Multi-Unit Franchisee Magazine Issue II, 2017 - Page 52

ADDING NEW BRANDS doesn’t stop with the franchisor. A franchi- sor’s strength (or weakness) can be found in the happiness and financial health of its franchisees. Speaking with as many fran- chisees as you can is a critical, yet much neglected step in the evaluation process. Meeting franchisees face-to-face provides invaluable insights into the day-to-day life of a brand. “They are in the same boat you are, they see the same things, and 90 percent of you are having the same experience,” says Solomon. Existing franchisees can share the pros and cons of the business, including how long it took to reach prof- itability, if costs are in line with expecta- tions, training, marketing, support, and how a franchisor resolves conflicts with its franchisees. “The first thing I do is go through the franchisee list. My favorite people to call—if you can get hold of them— are the people who left the system,” says Solomon. “You have to take what they say based on perspective, but they will tell you the good, the bad, and the ugly. You have to read between the lines and talk to enough people so you feel like you have a good feeling for the system.” Culture counts Doing your homework before signing on also includes ensuring that the brand’s val- ues and culture are a good fit with your own. This includes the corporate office and its relationship with franchisees, as well as the company’s social and charitable activities. In the end, says Owens, who sits Todd and Audra Fetter 50 MULTI-UNIT FRANCHISEE I SS UE II , 2 01 7 on Wine & Design’s franchise advisory council, finding the right fit means more than financial success. “Make sure a franchise brand fits into your lifestyle and your beliefs,” she says. “Also, that it fits into the community or market you want to bring it into. If you bring something into a market where it is needed, but it doesn’t align with how you feel and you are not 100 percent engaged, you aren’t going to get the full benefit of owning a business.” What if it breaks? Existing franchisees also can help you better understand many of the critical details involved in running the business. Common questions to ask include: Are you making money? What is your view on leasing versus owning? How hard or easy is it to attract good employees in your market? Can you share a bad sce- nario and tell me how you and corporate resolved the issue? “Everything is great when it is good,” says Fetter. “The bottled beer cooler doesn’t break Monday through Friday—it always breaks on the weekend. In those situations, who do you call?” These days, Fetter, whose business is a family affair, is happy to say good things about the brand to any prospect. He’s learned a lot since opening his first Buffalo Wings & Rings in March 2013, when he was optimistic but realistically cautious as he embarked on his brand new venture. “I was still unsure. What if we had the one store in the history of the earth that we open and no one comes? You have a big loan and a lot on the line and I had never been in the restaurant business,” he says. “I learned it was pretty much like any other business in that you have to watch your labor and costs.” His conservative approach gave the first-time franchisee a chance to test the waters of his franchisor’s ongoing sup- port before adding another unit—a key element potential investors should inves- tigate, he says. “Do they really support you, or is that just a sales pitch? If they hadn’t been there for me and supported me when I had questions, sending people in and helping me along the way, I never would have done a second one, much less seven or 10.” What if things go south? There will be times when a deal doesn’t work out as expected, despite all the best intentions and due diligence both sides invested. Whether it’s internal factors, external ones, or both, it’s wise to have a Plan B. Before he invests, says Werner, he makes certain he has an exit strategy. “If I get in, how am I going to get out?” Werner also has developed a strategy to increase his odds of success: he has transitioned from the traditional multi- unit franchisee model to an 80/20 con- cept, in which he provides 20 percent ownership and a guaranteed salary to a managing owner. “I try to recruit high-caliber talent or someone who has been with me for years,” he says. “The brand runs better because I can’t focus on everything by myself—and I don’t have to worry about it because I know someone else is worry- ing about it for me.” Solomon looks for commonalities among brands to build operational ef- ficiencies with expansion. Yet, no matter which brands they choose, buyers must approach any investment with open eyes and realistic expectations about the fran- chisee-franchisor relationship. “There are a lot of misconceptions about what a franchisor does and doesn’t do,” he says. “A franchisor is kind of like a consultant—kind of there and kind of not. You have to understand what your franchisor is willing to do for you. Your franchisor can’t balance your books for you, and they can’t tell you whether to hire or fire. The franchisor is someone who gives you guidelines, but they can’t run your business for you.”