Here’s the transcript of my interview with Flo Schell, Sales and Franchising Coach about buying a franchise business:
Barbra: When someone is looking to start a small business, there’s lots of different options. They can start a business from scratch or they can buy an existing business or there’s buying into a franchise business. Could you explain exactly what a franchise business is and what makes it appealing?
Flo: Yes, I’m happy to. Franchising in my mind is one of the best models available for building a business. And, I say that because franchising creates a partnership between a parent company, or the franchisor, and that’s spelled f-r-a-n-c-h-i-s-o-r and individuals in different locations who are known as franchisees. So, you have the best of this big company resource with the smart location knowledge that a franchisees brings to the partnership.
Barbra: And so, the advantage of buying a franchise is that things are already in place?
Flo: Well, you are buying a proven model, yes. So, there is a model of the business that you’re buying that has already been in place and documented. And, in fact, the franchisor will have figured out systems that work for that business model, a marketing plan, accounting plan, financial programs for that business. All of that will have been completed and at least you know that that business is vital and operating somewhere and the franchisor believes it is replicable in other places in the country or abroad.
Barbra: I suppose from a marketing point of view one of the advantages is that there’s a recognizable name.
Flo: Absolutely. That is one of the biggest advantages, because when a customer is looking for a service provider they are more likely to approach a company that they’ve heard of before. They feel more comfortable doing that than approaching a company in the Yellow Pages that they know nothing about.
Barbra: Right, for example, I was looking around for an exercise facility. I live in a small town, there happens to be a Curves. Curves is a franchise. There’s probably other exercise places, I know there’s other gyms and things but I don’t know what they’re like. I just don’t know anything about their quality. But, I’ve seen Curves advertised on TV and I like what I see about it, so I was drawn towards checking out Curves.
Flo: Exactly. And not only do we see advertisements that help us acquaint ourselves with that business model but we also figure in our minds that if a company can afford to advertise on TV that they must be stable. That’s not necessarily true but we make that assumption and we like the idea that the person or the company is stable, and it’s big.
Barbra You know, as a consumer, when I first saw advertisements for Curves on television a few years ago, I knew that there was this Curves up the road and I didn’t realize at that time that it was a franchise and I thought, oh my goodness, that exercise facility is advertising on TV, they must be really doing well.
Flo: And the truth of the matter is, they have to have some substantial money in place to be able to afford those kinds of advertising spots.
Barbra: Exactly. But, on the other hand, if someone just went ahead and started an exercise facility that’s not a franchise, say they called it My Town Exercise Club, they probably wouldn’t be able to afford to advertise on TV.
Flo: Yes and another big advantages to going into a franchise business rather then a independent business is that when it comes time to sell your business, you are selling the brand as well as that business.
So, for example, if an educator were to call me when I was Vice President of Sales at Sylvan, sometimes they would ask me, “Why can’t I do this myself?” And I would say, well, you certainly can. However, when you’re going to sell that business (and all of us when we’re creating a business, we should be looking at a resale plan, because we’re not going to be in that business forever), if you’re the only one that knows your system, and if you’re the one that’s been delivering the system, what do you have left to sell when you leave it?
It’s important to realize that with a well-established franchise business, that brand is going to go from owner to owner and the systems are going to go from owner to owner and people know what they’re getting.
Barbra: Right, so there’s a real advantage from a resale point of view. What is some of the other main advantages of buying into a franchise?
Flo: Well, I think a lot of people who look at franchising, look at it because the franchise company is a partner. The franchisee doesn’t have to do this whole business by themselves, and when you’re in small business you’re wearing many, many hats. You’re the accountant some days, you’re the marketer some days, you’re the sales person hopefully every day, you’re the technician some days, and you’re making the coffee and cleaning up.
And, in the franchising partnership your franchise partner, this large franchising company, they are doing some of that stuff for you. They’re doing the marketing, they’re doing the accounting on their end, while you’re still having an individual accountant, they’re going to be managing the bigger books. And, people like to know that they don’t have to be in that business alone.
Barbra: And what about disadvantages of buying a franchise business, Flo?
Flo: Well, of course a disadvantage would be, if you buy into a franchise system that does not fit your value system, or your culture, or does not turn out as you expect it to. That’s a very sad situation and you want to do everything possible in your study and research of that business to make the best decision you can.
Barbra: Okay and we’re going to be talking in a future interview about how to do that due diligence. In the meantime, Flo, if someone wanted to learn more about this subject, how can they contact you?
Flo: They can contact me in any one of these three ways. They can certainly call me to get acquainted and I’m in the Eastern Time Zone in the US at 732-528-4385 or they can certainly email me at mycoach [at] floschell.com or visit my website at www.floschell.com.
Barbra: That’s wonderful Flo. This has been really informative. Thank you very much.
Flo: Thank you, Barbra. It’s been a pleasure.
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