If You Are Thinking Of Buying A Franchise, Watch This First!

Notes Section

At FranNet, they partner with aspiring entrepreneurs and individuals interested in taking advantage of a franchise opportunity and becoming business owners. Together, they will determine your ideal franchise business opportunity, effectively matching you and your business needs with the right franchise for sale. Their locally based franchising consultants are experienced entrepreneurs and authoritative experts of their respective markets. Through their free consulting services, our consultants will provide the valuable research and guidance necessary to feel truly confident in your decision to buy an existing franchise opportunity.

If you are interested in owning a franchise, speak to Franet today. Click HERE

Dan Farnsworth:   Hi and welcome to boomerincomeideas.apps-1and1.com. I think you’re really going to enjoy the segment today. Today I’m going to be talking about franchising and before I go into that I want to point out something.

One of the best contemporary thinkers of our time is a guy named Malcolm Gladwell who did a lot of research and he discovered that is usually takes 10,000 hours to become very, very competent in anything. In order to become an expert you basically need 10,000 hours of doing that same time before you’re really at that level. One of the things that franchising does for you is that it allows you to buy that 10,000 hours. I don’t know about you but I don’t have 10,000 hours to spend on learning on the job anymore. I want to hit the ground running and I want to be able to get into something right away that is kinda mapped out for me. All I have to do is go in take the reigns and just keep on going from there. And that’s what franchising is all about. The question, however, is: What’s the best franchise? And I’m going to talk about that a little bit, but before I do let me share a story about me that’s kind of embarrassing actually and that I think kind of sums up what we’re going to be talking about today.

Years ago when I first started out in business I traveled. And I didn’t really know much about traveling. I didn’t know anything about travel agents. And because of that I spent a tremendous amount of time looking at airline schedules and booking hotel rooms and booking rental cars. Things along those lines. Because I thought that if I used a travel agent they were going to charge me a fee and I didn’t want to have to pay the fee.

Imagine my surprise and my embarrassment when I found out the travel agency didn’t charge me anything. So I could have been having them do that for me and take advantage of their wisdom and their systems, all along, at no extra charge to me. And today we’re going to be talking to John Blair, he’s executive vice president of marketing and PR at a company called Frannet and with that in mind I’d like to introduce John now.

Hey John, thanks for joining us today.

John Blair:  Hey thanks for having me Dan I appreciate it.

Dan Farnsworth: Well I really am excited for you to be here today because I think your company has a lot of exciting things and great things to offer to our viewers. With that in mind, can you tell us a little bit about Frannet, what you guy do, and how you do it. And then kind of give us a little bit of history of your company as well.

John Blair: Frannet is an international franchise advisory company. We’ve got about 120 consultants across three countries. In the United States, Canada, as well as Germany. What we do essentially is we help people who are interested in starting their own business identify a franchise that kind of uniquely fits them, based on their skill set. Based on their budget. Based on their goals, both personal and financial goals. As well as their lifestyle. You’ll want to think of us as kind of the match.com for businesses and people. We align people with a business that kinda uniquely fits them.

Dan Farnsworth: Earlier I kinda likened you guys to a travel agency, in that the travel agent doesn’t really care which airline they book you on they don’t have an affinity for one company or the others. They just want to make sure that you get there on the right plane go to the right place in the right seat, at the most economical price possible. And the interesting thing about that is that you as the passenger don’t have to pay the travel agent anything, and I understand that’s the same way with Frannet. Is that correct?

John Blair: Yes. That’s true and that’s a great point. We work as a travel agent. A lot of people in corporate America will closely assimilate us to a an executive recruiter. Whereas, we are paid by the franchise company. So it doesn’t cost the client, the individual, anything more anything less than if they were going to go completely on their own and try to find all this research say through Google. Or if they were to work with a Frannet consultant and get all the information all the research.

A lot of people are afraid to go into business because they don’t know what they don’t know and that’s scares a lot of people. We’ve been there. We’ve done this for 30 years. We know what to expect. We know not only the process that you’ll go through, kind of the pragmatic process, but we also understand the mental approach, that’s also going to go into some of the mental hurdles that you’ll have to get over in order to be able to invest in your own business. The interesting thing is about 75 – 80 percent of the people we work with don’t buy a business. But, what we find, is they arm themselves with enough information, and they’re able to make a decision that’s educated for themselves.

Now, the one’s who do buy a business. They are also very educated.

