A Well Paved Path
If you are reading his article then chances are good you are on a journey to considering the purchase of a franchise. Welcome! You are on a path trod by millions before you and no doubt millions to come. The good news is it does not require a pioneering effort as the trail is well paved, however, don’t be fooled by a franchise freeway filled with off ramps to opportunity. This journey requires an education to successfully navigate the various roadways that might lead to a successful destination, and the process is getting easier every day. The starting point for most travelers into the franchise realm is desire. Something in your life has sparked an interest in taking this journey. For many it is a significant transition in their lives such as a career change, relocation or even becoming an empty nester. For others, it is just time to “do what I want to do”.
Regardless of the motivation that has set you on this journey, rest assured that it will be both exciting and confusing for most travelers along the way. As history has taught us, whenever we are headed towards a major decision in our lives, it is best to become better educated. Think about your decision to buy a car. You need to determine what would suit your needs, how much you can/should invest, what model “fits” you best, how much the insurance would cost, what kind of performance you need/expect, and even the potential resale value. After over two decades in franchising I can tell you that many people I have known invested more time becoming an educated car buyer than they did becoming a franchisee, and as you are probably finding out, the cost and implications are much more significant with the franchise. So, how do you become an educated prospect?
An Evolved Education Process
First, let’s consider the education process and in particular, two basic approaches: adaptive learning and generative learning. We begin our journey in life adapting to our environment and it is a process of education that provides us with our basic survival skills. If we touch something hot we quickly learn to avoid it going forward. This type of learning is natural and in many cases happens without even a thought on our part.
Back to the car you wanted to buy, once you determined one of interest a funny thing began to happen. You started to see them everywhere, even going the opposite way down the freeway. Your head might turn to see it and you ask yourself, “is that the color I want?” Our minds are powerful and once we program in something important it points it out whenever crosses our minds eye. This might be happening to you now as you begin to narrow your franchise search. All of a sudden your mind is bringing you updates and input almost daily regarding your franchise(s) of interest. You may find friends that are customers or that have family members that own a franchise. All of this activity is you adaptively learning about franchising. Well, this is nature and valuable, yet it is not enough to make a good decision when considering the purchase of a car, let alone a franchise. As your interest in something grows you must make a deliberate and strategic decision to move from adaptive to generative learning.
Invest in Your Success
Generative learning is the process of linking our experiences with our knowledge base in a way that results in better decision making. This process happens when we start engaging our interests through deeper and more robust data gathering. The increase in our knowledge base will link with our short and long-term memory to “generate” a better, more meaningful understanding of our subject, thus leading us to a more productive outcome. We use this process in numerous ways as we consider important decisions in our lives.
Typically, when buying a new car we will search the internet for pricing, availability and options. We begin talking to family and friends about our interests to determine if they have any experience to share. We may start investigating articles and other publications that can provide more details on various aspects of the vehicle, the manufacturer and consumer experiences. We generally find that the more we invest generating inputs the more confident we become in our final decision.
Improve Your Odds for Success
Well, back to the franchise journey. Your adaptive nature has led you on the road to discovery, so how can you maximize your generative learning opportunities? It is certainly much easier today than ever before. Technology is a virtual highway of information through search engines, online portals, and an ever-increasing array of data sources. This type of data mining can provides a broad spectrum of inputs to add to your knowledge base, yet this type of information is passive. You find it and store it away. There is not much opportunity to engage the data, thus the ability to extend your learning is limited. Here are some key engagement opportunities that all franchise prospects should pursue on their journey:
Group Input: Making a long-term decision of any kind can be greatly enhanced by enjoining qualified participation. By assembling a few trusted advisors with complementary skill sets you can greatly enhance the perspectives generated and uncover valuable insights you might not have seen on your own. You cannot do this if you only solicit folks just like you. If your background is financial then look for a good marketing confidant to add to your team, and so on. Recent research on the power of teams to solve problems highlights how important gaining perspective from various viewpoints is to the process of generative learning.
Formal Education: While there is precious few structured franchise education programs offered across the country, seeking them out could prove invaluable. A good place to start is the International Franchise Association website at www.franchise.org. They have numerous articles on various aspects of franchising and they even have a free online course you should take (check under IFA University). Also, every semester I have one or more individuals that attend the Franchise Management Certificate program at Georgetown University. This nine-day course covers all aspects of franchising and can provide a solid foundation for purchasing a franchise as you interact with attendees from franchise companies and guest speakers from the industry.
Taxi-cab Research: I use this term to describe what you might learn by asking questions across a broad array of people, like a cab driver might gain by asking all their fares a question on a particular subject. In the case of franchising, there are two groups you need to interview in order to generate a clearer understanding of any opportunity. First, a cross section of existing franchisees, which can easily be found in the franchisors disclosure document (“FDD”) as required by the Federal Trade Commission.
If you have not received this document yet, you can simply let your fingers do the walking through the yellow pages to find franchise outlets in outlying areas. Talking to franchisees is critically important to expanding your knowledge base. Keep in mind that the research strongly suggests that franchisees tend to help “sell” the franchise since they are already heavily invested in it. That should lead you to the second group, franchisees that have left the system, which are also included in the FDD. Given there are typically only a handful, you should attempt to contact all of them and gain an understanding as to why they left the franchise.
Professional Advisors: I have met very few people that bought a house without the qualified assistance of professional advisors, yet countless individuals have inked franchise agreements without working with a consultant, banker, accountant or attorney. The challenge in this regard is finding the right advisors to add objective information to your data base. Franchise brokers are generally compensated by commissions received when you purchase their recommended franchise(s). Bankers are generally limited in their franchise knowledge as are lawyers. So making sure up front that you chose advisors that are knowledgeable, specifically in franchising, and objective in advising you can be invaluable.
Rising Above the Ordinary
Well, it may seem like a lot of work to build a solid database on franchising before making a buying decision, but unless you move beyond simply adapting to whatever is motivating you, “luck” will be the only possible reason for a successful franchise outcome.
Taking the time and deliberate steps to become an educated prospect will move your confidence level up, increase the odds of not making a long-term mistake, and enhance your attractiveness to high quality franchisors. Unlike “lemon laws” that allow you to return a bad car after you’ve made the purchase, you’ll be living with your franchise decision for a very long time. Make it a good one and rise above the ordinary.