Be afraid. Be very afraid.
That's the message many of us have about franchising. But Dr. John Hayes – a journalism professor turned franchising guru, after deciding in 1979 to write a book on the process – says while it's good to be fearful, we shouldn't let the risks block us from what could be the opportunity of a lifetime.
If you would like to own your own business, there are far more franchises available than you might imagine, extending well beyond Tim Hortons and the fast-food restaurants that we are familiar with.
Take Dental Fix: It services equipment in dentists' offices in your area, from mobile vans, one of many such servicing-on-wheels opportunities. Experimac sells and services Apple-brand products. As well, there's travel, executive coaching, laundries and a host of other non-food opportunities.
Instead of starting a business on your own, the franchisor gives you a boost, with a system that has worked successfully elsewhere.
Start your own pizza restaurant, he writes in his book, Take The Fear Out of Franchising, and you are on your own. You'll hit bumps along the road, even sinkholes, often self-made, which a franchisor would have helped you avoid.
That being said, he says it's legitimate – and wise – to be afraid. Franchise agreements are specific and long-term. They lock you into something that, if you haven't properly investigated, may be wrong for you – a bad business, or a great business that is just bad for you. "Franchising is not something you should take lightly," he says in an interview.
Based in Palm Beach, Fla., after seven years teaching at a private university in Kuwait, he sets out a number of tenets to be alert to:
- Every franchise requires specific values and skills from franchisees: You need to be sure that the franchise opportunity fits what you want to do and are capable of doing. “You are not your neighbour or brother-in-law who bought a franchise and has been very successful. They may have skills you don’t have,” he says. He points to early franchisees with Mail Boxes (now the UPS store) who thought they were getting into a Monday to Friday, 9 a.m. to 5 p.m., retail operation, dealing with copying and couriering. But to be successful, they needed to work much longer hours, a good deal of those selling their service – something they may not have enjoyed – to the local business community. Many franchisors have personality tests that compare you to the profile of their most successful franchisees. He encourages you take the tests to understand yourself and the opportunity better.
- A franchise is a licence: Someone is giving you the right to operate the business under their brand for a specific time during which you must follow their rules. “Violate their system and you lose the license. You can’t change the system. You can’t ignore the system. But people try to do that all the time,” he says, which leads to problems.
- Every franchise is a system: Make that, Dr. Hayes says, every good or great franchise is a system. You need to understand that system and whether it’s ideal for you. The best way is to work at one of the outlets; indeed, he says, some franchises require prior experience in their stores. Offer to work a day, or part-time, or during a vacation period so you can see the system from within.
- The franchisor is always in control: With the benefit of a proven system comes loss of control. That is the dilemma you face, and why some people choose instead to open their own independent outlets. “The franchisor owns the name and the system. You don’t own anything. You can’t change the colour of the paint in stores. You can’t have a Wednesday special. You can’t change anything,” Dr. Hayes says. Good franchisors want you to succeed and try to make the system work for you. But they are still in control.
"If you're a teacher and want to start a travel business, how will you know where to advertise and what to say? But the franchisor knows that, will give you the ad and tell you where to place it. They take the guesswork out and save you money, keeping you in business as a result," he says.
So, be afraid. Very afraid. But don't let that stop you from doing due diligence if you have always wanted to own your own business. It may be the right opportunity for you.
Harvey Schachter is a Kingston, Ont.-based writer specializing in management issues. He writes Monday Morning Manager and management book reviews for the print edition of Report on Business and an online column, Power Points. E-mail Harvey Schachter