We’re In The News Again! Franchise Times’ Book of Brands

Franchise Times - BOOK of BRANDS (Spring.Summer, 2016) NFI on Pg. 11We’re In The News Again!                                       Franchise Times’ Book of Brands

The National Franchise Institute is honored to appear in the Spring/Summer 2016 edition of Franchise Times’ Book of Brands. 

 

Click the link below to view the article.

 

 

National Franchise Institute – Franchise Times BOOK of BRANDS – It’s What You Don’t Know That’s Key


Franchise Success by Asking THE Most Important Question

Franchise Success by Asking THE Most Important Question

 

Nfi april #2 post 2016When it comes to selecting vendors, making purchasing decisions, bringing on partners or investors, hiring staff, weighing lending options, or building new locations, what we don’t know is often what comes back to bite us – sometimes in a big way.

Hindsight is 20/20 – This sentiment has been echoed for decades because it is as applicable and relevant today as it ever was.  When things are going well, Hindsight is nowhere to be found – and no one is looking for it!  When things go awry, Hindsight and Murphy (of the Murphy’s Law persuasion) are often found hanging out together, wreaking havoc in seemingly every area of your life.  If only we could have known how to prevent Hindsight and Murphy from ever beckoning our doorsteps in the first place!

In the future, maybe we can.  What if there was one question that, when asked, might thwart Hindsight and Murphy?  It can’t be just any question – it has to be THE most important question.

Few people would argue that ‘How much will this cost?’ or ‘How long will this take?’ are important questions to ask.  But is either one of them THE most important question?  ‘Will I be covered for this?’ is also a good question, and so is ‘What are the additional costs I will incur down the road’ but by themselves, neither of these would likely be considered THE most important question either.  Is there even such a thing as THE most important question — one that gets to the truth, begs transparency, creates trusted advisor opportunities, and is applicable in practically every purchasing decision, partnership/investor decision, new hire decision, borrowing decision or build-out situation?

It seems to me that there is…and here it is:

“What questions am I not asking that I need to know the answers to?”

Before you roll your eyes and stop reading, hear me out.  I recently wrote an article titled ‘Sounding the Alarm on Development Timelines for Franchise Locations’.  We’ll use this article as the litmus test.

To give you a quick summary, a prospective franchisee asked a franchise concept how long it would take before they would be open for business.  The concept’s representative painted an appealing answer by prefacing their response to include only a small portion of the overall development timeline (in this case, specifying “90 to 120 days from the date a lease is signed” vs. the more realistic timeframe of “9 to 12 months from today”).  In this example, the sizeable due diligence portion that usually accompanies the building of new locations was omitted because the truth would likely have elicited fear and brought an abrupt end to the conversation.

Had the prospective franchisee asked THE most important question, they would immediately be better equipped to make an informed decision.

‘What questions am I not asking that I need to know the answers to?’ could then have been answered more thoroughly:  “The question you’re not asking that is important for you to know is that it will likely take six to nine months from today before you are able to find a location, negotiate the lease, sign the lease, and actually take possession of the space.  Once you get to that milestone, it will be another 90 to 120 days until you will officially be open for business.  This means that you will need enough money on hand (or included as part of your lending application) to keep yourself afloat for up to a year, possibly longer.”

What questions am I not asking that I need to know the answers to?’ is a great tool that pulls back the curtain and gives more of a behind-the-scenes look at areas where knowledge is often hard earned though costly trial-and-error mistakes.

THE most important question doesn’t require you to have extensive knowledge about a particular subject in order to receive its benefits.  In fact, asking THE most important question opens a door that allows for a trusted advisor to shine their light and help you succeed.

Of course there are other ways to ask THE most important question which also get at the heart of looking under the proverbial hood of the car:

  • What do I not see that I should be looking for?
  • What will come back to haunt me?
  • How could this turn out to be a bad deal for me?
  • What additional information (or parts, or components, etc.) will I need?
  • What hidden fees will no longer be hidden once I sign on the dotted line?

