15+ Year Franchise Development Pro Here To Answer All Questions-let Me Help You

[freeman]

Hello..

I've been in the business of franchise development for over 15 years and have worked for the largest companies in the world as well as a couple of start ups. I've personally sold over 450 franchises in my career and honestly very very few actually make it..there are a wide variety of reasons but certainly a common thread in most.


My experience is yours..let me answer your questions from the "inside" perspective. There is a "tremendous" amount of risk to buying and opening a franchise and about 5000 total scams to watch out for. I'm not here to sell anything. I'm here to clear my conscience.

Go ahead ask

[khanhhoang]

Hi freeman,
I'm a teacher in Vietnam. I want to ask you this newbie question:
What is the good ways to plan ahead for a country like in Vietnam which we don't have a lot of franchise business?

What I'm planning is:
I plan to buy lot of property to open up the mini mart for the future use or should go back to school to study more about "franchise business". I'm a teacher

Thanks in advance
Hoang Khanh Nguyen

[Marcela85]

In your experience has franchise been the way to go?

[freeman]

Hi Khan

Owning your own business is a great dream..however it is far more difficult than most people ever imagined. Remember the business owner is "always" the last to get paid (thats no old wives tale my friend)

Knowing that to be the case you should be absolutely certain that you have ample resources to feed and house yourself. The Understanding should be that in 98% of the cases it takes "much longer and cost much more" than the person ever dreamed it would to make real money.

Remember: Takes longer and cost more than you will ever imagine.

The Job of a franchise salesman or broker is to hide that fact. You will never hear a franchisor tell you it's gonna take a year or two to turn a profit. There are ways to accurately gauge the viabilty and we could discuss those in greater detail in a another thread.

Convenience stores are the types if businesses that people accept as Validated methods to make money.. Unfortunately people validate in their own mind that somethings got a greater chance of success simply because "there are so many".

If a franchisor were to offer, oh say, a Lollicup Franchise you would naturally be skeptical and the process of discovering the real potential would take much longer and require a greater leap of faith, than say a UPS postal store.

The fact that you see the UPS stores everywhere but not a lollicup Validates incorrectly the best opportunity. (not an endorsement of Lollicups)

I said all that to try to drive home a point. Now lets discuss C-stores; A very cash intensive business model. If you are not able to be there during all open hours and personally handle deposits and such, you will be stolen blind by employees (same thing for QSR). Although the margins on items sold there seem to be very good, the cost of the location (location is everything in that biz) will eat every penny. The only way to real money in that type business "work it yourself" and drive volume higher and higher each month or quarter
(very difficult to do).

Last but not least, never invest in a business model that has more than 3 competitors on opposite corners. That's called a bloodbath.

Now if mini marts aren't everywhere in VN it might be a great opportunity. If that's the case you would be wise to secure the properties that a competitor might want to open another. (defense is the best offense) You might ask yourself if there aren't any there now, is it culturally acceptable. Sometimes change is difficult, sometimes it takes off like fire. I don't know a thing about VN.

A great idea doesn't need a franchise to be successful. Something no one is ever going to point out is the fact the the Franchisors "royalty" payments are always on the gross sales. Now after all expenses are paid and the owner gets down to the net profit each month he will find to his horror that the franchisors percentage of GROSS sales is almost always 50% or more of NET profit. A bitter pill to swallow and the most common cause of failure.


buying a franchise is no different that having a 50/50 partner that never shows up for work

[InsomnicBrain]

Hi Freeman,

I'm opening an AAMCO Transmissions this month. My business will consist of fleets business, which will keep me afloat during the slow months and retail business. My franchise has placed me right next to my competition in hoping I will become successful since we are a well known name. You mentioned in the previous thread that being next to your competitors will be a bloodbath. Since, I'm already stuck with my location, what do I do now? I have researched all of my competitions business model and they aren't up to par as ours. They want me to be spending most of my time doing outside sales.

I had the opportunity to choose between this and the Liberty Tax franchise, I chose AAMCO. I liked the idea of being able to do outside sales. My last company it was hard to gain that position in the company. I have questioned choice of franchise many times, with the end result being I have already came this far, theres no alternative but to keep moving foward with a positive attitude.

My location is off a very busy road but my building is pretty old and worn down and my signage isn't the best. Some company just installed a huge billboard across the street and I am going to test it out. I am going to have a huge arrow pointing across the street to where my business is. It is very expensive but if I can pull a couple jobs from that billboard it will more than pay for itself.

I am currently advertising Advo/Valassis/Red Plum, Yellowpages, Billboard, door hangers.

I have elminated all my debt, rented out my house, and moved back in with my parents. I dont' expect much from the business right now. I just want to be able to pay the expenses with a minimum loss and just be able to wake up and go to work everyday.

Could you give me some advice or tips on marketing, surviving my first year? Could you discuss in detail what you mean that a lot of franchises are scams. Please don't bash me if you dislike my franchise, I'm sensitive =). I'd appreciate any of your thoughts.

Thanks...Robert