So if I scared you in the last blog about the 85% failure rate you are now being realistic about your chances. I also promised a way to get into business that is less risky, ready.
I’m writing this to both newbies and serial entrepreneurs, consider a proven concept with a well-established franchise. Of course, you already know all about that and have been receiving vast amounts of promotional material from various Franchise ownership and development departments. They want you to buy a NEW location. While their concept might be proven, locations seldom are. However, good Franchisors have good methods for picking locations. So what do I have to say that’s different?
I suggest you seek out existing franchises that are either underperforming or the owner (franchisee) just needs or wants to get out. Franchisors know about these folks but will not suggest this upfront as their fees are much less when a transfer is made. In fact, at any one time at least 20% of a Franchise portfolio is in transition or holding the ownership of the franchise is looking to move out a poorly performing location because the owner is just a bad manager or lazy thinking he or she didn’t have to work at the business. This can be the “chicken” way of getting into a business as there are good records and you’ll know what you are getting into. Plus, it will have revenues day one! You will most likely get into this existing location around 30% less than if you had started it. Now that’s a better deal. We like to be creative in finding deals for folks.
For you serial business folks with deeper pockets, there are often groups of locations available for many of the same reasons above. You can buy the whole package or pick and choose for a slightly higher price. Either way, you get a viable, ongoing group of locations priced based on their current performance, not the excellent performance you will get out of them once you apply your smart management talents. Choosing franchise ownership can reap great benefits.