Interview: The Franchise King

Posted by 22 January, 2009 (4) Comment

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This is an interview with The Franchise King, Joel Libava. He is a franchise expert and was nice enough to give us his insight into the franchise world. You can find out more about him on his blog, http://thefranchiseking.typepad.com.

1. Can you start out by telling us a little about yourself?

I am a Cleveland, Ohio based franchise consultant, blogger, and marketer. My late father, Jerry Libava, was one of the first real franchise consultant/brokers, back in 1991. I joined the firm in 2001, after being downsized {fired} from a management position in the Automotive franchise industry.

2. Why should people consult you prior to considering a franchise?

Because they don’t know what they don’t know. A lot of folks that I talk with have blinders on; they are thinking food, food, food, when it comes to franchising. There are so many different opportunities out there. There is really nothing wrong with investing in a food-related franchise. {If you have real life food industry-restaurant experience} One can do very well in a franchise that cooks and serves food. It’s a matter of lifestyle. If someone with previous restaurant experience invests in a food type of franchise, they have a much better chance of being successful, because they know what they are in for; super-long hours, big time employee turnover issues, and a high investment.

Another reason to consult with someone like me is that I have access to opportunities that they may not yet know about. A great reason that one may want to talk with me, before they embark on their franchise adventure is that I am independent. I get to choose which franchise companies that I want to work with, and help grow. I used to be  with a large national franchise brokerage group, and they told me who to work with. I have lots of latitude, and lots of very unique franchise concepts that I work with.

Finally, one should consider working with a franchise consultant or broker because they usually know what types of franchises are doing things right, and which ones are not.

3. What type of person fits the franchise mold?

Here is my one sentence answer:

Someone who is ok working and following someone else’s business idea and business system.

4. The economy is down. Should people look at franchising right now?

Yes, it is certainly ok to look. I am recommending that people be very careful about what types of franchise opportunities they are exploring. Here is some food for thought; In a down economy, are consumers buying what they want, or what they need? Investigate opportunities that provide a need. The ones that provide a want, may not do as well in a recession. Another words, would you rather be the franchise owner of a senior care franchise, or an upscale massage studio? I am not saying that investing in any one of the 3-4 massage studio franchises is a bad thing. What I am suggesting is that watching consumer spending trends during tough times is well worth it.

5. I stress alternative income, known to some as passive income. Are there any franchise avenues that allow a person to own a franchise part time or better yet, hands free?

There are very few legitimate franchise opportunities that allow for part-time ownership involvement. Franchises like Great Clips, and Best Cuts are examples of franchises that actually encourage their franchise owners to keep their jobs for awhile, while they are ramping things up. They are not the hairdressers, anyway. As for hands-free franchise ownership, I don’t know of any opportunities like that.

6. If someone was interested in owning a franchise, can you give us some resources that would be of value?

I suggest spending some quality time with some of the major search engines, and type in several different words that include franchise of business opportunities. This will lead you to articles, franchise news sites, and maybe even some opinions from current and former franchise owners, that could prove to be valuable. I also recommend reading anything that has to do with trends in franchising. See what the future looks like. There are a number of book out about franchising. Just go to your local library or bookstore.

7. Is there anything else you’d like to add?

Yes. These are difficult times, and anyone who tells you otherwise, or tries to convince you that this is actually the best time to invest, is not living right. It is what it is. For now. Things will get better. Personally, I just finished the toughest year I have ever experienced. It was so tough, that in order to cut my expenses, I have moved my office to my home. It was not my 1st choice, but I had to do it. I am actually enjoying it, so far, though.

One more thing. If anyone you know is looking for a franchise, I always suggest that they work with a local franchise consultant/broker. Number one, they know the local area, and hopefully have great connections that can assist them with legal and real estate issues. Number two, by working with local consultant/brokers, the fees that they are paid by the franchise companies stay local, which contributes to the local economy. I know that it may not sound important, but it is.

My info:

The Franchise King, Joel Libava

franpro@sbcglobal.net

216-831-2610

877-262-2816

Company website:

http://www.FranchiseSelectionSpecialists.com

Award winning Franchise blog:

http://thefranchiseking.typepad.com

My e-book on How to Research a Franchise:

http://www.FranchiseResearchSteps.com

Photo by: Tony the Misfit

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Categories : Entrepreneur Tags : ,

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

Posted by 25 December, 2008 (4) Comment

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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

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Categories : Entrepreneur Tags : ,

Interview: So You Want to Own a Franchise?

Posted by 23 December, 2008 (6) Comment

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A lot of Americans wish to work for themselves. One way to do that is through franchising. Franchising allows a person to set up a turn-key business in many instances with established systems in place. Having taken a look at Franchising.org, it was fascinating to see the sort of economic impact franchising has on the U.S.

HOW WIDESPREAD IS FRANCHISING?

The answer may surprise you.  By 2001, there were 767,483 business establishments in all domestic franchise systems (either owned by franchisors and franchisees), which employed almost 10 million people, with direct output close to $625 billion, and a payroll of $230 billion.  These establishments account for significant percentage of all establishments in many important lines of business: 56.3% in quick service restaurants, 18.2% in lodging, 14.2% in retail food, and 13.1% in table/full service restaurants.

