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Today, we’re happy to present a special guest post by franchise coach Phyllis Pieri
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A franchise opens every eight minutes in the United States and provides an excellent opportunity for someone to be in business for themselves but not by themselves. Is franchising the right fit for you? As a franchise consultant with MatchPoint Franchise Consulting Network, it’s my job to answer that question for each and every one of my clients. How do I do it, you ask? Read on for a few tips, tricks and myths about this $1.53 trillion industry.

Planning and Investigation
1. Consider your motivation. If you’re considering buying a franchise solely because you cannot find another job, you are not ready to take on this new venture; while franchising is a wonderful way to take control over your future, you need to be committed 110 percent in order to succeed.

2. Evaluate your skill set. Think about your strengths, weaknesses, interests and overall goals. Most franchisors don’t require their franchisees to possess industry experience but managerial experience is extremely beneficial. For example, the owner of a home painting franchise is seldom the one holding a brush but is instead handling billing, marketing, staffing and sales.

3. Do your due diligence. The Internet, franchise consultants and seminars are great ways to gather information but consider talking to an existing franchisee or two as well. Since they’ve literally been there and done that, they will be able to offer personal anecdotes and advice that won’t be found in any company brochure.

Challenges
1. Working within the system. Franchises have a proven system in place but many give franchisees a certain amount of flexibility to personalize their operations. Know, however, that the system is in place for a reason; those who follow the system succeed and those who do not struggle. If you are someone who likes to blaze their own path, make all decisions and have complete control, that’s great…but franchising is not for you.

2. Organizing your finances. All franchises require an up-front investment but the monetary commitment doesn’t end there. There are a lot of factors – rent, equipment, transportation and staffing, to name a few – that are not included in your initial fee so be sure to account for these extras when planning your budget. Also, since businesses take time to ramp up, check that you have enough savings to live on for at least six months.

3. Managing your expectations. No business – even a franchise – is without risks so understand what you’re getting yourself into before you sign the agreement. Unlike businesses started from scratch, a franchise has a built-in support network to help you through the rough patches but you are responsible for keeping your expectations in check. Franchises have a 90-percent success rate but each business is different; if you’re patient and work hard, however, success will ultimately follow.

Myths
1. Franchising is all about restaurants. While many of the best-known are restaurants, there are actually 3,500 franchise concepts in 75 industries.

2. The more you spend, the more you’ll make. There is no correlation between how much money a franchise costs and how much money it makes.

3. You must have experience in the field. Experience isn’t necessary; in fact, many franchisors prefer their new franchisees to have backgrounds outside the industry.

4. All franchises are created equal. Some franchisors will take on every franchisee that can sign a check, which makes for a weaker organization overall. The franchises that vet prospective franchisees just as much as the franchisees vet them get the best candidates and have the strongest system.

5. A franchise will run itself. Just because you have the support of a larger organization and ongoing training programs, owning and operating a franchise is still a huge responsibility and takes a lot of work – especially at the beginning – to make it successful.

(Questions? Contact Phyllis Pieri at Phyllis@yourfranchisecoach.com or www.yourfranchisecoach.com)

Today we have a special guest blogger: The Franchise King, Joel Libava. Joel has written an exclusive blog post on the popularity of Franchise Broker Networks. His opinions are as usual thought-provoking.
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I am amazed by the sheer number of new franchise brokerage groups that have launched this year. What gives? The US economy is what gives. As more people are laid off, the pool of prospective franchise candidates will increase. I guess that all of the folks that are starting these new franchise brokerages are hoping to capitalize on this trend. The problem with their thinking is that there are already way too many franchise brokers in the marketplace vying for the attention of a very limited number of prospective franchise owners. Very few prospective franchise buyers actually go through with a franchise purchase. It is the nature of any big ticket item, especially one that involves a moderate to serious level of risk. {Full disclosure; I am an independent franchise broker/consultant, but used to be with a “group.”} I chose to become an independent broker/consultant for a variety of reasons. They include

