The Pursuit of Profit

We’re not brokers who are financially incentivized to get someone to say, “Yes.” We’ve been in the franchise business for a long time. Our job is to help set up first-time franchise owners for success.

​Book a 30-minute call with us.

---

Hi Reader,

It’s easy to get caught up in the idea of buying into a franchise, being your own boss, and ditching a job you hate. Owning a business does change lives and build wealth.

In fact, a few years ago the International Franchise Association ran a three-year survey and determined 83% of new franchise businesses succeeded.

But at Franocity, we make sure our clients understand what it looks like to be on the dark side — the 17% failure rate.

Today we’ll take a look at three essential questions we ask our clients before they finalize an investment.

What is a reasonable risk tolerance for where you are in your working life?

We recently worked with a client who’s 70 years old. She hates her job and has decided to pursue self-employment. She has a net worth of a little more than half a million dollars and one of her goals is to build a business that generates a retirement income.

This client has a very small risk tolerance because if she falls into that 17% failure rate, she’ll never recover.

A fresh-out-of-college 23-year-old with lots of drive has a much higher risk tolerance. You hear stories all the time about the billionaire who lost everything, started over, and enjoyed massive wealth.

There are a number of risk factors beyond age that you must keep in mind before signing a contract.

Which leads us to the next question.

How much time will you spend on business growth?

It’s common for people to think the biggest risk mitigation strategy in their control is to keep their day job.

The expectation is that the business will “run itself.”

Reality check: Passive income is a myth — at least in franchising.

We refused to work with a client recently who couldn’t commit to a minimum of 20 hours a week to oversee a new business. Why? Because someone you hire — no matter how competent they are — isn’t going to care nearly as much as an owner who’s invested half a million dollars.

Before investing in a business, we insist that our clients have the time and energy — whether it’s 20 hours or full-time self-employment — to run a successful business. Otherwise, we won’t work with them.

What happens if the franchise doesn’t work out?

The process of planning for failure begins before making a financial commitment. Otherwise, you may get stuck with a personal-guaranteed 10-year lease, a loan you can’t pay back, or equipment that gathers dust somewhere in a storage unit you can’t afford.

We know what that’s like. Yes, we’ve invested in brands that didn’t work out.

But going into the venture, we had a good idea of how it would impact us financially and how we would recoup at least part of our investment.

Planning for the potential of failure is something few consultants want to tell you about. And, frankly, it’s not something you want to consider when you’re amped up about becoming a business owner.

At Franocity, our job is helping clients navigate the emotional part of entrepreneurship. Sometimes in the beginning, clients are too excited to consider what could go wrong. And right before they sign a deal, fear sets in. That’s when we remind them what could go right.

You need a mentor or a trusted advisor who will help you mitigate the risk of becoming part of the 17% failure club and the opportunities ahead when you join the 83% of franchisees who succeed.

​Book a 30-minute call. Let’s talk about your future..

The Franocity Team

P.S. Questions: Reply to this email.

BOOK YOUR 30 MINUTE CALL