Busting the Myths of Franchising
It's important to balance challenges with something personally meaningful.
In preparation for keynote franchise conferences, I always interview franchisees from the brand I'll be addressing. Over the years I've met a lot. I ask the best ones why they're successful. I see who they are and what they do. Then I talk to the struggling franchisees and ask them what they believe their high-performing counterparts have going for them. Often there's a huge disconnect.
I also ask the franchisors for their thoughts. They have a wider perspective, as they see the results over a wide field of franchisees running the same operations. They also tell me about the misperceptions many franchisees have about their top performers. To understand and replicate the success of top franchisees, we must dispel the myths about them. Here are the common ones.
They have winning locations
A fellow franchisee once told me how lucky I was to have my store location. I was a little insulted. He knew nothing about our operation or our customer service. He only knew our address, which was close to Beverly Hills. In his mind, rich people were lining up with stacks of Benjamins to buy enormous fruit baskets. But that wasn't our customer base. Our prestigious territory came with little parking, constant traffic (making deliveries tough) and high rent. I wouldn't sign that lease today. Our high sales weren't because of where we were. They were because of what we did.
Location absolutely matters in franchising, especially for restaurants and retail. Demographics, population density, foot traffic — they make a difference. You've got to fish where the fish are. Your franchisor can help with this. They know their customer profile and should be able to analyze your territory — at least on paper — and assist with site selection. Sometimes a great location can compensate for lackluster operations. It can also make some franchisees feel a little more confident about their business acumen than they should.
But a great location may be hard to identify. It may be too expensive. Or it may just not be available. That's OK.
Ultimately, it's the franchisee who will make or break the business. Franchisors all have stories of amazing operators tearing it up in locations where others failed. Their loyal customers travel long distances to repeat a great experience. Their dedicated, well-treated employees work harder to create those experiences.
Just ask Burke Jones, who twice bought struggling locations of The UPS Store. One was in an average neighborhood without any demographic advantages. The other was four doors away from a FedEx Office store. With his stellar customer service, he built each location (on separate occasions) into the number-one unit in the entire network of almost 5,000 stores.
Wealthy franchisees look for great locations but don't rely on them. For them, "good enough" is all it takes. Give the top franchisees in your system more credit. Their excellent operations make locations look better and may be easier to replicate than their ZIP codes.
Wealthy franchisees work hard and put in the hours. So do many typical and struggling franchisees, of course. Hard work isn't the secret to success. It's the prerequisite. Lots of franchisees are sacrificing and sweating, but not all of them are getting results.
The high performers I meet aren't always putting in more hours; they're putting in better hours. They know the difference between activity and productivity. They work on their business, not just in their business. They develop leaders rather than manage employees and put the necessary infrastructure in place to ensure they don't have to do it all themselves. A franchisee who owns 20 locations has no more hours in the day than someone with just one. With the right people, training and systems, their work yields more results. They're no busier than other franchisees; they're just more productive.
They have previous experience
Yes, previous business experience can give you a head start. Financial literacy, customer service, leadership, sales, marketing — these are all skills you can bring with you to your franchise. But "business" is a broad word. You can develop skills in one endeavor that don't translate into another. Past success in one career is in no way a guarantee of success running your own business. Even in a busy, high-stakes corporate environment, there's structure, feedback and a regular paycheck. There are bosses, expectations and a lot of intensity.
Franchisors complain to me that many new franchisees with a lot of outside experience have a difficult time embracing their systems. They come with knowledge and biases that make it hard to trust the company's methods. They have a hard time unlearning old ways of doing things and believe they know better than the franchisor. They try to outsmart the model.
Most wealthy franchisees stick to the system. When I try to convey this concept onstage, it can make me sound like a corporate shill, but it's true. I don't meet franchisees who've gotten wealthy by defying brand practices. But I do meet a lot of great franchisees who don't have extensive business experience. They come in fresh and open and curious. They trust the ops manual, bring the right mindset and execute better than anyone else.
So yes, experience is advantageous — provided it doesn't conflict with proven systems or close your mind to new ways of doing things. And if you don't have experience, don't worry. Running a franchise is the perfect way to acquire it.
They're more educated
I'm grateful for the higher education I was privileged to get. It made me a better, smarter, more informed person. But it didn't make me a better franchisee. Books and lectures can tell you a lot about swimming, but they can't make you a swimmer. If there was ever a discipline that needed to be learned in the field, it's running a franchise. I watched one of my neighboring Edible Arrangements franchisees drive his business into the ground. He had a master's in engineering. A less educated franchisee with more relevant skills bought the business and made it profitable.
Many franchising legends never went to college. Peter Cancro was only 17 when he bought Mike's Subs, eventually turning it into Jersey Mike's. Wendy's founder Dave Thomas dropped out of high school and didn't get his GED until he was 61. And these are franchisors. I've met countless successful franchisees who also got their education on their feet and in their stores. To be a wealthy franchisee, you don't have to be a college graduate as much as an ongoing student. What you know is less important than what you're willing to learn.
They love the business
I've heard different opinions on this. While CEO of Naf Naf Grill, Paul Damico told me without question that his top performers had a passion for their food and the experience they provide. I heard similar sentiments from Erin Walter, vice president of brand marketing at Freddy's Frozen Custard & Steakburgers. Their best franchisees also love delighting guests with Freddy's comfort foods and custard treats." When I asked Tropical Smoothie Cafe's CEO Charles Watson what his top franchisees have in common, the first thing he said was "passion for the brand."
But Great Clips vice chair Rhoda Olsen disagreed. ""Do what you love' is BS," she said. "This is work! We don't believe people need to be passionate about hair. They need to be passionate about the elements that build their business."
My take is that what franchisees love about their business is less important than that they love something. Whether it's the product, the process or the people, some element of their business should jumpstart their heart. Running a franchise is tough. It's important to balance the challenges you face with something personally meaningful to make the difficult times worthwhile.
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