• No fee sharing. I keep 100% of my success fees.
• No monthly group marketing fund contributions
• I choose which franchisors to represent
• No territory restrictions placed on me
• No politics to deal with

Whether or not one should join a “group,” has to do with one’s personality. Some people do a lot better, and end up being more successful, by going it alone. Some enjoy being in a group, and the feeling of being part of a team can be powerful. Individual brokers generally don’t need to recruit more brokers, but since most broker networks are themselves franchises, they need market to prospective new brokers. Some may advertise that brokers can.

• Become an entrepreneur!
• Small one time up-front fee
• No experience required!
• Professional training available
• No cold calling/Leads provided
• No inventory/No employees
• Executive level income
• Work part-time or full time

Here is what those marketing messages really mean:

1. The excitement of “becoming an entrepreneur” is a real feeling. So is depression. One can get rather depressed when they find out that it really takes several months to make their first franchise placement, and get paid on that placement.
2. This is also known as a franchise fee. Most of the newer franchise brokerages are set up as a franchise. {Most of the older ones have converted to the franchise model} This means lots of rules, and a fee of anywhere from $20,000 on up. Also, you pay the brokerage a percentage of your placement fee, every time you make a placement.
3. How many want ads have you seen that also say “No Experience Required?” This usually means a straight commission sales related job. In this particular case, it’s not a sales job. You have bought yourself a franchise, and you only get paid when you make a franchise placement.
4. Training. It’s usually 3-4 days. It’s probably good training, too. There is a learning curve, and like anything new, you need to be patient.
5. If you hate cold calling, then you may enjoy this career. Personally, I have never knocked on a door to find a potential franchise candidate. Now, about those “leads.” These come from the internet, and some of them can be quite good. It’s a numbers game, though. Figure on finding a one or two really strong franchise candidates per one hundred internet leads. Some lead sources are better than others, so the numbers may be better, sometimes.
6. You have no inventory. That certainly helps in the expense category. You are a one-person show. Can you say Multi-Task? If you work better by yourself, this one’s for you.
7. Income. This gets tricky. If you are thinking about becoming a franchise broker, what do you think executive level income is? More importantly, what do the executives of the franchise brokerage think it is? For instance, I have seen marketing messages from brokerage groups that say, “A Very Realistic 6-Figure Income Potential.” I guess by saying the word “Potential,” lawsuits are avoided. But “A 6-Figure Income” sure jumps out at you, doesn’t it? I just love marketing!
8. Flexible hours can be fantastic. I love the flexibility I have. It took a long time to get there, though. It’s your business. Work at it any way you want.

Does it seem that I am being rather hard on these new franchise brokerages? I am. Someone has to wake up potential new franchise brokers about the reality of this business. I love what I do. It’s a blast, even during real tough times. {Like for instance, 2007-2008.} There are some really good franchise brokerages out there. The good ones will be very picky about who they award their franchises too. The average and below average ones will eagerly accept your check for $20,000, and see if you can make it as a franchise broker. {The Franchise King, Joel Libava, is a Cleveland, Ohio based franchise consultant, marketer, and no-spin franchise blogger. His company site is Franchise Selection Specialists , and he regularly updates  The Franchise King blog}

This week, we are delighted to feature a guest blog from James M. Wilson

Veterans and Franchising

When leaving active duty, veterans often first look to finding a job in the defense industry or in aviation or other career that is strongly related to their active duty experience. This is appropriate because there are plenty of adjustments in moving from the military to the civilian world without adding completely unfamiliar work requirements to the mix.

One area that veterans traditionally give little attention to is owning a business through buying a franchise. Generally, the first reaction a veteran has to the idea of buying a franchise is either that they don’t know anything about or don’t want to get involved in fast food or they don’t have the available cash or net worth to qualify to own a franchise restaurant. While there are many fast food restaurants franchise opportunities available, numerous other industries use franchising to expand and those opportunities are worth considering. Some may be very similar to the active duty experience of the veteran.

