-An Insider's Guide to Buying A Franchise-

I was thinking a lot about the hectic frenzy I’ve created for myself – running the brokerage business while opening a retail store IS demanding. And there are a million-and-one things to do. But somewhere in my mind was the advice I’ve heard many times from business coach and friend Steve Chandler. And this post just showed up in my email box as part of my Club Fearless membership. If you’re unfamiliar with Steve’s work, see http://www.imindshift.com/ . Anyway, hope you enjoy it. 

 ”We evolve not by dreaming of giant steps, but by committing ourselves in action to little ones, moving step by relentless step in an ever-expanding field of vision.”

                                       ~Nathaniel Branden

      In golf, if you win by one stroke, you can get millions of dollars in prize money. But for second place you’ll just get a fraction of that.
    
     A single stroke is all it takes in life, too. A lot of people become preoccupied and think it takes so much more. They think they have to be much, much better than everyone else to succeed. 

     But the truth is, you just have to win by one stroke. One gentle little swing, and you’re in. You just have to be slightly preferred by your customer over someone else. And the same is true if you work in an organization and want that promotion. You just have to be slightly preferred over the other person. And you can be preferred by one small stroke. That one stroke of courtesy or kindness you put into your work that others don’t, and you win.

Steve Chandler

www.clubfearless.net

http://www.imindshift.com/

Something I see quite often is the initial excitement of new clients who are so taken with a new concept they can hardly contain it – only to be disappointed when they discover competitors in the same category. One could easily feel this way about my new venture, Big Frog. Just take a look in the phone book or Google it and you’ll find dozens of companies that are more than eager to put images on garments in one way or another.

So why not just tuck tail and run? Surely there’s a concept out there somewhere that no one’s ever seen before – something that is so unique and new – something that I could be the only one doing, something that… etc. etc. And so goes the thinking. But it’s a fantasy – businesses without any competition are rare and worse, unproven. Business isn’t about not having competition. It’s about being a better competitor!

Sadly, I see people put off their decision to open a business looking in vain for that one category that no one else has found yet. Years go by before a decision is made – or more likely – no decision is made. Score one for the competition.

So what’s better? Having a few competitors who may or may not know how to serve customers better than you – or not realizing your dream of owning a business and being able to call the shots?

Besides, if there’s one thing I’ve learned about business it’s that there are an awful lot of lazy business owners out there. Many of them shouldn’t be in business at all – they’re much better suited to work for someone because they have no fire, no desire to make a real difference in how they treat their customers. And there’s my opening.

You see, what I know from experience is that I can provide a better experience for my customers. Sure there are competitors in my market who can print on garments. They’re all over the place. But few have made it easy for the customer. First and foremost, most of them aren’t even in retail – they’re tucked away in industrial parks because the rent is cheap. With my retail location I’ll have more exposure in a month than they’ll see in a year. And we’ll welcome my customers with an in-store experience that’s fun and enjoyable – not stare down my nose at them because they only need a couple of shirts and I’d rather only do the large orders! We will welcome with open arms the customers that others turn away.

Will I get all the business and conquer the T-Shirt world?!?!? Not likely. In fact, if my competitors are any good they’ll go on servicing their core customers and I’ll get my own following. The weaker competitors will fail if not by my hand, then by someone else’s.

There’s a great quote from Ray Kroc, the mastermind behind the McDonald’s brand. He said “When the competition is drowning, stick a garden hose down their throat!” Mean spirited? Maybe a little, in a humorous way. But it puts my mind in a place where I can say “I’m the competition – I have a better way of doing this!”. Not “I’m going to whimper off and say no to owning a business just because someone’s already doing it.” Competition be damned – it’s time to get to work!

So what got me all fired up about this? Here’s yesterday’s post from a favorite blogger, Seth Godin. Rebecca turned me on to him a few months ago. I really enjoy his insights on all things business – maybe you will too.

Competition

The number one reason people give me for giving up on something great is, “someone else is already doing that.”

Or, parsed another way, “my idea is not brand new.” Or even, “Oh no, now we’ll have competition.”

Two big pieces of news for you:

1. Competition validates you. It creates a category. It permits the sale to be this or that, not yes or no. And this or that is a much easier sale to make. It also makes decisions about pricing easier, because you have someone to compare against and lean on.

2. There are six billion people in the world. Even if your market is hand-made spoke shaves for left-handed woodworkers, there are more people in your market than you can ever hope to track down.

There are lots of good reasons to abandon a project. Having a little competition is not one of them. Even if it’s Google you’re up against.

