Franchising is a lot like cooking. It doesn’t matter if you’re following a franchise concept or baking a cake, the recipe is one of the most important tools you have. But while you may have heard that the first step in cooking is to wash your hands, how do you know where to begin when evaluating a franchisor? Don’t worry, potential franchisees, we have your Step 1: Read “Tannerisms” by Greg Tanner!
In Greg’s book, he shares his invaluable wisdom on franchising. Whether you’re thinking about buying a franchise, or just want to learn more about the process, “Tannerisms” has some of the best advice in the industry!
We first met Greg over dinner at the 2016 Franchise Consumer Marketing Conference (FCMC) earlier this year. Just as re:group is the expert when it comes to marketing a franchise brand, Greg is a genius when it comes to franchise development. From his larger-than-life personality to his great sense of humor, Greg is the kind of person you just want to be around. He is such a friendly guy with a wealth of knowledge on franchising.
After reading his book, we were honored that Greg took the time to meet and expand on some of the advice he dishes out to prospective franchisees in his book.
Buying a Franchise vs. Starting Your Own Business
There’s nothing wrong with going out on your own to start a new business, Greg reminds us. People do it every day. The reward can be huge if you’re successful, but the risk is high that you won’t be.
That’s because 80% of start-up businesses fail. An 80% chance of failure is a big risk! On the other hand, 90% of franchised businesses are still operating after five years. The reason that your risk is minimized with a franchise is simple: both the concept and the process have already been proven. For a higher chance of success, stick with a franchise.
Selecting a Franchisor
OK, so you’ve decided to buy a franchise, but how do you select the right one? “Emotion should be taken out of the equation when choosing a franchisor,” Greg says, stressing that it should be purely a business decision and you should ask yourself these four questions:
- Is there brand recognition or are people aware of the product?
- Does the franchisor have a support network?
- Is there an operation and procedure system that you can follow?
- Are the franchisor’s other units making money? If you look at the Item 19 in the franchisor’s franchise disclosure document, you’ll get a good idea of the system’s franchisee profitability over time.
These questions are important ones to ask in order to make sure a franchisor is the right fit and has what you need for your business as well as your lifestyle.
Do Your Due Diligence
Make sure it’s a company of substance. As Greg says, “It should be more than a company working out of a trailer with a 40-watt bulb hung from the ceiling.” How does its network or support system look?
After you visit the franchisor, you should feel very confident about making a decision. Actually, according to Greg, you should be ready to buy even BEFORE you visit. “When you go to that discovery day, you should already be 60–70% ready. It should really be a validation day, not a discovery day.”
Questions to Ask Current Franchisees
Toward the end of the franchisor evaluation process, you’ll want to visit with some current franchisees to see what the whole experience has been like for them. Greg recommends asking these three basic questions:
- Are you happy?
- Are you making any money?
- Would you do it again?
Speaking with franchisees will help you get a feel for what’s involved and if the brand will work with your lifestyle. However, it’s important to be cautious because franchisors can steer you toward certain franchisees. Make sure you get an explanation of why you should talk to the people they recommend.
Before You Buy, Ask About an Exit Strategy
Most franchises don’t have an exit strategy outlined for their franchisees. Before you buy in, you should understand how to get out.
A great question to ask the franchisor is, “If things don’t work out, are you going to buy it back or assist me in selling it?”
While a buyout may not be guaranteed, the franchisor might have a plan to help you. If you know this, chances are you will work with a lot less stress on your shoulders and you will ultimately do a better job.
Stick to the Recipe
OK, you’ve talked with the franchise owners. You’ve visited the corporate office and discussed exit options. You understand the business. You trust the people – and you have made a decision to buy. Now what?
There are always going to be times when you think you know the best way to do things, but it’s crucial that you understand the importance of being part of a franchise brand. As Greg puts it, “If the franchisor says you need to step sideways at two o’clock, you don’t ask questions. You step sideways because there must be a truck coming.”
Remember how we said franchising is like cooking? A great example of this, from our talk, is when Greg was baking cupcakes with his daughters. They were making a mess all over the kitchen putting in the flour, eggs, butter, milk, etc. When the cupcakes were done baking, Greg pulled them out of the oven and noticed they were all flat. The cupcakes never rose in the oven. It wasn’t until looking at the recipe again that Greg realized they didn’t add the teaspoon of baking soda. The lesson: leaving out the smallest ingredient can result in failure. This is true in cooking and in franchising. FOLLOW THE RECIPE!
Greg didn’t know his book would be such a valuable resource for people stating out in franchising. “It was created as a marketing tool as well as a humorous book and it turned out that people really responded and found value in it.” Greg realized that people who wanted to learn about franchising didn’t know what questions to ask, who to ask or how to research. “Tannerisms” serves as a launching point so people can make educated decisions going into the franchise world. It’s not meant to tell people what to do, but to help them formulate their own opinions and make their own choices.
re:group’s expertise involves understanding franchisees and facilitating communications between franchisors and franchisees. In a way, we are a part of the franchisees’ support team. At re:group we have loved having this book around to reference and recommend it to people interested in franchising. It takes what can be a complex process and simplifies it, giving readers fun, practical advice for success.
Greg still gets a lot of requests for this book at trade shows and events. “I’m flattered,” he says, “that so many people are asking about it and are going online to download it. I’ve had a lot of fun with it and I hope people find value as well as the humor in it as was originally intended.”
Having “Tannerisms” in your back pocket will be like having Emeril Lagasse with you in the kitchen. BAM! Let’s get cooking, franchise friends…and don’t forget the baking soda! Download your own copy and start following Greg’s recipe for success today!