Franchise systems in the US have always recognized the special attributes that veterans can bring to their systems as franchisees. Veterans are comfortable working in a system that requires them to follow rules and to take charge. Veterans are generally more independent and therefore more comfortable with doing their work independent of oversight but within guidelines that the franchise system lays out.

The striking thing for veterans about owning and operating a franchise is that they do not need to be experienced with making pizza, for example, to own a pizza franchise. The franchise system provides methods for that. What a veteran brings to a franchise is an ability to follow the instructions of the franchise in effectively operating the business. Franchises are operated according to an Operating Manual that spells out all the operating procedures of the franchise. Veterans are familiar with having such a manual that details much of what the need to do to fly a plane, drive a tank, set-up and operate a field hospital or kitchen. Using and following those manuals as well as being comfortable with the idea of having this reference to refer to, to solve problems is subtle skill set that veterans have from their military experience that civilians may be unfamiliar with and have to develop. But more importantly for the veteran considering buying a franchise, the operating manual is a source of familiarity with the new business world that he/she is entering by buying a franchise that is not available if he/she starts a business on his/her own.

Recently veterans have gotten some assistance for acquiring franchises. The International Franchise Association re-launched the Veterans Transition Franchise Initiative, or VetFran, by which IFA member franchisors provide special deals for veterans. The offerings under VetFran stem from reduced franchise fees to special financing deals. You can get more information on VetFran at the International Franchise Association’s website, www.franchise.org. Additionally, in the past year the SBA announced a special loan program to assist veterans with financing for buying franchises and other business needs. The Patriot Express Loan program provides loans of up to $500,000 to veterans at reduced interest rates. Additionally, Patriot Express loans are processed more quickly than normal loans so they can be closed and disbursed in less time than other SBA guaranteed loans.

James M. Wilson is Contributing Editor to Operation Franchise. Operation Franchise is a quarterly magazine focused on helping veterans research, buy and run franchises.

He is a retired Navy Commander (O-5) and a business attorney in Richmond, VA. He is also a graduate of the US Naval Academy (1980) and the University of Richmond Law School (1992).

To find out more about franchise opportunities for veterans, visit our information portal which features a series of articles on franchise opportunities for veterans.

Today’s guest blogger is John P. Hayes, who has worked in the franchise community as a consultant, franchisee and franchisor and has also written a number of books about franchising. He’s written an in-depth checklist with every question you should ask yourself before purchasing a franchise. Follow his blog at Franchise Mastermind

92+ Questions To Ask Before You Invest In A Franchise

1.    What is franchising?
2.    Why does it work?
3.    Why doesn’t it work?
4.    Who do I know who is a franchisee?
5.    What makes me think franchising will work for me?
6.    How much money can I comfortably invest in a franchise?
7.    If I had to borrow money to invest in a franchise, where would I borrow it?
8.    Do I like following a system?
9.    Would I really prefer to create my own system rather than follow another system?
10.     Am I a good manager?

11.     How long could I survive without a paycheck?
12.     Would my family support me becoming a franchisee?
13.     Would investors support me as a franchisee?
14.     Do I like to sell?
15.     Do I like to market?
16.     Do I like people, including fussy customers?
17.     Would I like to employ people?
18.     What kinds of businesses will last for 25 or more years?
19.     What products would I like to sell, or what services would I like to represent?
20.     If I were a business person, what could I do better than someone else?

21.     What scares me about becoming a franchisee?
22.     Who could I consult with about becoming a franchisee?
23.     What is a Franchise Disclosure Document?
24.     What is a Franchise Agreement?
25.     What is a franchise fee?
26.     What does the franchise fee cover?
27.     What is a royalty? How and when is it paid?
28.     If I want out, can I get out? Can I sell the franchise?
29.     Are there any guarantees? If so, what are they?
30.     Have I looked at the Franchise Opportunities Guide, or another source, to find franchises that might interest me?

