Don't Buy a Franchise

That is, if you have an ironclad business model, you don’t need a franchise. The problem is that business models are formed via an expensive and time consuming process of trail and error in the unforgiving, real world marketplace. People buy franchises and licensed business opportunities in order to mitigate their risks when starting a business. Having a fully formed method for making money is what makes buying a proven model, one of the safest ways to become a business owner. 

B-school professors like to say that the number one reason businesses fail is that they are under capitalized. The real reason they fail is because they lack a sufficient method for getting their product or service into the hands of enough paying customers. This causes the business to run out of operating capital before they can generate enough revenue to cover monthly expenses.

Distribution is the key to any business and it starts with finding customers. Many brilliant business concepts have fallen by the wayside, for lack of an effective sales and marketing strategy. Ralph Waldo Emerson is often credited as saying “Build a better mousetrap and the world will beat a path to your door.” This is simply not true and any entrepreneur can attest to that. Acquiring new customers can be the most difficult, costly and time consuming activity for business owners. Franchises have already perfected the sales and marketing component of the business, which makes initial growth much easier. 

Best selling author and futurist, John Naisbitt has called franchising “the most successful marketing concept ever”. In a franchise, you not only have an established product,  but a field tested distribution strategy and an experienced business partner guiding you. Of course, there are other benefits in a franchised business model, but the goal of any business is to create profit and that is a lot easier when your sales are robust.

Have a question about business opportunities? Send it to dbrunell@dearbornwest.com. Dan Brunell is President of Dearborn West, LLC, an international business opportunity brokerage headquartered in Temecula, CA. He can be reached at (951) 587-6929 or on the web at www.dearbornwest.com.

 

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Dan Brunell

Dan Brunell is the CEO of Dearborn West, LLC, an independent boutique consulting firm that specializes in entrepreneurial talent acquisition and training. Dan has fostered recruiting relationships with over 300 franchise systems throughout North America, created and delivered customized training and coaching programs for global consulting network, and established the best practices and ethical guidelines for this emerging industry space.

Internet Obfuscation

These days most people will use the internet to shop for a business opportunity. This is a reasonable method for gathering information, but be careful not to let the internet define your range of options. This is a common mistake and it is easy to get caught in that trap. The advertising dollars spent by franchises and business opportunities do not correlate to the relative quality of the company. In fact, I see many downright lousy opportunities featured prominently in the search rankings on Google every day. 

The internet is a great source of information, but it is like a library so knowing where to look is imperative to finding the right data. Answers are easy, knowing what the questions are is the hard part. 

Any company with a deliberate and focused web strategy can rank high in the major search indices for the categories it wishes to dominate. With Pay-Per-Click advertising anyone can side step the whole web optimization strategy and be at the top of any keyword searches that they wish to purchase. The result is that any company, irrespective of their size, quality or history can dominate the search engines. This leaves many people to confuse internet prominence with true success in the marketplace. 

One way to minimize the impact of this is to use the search engines in a different way. Instead of searching for “franchises” on Google for instance, try searching for something that you enjoy like running or baseball. Within the search results you will find companies that cater to these interests and some of these will be business opportunities. When you click through to the website, look for information relevant to franchise or license opportunities. Of course, just because you like an activity doesn’t mean it is the right business for you, (lifestyle considerations are the key) but you will be finding companies that you would normally never see if you typed in “sports franchises” unless you scrolled through to page 46 on the search results. 

Remember that a growing franchise with a brand name that is not recognized in your market yet, often represents the best opportunity. As long as the model has been successfully replicated in other markets multiple times and has experienced leadership, it should be a good bet. And if you are not sure, call our franchise help line at (951) 587-6929. 

Whatever you do in your search, be sure to talk to lots of people. You can only gain the subjective information that will make a difference to you personally by speaking with people who operate the franchise units. The Web is a great resource if you utilize it as a tool, not a road map.

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Dan Brunell

Dan Brunell is the CEO of Dearborn West, LLC, an independent boutique consulting firm that specializes in entrepreneurial talent acquisition and training. Dan has fostered recruiting relationships with over 300 franchise systems throughout North America, created and delivered customized training and coaching programs for global consulting network, and established the best practices and ethical guidelines for this emerging industry space.

Brand Name vs. Brand New

Brand Name vs. Brand New

Many big name franchise brands are no longer attainable for the average aspiring business owner. As a franchise grows and builds on its success, often the bar is raised regarding financial requirements and experience qualifications. This is why most units of the top food franchise brands are owned by large restaurant groups. They have the experience, infrastructure and financial wherewithal to launch multiple units. 

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