FranchiseHotTakes

PSA for those that have interest in franchising their business OR buying into a brand as a franchisee: First: for those wanting to franchise their business: Before talking with some of the cottage industry vultures that exist in franchising, you should first explore whether your business model has the underlying economics to successfully franchise your business. Your brother in law that knows a general business attorney is not the right person to talk to. Franchise sales organizations that take a % of top line royalties or a fat retainer are not the right people to talk to first. Doing a Google search for “franchise my business” oftentimes is the surest way to get hosed and make a lot of wrong decisions that have a high likelihood of costing you and others a lot of time and money until you figure it out. I’ve heard 100’s of stories and have seen it directly as an investor in two franchisors that had already completed the process to set up their franchise offering. Speak with someone who understands the business model of franchising, and how to analyze whether or not you should even Franchise. Not someone that wants to sell you on the dream of what you want to hear, and take your check regardless. Second: For those buying a franchise Know that the consultant who refers you to an FSO (franchise sales organization), a brand, or group of brands is getting a check for $25k-$35k when you buy in, sometimes even more. And they make even more money the more territories you buy. The truth behind all of the altruistic rhetoric that gets spit at Franchise buyers from the broker vultures is: 85% of brokers / consultants couldn’t actually care less what brand you buy. This is the real real. Their incentive is to introduce you to the brands that will pay them, and they introduce you to the brands that are highest likely to “close the deal”. If the brand or consultant you’re talking to will take a check from you no matter what, and all they seem to care about is signing you. It’s the fee or commission they are after. Don’t walk. Run. Some of these brokers are very good and convincing you they care, at setting up a really excellent pitch or what appears to be set of resources. Some now do a good job of “teaching” and setting up little courses and communities. But really they are in the business of selling your dream back to you and making sure you buy from a brand they introduce you to. If they aren’t transparent about this, they are hiding something and I wouldn’t trust their recommendation with your life savings. Behind the smoke and mirrors you are number to 85% of them. There certainly are immaculate brokers and good actors out there. But exercise caution and choose who you trust wisely!