Fear And Consequences of Failure: A True Story Retold Once Again

I’ve been asked time and again to post the following article that I’ve written about in 2011 regarding my own personal experience as a multi-unit franchisee where I succeeded at first, only to crash and burn later on. Over the years, this article has been posted on several of my blogs, picked up by numerous other blogs & online publications, and discussed on various podcasts. I have received numerous comments and inquiries about the article and my experience as well as individuals sharing their own personal experiences and requests for assistance. Although I cringe at the thought of any business failing, I admire and respect the fact that franchisees and franchisors alike (small business owners and individuals & teams running larger organizations as well) know when to put their pride aside and ask for assistance, and I always look forward to providing my experience and expertise to help determine a practical resolve to their problems. 

I’m proud to say this article has been instrumental in helping a number of businesses keep their doors open and work towards recovery. On the other hand, I’m also sad to say several businesses were not as fortunate, but at least the owners were able to exit with dignity and in few cases, with less liability than they previously thought possible. And, in one case, the business owner actually exited in the black when we were able to facilitate the sale of her business when she previously thought about just walking away. Considering the difficulties many small business owners, restaurant operators, franchisees, entrepreneurs and organizations have experienced over the past two years and with challenges continuing, I’m sharing this article once again.

Fear and Consequences of Failure (unedited from 2011)

I can personally relate to the trials and tribulations of owning franchise businesses as I have “been there and done that” and have experiences on both ends of the spectrum from achieving overwhelming success to dealing with bitter failure. I have definitely come to understand the fine line between success and failure in trying to nail down the American Dream.

I know it is sometimes counterproductive to even mention failure which is why the subject is always avoided and never discussed. Yet, it’s out there and it’s real. Once franchisees face the possibility of failure and its very real consequences, they can be motivated to understand that failure is not an option and commit 100% to a plan that addresses immediate problems and provides solutions accordingly. Even if it’s necessary for the plan to be quite drastic or aggressive due to prevailing circumstances, franchisees that unequivocally realize that failure is not an option are prepared for immediate action.

Let me emphasize one point. Franchisees should not view poor sales and disappointing profits as either potential or immediate failure and stick their heads in the sand. I made that mistake in the past and suffered the consequences. Instead, franchisees should build upon the courage it took to become a franchise business owner and recommit to success as they did when they first took the entrepreneurial plunge.

They need to remember their wishes, hopes and dreams that prompted the decision to own their own business. They need to remember the admiration of family and friends when they heard about the new venture. They need to remember the excitement when they actually signed the franchise agreement.

Unfortunately, there’s a very distinct possibility the root of the problem is embedded in the franchisee’s actions, non-conformity to the franchise system and unwillingness to face reality. However, as there was some shining light evident during the franchise award process, it may not be a totally lost cause if the franchisee is made to completely understand the implications and consequences of failure.

As franchisors are faced with the potential of closed units [during this recession] that may be the result of things out of their control, it’s imperative they don’t lose even a single unit just because a franchisee just flat out needs a snap back to reality. It’s worth the effort.

Let me clarify something. I failed as a franchisee. Not because of anything the franchisor did or didn’t do but because I put and kept my head in the sand and did not face reality. I could go on and make excuses about things that happened around me but at the end of the day I could have turned things around if I got my own head out of the sand, made some difficult decisions and took full, immediate responsibility.

Unfortunately, I was scared of failing. I was afraid of what people would think. I was ashamed at what other franchisees, ones I put in business, would think of me. I couldn’t even think of facing my family. All lame excuses for not taking responsibility. Maybe a hard swift kick you-know-where would have helped.

Did I mention that I previously ran the franchise company where I failed as a franchisee? Did I mention I was elected by fellow franchisees, President of the National Advisory Council? Did I mention that I owned and operated five franchise units?

If I had clearly understood the implications and consequences that were looming on the horizon and if I was able to get my big ego out of the way and address things head on, maybe I could have survived. Maybe I could have at least implemented an exit strategy that would have, in some small way, paid back the loyalty and support of my employees, family and friends.

In the end, I may not have survived because it may very well have been too late when and if I finally took action and responsibility. But maybe I could have at least exited with some dignity. Also, I could have saved many innocent people a great deal of hardship, embarrassment, wasted effort and ill-spent resources if I did face reality. This includes my family, my employees and yes, my franchisor; all who believed in me.

Yes, it was a tremendous learning experience but not one I would bestow or wish on anyone. Now, all I can do is to offer my experience to anyone in the franchise industry that needs assistance. As we [prepare to enter 2012] in the realms of economic uncertainty, I’m certain already difficult situations have been compounded but I’m confident a snap back to reality could only help. If just one franchise business is saved from the consequences of failure, then we’ve made progress. Progress we’ll continue to build upon.

5 Tips for Finding the Perfect Franchise

With the Great Resignation still in full swing, a lot of people are choosing to take control of their personal and professional future by exploring entrepreneurship. 

Of those who realize their entrepreneurial potential many choose owning a franchise as the vehicle to take them from employment to entrepreneurship due to the already proven business model and built-in, ongoing support system, among other benefits.

If becoming a franchisee seems like the right path for you, follow the tips below to find the perfect opportunity.

1. Keep an open mind, then focus. No one wakes up and says, “I want to be in the septic tank industry,” but I know someone making a lot of money and meeting his lifestyle goals doing just that. The bottom line is: Don’t rule out a business without learning or seeing what the day-to-day will look like.