Dan Farnsworth: And I think equally as important is the fact that they didn’t make a costly mistake. [crosstalk 00:05:19]

John Blair: That’s exactly right… [crosstalk 00:05:15]

Dan Farnsworth: If they got into something that they really didn’t want to be in. Or they found out later on that they didn’t want to be in. It’s going to be a very costly mistake.

John Blair: Yeah, that’s a great point. You know we do hear from people who say I wish I would have know about you three or four years ago. Because the thing about it is, you know, people go into business. It’s one thing to not like a job. People get into jobs they realize they don’t like it. But at the end of the day, they’re still getting paid, right? If you go into a business that you don’t like or you make a poor business decision. Not only are you not getting paid regularly, but you’re having to pay out for this business. So it kind of works against you. So you’ve got to make sure that you are aligning yourself with a business that’s a good fit for you. That’s really what our role is. To make sure that that business is a good fit for you.

Dan Farnsworth: So expand a bit on these consultants. Why the consultants, as opposed to having just a couple guys in the office there fielding phone calls.

John Blair: Yeah, that’s a great question. Like I said we’ve got about 120 consultants across the three countries. Predominantly we’re in the United States. We’ve got about 100 consultants in the United States. Maybe 105. And they’re locally based, and that’s unique in our space. Locally based gives us a couple of big advantages.

One is because they’re in the market. Franchises.. I’m sorry. Frannet is also a franchise. So our consultants work in geographically protected areas. So if you are in Atlanta, Georgia you will work with a consultant who’s right in Atlanta. Who lives and works in Atlanta. Regardless of where you live, you’re gonna work with that consultant right in that market. Like I said the advantages are: they know the marketplace. Right? They know the competitive landscape. They know the real estate situation. They’re able to give better advice because they live and work right in that community.

The other big advantage that it gives you is… When you’re going through a decision as significant as going into business for yourself and a lot of people say it’s probably the one or two largest investment you’ll every make depending on how large your house is. But it’s probably going to be a pretty significant investment that you’ll make in your lifetime. Having someone that you can sit across a table from, and develop that relationship with, develop some rapport with. And really feel like they’re a part of your team. Makes people feel a lot more comfortable.

Dan Farnsworth: So can you kind of give me, give us a little bit of a run down of the process that’s involved. If I’m someone who says, “Gee John I’d like to talk with you or a local consultant about exploring what kind of franchise I might be interested in.” What’s the first step, where do we go from there, how long does it take? Just kind of give us a little bit of an expectation.

John Blair: Yeah, that’s another great question. Generally the process is going to take four to five months, from the time that you first engage with Frannet kind of signing on the dotted line. Or perhaps starting the business, is going to be a four to five month process. There’s a lot that goes in between that process. It’s not like you are meeting with Frannet person on a Monday, and you’re starting that business on a Friday. That’s not how it happens.

The first thing that we do is we have all of our clients take a, what we call, a personal franchise assessment. Or a PFA. This is a psychological assessment. For anybody who’s watching who’s ever taken a Myers-Briggs test or a DISC test, its most similar to that. But its not really anything like that, if that makes any sense at all. What it is.. The Myers Briggs test and DISC test, those look at your personality, and all psychologist agree that personality is rarely a predictor of business success. So what the PFA, the personal franchise assessment, that we utilize, digs into your business personality. So who you are as a business person. So it looks at things like, how you manage people; how you lead through that management style; how you handle conflict; how do you communicate with people, both in how you talk to them and also how do you listen to them, how do you process information. What are those things in your life that are motivators to you? What are your ideals? What are those certain traits about you, that make you who you are. Because, inherently who you are as a business person, will set you up for success in one business over another.

So you may have two people who look very similar. They have similar backgrounds. They have similar education. One person is inherently going to be set up for success in one business, this other person is going to be inherently set up for success in another business. They might be completely opposite businesses. But what this profile does, this assessment does, is help us kind of uncover what are those critical traits and characteristics that identify success in those different businesses. And then what we do is go through a modeling process. A business modeling process, and we start to identify those things that are important to you.

So we look at budget, obviously. We look at things like your life style. You know, what do you want from this business. Do you want more time for your children? Maybe more time for grandkids? You want more time for activities? Do you want to put some money back into your pocket because you’re realizing that you need a little bit more income. So based on all of those goals are you looking at being more an A to B business, or more of a B to C business. Do you want regular Monday through Friday 9 – 5 hours. Do you want to work full time, do you want to work part time on this business? So all these different criteria help us lay out you’re ideal business model. And then what we do is we take that business model and we match it to franchises that we work with.