I was fortunate enough to have two franchising experts who allowed me to ask them a few questions. This is a two part post, the first of which is an interview with franchising expert Leslie Kuban.

1. Can you tell me a little about yourself?

Leslie:

I have lived in Atlanta most of my life but feel more like a Midwestern girl; my folks are both from Ohio.   Vanderbilt University is my Alma Mater; I have a BA in Communications and also attended Leeds University in Leeds, England for one term.   When I am not assisting corporate professionals leverage their corporate success and experience into franchise businesses that they own, I am enjoying many personal interests; tennis, latin dancing, crafts, writing, yoga, cooking and entertaining to name just a few.
Feburary 2009 will mark my ten year anniversary as a franchise advisor and franchise owner with FranNet.    It has been a wonderful experience and I still have as much passion for doing this work as when I first started.   I am among the first to see up and coming growth franchise opportunities entering the Atlanta market place, which is exciting.   Franchise ownership has been very good to me in terms of personal satisfaction, lifestyle balance, and financial reward; helping others enjoy the pride, independence, and success that franchise business ownership can provide is work in which I feel a lot of pride.

2. I see that you have owned a Mail Boxes Etc. (currently a UPS store). Can you tell us about your experiences with that (good and not so favorable)?

Leslie:

Being a part of the Mail Boxes Etc. family was a super experience for me.   I learned a lot about managing financials of a small business, managing employees, customer service, and working within a franchise team.   It prepared me for the work that I now do.

3. You are currently a franchise owner at FranNet which is a franchise consulting business. What have you most enjoyed most/least about FranNet as compared with Mail Boxes Etc?

Leslie:

MBE was a great business and group of people; I learned however, that retail is not the best fit for me.    My personality is much better suited to a marketing and consulting oriented business with much greater daily flexibility and variety.    The day to day experience of running MBE stores became mundane because it was routine.   In my FranNet business, I work from home, every day is different and I meet new people all the time; this is a much more suitable “business lifestyle” for me.

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

Leslie:

The search for the right franchise does not begin with looking at lists of franchise opportunities in magazines or on web sites.  It begins by looking in the mirror and asking:

~What is motivating me to own my own business?
~What specific results would I need from a business in terms of financial return (income and future equity value) and personal lifestyle for this franchise business to be a justifiable investment of my time and money?  In what time frame?
~What are my best skills?  Sales? Marketing? Customer Service? People Management?
~What do I NOT want to have to do in a business?
~How will I support my personal expenses for the first 6-12 months of launching the business when I am not likely to be able to pull a pay check from the business?
~How much of my liquid capital can I realistically and comfortably part with to start a business that is a good fit for me and that will allow me to fulfill my goals?

There are many more questions that must be asked; these are the starters.   From here, we reverse-engineer forward to what the business is that matches these criteria.  Too often people choose a franchise because they love the product or service as a customer and then realize that they are not suited to own and run that type of business from a skill, lifestyle, and/or financial position.

5. 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?

Leslie:

This is the best news!   There is no correlation between the upfront cost of a business and how successful or profitable it can be.   Large fast food franchises have a high start up investment need because of the real estate, the playground, all the equipment and inventory, a large payroll, tremendous expenditure in marketing, not because they are “better” franchises.   There are countless lower cost service opportunities that yield an equal or higher return than franchises with higher start up costs.   Find the lowest cost franchise that fits your motivations, needs, skills, and wallet.  Why risk any more than you have to meet your needs and goals; that is the FranNet mantra.   When coaching my clients, I advise them that they need to have 6-12 months of personal living expenses set aside to pay the bills at home during the ramp period.   On top of that, a minimum investment of $40,000 is likely required to capitalize a franchise business.    Home equity lines of credit, self directed IRA rollovers are the most popular sources of funds people are using to fund franchise businesses.   SBA lenders are still making small business loans but their requirements are even tighter than they were prior to Sept. 08; I have found this to be the least favorable way to fund a business due to the length of time it takes to secure the financing, and the fees and closing costs associated with SBA lending.

6. 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)?

Leslie:

Franchise business ownership is not like real estate investing where you can hire a good property manager and not have to do much and collect your rent money.   Overall returns can be higher but there is more work involved.   After growing a business over 4-5 years, it is possible for franchise owners to employ staff and systems to handle some or much of the day to day operations so that s/he does not have to be there all the time doing everything; Kiyosaki’s “B Quadrant” business in other words.  There are even some franchise businesses that can be started as a semi-absentee investment allowing people to keep their primary job or business.   In either case, a minimum of 10-15 hours a week of involvement is realistic to expect.

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Are there any other questions you have for Leslie? Have you thought about opening a franchise? If so, what sort of franchise and what is your motivation?

If you would like to contact Leslie Kuban with any questions you might have, here is her contact information:

Leslie Kuban

FranNet of Atlanta

770-579-3726

lkuban@frannet.com

http://www.frannet.com/lkuban

Other Posts:

The 3 Myths of Happiness
17 Ways to Save the Planet
The Biggest Bailout Ever
Is Happiness Viral?
What Determines Happiness?

Photo by El Gran Dee

Categories : Entrepreneur Tags : ,