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Ask the Expert: Ask the Expert Is It Time to Break Out of Your Franchising “Comfort Zone” and Try Something New ?

Ask the Expert

Ask the Expert: Ask the Expert Is It Time to Break Out of Your Franchising “Comfort Zone” and Try Something New ?

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I’d like to start this article by telling you about two franchise owners who made similar changes in their franchise careers.

Chris, who owned several car service franchises, wanted to expand the number of franchises he owned. So, he bought a scoop shop franchise and started dishing out ice cream.

Karen, who owned a franchise that cleaned up water and fire damage, wanted to expand too. So, she bought an exercise franchise. As you can see, both Chris and Karen were making big changes. They could simply have bought additional locations in the franchises they already owned. But no, they wanted something new. But there is a surprising plot turn in their stories. Chris was extremely happy and successful in his scoop shop. He was incredibly excited to do something new and his excitement brought him success.

But Karen had an extremely negative experience. She found her new clientele of fitness enthusiasts difficult to work with and discovered that fitness didn’t excite her as much as she thought it would. Only a week into owning her new franchise, she was already wondering how soon she could sell it.

I am relating their stories to make the point that sometimes, acquiring franchises in a new and unfamiliar business category is a great thing to do and sometimes not.

The question, which we will explore in this article, is how to understand which decision is better for you.

 

 

Questions to Ask

Deciding whether to add more locations within your franchise company or move outside it is a business decision. And even though it has an emotional component, it is a decision that should be made objectively,
after analysis. Here are some questions to ask during that process.

What Skills Does this Other Kind of Business Demand, and Which Will You Bring to It?

Chris discovered that his new scoop shop allowed him to do something that he had excelled at in his car service businesses – inventing new processes and systems.

In his car service franchise, he devised new and efficient ways to bring tires into his inventory just in time for them to be installed whenever he could, and ways to get them installed efficiently. In his ice cream location, he loved improving systems to get ice cream products assembled in elegant and efficient ways. So even though he was entering a new industry sector, some of the things he most enjoyed carried over.

Karen, in contrast, realized too late that her exercise club would only succeed if she was able to sell memberships to lots of new members. She also realized that a gym was a business that required long work days that went well into the evening. That aspect of the business did not work for her. Unfortunately, she had failed to explore just what running a health club would demand from her.

What Kind of Employees Are Available to Run this Other Business?

If you are acquiring an additional franchise within your current system, you already have built up a group of employees, so you know what it will take to staff up your new company. You might even be able to have some of them work the new location. (Additionally, it will be easier for you to personally manage the new location because you already know what to do.)

When adding a franchise from another company or in another sector, proceed with caution. Karen, for example, realized that hiring trainers and other fitness personnel was a lot different from hiring and training cleaning technicians for her previous franchise.

Don’t assume that the process of hiring for different types of businesses will be similar. And you don’t want to start any franchise with a short or undertrained staff.

How Good is the Training at the New Franchise?

When a franchise system provides excellent training, that is a sure sign of course, that same training can help assure that as a new owner, you will know how to succeed. So when you speak to current owners of this franchise – which is something you definitely should do – be sure to ask about the training. Also ask the franchise company whether you, as a prospective owner, can take some of that training before you buy.

How Strong Are the Systems?

Also consider and ask about the current systems that the franchise company has in place. These can include everything from marketing programs to product distribution systems to cash registers and other equipment that you will be required to use. To learn more about the systems that are in place, speak with current owners and also ask to review any and all franchise manuals.

Check Out the New Franchise’s Financials

You don’t want to invest in a new franchise from a parent company that is underfinanced or in trouble. So do ask to see company financials. Also, look at the books of individual franchises that are part of the organization. Even if the parent company balks at showing them to you, don’t hesitate to ask current owners about their profits. The time to have this information is before you buy, not afterwards.

Can You Spend Time in a Location Before You Agree to Buy?

You can learn much more by doing this than you can by watching all the videos that a franchise company puts on its website for prospective owners to watch. Spend a few days in a franchise before committing to own one. As you do, consider . . .

  • Can you see yourself working this kind of business?
  • Do you like being there?
  • What are the customers like, and would you enjoy interacting with them?
  • If you would need to hire a manager to manage a franchise in this system, what kind of skills would he or she need to have? Do you think you could hire someone to do it?
  • Do the systems that are in place work efficiently, or are there problems that you will have to deal with if you become an owner?

So, Will You Be as Happy as Chris or as Grumpy as Karen?

Of course, I hope you will be happy. But none of us can just charge ahead, make an emotional decision, hope we will get lucky and live happily ever after. Acquiring any new business is an important decision that requires careful consideration. Then if you do move ahead, you can be assured that you will happily succeed.

About Evan

Evan Hackel is a 35-year franchising veteran as both a franchisor and franchisee. He is CEO of Tortal Training, a leading training development company, and principal of Ingage Consulting. He is a speaker, hosts “Training Unleashed,” a podcast covering training for business, and author of Ingaging Leadership. To hire Evan as a speaker, visit evanspeaksfranchising.com. Follow @ehackel or call 704-452-7368.
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