It’s important to find a franchise that allows you to reach your desired income, lifestyle, wealth and equity goals. For instance, think about a mom returning to the work force who knows she wants to interact with children on a daily basis. There are hundreds of options that allow her to do just that. Now, she needs to decide if she would like to be hands on as a teacher or if she would rather manage a facility that tutors children in math. Deciding between the two is easy if she considers which day-to-day position she would prefer and how that will impact her other goals.

2. Be proactive with your research. After you’ve determined what role you want in a franchise, it’s important to start scouting different options. Physically visit many different franchise locations to see if there is a void in the marketplace and start thinking strategically about how you could fill it.

Next, browse the web to see what is available in other areas and determine whether or not it will be a fit in your community. For example, if your neighborhood has many well-run restaurants but none dedicated to ethnic food, it may be time to look for Mexican franchise restaurants within your budget. 

3. Make sure the franchisor has experience. Before signing on to a franchise, it is essential to ask the franchisor about the executive team and its past industry experience. A potential franchisee should look for a company that has a corporate store — or better yet several — that have seen success that can be replicated. If this isn’t the case, find out if the company leaders have had significant experience at another franchise and are now applying that knowledge to this concept. 

4. Reach out to other franchisees. When asking other franchisees about their experience, it’s important to take the good with the bad and to examine a large sample size before making a statement about the franchise in general. I call this the “dilution factor.” If one franchisee says they can’t turn a profit at their store, make sure it isn’t because they refuse to clean the bathrooms and their customer service is lacking. By talking to a wide array of people you can get the best feel for the franchise as a whole.

5. Read the franchise disclosure document carefully. The first thing to look at is how much a franchise would cost to purchase. If the money is there, then check out “item 19,” which lays out the financial performance representation. Make sure you have a financial advisor who can look at that item with you and see the type of profit a franchisee can make on average.

Finally, take a look at the post-termination clause in the agreement. I am a big believer in exit strategies, because sometimes you may later find a franchise is not the right fit and sometimes things just happen. In any case, it’s important to protect yourself should there be a situation where you want to disembark from the franchise. 

Author’s Note: If you’ve been thinking about exploring business ownership and live in and around the Orlando area, then you will not want to miss The Great American Franchise Expo March 26-27 at the Orange County Convention Center and April 9-10 in Miami at Miami Airport Convention Center. Learn about future dates at FranExpoUSA.com.

Texas-based Pepperoni’s franchising as a 30-year overnight success!

After many years of building a successful brand, Pepperoni’s Founder & serial restaurateur, Ray Salti developed a more efficient scaled down business model that addressed many of the issues facing restaurant operators today – high real estate costs, escalating labor costs, diminishing workforce pool, quality control and increased demand for take-out & delivery.

Proving the new model for over five years with increasing revenue and profitability, Ray decided to launch the new Pepperoni’s into franchising in mid-2019. To ensure success as a franchise system, significant financial resources were committed to technology integration, modern unit layout & design, operations support & training and a call center.

In addition, construction on a modern corporate office was completed in early-2020. The goal is to have a state-of-the-art facility for the growing Pepperoni’s team with plans to include a test kitchen, training areas and a commissary. Combined with delivery of exceptional New York style pizza, positively memorable customer experiences and excellent unit-economics, Pepperoni’s is well-positioned for franchise success.

Single and Multi-unit Franchise opportunities are available along with Area Development opportunities such as those that recently resulted in several multi-unit development agreements in Greater Houston Area. Short-term growth plans include all major and secondary markets throughout Texas followed by expansion across Southeast U.S. Investment level starting at $153,000.

Interested in owning a Pepperoni’s? Learn more HERE.

#pizza #franchise #lowinvestment #QSR

QSR & Pizza Fueling Franchise Growth

Fast-Food-2Each year the International Franchise Association commissions a study from PwC (PricewaterhouseCoopers) on the economic impact of franchising in the U.S. Highlights from that study include the following:

  • Taking into account the indirect impact of franchised businesses, business format franchises support more than 13.2 million jobs, $1.6 trillion in economic output for the U.S. economy, and 5.8 percent of the country’s GDP.
  • Franchise businesses provided more jobs in 2016 than wholesale trade, transportation and warehousing, nondurable goods manufacturing, and information (including software and print publishing, motion pictures and videos, radio and television broadcasting, and telecommunications carriers and resellers).
  • Quick service restaurants (QSR) is the largest category, representing 25 percent of all franchise establishments and 45.5 percent of all franchise jobs.
  • Jobs supported because of franchise businesses were at least 10 percent of the private sector nonfarm workforce in 33 states, and at least 6 percent in every state.
  • The number of people employed by franchises is greatest in California, Texas, Florida, Illinois, and Ohio.
  • Franchisees own and operate 88 percent of all business format franchise establishments and franchisors own and operate 12 percent.

Read more…

Quick Serve Franchise Sector Continues to Blaze a Trail for Franchising

There is little doubt that the franchise industry is undergoing significant changes fueled in great part by the success of various PE firms that began in the QSR sector. As other franchise sectors are targeted by PE investors, the competitive environment in those sectors will become more challenging. In order to prepare for these challenges, small to medium sized franchises will need to become successful franchise systems that produces sustained system growth, successful franchisees and an efficient operating system.

Multi-unit franchisee ownership that originated in the QSR sector continues to increase as franchisors seek large multi-unit franchisees that can own and operate more franchise units.This ownership model provides organizational stability, ample financial resources, sustained growth and economies of scale to the franchisee operation.

Read more…

Who’s Winning the Pizza Wars?

Welcome to the pizza wars, where brands big and small, quick-service and fast-casual alike face two choices: pick up the pace and earn relevancy through definitive, clear marketplace differentiation or step aside.

Read more…