Fear and Consequences of Failure: A Story Worth Repeating

I’ve been asked time and again to post the following article that I’ve written about my own personal experience as a multi-unit franchisee where I succeeded at first, only to crash and burn later on. This article has been posted on several of my blogs, and picked up by numerous other blogs and online magazines. I have received numerous comments and inquiries about the article, individuals sharing their 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 know when to put their pride aside and ask for assistance, and I 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 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.

Fear and Consequences of Failure

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. If just one franchise business is saved from the consequences of failure, then we’ve made progress. Progress we’ll continue to build upon.


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Are New Franchisees Ready to be Successful?

Last week on Franchise Today, Joel Libava (aka The Franchise King) and I discussed an except from Lizette Pirtle’s recent book, Franchise Success: The New Formula. The discussion pertained to whether or not franchisees are ready to be successful and whether or not it’s actually an assumption that is incorrectly made when a new franchisee signs on the dotted line. Further, the excerpt included a passage about an unemployed individual that entered into a franchise agreement, and his subsequent failure as a franchisee. In an attempt to jump-start discussion on this and other factors relating to franchise success and failure, I have posted the excerpt below and encourage all comments and opinions.

Franchise Success: The New Formula
By: Lizette Pirtle
Chapter 3: Readiness (Pgs 59-60)

We can’t assume that when people invest in a franchise they are ready to be successful. We can’t even assume that they were ready to make the investment in the first place. But we do make these assumptions. Yet, action does not necessarily equal readiness. There is much more to the investment decision and the success of franchisees than we have traditionally considered.

William was laid off from a job he enjoyed as the vice president of operations for a manufacturing company. He had unemployed for 6 months and was getting desperate. He had applied for every job available. He had lost self confidence and was becoming increasingly frustrated. He felt pressure from his parents, his wife and his friends who recommended he consider starting a business.

William never considered self-employment before, but the thought of working again and owning his own business became very appealing. The more he thought about owning a business, the more excited he got. He decided to acquire a franchise, and by the time he made this decision he was eager to start and his excitement was almost overpowering.

William was extremely intelligent and had been very successful in his career, but during training he experienced difficulty. He labored through many portions of the program and questioned new concepts with mistrust. Many of the exercises seemed difficult to him.

While his classmates joyfully excelled, William’s mood became somber as the training progressed. Sometimes he became hostile and withdrawn, while at other times he would engage and be open. The franchisor called him aside and offered him the option to leave the training and recoup his investment. William declined.

When he opened his business, William could not make the business go. He fought and resisted many of the marketing activities and, although he was always busy and worked hard, his efforts were fruitless. In spite of his qualifications and the full support of the franchisor, within 6 months of attending training, William closed his business.

Okay, franchise professionals, tell us what you think. How would you have handled this situation? What would you have done differently? How can we prevent these situations from actually happening within franchising?


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Facts, not Fiction, Lead to Franchise Success

The following is an article submitted by Guest Author, Katryn Harris. Katryn is the CEO of Open Box, a company focused on helping franchisors use technology to build their franchises. She brings her background in management, business strategy and communication as well as her team of technical experts to work with franchisors, ensuring that their technology fits their business strategy and moves their franchises forward. Be sure to check out Katryn’s blog.

Feedback Loops and Franchise Success
By Katryn Harris

A few days ago, I was talking with Greg Nathan from the Franchise Relationships Institute about his software product that helps franchisors select franchisees who are the most likely to succeed.

In brief, the Franchise Relationship Institute does this by benchmarking characteristics & traits of past successful franchisees and then providing a system that compares new applicants with those traits and characteristics.

Greg is a trained psychologist and works strong in the scientific tradition; hypothesize, measure, analyze and then compare results with hypotheses. One of his current projects is the validation of the exact extent to which is product is successful in predicting new franchisee success and, not surprisingly, his results will be fact based & very precise.

Listening to Greg talk about the validation project, I was struck again by how vital these feedback loops are to franchise growth.

Successful franchises implement the best programs and systems they can come up with, but then they measure, analyze and adjust based on the numbers and results (rather than what they ‘think’ is happening). And the faster they can complete this cycle (and then start it up again), the more likely they are to be successful in the long term.

