HOW TO BUY A FRANCHISE (10 COSTLY MISTAKES TO AVOID)

BY CAREYANN GOLLIVER

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PURPOSE OF THIS REPORT

The purpose of this report is to act as a guide in helping you find the right franchise

opportunities to target. If followed correctly, this exercise will hopefully end with a perfect

match as a result, eliminating the most common mistakes people experience when

selecting a potential business purchase.

ranchising is a favored business

model because it works so well. You

will be executing a plan that has

been tested and proven over time,

which greatly reduces your risk of

business failure. Just like anything

else, not all franchise organizations

are created equal! A great franchise

organization has developed

successful systems, tools and

processes that help you get started

toward a profitable track with your

business venture. Contrary to what

most think, you do not need to be an

expert or have experience in any

one particular industry to be a

successful business owner.

You have to change your way of thinking

and remove yourself from the employee

role, while taking on the employer role of

sitting in the CEO seat. Throughout the

term of your franchise partnership you

will have the benefit of being in business

for yourself, but certainly not by yourself. If

it’s time to fire your boss and take

charge of your future, keep reading.

Franchising is big. Really big. According

to the International Franchising

Association there are over 825K

franchise businesses operating just in

the U.S. alone today, which support 18

million U.S. jobs and add $2.1 trillion to

the domestic economy.

As a whole, there are over 3,000 types of

franchises in 90 different categories to

choose from. With one out of every

seven dollars spent in a franchise

business, it’s safe to say that franchising

is a part of our everyday lives.

As a franchise business consultant, I help

individuals understand and identify high-

quality franchise opportunities in which to

consider investing. I can help you navigate

through thousands of opportunities and

guide you on the best ‘how to’ due diligence

you should be conducting. All before you

ever consider spending a single dime.

Finding a franchise is easy but finding the

right franchise to match your goals is not.

There is a lot of information here so don't get overwhelmed.

I’m here to help you each step of the way. Great franchise

companies are looking for candidates they believe will execute their

business model, be trainable and share common core values.

Because a franchise system is solely dependent on the success of

whom they award their franchise license to, they invest in

relationships with professionals like me to help them find those

ideal matches. Just as it has to be the right fit for you, it has to be

the right fit for them. After all, this is meant to be a profitable

partnership. The franchisor is more than willing to pay a referral

fee if a perfect match is made, making this service absolutely free

to you. Becoming an educated franchise buyer is key.

I can get you to the front of the line working with the best of the best franchise organizations out there today.

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LET'S GET STARTED! Here are some of the most common mistakes I would like you to avoid as you begin researching franchise opportunities:

NOT CONDUCTING A PERSONAL EVALUATION

Buying a franchise is a huge decision. For many, it’s the biggest financial decision they will ever make next to their home purchase. So, spend the time thinking about the following:

• What is your personal vision, desire and

long-term goals for business ownership?

Consider if the franchise in which you

have an interest can fulfill these

objectives.

• What do you want your role to be?

How much involvement do you

desire? How many hours do you want

to work and which days? Are you OK

with working weekends and evenings

seven days/week (e.g. restaurant-type

businesses)?

• What kind of environment makes you

comfortable? Do you want a home-based

business?

• How comfortable are you managing

others - including hiring and firing

staff? Most franchises do involve

employees other than you.

• What are your transferrable skills?

Make sure to compare your personal

skills that will lend themselves to

business ownership. Write out a list

of skills in which you excel.

• You don’t have to be an expert on

everything, but if you know where you

are strong and where you are weak, you

should plan up front to build your team

accordingly. The key is matching up with

the right franchisor. If chosen correctly,

they can bring the core strengths into a

system where you are lacking.

• Don’t buy a pizza franchise because

you love pizza. Buy it because it’s a

good business opportunity.

• Do you have an understanding and

comfort level with financial

statements (e.g. P&L, Balance Sheet

and cash flow statements)? If you

need some help here, consider

buying Robert Kiyosaki’s “CASHFLOW

Game”. It’s a fun way to get

comfortable with these concepts.