31.     Have I read about franchising? Call the International Franchise Association (202-628-8000) for books, recordings, etc.
32.     Have I met with a franchise attorney? Not a business attorney, a franchise attorney?
33.     Have I met with an accountant who understands franchising?
34.     In my personal make-up, what’s missing to become a successful franchisee?
35.     In my financial situation, what’s missing to become a successful franchisee?

AFTER YOU NARROW DOWN YOUR SELECTION TO A
HALF DOZEN FRANCHISE OPPORTUNITIES. . .

36.     What do these franchises have in common that attracts me?
37.     What’s missing in any one of these franchise opportunities?
38.     Why would I invest in these franchises as opposed to starting a similar business myself?
39.     Can I narrow down these opportunities to one to three?
40.     What does the President of the franchise opportunity say about the future of the company? Do I agree with what he/she says?

41.     How much training do I get when I invest in the franchise? Do I think I’ll need more training? And if so, where would I get it? How good is the training the franchisor provides? Who conducts the training classes? Where is the training conducted? Does it cost me more money?
42.     Once I become a franchisee, who will I communicate with at the franchisor headquarters? Be sure to meet with this person. Do I like this person? Could I work with this person?
43.     After I become a franchisee, what kind of support do I get? Will it cost me more money? How is support provided? By phone? In person? By Internet?
44.     If I have a question while a customer is standing in front of me, how difficult will it be to get my question answered by the franchisor?
45.     Do I get an Operations Manual? How good is it? How often is it updated? Are the updates available on-line?
46.     How good are the company’s products?
47.     How good are the company’s services?
48.     Where is the company headed in the next five to ten years? Do I want to go there?
49.     How confident do I feel about the leadership of the franchise company?
50.     How confident do I feel about the training and support staff of the franchise company?

51.    What do customers say about the quality of the company’s products and services?
52.     What do the media say about the franchise company? Forget the ratings. What articles have been written about the company? Were the articles written by someone at the company, or a journalist?
53.     Who’s responsible for advertising and promoting the company’s products and services?
54.     Is there a national advertising fund? If so, how much will I need to contribute? How is that money used?
55.     If I need a location to operate the business, do I have to select it myself? If so, do I know how to do that? What help will the franchisor provide? Will this cost me more money?
56.     If I need to purchase products from the company, how fast will my orders be fulfilled? How will they be fulfilled?
57.     If I need to purchase products from the company, could I purchase the same products for less money elsewhere?
58.     Do I have the right background to become a franchisee with this company?
59.     Can I see myself operating this business for the next 10 to 30 years? 60.     Am I allowed to be an absentee owner?

QUESTIONS TO ASK EXISTING FRANCHISEES . . .

61.     Would you buy the same franchise again?
62.     Do you trust the franchisor?
63.     What’s the franchisor’s greatest strength?
64.     Greatest weakness?
65.     How good is the training?
66.     How helpful is the Operations Manual?
67.     Do you get answers when you need them?
68.     Have you renewed your franchise agreement, or do you plan to?
69.     Knowing what you know, how much money can I expect to make my first year as a franchisee? The third year? The fifth year?
70.     What’s the secret to your success?

71. How much money do you spend to advertise and promote the business?
71.     What do you think about the quality of the products/services?
72.     Do you think the public respects the franchise brand?
73.     Is the ongoing support valuable?
74.     Do you attend the franchisor’s regional and annual meetings? Why or why not?
75.     I’d like to tell you about myself . . . and then would you tell me if you think my background, interests and personality are a match for the franchise company?
76.     What’s the best way to make money with this business?
77.     Do you find the business as satisfying today as you did when you first got started?
78.     How long do your customers continue buying from your business?
79.     Is it hard to find and keep employees?
80.     What will be the biggest challenge I face as a franchisee?
81.     Is your territory large enough? Too large?
82.     What keeps the franchisor from competing with you?

