Stick Like Glue Radio #122 On this episode of Stick Like Glue Radio I interview entrepreneur and franchise expert Tom Scarda. Franchising is often a viable option for business growth and Tom sheds light on this strategy - do not miss this call!
Stick Like Glue Radio www.getjimpalmer.com
On this episode of Stick Like Glue Radio I interview entrepreneur and franchise expert Tom Scarda. Franchising is often a viable option for business growth and Tom sheds light on this strategy - do not miss this call!
Main Questions Asked
- Tell us about your book The Magic of Choosing Uncertainty
- What are the best franchises?
- Are the best franchises service or home based?
- What are some of the ways you can judge a good franchise from a bad one?
- What is the investment level one can expect to make for a franchise?
- What are some good questions to ask a franchise company?
- Is 50 years old too old to get started as a franchisee?
- How many franchise concepts are there?
- Is there any business that is not a good fit for franchising?
Key Lessons Learned
- Choosing uncertainty is the scary area when you are choosing to jump
- The real decision is between unhappiness and uncertainty
- There are more than 3,000 franchise concepts spanning 90 industries
- A franchise offers a proven concept and blueprint that helps with uncertainty
- A franchise is a business with training wheels
- Anybody can franchise anything as long you get a franchise disclosure document printed and distributed to your prospective franchisees and follow up with the Federal Trade Commission
- A business doesn’t have to be profitable to franchise it, rather it’s a matter of if someone will buy it then good for you
- Whether it’s a service or product based business, franchising is a relationship business
- Franchising is an extremely transparent business model
- When you have a franchise its like having stockholders as you have to answer to other people
- A bad franchise is something that relies on the personality of the founder
- Its not a question of what you are legally obligated to do but what you have to do to make them successful
- If you don’t help franchisees be successful you will not sell more franchises and the word of mouth will be that franchisees are unsupported
Choosing a Franchise
- Take an inventory of your skills and personality
- Ask yourself “how do I want to spend my day?”
- Have a business that people ‘need’ but not ‘want.’ You don’t want to be the first thing people cancel when they lose their job or a recession hits
- Unsexy businesses like ‘water restoration’ is a great way to go but most people start with a food category in mind
- The best way to figure out if a franchise is really good is to talk to the franchisees
- The Franchise Disclosure Document (FDD) is a 23 items that every franchise company has to comment on. One of those items is how many franchises left or were added to the system in that year
- The FDD has a list of every franchise owner in the country and you are allowed to call and ask questions
Franchise Investment Figures
- Service Businesses: $50K - $150K
- Small Stores: E.g Subway $200K-$500K
- Quick Service Restaurants: E.g McDonald’s, Wendy’s, TGI Fridays, Taco Bell $1-2M
Questions to Ask a Franchise Owner
- Now you’ve been in it would you do it again?
- What is your vision for the next 5-10 years?
- What are the pitfalls I should be aware of being a franchisee through your company?
- What are the personality traits of the top performers in your company?
Franchisee Age Range
- Owning a franchise is usually someone on their second career
- The average age of a franchise buyer used to be 42 yo
- Post recession is the average age is now 56 yo (too young to retire but aged out of their job)
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Links to Resources Mentioned
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