Are you a pioneering business owner who intends to grow your brand by selling franchises? Read this blog first! Don’t make the mistake of going about this on your own, and then pivoting when you figure out what is working and what IS NOT working. Getting it right the first time will save you money!
Yesterday, I had a conversation with an emerging franchisor that left a lasting impression on me, and I think that YOU could learn from this conversation, too. I’ll start by saying that I’m not an expert in helping companies bring their brands to market—BUT, as a tenured Franchise Consultant who’s literally led THOUSANDS of people down the path of exploring franchises over the last 20 years, I ABSOLUTELY know what candidates buy and then why they don’t buy!
This particular franchisor had some thoughts about growing their business through franchising. He reached out to me seeking a franchise broker. I made sure to let him know that there’s a difference between a “broker” and a “consultant.”
Consultants do not have a license to sell a business. I don’t represent brands. I have relationships with franchisors that my candidates are leveraging. I learn about my candidate, what they’re looking for personally, professionally, and financially. I’m trained on franchisors and what their opportunity includes and what they’re looking for in their ideal candidate. And then as kind of like a matchmaker, I bring the two parties together and coach the process to see what may happen.
But then he shared this with me: “Well, we started with a really low franchise fee because we’re pioneering and we knew that people were going to be the first into our business and we didn’t really have a long track record. And now we’re going to raise that franchise fee.”
It is a myth in franchising that the higher the franchise fee, the more experience the franchise is. I see pioneering brands entering the market with $65,000 franchise fees all the time! So the franchise fee really goes to cover the cost of recruiting a new franchisee, YOU, more than for franchisors really to make any significant amount of money.
What he was REALLY saying to me, was “We didn’t know our worth, so we were a little more loosey goosey. We sold some franchises and sort of figured it out as we’ve grown. So now we’re tightening the belt a little bit and kind of like requiring more from our franchisees.” And I was sitting there listening to him and thinking “this is a disaster in the making.” You can’t change the rules midstream.
When you change the playbook after you’ve begun franchising, you’ll find yourself grandfathering the FIRST group of franchisees into the terms they agreed upon, and then starting over with your SECOND batch of owners.
The bigger issue, is that when potential buyers are validating the opportunity, they’ll be trying to validate the business plan and the experience from the FIRST batch of owners who had a completely different set of guidelines. Maybe they had less support, maybe they had less of a toolbox when they started.
That’s why you need leadership and experience from people that have built other franchise systems–to avoid this kind of potentially costly mistake. I’ve seen many franchisors try to grow through this type of mistake where they entered in with one set of rules and then had to create a tighter sandbox for everybody to play in later on.
It’s sort of like raising your child until he or she is 13 with no rules or discipline, and then once they become a teenager, you become militant. The kid starts rebelling all over the place because there’s no context and there’s no history of this discipline, right?
So in order to avoid that costly mistake, if you are a pioneering franchisor, I encourage you to reach out to some of these consulting groups that are out there that help raise up, they help ELEVATE franchise brands. They help bring in the right leadership. They help you to understand the infrastructure that’s going to be necessary in order to grow.
Full stop: Attempting to franchise your pioneering brand by yourself is dangerous. Working with a consulting group like FranChoice will give you the tools and guidance to do it right, and will position you for MASSIVE growth.
And if you’re a candidate looking to invest in an emerging brand, I encourage you to closely examine the companies you’re considering. Using an experienced Franchise Consultant will open to your eyes to everything that you should be validating in the process.
Ready to start exploring your future in franchise ownership? E-mail me right now using the form below.