QUESTIONS TO ASK THE FRANCHISE COMPANY’S SUPPLIERS . . .
83.     Does the company pay its bills on time?
84.     Do you feel you can trust the franchise company?
85.     Are you a customer of the company? Why or why not?

QUESTIONS TO ASK THE COMPANY’S FORMER FRANCHISEES . . .
86.     Why are you no longer a franchisee?
87.     While you were a franchisee, what would you say were the company’s strengths?
88.     Weaknesses?
89.     Did you feel you could trust the people who work for the franchise company?
90.     Did the company treat you fairly or unfairly?

QUESTIONS TO ASK YOUR ADVISORS . . .
91.     Can I afford this company?
92.     Is the franchise agreement fair?

These are by no means all of the questions that you need to ask before you invest in a franchise. This list gives you a good start. This report in no way offers business advice. Investing in a franchise is a serious matter. Consult with a franchise attorney, an accountant, and other professionals before you make your decision.

Over the coming weeks and months, Franchise Direct will be inviting a number of guest bloggers to provide their opinions on franchising and small businesses.

First up is Susan Gunelius, owner of the successful blog Women On Business.

Women + Business + Recession = Opportunity

Women are known for their relationship building skills.  It’s a fact cited in research study after research study, and it’s one of the reasons that women are positioned for success during an economic downturn.

Let me explain.

When the economy is weak, most business owners are quick to react, and that reaction typically includes cutting costs.  One of the first places that budget dollars are cut from is usually the marketing budget.  One of the easiest places to save money is to reduce advertising expenditures.

However, it’s been proven time and again that cutting the marketing budget when the economy tanks is the worst thing a business can do.  In fact, when the economy is weak, it’s more important than ever to ensure your brand messages are being heard.  That means your marketing initiatives should be ranked higher on the priority list than ever when the economy is on shaky ground and consumers are actively looking for messages of hope and trust as well as brands and businesses to build relationships with.

That leads us back to the opportunity that a recession provides to business women.  Since women are inherently good at building strong relationships, it makes sense that women can leverage that innate ability to seize the opportunity a recession presents.  The question for many business women is, “Where do I start?”  My answer to that question is simple, “anywhere and everywhere.”

With the growth of the social web, the opportunities for networking, interacting with consumers, and building relationships is bigger than ever.  Business women can use the tools of the social web to complement their offline networking and relationship building efforts.  Start a blog for your business.  Visit other blogs related to your industry and then join the conversation.  Get on Facebook, LinkedIn and Twitter and be vocal.  Brush up on your networking skills, and then put yourself out there.  Make your strength in relationship-building work for you.  In other words, use it to position yourself against your competitors.

Your efforts today will pay off in the short term and long term as many of the connections you make will become customers or spread the word about you and your business.  That kind of word-of-mouth marketing is worth a lot more than the ancillary ad you might cut from your budget now to weather the economic storm.

About Susan Gunelius
Susan Gunelius is President & CEO of KeySplash Creative, Inc., a full service marketing communications provider offering copywriting, business communications, blog, book and article writing, and marketing and branding consulting services.
Susan is a published author with three books available in book stores and online (Harry Potter: The Story of a Global Business Phenomenon, Kick-Ass Copywriting in 10 Easy Steps, and Google Blogger for Dummies).  Her fourth book is about the Playboy brand and will hit book stores in Fall 2009.  Susan’s marketing-related articles have appeared on a wide variety of websites such as Entrepreneur.com, WomenEntrepreneur.com, MSNBC.com, FoxBusiness.com, BusinessWeek.com, WashingtonPost.com, and more.
Susan is an active blogger writing about branding, marketing and advertising at KeySplash Creative Conversations, and she owns Women On Business, one of the leading blogs for women working in the field of business.  She is also the Guide to Web Logs for About.com (a New York Times company).