Published in Franchise Buyer Magazine, Vol4., August 2016
Discover the passion
Different franchises appeal to different people and there is no denying this. I shall try and classify a few:
Are you comfortable with the Management team?
Once you have decided the types of business of interest to you, start thinking about whether you are going to be comfortable with the team that will be guiding your future.
Leadership in the Franchise sector is very important. If choosing a Franchise, see what the CEO / Principal has achieved, and whether you want to hitch your wagon to their horse. If you see people that have graduated from other strong systems, then you would hope they have learned much along the way.
Personally, I am normally impressed by managers that have come from companies that are renowned for training their staff. Most people who have done a few of years in McDonalds, KFC or a major oil company should have an understanding and empathy to what a Franchisee requires.
These people normally understand what a good franchise system needs, and from their position of leadership will normally invest in proper systems and good people. This comes out in the quality of field staff, site selection processes, territory planning or Strategic Network Planning. A good manager normally has a plan on how these things should be done.
Good managers have been taught good communication skills and are prepared to make a decision. If you do not get an answer, and your phone calls are never answered and rarely returned (because they think they are too important) – it will only get worse!
Is the capitalisation sufficient for a long term business?
Many of the poor systems we see start out on a low budget, and the crucial initial establishment work is often not done. If a Franchisor wants to impress potential Franchisees, it costs money – and that is why God invented banks. If you feel the system looks undercapitalised, it probably is.
I am very sick of hearing from undercapitalised Franchisors with a great idea, and looking to start a business on the smell of an oily rag – and their first couple of Franchisee’s money.
If the Franchise indicates its major concern is to get their hands on your deposit cheque, and cannot show value for what you expect as their contribution to your future business, then levels of service (often committed in the Franchise Disclosure and Agreement), will probably fall far short.
Before you go into a franchise, make sure you have some passion for what you are going to live, breathe and participate in for the next few years of your life. Make sure you are comfortable with the Managers and team you are joining, and feel confident that they can afford to deliver what they are promising.
Peter Buckingham is the Managing Director of Spectrum Analysis Australia. He is a certified Management Consultant, and a Fellow of the FCA and IMC.