(Board game available at

amazon.com)

• If you are thinking you will follow

80% of the program, but tinker with the

rest, do not try to reinvent the wheel.

What you are buying is a proven

system and if you are not willing to

follow it completely, don’t buy any

franchise.

• Solid franchise companies require

you to follow their rules and proven

systems and reserve the right to

terminate your franchise if you don’t. I

can help you understand the power this

lends YOU as an owner.

• If you are the next Steve Jobs -

wanting to create a billion-dollar

business and invent things as you go,

a franchise is

definitely not for you. Take your idea

to venture capitalists for funding to do it

your own way.

• Make sure you understand that this

venture is not going to be easy – it is

work. Franchising is less risky than

starting a business on your own due

to the proven systems they have in

place. But you still have to run the

business. If it were easy, everyone

would be a CEO instead of working for

one.

• Know your income expectations. Are

they realistic? Define them. You

won’t know if you’re achieving them

until you know what they are! While

conducting a proper evaluation,

speaking with average franchisees

already in the system will be a key to

finding your right match. You may

need to be a multi-unit licensed

owner to reach your financial goals.

It’s best to know this at the beginning

of the process.

• Do you want to be a semi-

absentee owner? If so, make sure the

franchise system you are

investigating allows it. Some do,

some don’t.

• Make sure to include all decision

makers in your investigation and

decision-making process. It’s hard

enough to start and build a business

with support, but without it, your

chance for success decreases

significantly.

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Buying a franchise is a huge decision. For many, it's the biggest financial decision they will make next to their home purchase.

NOT HAVING ENOUGH CAPITAL

Let’s be real, owning a business takes money. Following the franchisor’s guidelines disclosed in Item 7 is a great start, but only gets you through the first 90 days. It’s best to make sure you have the capital for both startup and funding

operations for the first few years.

• Having extra reserve capital is never bad,

but having too little capital can knock you

right out of business.

• Don’t look at concepts you cannot afford

or can barely afford. Any small mistake and

you’ll be in trouble.

• Think cash flow, not just profits. A business

can show a profit, but still end up closing

down due to a lack of cash flow. If this

sounds strange, I’ll be glad to explain.

• Don’t just think sales. If your costs are out

of control, hitting your sales goals may

not matter. Most systems have guidelines

for you on each expense category, so that

you can tell if there’s a problem in any area

quickly.

• It’s OK to use debt for a portion of the

funds needed. Take a good look at your

resources. The good news is, for most

there are options. Consider using your

401K, IRA, equity in your home, equity

in other property, investments or even

funds from family members or a partner.

Consider a franchise organization that is

on the SBA registry for a 70% funded small

business loan. To learn more visit: www.

sba.gov. Working with a professional

in the franchise industry such as myself

will lend you introductions to the best

funding resources. These will include

people who understand the rules &

regulations of how to accomplish this

exercise because they do it every day.

• Don’t just think about the funds needed

to grow the business to sustainability, but

consider your living expenses. How much

do you need to keep the lights on while

growing the business? Make sure that’s

also covered in your budget!

• Look at the ROI of each system you are

considering. Understand that you should

expect an appropriate salary AND a return

on the capital you invested.

NOT INVESTIGATING THE INDUSTRY

Don’t think that just because the Federal Trade Commission

has requirements for franchise documents, each company has been evaluated and checked to make sure they are solid investments. They haven’t. Check for the following:

• Is the franchise industry growing or

dying? An example of a declining industry

is a small-run printing company. With

technology constantly evolving and

becoming more affordable, most people

already have sophisticated high-volume

color printers in their homes and offices.

• Another declining industry is photography.

With the new digital cameras and even

savvy smart phone camera options

approaching a professional level,

everyone is now a photographer.

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• An example of a solid growing industry is

elder care. Franchises in this industry

provide products and services for Baby

Boomers as they age. Population

dynamics are driving the elder care

industry, so it is currently in high

demand and expected to grow for years

to come.