From 1-800-GOT-JUNK?’s Net Promoter measurement tool to calculation tools for attrition rates to sales performance indicators, business growth is fueled by knowing exactly what is actually happen so the best actions can be taken. One of our customers ties client satisfaction records into payroll bonuses for their employees, which is a great motivator to get everyone in the company on board in trying their hardest to keep the clients happy – you can imagine what that has done for their referral and return customer rates.

What are your best scientific tools to create feedback loops and do more of what is working & change what isn’t?


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Franchise Success: The New Formula

Recently, as I was preparing for the Frantelligence Webinar series with Franchise Business Review, Lizette Pirtle, the author of various blogs including Small Biz Franchise and International Expansion Experts, contacted me to discuss franchise client support, and being able to provide information to her franchise clients. I could immediately tell that she had a definitive passion and desire to help her clients and provide them the resources necessary to continue to build their brands.

franchise success the new formulaSince then, Lizette introduced me to her new blog and book, Franchise Success: The New Formula. Clearly, Lizette is an expert in franchise operations and training at franchisee and franchisor levels. Her more than 20 years franchise experience is expansive covering daily operations, marketing, communications and training. She is passionate about designing franchise operational and training systems that allow franchisees and franchisors achieve the success they seek. With a knack for breaking concepts down and creating efficient and effective processes, Lizette derives tremendous joy in assisting her clients discover and implement their vision. A preview of the book confirmed my thoughts about Lizette’s passion and desire. The book is a definite must-read for anyone in franchising.

Would You Like a Complimentary Copy?

To download a complimentary copy of the book, please click HERE. Once you’re directed to the “Get the Book” page, scroll down to the “Do You Have a Gift Code?” section and look for the “Courtesy of Paul Segreto of franchisEssentials” link. Click the “Download” button and when prompted, type in the case-sensitive Gift Promotion password, “franchisEssentials1” to receive your complimentary copy. All we ask is that once you read the book, please let Lizette know your thoughts, comments, suggestions or stories HERE.

Would you like more than an e-copy? If so, the actual book may be purchased on Amazon.com!


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Growing Your Franchise in Today’s Climate – Now Available On-Demand

According to research, 70-75% of new franchisors fail over a 10 year period. Do you know the key factors that lead to a franchise succeeding or failing? Do you know the impact of strong communications and accountability on franchisee buy-in and therefore on franchise growth?

VIEW WEBINAR HERE

THIS WEBINAR HELPED ATTENDEES:

*Learn the most important factors in franchise success or failure
*Explore key societal trends that will affect franchising in the next 12 months
*Get concrete solutions to improve communications and accountability with your franchisees
*Discuss best practices around effective communications in the franchise marketplace and how these can be implemented in the areas of social media, franchisee communications, and operations management.

Attendees left with concrete tips they can implement as well as an understanding of how they can strengthen their franchise operations and a renewed understanding of the critical importance of good communication in franchise development.

VIEW WEBINAR HERE

THIS WEBINAR WAS ATTENDED BY:

Franchise company owners

* Presidents and CEOs
* Vice Presidents, Directors of Business Development, Strategy, Marketing, and Operations

This webinar was considered ideal for Franchisors who are in rapid growth, considering rapid growth or experiencing growth challenges, and who want to increase franchisee satisfaction and improve accountability within their franchises.

VIEW WEBINAR HERE

ABOUT THE SPEAKERS:

Katryn Harris, President, CEO & Founder, Open Box Integration Inc.

Since 2005, Katryn has been working with franchisors to implement best practices and help them grow their franchises faster and better. Clients appreciate her pragmatic approach and how often they hear the question: ‘What are you trying to accomplish here?’ She sees a huge opportunity for many growing franchises to take better advantage of tools that improve communications, automate accountability and measure and improve brand consistency.

Katryn has spoken at international conferences and written articles for online sites, blogs and magazines. She enjoys the challenges and rewards of working with small and growing franchises as they develop their growth plans and set themselves up on the path to franchise success.

Katryn Harris has been involved in management and organizational development since 1996. She has experience creating and realizing strategic plans, controlling finances, managing and training staff, and ensuring organizational accountability. Katryn founded Open Box in 2004 with the vision of setting people free to do what they do best.

