{"id":40763,"date":"2022-06-29T15:01:13","date_gmt":"2022-06-29T19:01:13","guid":{"rendered":"https:\/\/www.thefranchiseking.com\/?p=40763"},"modified":"2024-09-06T12:54:19","modified_gmt":"2024-09-06T16:54:19","slug":"franchise-investors","status":"publish","type":"post","link":"https:\/\/www.thefranchiseking.com\/franchise-investors","title":{"rendered":"Why Franchise Buyers Need To Stop Acting Like Investors"},"content":{"rendered":"\n
\"image<\/figure>\n\n\n\n

Franchise investors<\/strong> are groups\/businesses that focus on investing in a franchise<\/strong>. And they do it for one reason, and one reason only. That’s to get a high return on their investment. Here\u2019s an example<\/a> of a business that focuses on that metric.<\/p>\n\n\n\n

In contrast, franchise buyers<\/em> are people who want to own their own businesses so they can be their own boss. Greg Moore<\/a> is a perfect example of someone who did just that (quite successfully<\/em>).  <\/p>\n\n\n\n

FYI:<\/strong> I just answered a question about investing a franchise at Quora.com<\/a><\/p>\n\n\n\n

\"joel<\/a><\/figure>\n\n\n\n

Stay with me, because this post is going to show you why you need to stop acting like you\u2019re a franchise investor investing in a franchise<\/a>. \u00a0<\/p>\n\n\n\n

Because you\u2019re not.<\/p>\n\n\n

 <\/p>\n\n\n

On Franchise Investors And Franchises To Invest In<\/h2>\n\n\n\n

Investment firms that invest in franchise companies<\/a> and large multi-unit franchise groups have teams of people who use spreadsheets<\/a>, franchise market data, and proprietary algorithmic software to help them analyze the franchise investments they\u2019re considering. Now that\u2019s all well and fine. For them<\/em>.<\/p>\n\n\n\n

After all, they\u2019re looking at multi-million-dollar deals. More specifically, deals that can potentially earn them millions of dollars for merely investing in a franchise company.<\/p>\n\n\n\n

Furthermore, the deals these firms are looking to make take anywhere from 6 months to as long as a year to complete.<\/p>\n\n\n\n

Finally (and this is important<\/em>), the players who are part of these investment firms aren\u2019t looking to step away from corporate America to pursue their dreams of business ownership. Why?<\/p>\n\n\n\n

Because they don\u2019t need to look into franchises to invest in<\/strong>.<\/p>\n\n\n\n

They\u2019re in it for the major paydays that come with major deals. Those paydays can provide remarkable lifestyles for them. Especially if they\u2019re partners (owners<\/em>).<\/p>\n\n\n\n

Now let\u2019s look at a typical franchise buyer.<\/p>\n\n\n

 <\/p>\n\n\n

On Franchise Buyers<\/h2>\n\n\n\n

Today\u2019s franchise business buyers want change<\/em>.<\/p>\n\n\n\n

For a lot of them, corporate life isn\u2019t cutting it anymore. And they don\u2019t want to do a job search<\/a>. Again.<\/p>\n\n\n\n

In a nutshell, they may be sick of travelling<\/a>, working long hours, and\/or having to take on more and more responsibilities. Why?<\/p>\n\n\n\n

Because it\u2019s having a big impact on their family life.<\/p>\n\n\n\n

So what do<\/em> they want?<\/p>\n\n\n\n

They want more freedom <\/a>and more control.<\/p>\n\n\n\n

They want to attend their children\u2019s sporting events and dance recitals.<\/p>\n\n\n\n

They don\u2019t mind working hard…they just want to work hard for them. For their<\/em> futures.<\/p>\n\n\n\n

That\u2019s why their looking to become their own bosses.<\/p>\n\n\n\n

And for some, owning a franchise<\/a> seems like a good way to go.<\/p>\n\n\n\n

But there\u2019s a problem or two.<\/p>\n\n\n

 <\/p>\n\n\n

The Franchise Space Is Crowded And Confusing<\/h2>\n\n\n\n

It\u2019s becoming increasingly difficult to figure out which franchise opportunities are good and which ones are money pits…losing propositions. Why?<\/p>\n\n\n\n

