At Franchise Integration, over the years, our advisors have been franchisees, franchisors, CEOs and consultants to numerous companies looking to enter the franchise arena or grow their franchise network.
We have found that, all too often, franchisors come to us with any number of unrealistic ideas of how the franchising process works, and how they can simply turn on the franchise marketing spigot and reap the flood of franchise fees and royalties that will soon come their way. Unfortunately, it is not that easy.
The following Franchising Facts of Life give you a sampling of some things we have found, through long years of experience, to be true. They may not be easy to hear, but they can save you time, money and grief.
Six Franchising Facts Of Life
1. You have to kiss a lot of frogs to find a prince. Most franchisors report working through an average of 75-125 leads for each franchise sold.
2. Forget about Franchise Fees. Franchisors should NOT expect to “live” on the proceeds from franchise fees; most of the fee will be spent by the franchisor before the franchisee opens the doors.
3. If you’re not showing a profit, franchisees will become scarcer than hen’s teeth. Franchisees buy a “shortcut” to a moneymaking business; they will judge your words by your track record.
4. Marketing costs money. Probably more than you think. The more aggressive your sales goals, the more aggressive your lead generation program should be.
5. Consultants that make franchising sound quite easy are also usually quite wrong. Be wary of requests for large upfront payments or large equity positions. While reasonable retainers are standard, the bulk of a consultant’s compensation should be based on reaching specific performance goals.
6. Most new franchisors often have business plans that start with “Once upon a time…”. Are your sales expectations based on caviar wishes or pragmatic realities?