marketing Fees: Paying someone a % of sales for marketing to really sell more franchises
      Control: You really do not control your business, you have to do what the contract states, to the "T"

      Your own Business Pit Falls
      You are on your own: You have to do the research, you have to create the forms, systems, web site, everything.

      I see so many people invest their life savings into a business that is Location Based (all retail businesses operate under the same laws of success - Location, Location, Location) only to watch it slowly soak up their savings and credit and force them into bankruptcy. Don't be fooled into thinking someone invented a new sandwich, a new haircut or new way to inspect something. The real money in that game was 10 years ago. Don't get caught up in what was successful 10 years ago, look for where the market is going. The best food chain is not going to make you rich, unless you buy dozens of locations or bought it 10 years ago. The people that started the franchise are makig big money off their 100's of locations. Why do you think that they started the franchise business in the the first place. They were sick of running their multiple locations and finally figured it out. Take 5 - 9% from a lot of people is far more profitable than 100% from yourself.

      I know a man that worked in corporate America for 20+ years and decided that he ws going to go inot business for himself. He cashed in his 401 and started a sandwich/coffe shop. His wife was so excited that she decided to do the same and she opened up a speacility store that sells knick knacks and seasonally items. He invested $75k in franchise and $150k into is buildout and equipment and she invested $100K into buildout and inventory. They picked a location (that franchisor approved) that they thought was great in a growing community and signed 5 year leases. Two years later they have blown through their savings, have blown through their credit cards and have filed bankruptcy. They are in their 50's and are basically starting over with one of life's hardest lessons under their belt. Through all the pain, there was an upside. He learned soem valueable lessons that he will take with him and pass on to others. Rules 1, 2 & 3.

      He is now running his own business in a field that he is passionate about and is excited about what the future has to offer. He got caught up in the excitement and didn't do his research, he beleived the sales pitch and only looked at the positives without any consideration to the what ifs.