The Franchise

Franchises are sold as the sweetest deal since time began, but you need to TEST THE PROFORMA before you put the family fortunes at risk.

A few years ago, I had a business partner who bought a well known restaurant franchise. However, it was well known on the West Coast while we were on the East Coast. Six months later the building was empty. Doors locked! There stood a $350k beautiful tomb for the undertakers.

What happened?

Lots of things. Sometimes you can point to the economy. People quit eating out. Like today, gas prices soared and the lines formed at the pumps. Recently, another restaurant owner discovered that his “wonderful” cook was emptying the cooler on Sunday afternoon.

Waitress gives friends free tea and enters the drinks as water. The dishwasher carries out steaks in her BIG “hooters”. For the newbie on the scene, it’s one rude discovery after another.

However, one particular failure stands out from the rest. Franchisees need their own business plan. Prices are different in the South Vs the North. Also, Location, location, location is a KEY factor in success.

R.P.C.= Return Per Customer. How many customers does it take DAILY to turn a profit? Do you know? Have you run a proforma? It may really surprise you to discover the facts.

FULL CAPACITY

Activity does NOT equal PROFIT. Run the numbers with your financial advisor. You can fill every seat in the “house” and still lose money.

How many service calls do you have to make at $65. an hour to make a profit? How much can you pay the helper riding shotgun? Are you driving a gas guzzler or the economy model service truck?

Do you run a crew of 5 when 3 can do the job? These are critical questions to your success in a landscape business. My point is…. every franchiser should give you case studies of real success in their particular business.

HOW MUCH MONEY

Money is critical for the franchisee (unless you have a “sugar-momma”). When you are told it will take $50k then you need to know what happens if you need $100K more to stay in business. You are NOT an employee of the franchiser. This is YOUR business and YOUR money.

Few, if any, franchiser will bale you out of trouble. His contract with YOU is in HIS favor. You “pays your money” and “takes your chances”.