Blog http://growfromhere.com
Twitter http://twitter.com/katrynharris
LinkedIn http://linkedin.com/in/katrynharris

Paul Segreto, President, CEO & Founder, franchisEssentials

Paul Segreto, President, CEO and Founder of franchisEssentials, a Division of 21st Century CEO, brings unique perspective, entrepreneurial spirit and extensive industry experience to franchise marketing and development. For over twenty years he has exclusively served the franchise industry as consultant and coach, senior-level corporate executive, activist, multi-unit franchisee and area developer.

Understanding the franchise sales process from lead generation through franchise award, and the importance of forming an interdependent relationship between franchisee and franchisor, Paul has successfully developed and executed marketing and development strategies for franchisors across a variety of franchise segments. As franchise candidates and consumers have become more sophisticated and technologically advanced, Paul has embraced Web 2.0 technology and social media marketing, and has identified both as essential to future franchise growth at all levels.

A recognized franchise and small business expert,, Paul frequently serves as a guest speaker / topic leader for focus groups, strategy and sales planning meetings, training sessions and industry panels. He is frequently called upon to utilize his expertise in the development of articles for industry newsletters and blogs, and training programs for companies and organizations within the industry.

LinkedIn http://linkedin.com/in/segreto
Facebook http://facebook.com/paulsegreto
Twitter http://twitter.com/paulsegreto

Judy Brooks, Co-Founder, President & CEO, Blo Blow Dry Bar Inc., and Managing Director, Head Company Inc.

It was 2006, and Judy Brooks was in her 4th year of building out ProActive ReSolutions a company that works with organizations to build respectful workplaces. ProActive had opened offices in Vancouver, Sydney (Australia) and Edmonton and was at the height of developing the team, when a shiraz-fueled conversation between Judy and her daughter, Devon, posed a very vital question: “Why the heck can’t women get a great, affordable blow out in this city!?”.

The first Blo Blow Dry Bar location was born June 6th, 2007. The concept was simple: no cuts, no color — just wash-blow-go. Blo opened three locations in under a year, including one in the Four Seasons Hotel Vancouver. Since opening, Blo has received over 100 franchise requests from around the world and had over 85 editorial features. Being first to market in the category of Blow Dry Bar has had its advantages. Blo’s cheeky brand has been aggressively built. Blo has a big vision and Judy is working with the young team to capitalize on the success with a well-developed growth strategy.

Blo recently merger with Melonhead, Canada’s biggest kids cutting stores, to form Head Company Inc, a company Building Brands with Brains.

In the last 6 years Judy has sold a company she founded 15 years ago, launched two new ones, and has had the pleasure of working with a number of small businesses as an advisor.

Website: http://www.blomedry.com/
Email: judy@blomedry.com

VIEW WEBINAR HERE


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Opinions, Insight and Perspectives on Franchising

I recently posted a question on Linkedin that addressed the primary reasons to explore franchising. Below please find several of the responses from a cross-section of industry and non-industry professionals . As I have done in the past, the names of the responding individuals will be kept confidential. Instead, they will only identified by their Linkedin statement or profile.

doors-optionsWhat is your opinion of franchising as a business model, business expansion strategy and as a career alternative?
as posted in the Q & A section on LinkedIn under Franchising

An SAP Consultant with some franchising experience obviously has done his homework and offered valuable advice as well as sharing some real life experiences.

“I have studied business and many individual businesses personally. I read many business cases and books and have a deep interest in business models and how they work in the current market.

First of all, check out the book ‘The E-myth Revisited?’ It is a very interesting way of viewing a business model. It describes the benefits of the franchise way of doing business.

I also have been involved in a few franchise opportunities, most recently, I was looking to purchase a tanning franchise. The business model was highly tuned, the computer system was revolutionary and perfectly adapted to the business through many years of iterations. The computer system alone would allow you to manage multiple stores with very little hands on control. The power of the franchise itself brought purchasing power and brand recognition which would have been difficult to built independently. The small percentage of revenues to fund regional advertising brought in enough business that I could have been almost completely hands off while still turning a sizable profit.

In short, most entrepreneurs work IN their business, but at a point you need to delegate so you can work ON your business. And franchising is a marvelous way (for most businesses) to grow exponentially.”

