Questions from the Audience

The Pillars of Franchising show airs live every Thursday at 4:00 CT/5:00ET. Because we are a live show, we encourage viewers to call in and ask questions of our guests or our Million Dollar Mentors. Going forward, we will feature some of your questions in every issue of the magazine. If you have questions during one of our shows, we welcome you to call in during showtime at 323-580-5755 or email us ahead of time at yourdream@pillarsoffranchising.com

Kristin Selmeczy: Do I need to use a broker to buy a new franchiser only in existing franchise locations?

K.S. No, you don’t need a broker at all. However, I can tell you that using a broker makes all of the work that Jerry did (as he wrote in his book) a lot quicker and easier. It provides opportunities that maybe you won’t find on your own. But you can use a broker or not in both situations. In my personal experience, I used a broker, and it was one of the best decisions that I could have made because I would have never thought to buy a maid franchise. That was not what I was looking for, but I couldn’t be happier that I did. It was exactly what my family and I needed at the time, and it turned out to be a great business model.

Jerry Akers: I’ll reinforce that. I think that about 90% of the time you should use a broker, no matter what kind of business you’re looking at. To Kristin’s point, they take a lot of the work out of it. They vet the other side. So, you have less worry about what you’re getting or not getting.

They’ll actually catch problems in the offering in the real estate as well as issues with things that you get when you buy a franchise. So, I think that’s a good idea. The only time I don’t necessarily think it’s necessary is for instance, is if you know somebody that’s already in that franchise group. If you have been tracking their success for a while and, they know you, and they’ve said, ‘Hey, if you’re thinking of a franchise, this is the one to think about because it would be a good fit for you.’

K.S. Then you can probably go directly to that corporate group and work with their franchise rep. The franchise rep is really a broker that doesn’t make money off of it because they’re paid a salary to help bring people in. You’re still getting a lot of the same resources when you go that route, but you don’t have an unbiased third party.

J.A. If you have any concerns, get a broker involved. They will give you some good guidance. But there are times when it may not be necessary.

K.S. Why do we believe that the under-40 population will go off and start their own business, but they either don’t or aren’t considering buying a franchise? Is the franchising industry not wanting young owners?

K.S. Well, let me tell you about a personal experience. I can tell you the industry would love young owners. I think that especially franchisors who recognize that their brand has been around for a while are looking for fresh blood, not only to share ideas but also to come in with fresh perspectives and higher energy levels.

I see more and more brands looking for younger people. I’m only 50 and I’m out of date on most all of the social media stuff compared to my 14 through 17-year-olds. They know stuff that I don’t. So, I think there’s a lot to offer for younger people. I would never say that the franchise industry doesn’t want younger people, that is just not the case. But I think it’s a matter of educating people. And that’s why we have the show — to try to talk to people about all the opportunities that are out there. And there are such great brands for young, energetic people to go into.

J.A. Well, Kristin, most young people start their own businesses because they don’t know better. And I’m not saying that from a negative standpoint. The fact is, they get this really great idea of something they think their community needs or would get excited about. They bootstrap it, and they go out and make it happen which is great. I think that’s phenomenal. I shout praises from the rooftops, but, the fact is 80% of those businesses will fail in the first five years. And it won’t be because the young owner didn’t try hard or didn’t have a good idea. They may just not have been able to put all the pieces together and cash flow it. I just think they don’t understand that franchising is an expedited route to get into a fairly safe and secure business that may be very well related to whatever their idea was.

K.S. I don’t want anybody to hang me up on this thing, but young people, because we were all young at one point in time, we think we can slay dragons and we’ve got a better idea than anybody else. Mine’s going to be better than the other options out there. And there’s nothing wrong with exploring that. But I think that’s one of the reasons so many young people don’t try franchising. They think they can do it on their own.

The other thing is many young people may do some online research about what it costs to open up a franchise and say, you know, I don’t have that much money. I don’t have borrowing capacity. I’m going to do something else. I’ll open up my own thing. There are lots of ways to get financing in the franchise world. So, if anyone out there is in that younger category, do not let that hold you back until you’ve explored some other options. We’ve got some great resources just here in our group at Pillars, and we’d love to have those conversations with anyone who is interested.

If you go back and listen to some of our older episodes, we talk about different options and how you can go about either finding funding or leveraging what you have in a 401k. We also talk about how to approach your family and how to get partners.

J.A. You brought up a great point about looking for partners. And we both know that I don’t do partnerships very well because I don’t play nice with others. But the fact is, if you’ve got a young person out there who would like to buy a franchise and you don’t have the bandwidth or the financial ability to borrow that money, there are probably five people in their forties or fifties who have a good job who want to continue it and would love to be a partner in a business. And they have the money and the borrowing capacity to partner with this person and maybe even mentor them a little bit. That’s what I’m doing right in the Joint Chiropractic. I’ve got Vinny, and he’s coming in to learn underneath me. He’s going to slowly buy in and then he is going to end up owning it someday. There are a lot of those opportunities. So young people keep that in mind.