The point here is to craft questions that will reveal important details that you may not even know to ask about.  We’ve all seen or heard stories that go something like this:  “Why didn’t you tell me about that?” “Because you didn’t ask.”

Is this a foolproof way to avoid every Hindsight or Murphy sighting?  Probably not – but you have to admit it will definitely lead to better dialogue and more informed decisions.  Give it a whirl and let me know what you find out.

To your success…


Franchise Times’® Visit to the National Franchise Institute’s Essential Competencies Program

Franchise Times (March, 2016 Cover)Franchise Times’ Visit to the National Franchise Institute’s Essential Competencies Program

In late 2015, the National Franchise Institute spoke with Nancy Weingartner, editor at Franchise Times magazine.  As the premier publication dedicated to franchise-related content and resources, we were only too excited to share details about our Essential Competencies program and how it helps franchisees to successfully open new brick and mortar locations.  Imagine our surprise and excitement when Nancy asked if she could fly to Denver to attend our January Essential Competencies program!

                                                                                                         View the Franchise Times Article Here


Sounding the Alarm on Development Timelines for Franchised Locations

Sounding The Alarm on Development                                            Timelines for Franchised Locations

AAEAAQAAAAAAAAZ1AAAAJGM2MDYzODhiLTQxZTItNDc1ZS1iZDEzLTA4ZTQ5MTI2YWZiOAIf you are contemplating becoming a franchisee or you recently signed a Franchise Agreement, the question that is probably top of mind for you is ‘How long until I will be open for business’.

Depending on who you ask (and how you ask the question), the answer you receive will be different – sometimes very, very different.

It’s important for franchisees to be aware that the answer to this question is usually prefaced on a specific event such as ‘From the day a lease is executed, you should be open for business in X number of days’.

Is this an accurate answer? Yes – based on the way the question was asked and answered. The potential problem is that most prospective franchisees believe they are asking ‘How long from today (or from the date that I officially become a franchisee) until I am open for business?’ Without realizing the difference in how the question was asked and its impact on the overall development timeline, franchisees can find themselves in an ‘Oh, I thought….’ situation that can have huge financial ramifications.

When calculating the cost of going into business (i.e., the franchise fee, FF&E, site build-out costs, professional services and other expenses), franchisees ideally need to know how long from today it will be before their POS starts ringing in sales because only then will they be able to figure out if they have enough cash on hand to keep their wallet above the surface of the water until money actually starts coming in.

The Other Side of the Coin

So what is the potentially very, very different answer? Well, assuming you will be signing a Franchise Agreement in the next week, it will likely be 9-12 months until you are open for business. WHAT?!? How is that possible and why is no one telling me that? It’s because the 9-12 month timeframe, although accurate, feels like an eternity to new franchisees who quickly realize that they could easily run out of money (or have to borrow more) to bridge the gap from where they are today until they open for business. Not surprisingly, this extended timeframe causes many prospective franchisees to pause or even reconsider the decision to move forward.

What the ‘X number of days from lease execution’ doesn’t take into account is the amount of time it takes to get from the date they sign their Franchise Agreement until a lease is actually executed – and that’s the missing piece of the puzzle that can trip up new franchisees if they fail to ask the right question.

According to Vik Bangia with Minneapolis-based Verum Consulting, “I caution franchisee clients to be realistic when listening to claims regarding development timelines that cite 90 to 120 days as a good rule of thumb. This industry isn’t known to give prospective franchisees the appropriate disclaimers of ‘your mileage may vary’ or ‘results not typical’, thus many franchisees believe the most ideal, most aggressive timeline should apply to their business. When things don’t go as planned, they are often disappointed, not to mention financially over-extended. Everyone is much happier when the project comes in ahead of an expected, but realistic, deadline of 9-12 months.”

As I often say, “The franchise model is brilliant! Its success across countless industries leaves many people in awe of just what is possible when a proven business model is proved yet again.” With more than 7,500 franchise concepts in existence today, franchising is the fastest-growing method of conducting business in the world. It’s much easier for everyone to arrive at the same destination when they are using the same map and can easily acclimate themselves to the ‘You Are Here’ marker.