To the Rescue

Last month, Jack was in trouble. a potential developer had pulled out of the deal to build a retail location for Jack's franchised oil-change center. The property was perfect, but funds were tight. It has been nearly a year since our franchisee met with his bank to gain pre-approval of a deal that's now beginning to seem hopeless. Jack is adrift in a sea of choices, and he needs help.

The moment Jack's potential developer pulled out, I counseled him to seek the guidance of his fellow franchisees so he could learn from their experience. Jack declined to do so. Instead, he made a bold move by writing a purchase offer for the land he so desperately wanted. Jack did so with the degree of optimism that leads many a naive entrepreneur into rocky shores. However, to stave off another potential purchaser, he felt a swift stroke of the pen was required. The offer was accepted, and Jack fortunately included a 60-day contingency period in his offer, which would permit him time to gain financing. Now the clock is ticking.

Jack's next phone call is to a builder who was suggested to him by his attorney. The builder is interested and, shortly thereafter, contacts Jack's franchisor to request building specifications. This phone call is the breakthrough Jack needed. When the franchisor receives the message from a stranger interested in their construction specifications, they call Jack to find out what the heck is going on. Jack mentions he's searching for developers. The franchise representative asks, "Didn't you pay us that real estate assistance fee of 10 grand?"

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Jack had in fact done so months earlier but thought the fee was being used just to find a location. Apparently, the rocky start Jack had with his franchisor had diminished his reliance on them, so when the franchisor informs him, "You don't have to do that. We do that for you," you can imagine Jack's surprise. At that point, things start to move quickly as the franchisor helps Jack form new relationships by making a few phone calls on his behalf.

With the franchisor's recommendation, Jack meets with another builder who had already constructed a number of the franchisor's facilities. This guy knows the exact expense and the timing of building the oil-change location. Realizing firsthand the advantages of being a part of a larger system, Jack moves forward with renewed faith. "I want to follow their plan, their formula. I don't want to be a rebel," he says.

If they handed out report cards for franchisees, I promise you most of the multimillionaire franchisees out there would score high in the category "gets along well with others." The best franchisees are excellent followers. Listening to the experience of your franchisor and other franchisees is a primary benefit of being part of a system.

To excel at this, you must be willing to treat the other participants in the organization as respected friends. By contract, franchisors agree to provide a certain level of minimum service to their franchisees, but those with an individual connection with the home office are far more likely to get a positive nod in questionable situations. It's wise to establish relationships with those who will be supporting you. Make a point of calling, remember a birthday or send a thank-you note, and you may end up being the first person called when a new opportunity is born. This can be hard to do, considering writing a royalty check every month is about as much fun as paying estimated taxes, but in franchising, nice people do finish first.

Soon it will be time for the next leap of faith, as Jack has to time the departure from his "real job" so he can access his employee savings plan. This sum, which amounts to about $50,000, cannot be accessed until he quits. Because Jack had already established a banking relationship before he needed the money, his bankers are now working with him to fund his dream. Accordingly, Jack and his wife, Diane, may be able to finance the franchise and the building with only 17.5 percent down.

Saved from the throes of desperation, Jack is suddenly upbeat again: "You know what? I'm ready. Bring it on." We'll see if that enthusiasm persists as Jack goes into unemployment free-fall, writing big checks while his bank account has yet to reach critical levels. Stay tuned.

*The franchisees' names have been changed.

Todd D. Maddocks is a franchise attorney and small-business consultant who is founder of Franchisedecision.com. You can reach him at yourcounsel@attbi.com.