International Franchising Association’s senior director of communications
Interviewed By Brian Horn
Every month, we'll feature five questions with someone who can give you tips on the world of franchising. This month, we spoke with Matthew Haller, the International Franchising Association's senior director of communications.
While owning a franchise comes with the benefit of having an established brand, don’t let that fool you into thinking it’s an easy job to do. Matthew Haller, the International Franchising Association’s senior director of communications, says you’ll get a rude awakening if that is the thought process you take with you into the job.
"The common pitfall is thinking that the business is going to run itself. ‘I’ll pay the initial franchise fee and then whatever the initial capital investment is, and then I’ll just sit back in my corner office and hire a bunch of people and it’ll run itself.’ That is certainly something that is a common misconception,” he says. “You talk to existing franchisees and they will tell you that’s not the case."
Investing in a franchise will differ with each company, but, within the green industry as an example, Weed Man’s start up cost ranges from $65,000-$86,000 and the total investment can cost anywhere from $85,000-$130,000 according to IFA’s website, www.franchise.org.
Here are five questions with Haller where we find out about what to expect when owning a franchise and what you need to look for before buying into one.
1. What does someone need to know to be a successful franchisee?
It depends on the person. In terms of what they’re level of experience is or what their level of research is, in terms of what they’ve done to look into franchising. Assuming they haven’t done any homework at this point, I think that one of the things that is a common misconception about franchising is you kind of get into it without having a high level of business acumen or understanding of how to run a business. That’s not really the case. The business doesn’t run itself. It’s experience. It takes a lot of hard work, so this whole notion of a business in a box is a bit of a misnomer.
These are small businesses that are owned and operated locally. And it takes as much hard work if not more than to run a successful franchise than it does an independent business. That being said, franchisors are certainly there and offering franchise opportunities to qualified candidates that they believe can be successful within the system that they’ve created. That’s why franchise development folks are out there every day talking to perspective franchisees and entrepreneurs about, is this a fit for you and is it a right fit for the franchisor to bring that person into their brand.
2. What kind of research should they be doing?
You should compare multiple options within the same industry. Thinking about your audience, there’s, I don’t how many brands are IFA members within the lawn and landscape field but there are certainly many. They differ in terms of their corporate culture, what they do or don’t do to support their franchisees, different types of marketing programs. How are they dealing with social media and how do they allow you some freedom to connect with consumers at the local level? What is the parent control at the franchisor level?
There are all these things that people need to think about before they get in to buying a franchise and signing that contract. Once the franchisor wants to bring you into the system, there is additional research you need to do. There’s a legal component to it. Obviously you are signing a contract for a certain period of time and there’s a whole host of things on a check list that somebody should look at there. You should have a good lawyer who is experience in franchise law. You should look at their disclosure document, the FDD.
Certain things like an item 19 that disclose financial performance history and things like that. You should speak to other franchisees within the same system. You should also talk to franchisees that are no longer with that brand for one reason or another. This is all information that a franchisor will provide to a franchisee that they want to bring into the system.
3. Is there a specific question they should ask a franchisee?
What’s the level of communication between the franchisor? Really, more about what is the relationship like. How do they manage their franchise/franchisor relations? That could be from the CEO level if it’s a smaller franchise, it can be at a regional level if it’s a much larger franchise. To me, that’s something I’d want to know before going into the contract. If I have an issue, who do I go to?
4. What advice do you have for franchising in the green industry?
One thing to think about when it comes to these service-type franchises which is the case with your industry is you don’t necessarily need to be somebody that has a green thumb. Being a successful business person, whether it being they worked at Xerox or wherever and want to get into franchising, that person doesn’t need to be handy at yard work to run a successful lawn and landscape franchise. Somebody that just understands the business plan or just understands how to operate within the structure that the franchisor has put forth can certainly be a successful franchisee.
5. What's an advantage/disadvantage to entering franchising?
Franchising is definitely not for everybody and if you are the type of person that needs that aspect of control, you really want to open Brian’s lawn service (and not a franchise) and you want to offer some services that aren’t part of the portfolio of that franchise, maybe franchising isn’t for you. That’s something that’s really important for people to consider because it’s not for everybody.