If there’s one thing that’s fascinated and frustrated me in over a decade as a franchise consultant, it’s the fact that from time to time I’ll see two candidates invest in the same business and end up with completely different outcomes. In some cases, this is the difference between one person growing a multi-million dollar business and the other just not growing. These unmatched pairs have become a bit of a study project for me, because great franchise systems are designed, by definition, to be replicable. Territories and unit locations are meticulously vetted. Candidates are carefully considered until the franchisor is confident they can be successful. Most of them are. But what about those outliers—the ones who take a great concept and run it into the ground? Over the years I’ve made a lot of notes about what divides these two groups so I can better prepare candidates for success.
The best way to explain the differences is look at a direct comparison between how Executive A and Executive B might wind up in entirely different places, so let’s take a look at 8 areas where they’re performance might diverge:
Know What You Want
Executive A comes to the idea of franchising wanting change in general but without a specific vision of what shape that change might take. This is a person who’s looking for something, but not entirely clear about what exactly they’re trying to achieve.
Executive B is often a list person. A pro/con person. This is someone who has a firm idea of how much time, energy and resources they’re prepared to invest in a franchise, and they’ll vet prospects with those specifics in mind. Executive B will likely work with a franchise consultant or other industry expert to help them navigate the process of screening the thousands of available concepts to find the one that’s right.
Do the Homework
Ah, homework. Nobody likes it, but as we all learned somewhere between the fourth grade and high school, sometimes you have to knuckle down and do it anyway. The franchise investigation process involves a number of steps specifically designed to make sure you know what you’re getting into and what to expect as you move forward.
Executive A doesn’t like homework. This person may find the federally-mandated Franchise Disclosure Document (FDD) too long and boring to read. They may not want to pick up the phone for validation calls with strangers (who happen to be active franchisees) because they hate to talk with people they don’t know, prefer to research online only, or don’t have a list of questions prepared.
Executive B tends to leave no stone unturned. That FDD? It’s got a ton of otherwise privileged information about your potential investment in its pages. Executive B will read it carefully, and perhaps discuss it with a knowledgeable consultant or an attorney. This person realizes validations calls are the single best opportunity to gain insight into how the business is working for other franchisees. They’ll use those calls to gather information and to make valuable connections.
Capitalize Sufficiently
Executive A may be going down the road to entrepreneurship for the first time, and may not have any understanding of the financial fitness it takes to get a franchise unit or territory up, running, and profitable. There is always more than the franchise fee. There is always a need for early operating capital. It’s always a good idea to plan for one more rainy day than you expect.
Executive B sits down with a franchise consultant, with the franchisor’s representative, and if possible with existing franchisees—calculator in hand—and comes up with a worst-case budget. This person is prepared to handle small setbacks and primed for big success.
Know (and Embrace) Your Role
There are more than 4000 franchise concepts. It’s not much of an exaggeration to posit that among them there is something for every personality, every budget, and every skill set. But it’s also true that not every person is a good fit for every concept.
Executive A is someone who doesn’t match their personality and skills with their role in the concept. This may be the case of an artisan who doesn’t have a knack for sales. Or a boss who isn’t comfortable leading employees (or hiring a manager to do so). Or an introvert who doesn’t want to get out and connect with the community of customers that await.
Executive B has put a lot of thought into how they’re going to wear their role in the franchise. This is someone who has learned what success entails, who has confirmed they have the necessary skills and the will do deploy them, and who hits the ground running as the franchise kicks off.
Roll Up Your Sleeves
Yes, it’s obvious new franchisees have to do the work. But when we take stock of the differences between Executive A and Executive B, this is sometimes where they diverge.
Executive A may have gotten into franchising with a hobby in mind. The reality of the work load in the first year may come as an unwelcome surprise. Even among semi-absentee owners, there is a load to carry to get the business off the ground, and you have to do some of that heavy lifting yourself to ensure it’s done right.
Executive B rolls up sleeves and gets to it. Starting anything new requires a certain amount of sweat equity, and this is a person who knows all the work that goes into the first year of getting the business up and running will be rewarded in the long run.
Follow the System
Executive A comes from a background of great corporate responsibility and decides to reinvent the franchisor’s systems right out of the gate. This choice (one I’ve seen made by actual executives a few times) leads to an extremely slow start for the business. It’s so slow the franchisor’s management team calls to help figure out the problem, and then politely asks Executive A to please (please!) try working with the system instead of against it.
Executive B also comes from a C-suite background, but this person knows the franchisor has spent millions of dollars and years of time fine-tuning processes to ensure a successful launch for each franchisee. With that in mind, this exec follows those processes and has a great first year. In the long run, Executive B may come up with improvements and suggestions for the business, but at the start he trusts the system.
Roll with the Punches
Do you know what personality trait is best able to predict kids’ lifelong success? It’s resilience. It makes sense, because resilient people don’t give up when they encounter problems. They learn; they reconsider; and they move forward.
Executive A lacks this key survival quality. Faced with a staffing problem, a logistics challenge, or an early setback, this is a person who either wallows in troubles or can’t seem to find a way out of them.
Executive B knows problems are part of progress. When some inevitable snafu arises, this person doesn’t hit a wall. Executive A figures out a way to go over, under, around or through.
Build an Outstanding Team
Somewhere along the line, Executive A may have internalized the idea that an entrepreneur is a loner. This can be a costly mistake.
Executive B may have a buck-stops-here attitude, but that doesn’t stop them from building connections and community whenever possible. The most successful franchisees I’ve encountered know they are part of a network and look to become integrated not just with employees, but with franchisor representatives, with personal and professional mentors, with fellow franchisees, and with members of their communities. The entire concept of franchising is built on the understanding that not everyone has to start from scratch and go it alone to become a successful business owner. Take that sentiment to heart as you create your own team and you’ll be well on your way to success in your new business.
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Pete Gilfillan is a leading franchise consultant, entrepreneur, and author of the best-selling book HIRE YOURSELF: Control Your Own Destiny through Franchise Ownership.