You can subscribe to Seth’s blog at http://sethgodin.typepad.com/seths_blog/

It’s been a few days since my last post – evidence enough of what’s going on around here lately. It’s that time in a business startup when there’s more to do than there is time in the day to get it all done. Just name a topic and it seems it needs attention.

From working with the contractor and architect to tracking down details for the bank, getting all the new services set up, you name it. Things have been nothing short of chaotic. And there are a million and one new details waiting after all of these are handled. There’s simply no choice but to just put one foot in front of the other and get it done.

By the end of the afternoon, I actually felt like I’d made some significant progress. Now over to my bookkeeper’s to start getting the accounting set up. We’ll see what tomorrow looks like.

As you might have guessed by now, I’ve had to take some liberty with dates in order to reconstruct events of the last few months in this blog. I’m now close to catching up with real time so in today’s post I’ll bring it up to present day. There are going to be so many things happening in the next six to eight weeks but this is really a fun time…. no, really. (Say this repeatedly until you actually believe it…)

Tampa training was awesome. Even though this is a new franchisor and they don’t have the resources of some larger companies I’ve worked for, these folks put everything they have into it. The facility is professional, the content is relevant and well thought out, and the presentation is great. There were times where it was like taking a drink from a fire hose, but it’s normal to feel overwhelmed in this situation – there’s a lot to learn. We covered everything from marketing the product to hiring, equipment, inventory, vendors, you name it. And although a week didn’t seem like enough time to cover everything, I don’t think we could have absorbed much more – you just can’t expect to learn it all at once.

Back in Tucson, I’ll meet with the landlord and their contractor to get their demolition and my build out underway, start working with the franchisor’s vendors to line up things like equipment and inventory, set up accounts with my vendors, work on all the licenses and permits I’ll need – a LOT to do.

One thing that’s become very apparent is that everyone I talk to about this business seems to have a genuine interest in the product. They see the same fun and excitement I see and they’re anxious for us to get open. Time will only tell if that will translate into real sales. But for now, I’ve got a lot to do to get us open.

And, oh, there’s the brokerage business to think about! I have quite a few active clients and I’m really excited about a couple of new franchisors Rick has brought on board lately, but I’m going to have to devote some time to study their concepts before I can present them. Oh so much to do. This really is fun, this really is fun, this really is fun….

The lease is now final. Rebecca and I met at the agent’s office and signed all the necessary documents and gave the landlord the lease deposit. For the next five years at least, we are now officially back in the retail business.

Tampa looms large and I have a lot to do before leaving. UPS just delivered a huge box of training manuals that Big Frog wants me to review before I get to training. I’m cramming a bit to get to their June class so I’ll have to take any material I don’t finish on the plane with me. I’ll surely find some quiet time there to get through everything.

So, for now, things are pretty much on track. Franchise contracts, lease, then training. Leaving Sunday for a week, spend a few extra days visiting family and meeting with my business partner. So far, so good.

Now that the franchise contract is signed, a lot of things will start happing and the two most important for now are site selection and preparing for training. Let’s start with site selection.

Site selection is an art unto itself and I won’t try to explain the entire process here, but if you don’t have any experience in this area, that’s OK. Most franchisors provide  plenty of assistance. They can’t very well expect to grow if they don’t. They’ll show you how to find a local commercial real estate agent, give you a list of site criteria, and guide you through the entire process.

I mentioned earlier that I’d found a site I like. I’ve contacted the landlord’s agent and scheduled to meet her at the site and look it over. And I sent the site info to the franchisor to see what they thought – they said it fit their criteria perfectly. I met with the agent, got the rent and other vitals and started working on a Letter of Intent (LOI). In my LOI I offered what I thought was a fair rent rate and suggested a few terms that would help me get off to a good start. I don’t mean to skip through this too fast but, again, the franchisor is going to be taking the lead most of the time. I’ve done it many times in a past life so, if you haven’t, rely on the franchisor for help – the lease has more liability than any document you’ll sign.

But I have to make sure I’m not overlooking anything in other areas of town. Based on the way Tucson is laid out, there are three primary areas I’d consider for a store – northwest, central and east. My current pick is central and the east side is my last pick for a store – simply not as concentrated shopping areas as the other two – so I took a drive on the northwest to see what I could find. There was only one site that was on par with my first one, but it was twice the price. Strikeout. Nothing else even came close so I’ll see if I can wrap up the deal on the original site.

After a few exchanges with the agent, we’ve come to terms. In fact I think I got a pretty good deal. The lease is coming over today and I’ll start reviewing it right away. I really suggest you use an experienced real estate attorney for this and I can recommend several to you should you ever need it.