This next response if from a business coach that specializes in guerilla marketing strategies. Before I even read her response i knew I would agree with her perspective of franchisees needing to be prepared to work hard despite buying into a system. How true, indeed.

“I think that Franchises represent an great opportunity for some people. They can provide an excellent template for success, as well as resources and support as you are growing your business. That said, opening a franchise is just like starting any other business from the standpoint that you must have a clear idea as to how you will drive customers to your product/service. A franchisor will provide you with the tools and a blueprint, but you are going to have to do a lot of the heavy-lifting yourself. Make sure you are prepared!

Before committing to any franchise, talk to some of their current (and former!) franchisees. Don’t just call the people the franchisor tells you to call; reach deeper into their list of franchisees. Develop a list of questions that you can ask that help you to understand whether this particular franchise is going to be a good fit for you.

Lastly, if you are someone who doesn’t really like “rules”, you may want to think twice about franchising. What makes franchises work is that things are delivered consistently. That can be a good thing, or a bad thing, depending on how well you follow rules!”

An entrepreneur who previously founded a small franchise company offered his view which it appears may have been formed by some entrepreneurial types that entered into a franchise agreement with his franchise company. Personally, I do not believe true entrepreneurs make very good franchisees. On the flip-side, is he referring to true entrepreneurs or franchisees that just had buyer’s remorse and had to blame someone for their poor performance and/or failure?

“I could wax on for hours on the subject and don’t have the finger skills to type it all, but…

First, my qualifications: I founded/own a successful retail business for over 15 years. I have created multiple businesses, some successful, some not, but all independent. I also created a retail concept that I franchised. So I have the unique view of being an independent and a franchisor.

Here are some quotes:
-A franchise is like a bicycle with training wheels. Once you learn how to ride, you won’t want training wheels anymore.
-Franchising is for those who want you to help them…but, then to leave them alone. In other words they want to be indies, but in a community.
-A franchise is only as good as it’s support.
-If a franchise operation doesn’t give back in value more than royalties paid in, the franchisee will eventually resent writing a check to “the mother ship”.
-A franchise is a business model that people expect to have it all figured out – no one has it all figured out.”

A very well-respected and experienced franchise consultant offered his perspective from having worked with individuals explore franchising as a career alternative. I agree that many explore business ownership options because they cannot find a career position that will compensate them as they have grown accustomed to in the past. the choice between franchise and startup often comes down to risk.

“As a business model I think that franchising is or has taken the place of corporate expansion in a lot of cases. Especially in the startup sector. I don’t know how many times recently I have been contacted from a startup that wants to expand via franchising.

I am talking to a lot of people that are looking at franchising as an alternative career path. Most of them are coming to me because they can’t find a job, it isn’t that they don’t want one, but they can’t find one making the money they were making before.

So they turn to owning a business and a logical choice for some of them is a franchise. For others it is starting their own business.

I think it comes down to personal preference and ability to cope with risk factors. I think most of the people that buy a franchise do so to help reduce their risk, so if they were really looking for a job and then had to buy a business, a franchise is probably a one choice.

About 1/3 of my clients are people in this situation that were looking for a new career, due to recent economic conditions, and they couldn’t find what they were looking for.”

An upstart franchise founder offers her views from the perspective of being new to franchising but quite experienced in running her own business. She appears to be spot on about ideal franchise relationships but I look forward to discussing her thoughts after she awards her first four or five franchises.

“As a career alternative, franchises are not for entrepreneurs, whose M.O. is ‘anything you can do, I can do better’. As an expansion strategy, it depends on the industry, product, service and system. For those that rely heavily on outside sales, for instance, hiring salespeople is more risky and time consuming than offering the opportunity for ownership.

I agree that franchising is a great way to grow by working on your business instead of in it.

Franchises offer franchisees:
– Self direction (while some do, many don’t have too-stringent rules)
– Higher income potential than a fixed salary or most sales positions, and often even more than business ownership because growth may be better supported
– Proven solutions to problems that exist in the market, the basis for any startup
– Elimination or reduction of what can often be years or decades of research, development, relationship building and trial and error and financial investment
– SUPPORT”