Franchise Industry Shakeout Coming?
What happens to a segment of an industry that has too many players?
The segment that I am talking about is one that is very close to my heart…..
Our type of business {Franchise Consulting-Brokering}has been around since the late 1980’s.
Until 2001 or so, our local firm has had very few competitors.
However, our part of the vast franchise industry, like a lot of other industries, is gettingrather crowded. There seems to be a plethora of folks who think what we do is easy.
Simple, and easy stuff, what we do. We try to help those wishing to explore business ownership, get into business! There are just gobs of folks that can write a check for $50k-75k, go to a bank for more, and prepare themselves mentally to possibly not make any money for the first year!
So what we have now is a bunch of “franchise brokering groups” that are themselves selling franchises to folks to sell franchises. HUH?
Folks that are paying $75k-$100k for these “home based” franchises are in for some surprises.First of all, the folks that are buying these unproven franchise brokering franchises are usually folks who have never been in the franchise industry! Their familiarity of the franchise industry consists of eating at burger and donut restaurants…
This is not anything personal against some of the folks that are writing the checks to buy into these franchise concepts, but, this is not “easy money“! What is really going on is that franchising is “HOT”, and more and more folks want to learn more. Learning and doing {writing a big fat check!} are two vastly different things. Sure a nice comfy “home based” business sounds good. But in reality, one is not “home.” One is out networking, and figuring out where these “people” are, that want to buy franchises.One is also spending lots of money advertising, and marketing, and advertising to find a couple of “interested parties.”
{End of Part 1} Part 2 coming soon……
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Some businesses are not so easily franchised and you really do have to have some knowledge of franchising before you can help others invest in a business. It’s a bit like business coaching franchises. Many of the coaches have never ran a business before in their lives.
It’s a lot like having a driving instructor who can’t drive.
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Maybe the brokers/consultants should do what discount brokers like ZipRealty is doing - refund 25%-50% of their fee to their client. I actually think that would work.
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