• Know your goals. Long-term trends offer

security and sustainability, while pioneer

brands may yield strong sales for short-

term goals. Just know what you want.

While the rise of the elder care industry

results from a population shift, novelty

food items like frozen yogurt are

examples of businesses that could easily

come and go.

• With thousands of different franchise

opportunities available, understanding

what is real and not real, which ones are

quality organizations and which ones are

not certainly can be overwhelming for

someone who is just learning about

franchising. As a franchise business

consultant, I have helped hundreds of

people find that perfect match and I make

it my business to help you make your best

choice.

• Strongly consider industries and proven

systems that will do well in a bad

economy or recession. For example,

there are franchise organizations that

do well in a good economy but thrive in

a bad one. Really? Really! I can share

with you why.

• Look for industries where the franchises in

that space have good gross profit margins.

Tight margins can hinder your end goals.

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NOT KEEPING AN OPEN MIND

If you have never bought a business before, you may not know where to begin.

This is where my help can be most instrumental for you. Time is something you can never regain. I will respect and protect your time, making sure you won’t waste any of it evaluating something you cannot afford, which is not available in your area and most importantly doesn’t fit your goals and criteria.

There are thousands of franchises in hundreds of various categories. The best one for you could end up being one you never would have imagined or even knew existed.

Experience counts! Having over 20 years of small business experience, I am continuously connected to the safest, most lucrative and fastest-growing franchise companies.

Throughout my career I have helped hundreds realize the American Dream of owning their

own business.

My approach is process driven and all about YOU. I combine my experience in the franchise industry with an understanding of your most important goals, passions, and motivations, as well as your spending tolerance. The better I can see through your eyes, the better I will be at finding an opportunity that represents a perfect match for what YOU want.

NOT DOING YOUR RESEARCH

There is no shortcut to doing your research. Before you can begin, you first have to identify the target companies to investigate. Once we have identified the right companies, statistics show that doing a thorough investigation on a

franchise takes between 10-20 hours or 2.5 - 4 weeks from beginning-to- end. You certainly do not want to

waste that many hours on the wrong opportunity which doesn’t meet your needs and goals! While the terms and policies are not generally up for negotiation, the purpose of reading the entire Franchise Disclosure Document (FDD) carefully is to make sure you understand the rules

entirely.

• One of your most important tasks is speaking with existing operators. Having proper structure in your approach to this exercise is the key to getting the right information you need. Validating what you have read and been told through others running these businesses is a critical factor in the information gathering stage and should not be skipped.

• As your coach, we will use “best practices” to get the facts you need to make your final decision.

NOT CHECKING TO SEE HOW TECH SAVVY THEY ARE

The online world is constantly changing. You want a system that is up-to-date and stays with the trends to make it easy for your customers to do business with you. Here a few ways to tell:

• Look at the franchisor’s website. Is it easy to navigate? Is it focused on helping the franchisees get business or to sell more franchises?

• Look at individual franchisee web sites to see how easy they are to navigate. Is there an opt-in form to capture leads, also called a “conversion point”, that does not require scrolling down to the home page

to see?

• Do they have a blog? How frequently are posts uploaded to it? Is there an easy way to subscribe to posts?

• Are both the franchisor’s and franchisee’s sites mobile friendly? They should look and function well on all brands and sizes of mobile phones, tablets, laptops and other devices.

• It’s hard to underestimate the importance of mobile. See figure 6.1, 6.2, 6.3 and 6.4 on the next page which shows data from a 2014 Microsoft infographic about the trends of mobile use.

• Are they using the social media channels and how often? (e.g. Facebook, Twitter, YouTube, LinkedIn)

• See figure 6.5 on the next page for some stats on the importance of social media, also from the same 2014 Microsoft infographic about social media & mobile use.

• Websites that are not mobile friendly will start getting ranked lower on the search engines this year. The stats show that users accessing non-mobile compatible web sites spend less time on the site and are less likely to take any action while visiting.