First off, there are more franchise opportunity choices<\/a> than ever before. That in itself creates confusion.<\/p>\n\n\n\n

Secondly, it\u2019s becoming harder and harder to figure out who to trust<\/a>.<\/p>\n\n\n\n

More on that in a moment.<\/p>\n\n\n

 <\/p>\n\n\n

Thousands Of Franchises And You Only Need To Pick One!<\/h2>\n\n\n\n
\"woman<\/figure>\n\n\n\n

Hold on to your hat, because what I\u2019m about to tell you isn\u2019t going to make you feel very good.<\/p>\n\n\n\n

There are approximately 4,500 different franchise opportunities currently being offered in the United States.<\/p>\n\n\n\n

That means that you, as a franchise buyer, \u201conly<\/em>\u201d need to pick one to buy.<\/p>\n\n\n\n

In other words, you have a 1 in 4,500 chance of choosing a franchise that will enable you to make money. Again, a 1 in 4,500 chance.<\/p>\n\n\n\n

As you gather your thoughts, I need to share something else.<\/p>\n\n\n\n

Your chances aren\u2019t really 1:4,500.<\/p>\n\n\n\n

That’s because the numbers go down as you narrow your search.<\/p>\n\n\n\n

Looking at a home services<\/a> type franchise opportunity?<\/p>\n\n\n\n

You\u2019re probably looking at a 1:250 chance. Much better.<\/p>\n\n\n\n

But I have a feeling you\u2019d like to increase your odds of success by a lot.<\/p>\n\n\n\n

Right?<\/p>\n\n\n\n

Well there\u2019s a specific way to do that.<\/p>\n\n\n\n

And I\u2019ll tell you what it is in a moment.<\/p>\n\n\n

 <\/p>\n\n\n

The Franchise Industry Has Some Trust Issues Concerning Franchise Investing<\/h2>\n\n\n\n

It\u2019s no secret that most industries have trust issues. Some more than others. Can you think of any<\/a>?<\/p>\n\n\n\n

In the case of franchising, issues of trust tend to stem from how franchises are presented and sold<\/a>.<\/p>\n\n\n\n

But there\u2019s something else today\u2019s aspiring franchise buyers need to be on the lookout for.<\/p>\n\n\n\n

Words<\/strong>.<\/p>\n\n\n\n

Because specific words are (strategically<\/em>) used by some website owners. <\/p>\n\n\n\n

Words that come extremely close to misrepresenting what they provide for would-be franchisees. <\/p>\n\n\n\n

With that in mind, here\u2019s an example from one of the newer style franchise opportunity websites<\/a>.<\/p>\n\n\n\n

\u201cOur team has reviewed<\/strong> over 5,500 franchise opportunities<\/em>.\u201d<\/p>\n\n\n\n

No they haven\u2019t<\/strong>.<\/p>\n\n\n\n

Keep reading, because “reviewed<\/em>” is one of those words. <\/p>\n\n\n

 <\/p>\n\n\n

Franchise Buyers Can Get This Information For Free<\/h2>\n\n\n\n
\"free<\/figure>\n\n\n\n

What some of these website owners have done is copied and pasted information that anyone with a laptop can get<\/strong> for free,<\/strong> in two minutes or less<\/strong>, from the Wisconsin Department of Financial Institutions<\/strong>.<\/p>\n\n\n\n

This information is taken from Franchise Disclosure Documents (FDD\u2019s<\/em>). And providing this information is not a \u201creview<\/em>\u201d of anything.<\/p>\n\n\n\n

That said, I encourage you to click here and try it yourself<\/a>.<\/p>\n\n\n\n

As you\u2019ll see, all you need to do is type in the name of a franchise like Subway<\/a>\u00ae or Crumbl Cookies<\/a>. See?<\/p>\n\n\n\n

Admittedly, it would take you a lot of time to download every single FDD.<\/p>\n\n\n\n

