International Law

Franchise Reps' Advice for Buying

Here is some interesting advice from "franchise-rep" about franchise due diligence

I am going to reprint large parts of the post.

Dear Fran: I’m glad you liked my comments. I’m betting that a smart chic like you already knows that the word ‘franchise’ originates from the Anglo-French, meaning freedom and liberty.

Alas, what so few prospective franchisees don’t know is that in today’s world, freedom (as we know it) has nothing do with owning a franchise.
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What are the prerequisite skills needed to make it in Franchise Land?

Here is one that you will hear ad nauseam: ‘You should have a strong desire to succeed while being your own boss.’ More importantly, you should understand that you are NOT going to reinvent the wheel when you purchase a Wonder-Rama franchise. Billions were served because ‘people love consistency.’

Do not go boldly forth into Franchise Land thinking you can change the formula with a bright new idea. Uniformity rules.

Do not dream of owning a McRoyalbucks franchise only to be appalled by the idea that a steady diet of fat-laden junk food will have your customers on the fast track to a triple bypass.

Running a franchise is NOT for the free-spirited, independent-minded, innovative entrepreneur.

It is however, ideal for people who want to bust their butt following a proven method for making a tidy profit, who will agree to follow the corporate party line and who will cheerfully pay a royalty for the privilege of riding on the coattails of a nationally-recognized brand

So what do you need to do before deciding to buy a one-way ticket to Franchise Land? (That’s right, one way. Beware the non-compete clause).

Step Number 1. You need to look at the whole idea with a jaundiced eye. Don’t behave as if you are on a first date with someone from Baywatch. Remind yourself that the buxom models probably have implants and the hunky lifeguard may be on steroids.

Start by reading the October 10th, 2006 issue of Forbes ‘Ten Reasons Not to Buy a Franchise.

Step Number 2. Caveat Emptor! I didn’t take Latin, but even I know what this means. Unfortunately, too few franchisees do their homework.

I took part in presentations to prospective franchisees and was amazed at how little they bothered to ask while they had the chance.

Most of the prospects seemed as if they were in a hypnotic trance while being shown around the corporate HQ.

Maybe it was the non-stop whirl of canned presentations, the plastic-smile- razzle-dazzle or the Ambien-laced coffee. Something got to them.

Do some detective work before you plunk down grandma’s Mutual of Omaha money.

If the company is publicly owned, ask for an annual report. It might a good idea to know how to read that annual report.

Do you know what to look for?

Do you know what you are looking at?

If, like me, you can’t make heads or tails out of a spreadsheet, make sure you have a business partner who can.

Or, if you flunked out of the London School of Economics, go to Google and type in ‘How to Read an Annual Report.’ Otherwise, go back to your cubicle where you belong. You have no business running a business."

(Via Franchising Craziness-A Franchise Reps Life.)

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Full post as published by Misleading Advertising Law on February 12, 2008 (boomark / email).