And then we’re kind of there for you every step of the way. Providing you with Q and A, providing you with research, kind of helping you along the process. Serving as kind of the translator so to speak between the franchise and you as the client. To make sure that you’re being treated properly and fairly throughout the process because a lot of people don’t realize, it’s a it’s a two way process, this thing. Not only are you interviewing and looking at the franchise company. The franchise company is also looking at you. So it’s able to. It’s a really good process to get a good feel for, is it a fit for both sides. And at the end of the day, that’s really what you want and that’s where our expertise comes in. To make sure that the person we’re recommending and introducing to this franchise concept is a good fit for them. As well as a franchise is a good fit for that individual.

Dan Farnsworth: I think that’s a very good point. Because I know that in a lot of cases if you’re dealing directly with the franchising company they’ve got a sales guy who’s job it is to sell you that franchise. So he’s not looking in the sense of are you actually going to be a good franchise for them. He’s just trying to sell you a franchise. Where you guys, you guys must have a tremendous amount of patience. Because if 80 percent of the people that you walk through the process with over four months don’t move forward. I think I’d get a little frustrated.

John Blair: Yeah. It’s an interesting way to think about it. The way we think about it is kind of the opposite. There’s always two ways to look at it. It’s how you look through the paradigm. We look through the paradigm through the standpoint of we have helped this person potentially from a grave mistake. As we were talking about earlier, the last thing you want to see is someone go through the process potentially on their own, invest in a business that they think is a good idea, and two years they look up and they think, “What in the world did I just do. What a mistake I’ve made because I didn’t realize x, y, or z about this company.

Let me give you an example. You know we’ll hear all the time people calling in, “What are the hot franchises?” “What are the hot concepts?” “You know, I went and I saw ABC franchise and it had a line out the door, that’s the business I want to get involved with and that’s the business I want to invest in.” And then they get in there and they realize, okay this is not the business at all that I want to be involved with. Maybe it’s my lifestyle, this business is seven days a week and I wasn’t quite ready for that. It’s 15 hours a day, no that’s not really what I wanted either. But all they saw was the line out the door of, the ABC franchise down the street from them and thought that would be a good fit for them. So that’s the major part of our role is, okay let’s kind of take all of the… let’s take the blinders off and look at it factually. And let’s really dig down to what’s going to make you happy as a franchise owner. As a business owner, as a small business owner. What’s going to ultimately make you happiest.

Dan Farnsworth: All right, I can definitely understand that. You know it’s funny, it seems like every year there’s the hot new retail. This year it might be Five Guys, year before that it might have been Krispy Kreme doughnuts or something. And everybody wants to get into that. Like you said, it looks good from the outside but nobody that hasn’t been in that role before really realizes how much time and energy and, do you really want to go down to that store at five o’clock in the morning and fire up those vats. Do you want to be standing there at midnight cleaning the store after you’ve closed at 10 o’clock.[crosstalk 00:14:38]

John Blair: The joke I like to talk about, Dan is you know like an ice cream parlor, and I’ll use myself as an example. I love ice cream. I could eat it every single day. My waist line probably wouldn’t appreciate it very much. Some people may say “Hey you know, I should go into an ice cream parlor”. You hear a lot about those people who say you have to have a passion for that business. Not necessarily, it can be a problem for a lot of people. You need to make sure you have a passion for being in business. Not necessarily for that business, and I’ll go back to my example of the ice cream parlor.

Some people may say you’d be a great fit for an ice cream parlor because you love ice cream. Well yeah, I love ice cream. But then I start thinking about okay, open seven days a week, that’s not what I want. We talked about open 12-13 hours a day. Then you start thinking about the product itself. You’re managing expiring product that you may have to throw away. I don’t know if that really excites me. Then you’re managing hormonally challenged teenagers, predominantly. If one of those hormonally challenged teenagers don’t show up on a Friday night because they’re so distraught because their boyfriend or girlfriend broke up with them, guess who’s trotting in there Friday night to cover that shift. It’s gonna be the owner.

That’s not something that necessarily appeals to me.

Dan Farnsworth: So in your case, do you take people out before you would allow them to go forward with buying some kind of business that has these kinds of challenges, and make sure they fully understand that they have to go out there at 5 o’clock in the morning. They stand there and watch the teenager not show up for that shift and that kind of thing.

John Blair: Are you talking about that they bring a suggestion to us that they want to look into? Or is this?

Dan Farnsworth: I’m just asking you as a part of your due diligence and really making sure that that potential franchisee fully understands what they are getting into.

