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Let me start my first column on franchising with a declaration: 2008 is over. It was a brutal year. Some of you might have felt some of the pain – being downsized, right-sized, relocated, however you want to say it. Maybe you have decided that the time has come to be your own boss and buy your own business.
Now comes the eternal question: franchise or independent. There is merit to either side. You, your skill set and your interests are the key factors to think about when making your choice.
For the past 11 years, I have owned and operated five Midas Auto Service franchises in Central Virginia. I previously worked for Midas for 11 years. So I came into this with my eyes wide open and with all of the experience I thought I needed. I was right and I was wrong, and perhaps in both I can offer you things to consider in making your choice.
Over the years, I have become involved in the lives of hundreds of people who have purchased a franchise. The thought process seems to be that franchising is a relatively easy career path and a license to print money. Both of those perspectives are wrong, plainly and simply wrong. The sooner you understand this, the better.
A business is a business. There will be fixed expenses, variable expenses, changing market and industry conditions, staffing considerations and personal issues.
If you are considering purchasing a franchise, or any business, nothing beats preemptive due diligence. Take nothing at face value, and, as Ronald Reagan often said, “trust but verify.” Due diligence means a visit to any and every similar operation in your community: competitors, similar or identical franchises, other business in the geographic area you are considering. Get to know the industry, the issues and everything else you can about what you are considering. We will cover due diligence in more detail in a later offering. For now, though, I will tell you that due diligence is the second most important issue to address.
The single most critical issue is you. Are you hard-wired to be entrepreneurial enough to manage your own small business while simultaneously being flexible enough to be agreeable when your franchisor comes knocking?
I am a car care guy. In 1995, for every 300 new cars sold, service providers in our industry could expect 200 repairs to be needed. In 2005, those same 300 new cars generated only 50 repairs. We have gone from a repair business that did maintenance when we could to a maintenance business that does repairs as they present themselves. That singular industry dynamic changes everything! Staffing models, supply chain relationships and frequency of transaction models have all changed and changed dramatically. To compound things further, there is a reasonable body of evidence that in the next 18 to 24 months things could well change another complete order of magnitude for us. We have seen some of this coming and planned accordingly. I have peers who are now on the outside looking in because they didn’t react quickly enough.
Now take all of the industry related evolution and add you to the recipe. Me? I have a reasonably strong work ethic. Like Bob Bethune of Continental Airlines, I am often wrong but rarely uncertain. I will act on an as-needed basis, and I am not overly compliant when I know I am right.
How about you? What are your lifestyle expectations, and can the business you are considering provide you the income to support them? How hard are you willing to work? Each franchise comes with a model: What is your role in each aspect of the same? Know yourself. If there are aspects of the franchise you are considering that require you to do things you have historically not enjoyed doing, you will not enjoy doing them tomorrow.
This knowledge will help you decide not only whether you should franchise, but also which franchise you should consider. Case in point: You plan on buying a fast food franchise – are you ready for long hours and seven-day weeks? How are you at dealing with the younger generations who will be a core part of your workforce? Are you intellectually tuned in to building the perfect burger 100 times a day, seven days a week? Not much flexibility, creativity or spontaneity there.
Or you decide you are going to buy a printing franchise – maybe an Alpha Graphics (a franchise I took a long hard look at). Much more creativity and flexibility in what projects you might get, a chance to make your own unique stamp on your efforts, a more technologically advanced and diverse workforce – in other words, a whole different you.
The acquisition of a business is an incredibly exciting undertaking. Due diligence and an all-inclusive plan can make it successful, but first you have to take a long look in the mirror and make sure you know yourself.