The tale of a franchisor and a budding franchisee

Terry Sage of Trades Coaching New Zealand

I want to tell you a tale. Unfortunately, it’s not a unique tale as I have seen it over and over again.

What gets my back up is it should never happen, as the purchaser has been sold a dream and they get a nightmare.

Nightmares are supposed to go away in the morning, but in this tale the morning can bring, at the least, stress-related illness, then bankruptcy, no family home and divorce. You have all probably heard similar horror stories.

Where does this tale begin? It starts with the dream to own a business and the purchase of a franchise.

Stop the bus there all you franchisors who have leapt for your keyboards and are about to give me a blast. I am an absolute believer in the franchise system. I owned my first franchise back in the 1980s and it was semi-successful.

I am now a franchisor, and have coached a dozen different franchise models. An expert? No, but I can talk with a bit of experience.

A real franchise doesn’t have to be a complex beast. As long as it has the basics and a couple of key ingredients it has a good chance of survival.

A not-so-real franchise will come with a name, a manual, training of some sort and a bucket load of promises.

When I get approached and asked for help to set up a franchise, I ask a few questions.

Is it repeatable in every town? Can the franchisee make very good money? Will they be buying a business in a box? And here’s the big one — does it come with 24 hour, 7 day a week, 52 weeks a year full franchisor support?

Here’s the tale. A young couple with two small kids returns home after making some money overseas. He wants to be his own boss, sees an advertisement for a building industry franchise, starts dreaming and makes an appointment.

This chap has no construction experience. He gets sold a dream — “We’ve been operating for 18 years, you can make a fortune, it’s really easy, virtually sells itself, no you don’t need any experience, you just run the company, leave the silly building stuff to your contractors.”

“Great,” he says, “here’s my $80k and I am happy to pay you $1500 a month because you said I will be earning $250k a year profit after only 12 months.”

Yeah, it’s very easy to say he was naive and should have got better advice. But when you are being sold to by a pro with a smile, well, the world just seems a much better place.

So seven months into his empire building he has re-mortgaged his house, is on anxiety pills, and out of 90 quotes he’s secured just four jobs. All but one made a loss — and now he is at a total loss.

“Help,” he shouted to his franchisor, “come and rescue me”. The reply was a simple “sorry, too busy to come up right now” — “up” being only a 300km drive away.

It’s not quite a short rope and a three legged stool scenario for our naive non-builder, because what he bought does meet most of the ticks for an okay franchise.

The missing links are clear to see though — there was not enough training, the support was not there and the franchisor, like so many franchisors, saw dollars walking through his door rather than a potential successful franchisee with the right skill set.

Oh yeah — and the franchisor’s sales technique included a pack of lies.

Luckily the basics of this particular franchise model are all there — basics that can and do work.

Our empire builder will have a happy ending, as his call for help was answered by TCNZ. We have started remodelling his franchise, put in basic systems and enlisted the skill base he needs. He actually smiled the other day after securing his biggest job yet.

The moral of this tale? Franchises are a great way to own your own business. Just do your homework first, and if the advice that comes back is a “no go” then listen to it. Or better still, give us a call.

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