2014 is going to be exciting to watch franchising emerging from the tough years of 2008-11! Some companies went under or had to put themselves in peril to get the funding they needed, but others have survived and even thrived in those dark years for business.
One very good thing about hard times is that it showcases the leaders of these companies. When expenses started leaking out faster than revenues came in, franchises found out whether they had a savvy president or not. If he or she shored up the leaks by cutting costs to keep the boat afloat, that company is now in a position to set sail on a new course for growth. Conversely, if the company went into debt to support its high overhead, they’ll still be bailing out the debt for a couple more years at least, holding them back from being able to offer more marketing and support.
BIG BUYING HINT #1
Check the financials.
How many potential franchisees are knowledgeable enough to look at the company’s financial situation instead of just the franchisees’? By checking into their debt situation, a candidate may be able to steer away from shakey choices – even if the franchise has a big brand name.
Because studies show that about half of all new franchise companies fail by their 5th year, I usually don’t recommend looking at any franchise until they have had a chance to reach a critical mass of franchisees. By that I mean – they have enough franchisees up and running and sending in royalties that cover the basic expenses of the company. And I still recommend being very careful about young franchisors….HOWEVER, there are some really great new ideas out there! I have even been tempted myself to buy a couple of them, lured either by the fun concept or the high income potential.
BIG BUYING HINT #2
Be careful if you buy a young franchise.
If I were buying a franchise younger than four years, their financial situation would be of very great importance to me, but also important would be this: if the franchisor went under, could I continue to operate the business successfully without the franchisor’s help?
Some concepts depend on a big brand name to pull people in, but some have a concept so needed, so crucial, that it doesn’t need the big brand. Last year I did some work for Steri-Clean. You may have seen them on a reality TV show helping to clean up hoarders’ houses. They also do crime scene and biohazard cleanup. This is not the franchise for the average Joe, but what a great business for a vet or a retired police officer! Good strong systems will make this young franchise go far; and unfortunately, the need for their services will remain strong.
BIG BUYING HINT #3
Buy a business that doesn’t depend on current technology.
Newer technology will make your business obsolete. Printing, bookstores, and movie vendors (Blockbuster, film vending) never thought that their businesses would be so badly hurt. What seems really cutting edge today will be replaced – count on it.
BIG BUYING HINT #4
Buy something you really like.
Why buy something that sounds boring even before you buy it? If you don’t see yourself in a sandwich shop all day, keep looking around until you find the right thing! Some franchises fit lifestyle niches – I can think of some right off the bat:
#1- Fitness on the Go is great because you don’t have to pay for a big location and then try to lure customers into your gym – you go out to them, which is certainly the wave of the future. And you don’t start out with a huge debt for construction and rent.
#2- Last week I attended a franchise conference with Lisa Druxman who started Stroller Strides for new moms. She has expanded and grown the franchise to include fitness for all moms as well, called Fit4Mom. This is a franchise that fits right into a woman’s life at a time when she is both excited to have a new baby and feeling the loneliness of staying at home when she was used to being out and active. Or how about this:
#3- If you love being around cooking but the thought of a restaurant fills you with dread, how about a wonderfully fun cooking school concept that offers the social side of cooking – so great for a person who loves being around food and people (Tspoons).
So 2014 is going to be exciting because there are businesses out there that you could love!
They say that there’s the right business for everyone, and the secret to buying your franchise in 2014 is to find the business that fits you and your lifestyle. You won’t believe the variety! Find something that you can really get into and enjoy, and you’ll be a successful business owner by 2015.
Cheri Carroll has over 30 years of franchise experience, beginning with Jack In The Box as their first franchise salesperson and then sales manager, then a franchise executive with several other companies, before finding FranNet, where she worked with over 60 companies as a broker – she says it was the best franchise education ever because she could see the inside story on what worked and what didn’t for so many companies.
In 2001 she began her own franchise consulting company, FranDevelop Consulting, and has created almost every type of franchise as well as spending 18 years as a volunteer with SCORE (free business counseling – US SBA).
Currently she specializes in helping companies develop and document their systems – she
actually enjoys writing franchise operations manuals! She also enjoys writing a blog, which she began in order to stay current with social media marketing. Her blog, http://adhelper.com, is full of marketing ideas and information aimed at franchisees and entrepreneurs that need to know more about marketing and don’t have much time to spend on it.