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MARKETING

ABOUT THE TRENDS OF MOBILE USE AND SOCIAL MEDIA

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figure 6.1

figure 6.5

figure 6.2 figure 6.3

TRENDS

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figure 6.4

NOT UNDERSTANDING HOW TO GET CUSTOMERS

Obviously, you can’t have a business

without them, so how will your franchise partner help you gain your customers? Things to ask:

• What systems does the franchiser have in

place to help you get customers?

• What is the average value of a customer over their lifetime as a customer? For instance, if your customer value is twice that of a competitor, you can spend more to get a customer and totally dominate your market as a result.

• What does their customer acquisition cost? Each method will probably be different.

• What advertising and marketing is provided for you? How does it work? What do you pay and what does the system generate in return for ROI?

• Do they have any referral programs? What are the stats on how well do they work?

• Do they provide any help in driving traffic to your web site?

• Do they have any paid traffic campaigns that are working well? Are they willing to share these statistics with you?

• Do they have marketing systems that find you prospects, help convert prospects to

customers and stay in touch with all the prospects that don’t become customers, so that they will buy from you later?

• Do they have systems to help you upsell and cross-sell?

• Do they have both customer retention systems and programs to increase customer value over time?

• Is there a co-op advertising program in your area that you can participate in to reduce costs over time?

NOT LOOKING AT THE MANAGEMENT'S VISION, CULTURE AND GOALS

• Where does management plan to take the business? What are their one, three and five-year goals? Can they share their vision with you?

• Are they more focused on finding new franchisees or in helping existing franchisees grow and profit?

• Has management had at least three years

in the business and do they have successful past experience in franchising?

• Does the culture of the business match your comfort level? Culture can be hard to define, but you should know if you feel comfortable with the people and how they operate (or don’t) once you visit them in person at a Meet the Team Day.

• How does management interact with home office employees and with existing franchisees? Is there a family atmosphere between management and their franchisees or is it more formal and rigid? Not to say one is better than the other, just make a note of this and whether or not you will be a fit.

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9 NOT WORKING WITH SUPPORT FROM A FRANCHISE CONSULTANT

As we stated earlier, you can’t begin a proper investigation until you identify which franchise companies

to target. I can help you become laser-focused, as your investigation is the most crucial part of your franchise purchase. Spend your time researching the best of the best. A franchise consultant will help you narrow down the field, saving you time and a lot of frustration.

• The best franchise companies invest time and money in developing working relationships with knowledgeable franchise consultants who will help find them matches that best fit their systems.

Successful franchise consultants are those who take the time to actively listen and understand your vision and goals, with the end result of finding the right franchises for you to consider. It’s a win-win for all involved.

• When researching online you need to be careful with your exploration. Nothing assures the information you find is accurate or even true. You can find enough information to keep you busy for hours, but are you looking at the right information for decision-making purposes?

• Online data will give you the bird’s eye view, but won’t tell you whether the franchise matches to your goals, your vision,

culture and your skills or your spending tolerance.

• Proper due diligence is key to finding the right match. My website, www.Franchise-Logic.com, is loaded with free education and allows you to schedule your FREE Consultation today.

• Don’t settle on one single thing too quickly! Let me help build your unique model of what YOU want, after all, this is all about YOUR FUTURE. Allow me to match you with the best franchise opportunities which will deliver everything that you want and nothing that you don’t.

WORK "ON" YOUR BUSINESS NOT "IN" IT

There is a great book by Michael

Gerber called “The E-Myth Revisited” (revised book available at amazon.com) He was the originator of this concept. His book is an easy read and I highly recommend it.

Here -to-follow are a few of Gerber’s key points:

• People think of themselves as entrepreneurs because they either buy or have a business. But for many, what they really have is a job.

• Working “in” your business means you are trying to manage and do everything

at the same time. You’ve seen the type. Owners of single retail operations are working 80 hours per week just to keep it all running.