But you don\u2019t need every single FDD<\/a>. No one does.<\/p>\n\n\n\n

On the contrary, you only need FDD\u2019s from the franchise concepts you\u2019re seriously<\/em> investigating. And in almost<\/a> every case, franchisors will send them to you fairly quickly.<\/p>\n\n\n\n

In fact, you don\u2019t need to get and read FDD\u2019s from franchises you\u2019re only curious about. It\u2019s not like they\u2019re fun to read. It’s a huge waste of time. Your<\/em> valuable time. But I digress.<\/p>\n\n\n

\nYou ARE using Quickbooks<\/a>, right?\n<\/p>\n\n\n

Additional Services<\/strong> Are Normally Offered<\/strong><\/p>\n\n\n\n

Note:<\/strong> some franchise \u201creview<\/em>\u201d websites provide more<\/em> than free, readily available information that anyone can gather from a Franchise Disclosure Document.<\/p>\n\n\n\n

For instance, some of them offer deeper analysis<\/em> for franchise company investment firms. Again, for franchise investors<\/em>.<\/p>\n\n\n\n

Another thing some of these websites do is link to franchise brokers<\/a> who obviously compensate these website owners if the broker earns a commission from a referral.<\/p>\n\n\n\n

Finally, some offer \u201cconsulting<\/em>\u201d services to franchisors who want help with their \u201creviews<\/em>.\u201d<\/p>\n\n\n\n

Translation: franchisors who have lots of unhappy franchisees. <\/p>\n\n\n\n

Tip:<\/strong> read the ugly truth about franchise review websites<\/a>.<\/p>\n\n\n

 <\/p>\n\n\n

\u201cReviewing\u201d Franchise Opportunities Takes Time<\/h2>\n\n\n\n

In my estimation, it would take a team of 142 \u201cresearchers<\/em>\u201d 4.7 months to \u201creview<\/em>\u201d 5,500 franchise opportunities. And a little over $2 million in payroll costs to pay the \u201cresearchers<\/em>.\u201d<\/p>\n\n\n\n

Can you imagine how long it would take a web-based business in a small niche like franchising to make back $2 million dollars in \u201cresearch<\/em>\u201d costs?<\/p>\n\n\n\n

One more thing. Is reviewing something the same as researching<\/a> something?<\/p>\n\n\n\n

Let\u2019s find out.<\/p>\n\n\n

 <\/p>\n\n\n

What Is A Review?<\/h2>\n\n\n\n

\u201cA review is a critique of something\u2014a look at something\u2019s good and bad points. Reviews are very common in every industry, and many people rely on them to learn more about something they are interested in, especially something they want to buy. A person who writes a review is a reviewer<\/em>.\u201d Courtesy of Dictionary.com<\/a><\/p>\n\n\n\n

So how does one determine the good points and bad points of a franchise opportunity?<\/p>\n\n\n\n

Not by data alone, that\u2019s for sure.<\/p>\n\n\n\n

You need to have real-world knowledge<\/em>. And it\u2019s not going to come from 3rd <\/sup>party websites. <\/p>\n\n\n\n

For instance, you can scour the internet to your heart\u2019s delight to try to see what customers<\/em> say about the franchise business you\u2019re focused on. It can take time, but you can usually gather<\/a> some<\/em> information from websites like Yelp\u00ae and Trip Advisor\u00ae. However…<\/p>\n\n\n\n

Fake reviews do exist. Heck, even Amazon<\/a>\u00ae has had to deal with more than a few of those<\/a>!<\/p>\n\n\n\n

But the most important thing you need to do, (no ifs ands or buts<\/em>), is talk with (and visit<\/em>) the people who own and operate the business. In this case, the franchisees<\/strong>. And you need to ask them lots of questions. Like the powerful ones I\u2019ve included here<\/a>. And talking with franchisees is where the rubber meets the road.<\/p>\n\n\n

 <\/p>\n\n\n

___ Car GIF<\/a>from ___ GIFs<\/a><\/div>