John Blair: And that’s a big part of what we do. There’s a couple of different ways that we try to counter act that. One is through the business modeling process. So as we build out this business model we’re talking to them about how many hours they want to put into this. Do they want to be 9 to 5, they want to be Monday through Friday? Are they okay with working some weekends? Are they okay with doing cold calling? Maybe they say, “I’ve done cold calling my entire life, I absolutely hate it.”

Dan Farnsworth: Right.

John Blair: I never want to cold call again. Okay, so that takes all those businesses that are cold calling, and kind of takes them off the table. So through all this criteria that we build out, it will necessarily match up with what they want out of the business. So that’s kind of the first step.

Then the second step is while you’re in the process, one of the things the franchise company will have them undertake is a day called, discovery day. That’s where the person, the prospective franchisee actually goes to the headquarters and they learn all about the business. This is before any papers are signed, it’s going to be towards the end of the process. But they also will go out and go visit actual franchise locations and talk to the franchisees and see the operation kind of get a feel for again, is this something that I want to be a part of. So that discovery day is a really really important part of the process as well. To get a good feel, as you were saying earlier, are you the one who wants to be there at 5 in the morning kind of making the doughnuts. Or are you someone that would rather be more of a 9 to 5 kind of job.

Dan Farnsworth: So lets talk about the typical profile of someone who becomes a successful client of yours. I was reading somewhere that a lot of your clients are coming out of corporate America, they’re used to six figure jobs. They’re trying to replace that six figure job, and I can certainly understand that. Can you give us kind of a run down of, really the typical profile.

John Blair: Yeah, I’ll tell you. It’s funny, it’s traditionally our profile was that person coming out of corporate America, who’s been downsized or forced into early retirement. And what we’re seeing is that the face of the franchisee is changing. We still obviously have a lot of middle aged, typically men, it’s going to skew male, they’re going to be 45 – 55 years old. But we’re starting to see, like I said, that change a little bit. We’re starting to see some baby boomers coming back in and becoming franchisees. Looking at franchise ownership as an option. It could be for a couple of different reasons.

One is, maybe someone once they retire, and they think “gosh this is gonna be great, I get to play golf every single day. I’m gonna love it.” Then they play golf for a full summer and they think. “Okay, I’m kind of golfed out maybe.” I won’t ever get that way, but maybe someone [crosstalk 00:19:29]

But whatever that hobby may be, be it tennis, or golf, and they think “You know I’m going. I still want to do something. I still want to work.” And they’ll look at investing into a franchise. The other thing is that the boomer generation, that was forever the largest generation in the history of the country. It’s also the longest living generation in the history of the country. So what we’re finding is people unfortunately may not have planned as well, to make sure that their dollars are living as long as they are. They’re finding maybe they might have to go back into business and they’re choosing to invest in a business that they can then potentially pass on to children or grandchildren.

The other thing that we’re seeing are a lot of women are coming into the franchise as an opportunity. This is going to be a lot of women who are coming out of the corporate world, we think what’s happening is that the fate that a lot of their male counterparts experienced forever, which was getting into that C level and getting downsized. Well females, are now in that same C level position and are unfortunately experiencing the same fate that their male counterparts did, and that sales aren’t where they need to be, they are being downsized as well. So we’re seeing a lot more women who have the available capital to be able, and the skill set frankly, the business skill set, to be able to invest in a business.

And then the third thing that we’re seeing is lot more young people coming in. So we’re seeing that face of the franchisee kind of changing.

Dan Farnsworth: You see some of these advertisements where it says “Franchises under $10,000.” Or “$10,000 capital” that’s it. That kind of thing. Give us a realistic expectation of what kind of range in capital requirements you see.

John Blair: Yeah. That’s another great question. Because we hear that a lot. There’s a lot of, I talked earlier about a lot of misperceptions about franchising. Two of the biggest misperceptions are that it’s all fast food, is one. So people say “I don’t want to be in the back of a greasy restaurant flipping burgers and making French fries.” That’s a big misperception.

The other one is, “It costs me a million dollars, if I’m ever going to invest in a franchise.” If you look at the actual cost and the franchise investments are all over the board. Like you said there’s ones you can get into for $10,000. The ones that Frannet works with are generally going to be roughly about a $100,000 investment, that’s total all in costs. Up to probably about a $300,000 – $350,000 investment. So, that’s kind of the range that we see as in terms of a total investment.