• If your goal is a real business, you’ll want to work “on” your business not “in” it. That means you need to spend most of your time setting up, testing and implementing systems other people can follow in your absence.

• This is exactly what a franchise provides - turnkey systems. You can still get stuck working in your business, but if you want freedom, control and flexibility and to gain a true work/ life balance, work “on” your business

instead.

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EXAMPLES OF... 10

WORKING "IN" THE BUSINESS A gentleman I know owns a well-known sandwich franchise. He’s working 80+ hour

weeks, getting no time off, not making the money he hoped for and is essentially

miserable. He’s working “in” his business. He’s the worker-bee, not the CEO.

WORKING "ON" THE BUSINESS Another gentleman I know owns the exact same franchise business in another state,

but he has 12 locations. He has management in place and works 10-15 hour weeks,

sometimes less. He is making a mountain of money and has all the time he needs to

travel and spend time with his family. He’s working “on” his business by adding more

units.

Here’s a simple test to see which one you’re doing . . .

If you could go on a vacation for a month, never call in to the office and come back

to a business doing even better than when you left, you’ve been working “on” your

business.

If everything would fall apart in two days if you weren’t there, you’ve been working

“in” your business.

Now which sounds better to you?

You and I will go through these steps together to find your perfect matches:

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STEPS

INFORMATION Tell me about your franchise search so far. Keep in mind that life as a business

owner may be very different than the experience you would have as a customer.

QUESTIONNAIRE Take 20 minutes to fill out a Confidential Questionnaire.

ABOUT YOU

Next up - all about YOU. Our consultation together will allow us to dive into the

characteristics you require that make up the perfect business for you to consider

investigating by creating your unique “model”.

TOOL MATCHING We use your model as a tool matching up against prescreened, A+ franchise

companies that are low investment, quick break even with high ROIs. Within

those matches, we confirm with the franchisor that the match looks right and the

learning process begins.

ADVISE Once you begin gathering information on your options to investigate, we work

closely. I will act as your sounding board and advisor. We will be going over what

you are learning and provide you with tools on how to know the next steps

coming your way. This way, you are prepared with your information gathering for

the decision-making process. I will be there every step of the way, assisting you

from beginning to end.

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You will never pay me a dime for my services offered to you. I will never ask you to sign a contract. Franchise companies value finding the right candidate as much as you value finding the right franchise. For this very reason, they provide me a referral fee when a perfect match is made.

There’s never been a better time to go into business for you. And the exciting part is that you will be launching and building a business for you and your family - not for someone else!

I am committed to helping people realize their dreams. It doesn’t make any difference to me which business you ultimately choose, as long as it is the right fit for you. Ready to begin your search for “what’s next”?

Careyann Golliver Independent Franchise Business Consultant

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Visit Franchise Logic and request to schedule a FREE consultation today.

Franchise Logic

CAREYANN www.franchise-logic.com

Mrs. Golliver focuses on helping individuals discern whether small business

ownership and franchising might be a good fit for their future - both

financially as well as meeting their lifestyle objectives.

Careyann is a Colorado native who enjoys a healthy and active lifestyle

that includes ballet physique, hiking, hunting & mountain biking. She is

active locally with Denver Divas ~ Entrepreneur Women’s Group,

Franchise Business Network, Local Littleton BNI chapter and TMI along

with the International Franchise Association, as well as being a community

volunteer.

She strives to maintain a lifestyle reflective to a strong commitment of

balance; determination and drive in her own life and helps others around

her achieve this as well.

Franchise Logic, Inc. Proudly Based in CO advising candidates throughout the US Phone: 303-805-5078

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ABOUT Careyann Golliver brings

over two decades of

personal experience in

small business ownership,

management and sales /

marketing strategies to her

role as a Franchise Business

Consultant. Having started

and assisted in running

a franchise business

herself, she has a unique

perspective when engaging

with those looking to take

the leap into franchise

ownership.