Once the lease is signed, I’ll head to Tampa for training at Big Frog’s corporate headquarters. In the meantime, I’m already feeling the extra workload this has added to my brokerage business. Business is good, I’m not complaining – I’ll just have to deal with it. More later.

I signed my franchise contracts today. After weeks of research and due diligence, it all comes down to this. Actually, it’s all just now beginning but nothing happens until I send the contracts back to the franchisor, big fat check attached. I leave next week for training in Tampa then there’ll be a million things to get done before we open in about 90 days. No surprise - it’s pretty much what I signed up for, but a milestone nonetheless.

One important step I haven’t touched on yet is financing. And the reason I haven’t spent too much time on it is that it’s really different for everyone and therefore anything I do may or may not apply to someone else. And that’s another reason why I recommend using a franchise consultant or broker if you ever decide to get into this. They usually have experience with helping in this area and, as in my case, they may have gone through it for themselves.

I welcome any questions or comments you might have in this area. If you’d like to know more about the options available to you or to discuss the ins-and-outs of how to review the franchise contracts, drop me a line via the “Contact” tab on our web page. I’d be glad to help.

Suffice it to say, the financing needs to be lined up before you go signing any franchise agreements or paying any fees. But once financing is in place and you’ve found the franchise you think is right for you, be ready to step up and sign the check. It’s the last step in our process – DECISION!

And it feels good to have made it to this stage. All hell’s going to break loose soon and I know I’ll feel overwhelmed at times, trying to pull everything together for a successful opening. But for now, it feels good. And I’ll enjoy it while I can.

OK, we’re ready for the “Big Reveal” as they say on those reality TV shows. The franchise I’ve decided on is called Big Frog Custom T-Shirts & More, based in Tampa. There was a lot of work to do to get to this point, including:

• Contact Rick and get a current list of the franchisees.
• Review the current copy of their Franchise Disclosure Document.
• Contact a sampling of the franchisees and start learning things from their perspective.

When you’re in this stage, there are a lot of things you need to ask about, both from the franchisor and the franchisees. From training programs to territories, management structure, advertising funds, etc. That’s why we make sure we give our clients separate lists of questions to ask each. It makes sure nothing is missed and the whole process is easier.

With Big Frog, I already knew what I needed to know about the franchisor. I’d recently helped my Houston client with his Big Frog purchase. Then I got on the phone with a sampling of their franchisees and found out what I could about their experiences, their sales, and the key expense items. As I did this, I entered the data info into a spreadsheet and began building my own set of projections. I’ll use this to project my profits but also as a tool for any funding I might seek.

Enough for now. The suspense is over and I still have a lot to do.

So, a T-Shirt franchise eh? Yeah, I know what you’re thinking. But bear with me a bit.

There’s a little bit of a story behind how this franchise came to be. Remember my partner, Rick Shampaine, who’s in Tampa? Well, he got a call a few years back from a banker friend who mentioned that he knew of a company that he thought Rick could help. When Rick asked what kind of business it was, he was less than excited to hear it was a t-shirt shop! His first impression was of the old, tired concept of a store full of the heat press decals, the ones that would flake off after a few washings. 

After a bit of prodding from his friend, Rick finally agreed to meet with the company and only then did he discover that they really did have something unique. They had created a retail business around a new ink-jet printing technology that, until then, had only been picked up by a few screen printers and wholesalers who really hadn’t done much toward getting it into the mainstream.  The owners were highly educated, technically proficient, had extensive business experience and, most of all, their proof-of-concept store had posted some impressive initial financial results. 

Not only did Rick help them become a franchisor, he is now their franchise development expert and has helped them grow to over a dozen stores in only a year and a half. Actually I helped a bit as I’ve sent them some clients as well. They’re now up to 14 stores and I’ll be  number 15 if I sign.

So what’s the franchise name? Whoops, my word count thingy says I’m over the limit. Actually it’s just late and I need to turn in. More tomorrow – I promise.

By now, you’ve seen this process of buying a franchise up close, closer than most ever will. You’ve heard about CONSULTATION – PRESENTATION – DUE DILIGENCE – DECISION and the way we use it to hone in on a person’s preferred business model. I’ve used this same process for myself, with the exception of the CONSULTATION part since I’d probably get some pretty funny looks from the family, sitting there talking to myself.

And I’ve made it through the PRESENTATION part, whittling down the franchises that were a close fit, finally hitting on one that may show promise. Now it’s time for the DUE DILIGENCE.

And to finally let you guys in on what the franchise is exactly.

But I promised to keep these posts short, so now’s as good a time as any to start making good on that. More later.