To Franchise or Not to Franchise?
I have spent $43,000 so far for the privilege to become a commercial cleaning franchisee. That was above and beyond what I had to spend to actually start the business. Purchasing things like equipment, chemicals, tools and supplies, as well as vehicles, is not included in the above number. That number worked out to be only around $30,000 as I purchased several things used. I will continue to pay royalties each month based off of my CLR (Customer Level Revenue) that I create. This leads me to the question; is buying into a franchise worth the investment?
Of course, this varies from franchise to franchise, but I'm going to share with you my experience so far 52 days into franchise ownership.
When giving feedback to people, I like to make a negative feedback sandwich. Meaning, give some positive, then deliver the negative observations, and then end with positive again. However, in this case, it makes more sense to simply list the negative first and then the positive aspects of buying into a franchise.
Negative Experiences Thus Far:
-Heavy initial financial investment ($43,000 – this is what I had to pay, other potential franchisees may pay less or more than what I paid) and of course royalty fees after that.
-Having to wait weeks and sometimes months for simple steps like a URL address, and DBA name approval. Lots of bureaucracy to deal with overall.
-Having the longest DBA name known to mankind because that is how the franchisor wants it to be. (Not great for marketing when you have an 8-word long DBA, the shortest they would let me make it was 6-words long)
-Time spent learning their specific software, products, equipment and procedures (aka time sitting on your butt in front of the computer).
-Reaching out to a nebulas group of people to help you solve franchise specific problems and getting a delayed response, if any. This is my favorite so far. They set me up on their systems, and then those systems aren't working, and you email the "specific generic" email they say to email, and nothing gets resolved. You must make phone calls, send more emails to get things moving forward that you wouldn't have to deal with if you were just running your own business.
Positive Experience Thus Far:
-Receiving over 15 warm leads sent my way in a 52-day period with little to no effort from myself.
-Having $3,000 a month in revenue handed to me from the franchisee on day one.
-Having logos and marketing material ready to go and available. Much of the marketing material can be downloaded for free and printed locally. This includes a basic website that sends the warm leads my way from day one.
-Having training available at the push of a button in their online training platform
-Having a national sales force working on sales for accounts that want a national vendor. These are accounts I probably wouldn't have access to as an individual business, based in Arizona.
-And the most important thing of all so far, has been the ability to network with other successful franchise owners. These owners have the knowledge to help my company grow along with the systems and processes of the franchise.
Returning to the question above: Is buying into a franchise worth the investment? From my personal experience thus far, I'd have to say yes. With the brand recognition, leads & jobs sent to me, mentors to work with and revenue from day one, it has been worth the extra investment and headaches. I am slated to already be in the black (making a profit) by month number two. I don't feel that starting a brand from scratch would have propelled me to this level this quickly.
There is a disclaimer to my above answer. Having been a business development consultant for the very franchise that I am now a franchisee with, I saw many different types of owners. There were owners who went to every meeting, workshop and training session. They networked with the successful franchise owners, and they too became very successful. Success to them may have been being able to support their families over 30 years and pass the business on to their children or building an empire that they are able to sell for millions of dollars. There were also the owners who stopped learning, stopped using the tools available from the franchisor and stopped networking and attending conventions and trainings. These owners typically fell in two categories. They either survived painfully for several years until they just closed their doors or sold at a rock bottom price. Or they stayed small for 20-30 years but had no advantage over the neighboring "mom & pop" business because they didn't take advantage of everything the brand had to offer. They are not getting all the benefit they can out of their royalty payments. And so the royalties became more of a burden than they needed to be, making them less competitive than their independent competition.
Again, going back to the answer I gave above. I believe that buying into the franchise system was a good decision for me. If you feel that you are not willing to take advantage of all the tools your franchisor has to offer, maybe you should rethink your decision to become a franchisee. Don't pay for something that you are not using.
In the end, I feel that being successful in business takes guts, grit, and determination. You must be willing to grow, learn, delegate and deal with change. Franchisee or not, you have your work cut out for you creating a business that is successful. There are no short cuts. The royalty fee is just another monthly cost you pay to a "Vendor" (Franchisor) to help you grow your business. It's how you leverage your vendor's and your clients that makes you successful. There is light at the end of this long hard road of business ownership. Two thirds of the working millionaires in the United States are business owners or self-employed (The Millionaire Next Door).