According to the Merriam-Webster dictionary, an expert’s definition is one with the special skill or knowledge representing mastery of a particular subject.
People often contact me and say, Tom, you’re the expert, what’s the best franchise to invest in? That is a valid question. You may be thinking that same thing, and I will answer it in a moment.
However, I want to clarify a few points. When someone asks the question about what’s the best franchise, what are they really asking? They are asking what makes the most money and should I get in on it. And there’s the issue. I do know what’s good and what’s not. What I don’t know is how well someone will do as an operator of a business.
As we look across the spectrum of franchising, there are 4,000 concepts spanning 90 industries. Like anything that has multiple people in a study, you will immediately see a bell curve. A bell curve illustrates the results of a study. The average is usually in the middle of the curve, and on paper, the image looks like a bell.
In a franchise concept, there may be three franchise owners or three thousand. If you plot their store’s revenue, it will look like the diagram above. Generally, we can say that to the left of the curve, 20 percent of franchisees are superstars. In the middle of the curve are the average producers. On the right side of the slope, we have the poor performers.
So, the graph begs the question, what separates the three sections of the diagram or curve? That is the million-dollar question. Unfortunately, after years of data analysis, there is not a single answer. Many factors are involved. Factors include the unit’s location, seasonality across the country, consumer behavior in various regions, the rent factor, local laws and regulations, the local availability of qualified staff, to name a few factors. The most significant factor is owner capability.
My first franchise was a smoothie special events concept. We had Tiki Huts on wheels that could be operated at various events, from a backyard birthday party to a county fair to Madison Square Garden. In 2002, I was the franchisee of the year. That meant I (I should say, my staff) sold the most smoothies out of the entire franchised company. So I was on the left of the bell curve.
I had a neighbor who saw my success and the fun I was having slinging smoothies while wearing a Hawaiian shirt and making great money. They decided to buy into the franchise, too, and I was excited about it. We got them into two great locations, a Mall and a minor league baseball stadium. In less than a year, they were out of business and walked away from their investment. So, what happened?
The answer to the question is simple. My neighbors saw the outside of the business, but they didn’t know the business’s backside. They didn’t see me waking up at 6 am on a Sunday to go to the produce warehouse to pick up 10 cases of bananas for the day’s event. They didn’t see me get rained out and make no money. They didn’t realize that working a fun baseball game also meant working in the evenings sometimes.
To answer the question, what is the best franchise? It has nothing to do with the business. It has everything to do with picking the right company that aligns with your skills and goals.
There is where I can help as an expert. Because I was successful with my smoothie franchise and failed miserably with my second concept, I can lend insights and wisdom. Yes, that makes me an expert. But not an expert in knowing how to operate every franchise. I AM an expert on how to pick the best franchise. That is why anyone thinking about buying a franchise should have a conversation with me.
If you’re asking the wrong questions about franchises or making false assumptions because you’ve never purchased a business before, you may end up with the wrong franchise. But, if you know the questions to ask yourself and the franchise company, your chances of choosing the right franchise, having success, and loving what you do, will increase dramatically.
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