Interview: Do You Have What It Takes to Own a Franchise?

Posted by 25 December, 2008

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This is the second part of two part series on franchising direct from franchising experts. In the first article, I was fortunate enough to speak with Leslie Kuban who is a consultant to people interested in franchising. In this article, I was fortunate to have Paul Segreto answer a few questions to give his perspective on franchising.

1. Can you tell me a little about yourself?

Paul:

Utilizing over twenty years’ experience as a senior level franchise executive, multi-unit franchisee and area developer, I started a coaching / consulting business As Founder and President of 21st Century Franchise Coach I am dedicated to franchise success at all levels. Complemented by a strong drive and passion towards establishing and building interdependent franchise relationships, I provide practical, innovative business solutions and comprehensive services to all segments of the franchise industry.

2. How did you become a franchise coach?

Paul:

More than anything, I believe in interdependent relationships and a franchise relationship should be just that in order for it to be successful. Unfortunately, as in many industries, people aren’t always what they seem to be on the surface and relationships suffer. Ultimately, businesses may fail as a result. My passion is to build and develop interdependent relationships and I’ve dedicated myself to franchise success at all levels.

3. If someone was interested in owning a franchise, what questions should they be asking themselves?

Paul:

Money and education being no object, what would be your ideal job? Why?

Do you consider yourself a leader? Why?

Would you describe yourself as a “people” person? Why?

What are your strongest personal attributes? Explain.

What are your personal weaknesses? Explain.

When thinking about business ownership, what excites you? What frightens you?

How will owning your own business help you realize your wishes, hopes and dreams?

Do you have the support of your family?

4. When I imagine a franchise, McDonald’s and Quizno’s pop into my mind. A large upfront investment also comes to mind. Do most successful franchises require large up front investments?

Paul:

Initial investments vary greatly based upon the franchise concept and industry segment. For instance a hospitality franchise (hotel) would command a total investment over one million dollars with initial cash requirements at two hundred fifty thousand or more. On the flip side I know of a networking franchise with total investment of less than twenty five thousand dollars and initial cash requirements at ten thousand dollars. Ultimatley, the answer to your question is yes, an initial investment is required equal to approximately twenty to twenty five percent of total investment. Of course, the candidate must be credit worthy to secure financing for the balance.

5. One of the topics I stress on my blog is passive income. Is there such an avenue in the franchising world (or at least close to it)?

Paul:

Yes there is but more so on the executive levels of franchising commonly referred to as Master Franchising. This business model affords the master franchisee the opportunity to share in royalty payments and franchise fees in return for subfranchising the concept to franchisees below him. This usually requires a large initial investment and covers a wide area, even statewide in some areas of the country and could be extremely financially rewarding.

6. A lot of business and families are financially stressed at the present time. Is this a very good time to be looking at opening a franchise?

Paul:

Historically franchising has seen explosive growth during a recession as many individuals are tired of be frightened about layoffs and are disillusioned by low or no returns on their investments. Instead, many choose to control their own destiny and venture out on their own. The safety net is a franchise because it is a proven business system where they’re in business for themselves but not by themselves.

7. Is there anything you would like to add?

Paul:

Franchises are not for true entrepreneurs. Franchisees must follow the business system provided by the franchise company with no exceptions where a true entrepreneur is more of a maverick and will try different things and take greater risks. That being said, it’s imperative a franchise candidate understand he will need to work harder than ever before and must wear many different hats in order to succeed. Many transitioning executives that venture into franchising ultimately fail because there is virtually no one to delegate to as in the corporate world and essential things fall by the wayside. Such as a P & L statement!

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I want to thank Paul for his time. Do you have any questions for Paul? I find it interesting that franchising has seen explosive growth during a recession, but he does make valid points! Have you thought about opening a franchise? I love comments!

Photo By: Striatic

Other Posts:

Interview: So You Want to Own a Franchise?
The 3 Myths of Happiness
17 Ways to Save the Planet
The Biggest Bailout Ever
Is Happiness Viral?


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Comments
December 29, 2008

Paul offers up a lot of good insghts. For example, I always associated owning a franchise with being an entrepreneur but as Paul indicates, that is really not the case. It’s obvious he has some real world, practical experience!!

Posted by Rich Catanese
December 29, 2008

Thanks for the comment Rich! I had your same thought. I always thought that being an entrepreneur and franchising went hand in hand!

Posted by admin
January 9, 2009

I like the part when Paul said franchise is not for true entrepreneur. But it is a gateway for people who still have a employed mentality to start a business.

Posted by Hamdani Amin
January 27, 2009

Hello Hamdani!

That also struck a cord with me. I agree that this is certainly a stepping stone for people who have the employee mentality, but have reached a ceiling with their current job.

Posted by admin
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