Dan Farnsworth: Yeah, I can understand that. But I think that preconceptions are the hardest thing to overcome, and as you mentioned. I think enough people when you mention the word franchise, immediately think in terms of a Wendy’s or Burger King, or some kind of fast food operation, and they say “I don’t want to do that.” Without really taking into consideration all of the other, in fact pretty much everything [crosstalk 00:22:31]

And the thing that I really want to try to get across to the viewers, is the fact that that franchise is there because they knew what they were doing. Its one of the most dangerous things to do, is start a new business from scratch without any kind of road map in front of you.

John Blair: Right.

Dan Farnsworth: And the franchise by virtue of the fact that they’re selling the franchise, is that they’ve been successful. That they’ve got this roadmap; they’ve got this operating standard. They know exactly what they’re doing, and we’re going to bring them income ideas that count. Our viewers are targeting people 50+ and the last thing that we want to do is, lose their money.

John Blair: Right

Dan Farnsworth: We want to preserve our money. So, we need to look at less risky things that have some kind of proven track record. That can make sure that we’re going in with as little risk as possible. I know that there is always risk, but can you talk a little bit about the statistics about franchise operators surviving after that magic five year period compared to just standard start up new businesses?

John Blair: Yeah, that’s a great point. And if you look at the statistics franchise businesses far succeed any start up business. There’s not really good research in the franchise industry on those same numbers. So what Frannet did, is we went out and undertook our own survey. We’re in the process of doing it again. We looked at the Frannet placements. And what we found was that 92 percent of the businesses that we helped open, were still in business after two years. Again compared to remind you, 67 percent. Then 85 percent were still open after five years compared to 50 percent. So there’s a 35 percent split there, in how better a franchise business will do. And these are our numbers, so these are our matches. How much better a franchise business will do. I think any statistics that you look at will support those numbers [inaudible 00:24:53] exactly as you said.

The way I like to put it is, someone else has skinned their knee and stubbed their toe, to learn how to most effectively operate the business. And they’re giving that game plan, or that playback, that playbook to you in order to most effectively operate your business. So that you don’t go out and, you know what we talked about, you don’t know what you don’t know. That’s what the franchise is there for you, to provide that support, provide that infrastructure, provide the training. They want to make sure you’re set up for long term success.

Dan Farnsworth: Well I think that it’s great that people like me, the viewers, and this blog have this kind of availability to them. That they’ve got this buffer, that your job is to basically is to help them not make a mistake, number one, but then, number two, then make the right decision from there. I think that that’s huge, I mean, I’ve personally made a lot of mistakes and lost a lot of money doing it. [crosstalk 00:25:59]

I’ve been through those experiences, and it’s painful, and that’s one of the things that I’m really hoping to kind of get across.

Give me three pro’s and three cons of your business, or doing business with you guys?

John Blair: Well, three pro’s, One big one is going to be you’ve got someone right in your mark. Who understands the marketplace, they understand the opportunity, they understand the competitive landscape and perhaps most importantly, they understand you. They get to know you.

Number two is our services are free. And three, frankly, the franchise industry is such a growing industry, there’s so many opportunities in that industry. We always say, if you can imagine an industry, there’s probably a franchise in that industry. Now it’s our job to match you to that franchise that kind of ideally fits you.

Now from a downside, like we were talking about earlier. No investment is guaranteed. Just like any financial investment anybody would make, running a business is, investing in a business can be risky. Other cons, when you think about how to invest in the business, there’s different ways to go about it. Some people may utilize their 401K, which again can be risky, but that’s another opportunity that people can use their 401K funding tax free and penalty free in order to invest in their business.

Dan Farnsworth: I think that you mentioned to me at one point that 90 percent of the people think that they want to be in business yet only 5 percent of the people actually make that move, take that action, and actually go into some kind of business. So you’re dealing with a situation where people justifiably need to be very cautious and in many cases that keeps them from taking that plunge. But at the same time I mentioned I think that it’s great that we have people like you in place to help through that process, to make sure that we’re not making mistakes.

Well John, I think that this was a great interview. I think it’s been very helpful, real informative. I really appreciate your time.

John Blair: Thank you!

Dan Farnsworth: If it’s okay I’d like to stay in touch and maybe we can revisit what’s happening with you in the next few months and go from there?

John Blair: Would love too. I would always love to share any ideas. I love talking about this business. It’s a great business model and I really appreciate you inviting me to spend some time with you and your viewers.

Dan Farnsworth: Great. Well thanks again, and we’ll talk to you soon.

Hey thanks for tuning in to this episode. I hope that you found it informative, please make sure that you check out the notes section. We have relevant links and information that you might find also interesting.

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