Debunking five common misconceptions about how certain franchisees find success.
Human beings love their myths. In Scotland, it’s the Loch Ness monster. In New Mexico it’s UFOs. In the franchise industry, it’s the reasons for franchise success.
Over the last 15 years, I’ve had the privilege of working with many franchise brands throughout the world. They invite me to their annual conventions to speak to their franchisees and coach them to success. I interview as many as I can prior to every presentation so I can tailor my message. I ask to speak with a variety of people achieving various levels of success.
The highest performers, whom I call “wealthy franchisees”, meet three criteria for being “wealthy”: 1) they’re making good money (relative to their investment), 2) they’re in control of their time (and not slaves to their business), and 3) they have quality of life. When you meet enough of them across many industries and brands, it’s hard not to notice some common denominators. There are behaviors and traits they all share, no matter the product or service they sell. They may have different skillsets, but they all have the same mindset. Their philosophical approach to business permeates every aspect of their operation, making them superior.
The same can be said for struggling franchisees. They share with me the same complaints, perspectives and attitudes. They tell me what’s lacking in their business and how their franchisor is letting them down. Their philosophical approach to business also permeates every aspect of their operation, limiting their performance.
When I ask them why their higher-performing counterparts succeed, what they share are not the same observations I’ve made, but their own beliefs, based on misinformation and assumptions. They tend to buy into the same myths.
In order to replicate the success of top franchisees, you need to know the truth behind their success. You must dispel the falsehoods to get a clearer picture of what it takes to be successful in franchising. Let’s look at five of the most common ones:
Myth #1: Successful franchisees have the best locations
Certainly, a good location is advantageous. You need to fish where the fish are, particularly for restaurants and retail. Convenient, well-exposed locations have an edge. In some cases, this advantage is so good, it makes up for lackluster operations. But ideal locations aren’t always affordable. That top-ranked franchisee in your brand may be pouring all revenue into rent. And great locations may not be available in your territory. Geography can be hard to replicate.
“The wealthy franchisees I encounter don’t all have great locations”
Truth: The wealthy franchisees I encounter don’t all have great locations. Often they acquired a franchise from a struggling owner who blamed their location for poor sales and sold it cheap. Top operators turn these locations around and build them up. When they lack foot traffic, street exposure or even the ideal demographic, they compensate with superior management, excellent customer service and ongoing marketing. And with the money they save on rent, they often profit a lot more with less-than-ideal locations. Most franchise brands have turnaround stories of “bad locations”. Until you optimize your operation, you really can’t accurately assess your location. Where you are matters, but not as much as other factors that are more within your control.
Myth #2: Top franchisees work 24/7
To do that well, they must work around the clock. They live in their business. They’re there all day, every day, open to close. Doing as much as they can themselves saves them money. These people sleep little and sweat a lot. They must be giving up everything else in order to succeed.
Truth: Hard work isn’t the secret to success. It’s the prerequisite. Lots of franchise owners put in the hours but still don’t have much to show for it. Wealthy franchisees work hard (especially in the beginning), but more important, they work smart. Their time isn’t spent operating the business as it is growing the business. They invest time growing team members into leaders. They develop systems that don’t rely on their direct personal involvement. If there’s something they can train an employee to do, they do. They know that being busy isn’t the same thing as being productive. Their time is best spent on the big picture. When possible, they stay out of the minutiae, allowing them to focus on strategy and expansion. It also enables them to enjoy a balanced life with time for the people and activities they love. Or if they want, more work. Their franchise doesn’t run their life. It supports it.
Myth #3: Top franchise performers have more education
They’ve gone to university. They have business degrees. They received lots of schooling that taught them how to operate a business.
Truth: Many successful franchisees have received a higher education. Plenty have not. I’ve not observed a correlation between high ranking franchise owners and their formal schooling. Here in the United States, many well-known people in the franchise industry never went to university. Jersey Mike’s founder and CEO Peter Cancro purchased his first sub shop when he was 17 years old. My former franchisor Tariq Farid from Edible Arrangements began his career as a teenager operating his own flower shop. Wendy’s founder Dave Thomas didn’t even get his high school completion certificate until he was 61. I’ve watched lawyers and engineers drive their franchise businesses into the ground. I’ve seen young, scrappy entrepreneurs embrace the systems their franchisor taught them and thrive. I went to college and will be sending my kids. It’s important for having a better understanding of our world. It’s not necessarily the most important asset for operating a franchise business. Franchise success comes less from what you’ve learned in school and more from what you’re willing to learn from your franchisor, your employees and your customers.
Myth #4: Wealthy franchisees have more business experience
Many people come to franchising from different industries. I speak to a lot of people with a corporate background. They’ve had important jobs for many years. All of that experience in a high-pressure, fast-paced environment should make it much easier to run their own business.
Truth: Nope, this simply isn’t true. Actually, many franchisees struggle because of their past experience. The wealthy franchisees I’ve interviewed all embrace the systems developed by their franchisors. They don’t spend too much time innovating something new or pulling in ideas they learned elsewhere. They’ve paid for a proven model.
“I’ve not observed a correlation between high ranking franchise owners and their formal schooling”
Their focus is on excellent execution. Many experienced business owners who bring in ideas that have worked elsewhere have a hard time letting go of these ideas and trusting the system they’ve invested in. Another consideration is that job experience, even in an important role, is not the same thing as business ownership. When the business is yours, there’s less structure and stability. There’s less personal feedback and accountability. There’s more responsibility. You’re not guaranteed to get paid, and you can’t just quit. Of course, there are many job skills that can translate, such as marketing, accounting and team leadership. These skills can really help, provided you still embrace your franchisor’s proven systems.
Myth #5: Top franchisees are passionate about the business
To operate at that level, they must love the business. They’re passionate about smoothies. They get excited about in-home senior care. They live to remove mold from their customers’ homes. “Find something you love to do and you’ll never work a day in your life.”
Truth: When I ask wealthy franchisees if they’re passionate about their business, their answers vary. Many really do love what they sell. Others love interacting with customers. Some have fun crunching numbers. I was a franchisee with Edible Arrangements for 10 years. Honestly, I had no strong feelings about fruit baskets. I did, however, really enjoy helping people celebrate special occasions. That was meaningful. The truth here is that successful franchisees don’t necessarily love the business, but they all love something about it. It’s essential to know the real reasons top franchisees succeed if you want to replicate their success. They don’t have magical locations, nor are they workaholics. They’re not extraordinary people, nor do they have extraordinary advantages. They’re regular people who execute extraordinary well.
FIVE TRUTHS ABOUT WEALTHY FRANCHISEES
• They can excel with only adequate locations
• Instead of working full time, they work with full commitment
• They come from all levels of education
• They stick to the proven system
• It’s enough to love something about the business without being passionate about the entire business
Franchise expert Scott Greenberg is the author of The Wealthy Franchisee: Game-Changing Steps to Becoming a Thriving Franchise Superstar.