Are you considering investing in a home services franchise opportunity? Are you unsure of what to ask the franchise sales person? Would you love to have the key questions to ask them to avoid making the most common mistakes?
With over 20 years experience in the home service industry,I have been involved indirectly and directly in the recruitment of over 2000 home service franchisees. I have seen all of the mistakes made by individuals in the recruitment process.
Here are the 3 most common mistakes made by potential franchisees investigating the home service industry. I’ll arm you with the questions you need to ask to make sure you don’t get caught unawares.
Mistake #1 Buying into a Particle Service Franchise Only Because You Think It Will Make The Most Money.
In the James Home Service network we had 8 different service franchise opportunities to choose from. I don’t know how many times I’ve been asked “Which services makes the most money?” The answer is the one that suits you and your family needs the best.
If you hate mowing lawns ,it doesn’t get more inviting mowing 15 of them a day, if you do have a green thumb then don’t hedge your bets go for it as a pro garden guy.
If you hate dogs, no matter how much cash is in dog grooming you will not have much fun in your business washing 25 dogs a day.
The trap here is if the “Franchise Sales Person” sells you what he wants to sell ,instead of the business that suits you personally long term.
If you hear things like
“I really need a carpet cleaner!” or I have heaps of work coming through for ………….!”
Listen for the personal agenda from the person selling you the business. There can be a list of reasons that they want to push you towards that particle franchise.
The Key Questions #1 “.
Ask Sales Person: Why do he/she think this services will suit me? How will this business help me achieve our families goals?
Ask Self: Can you enthusiastically deliver this home service to a professional level?
Pick a service that suits you long term, do your homework about the demand.
Mistake #2 Not Independently Investigating the Promises of Support .
Support, support, support and more support is what you will be promised from all of the home service franchise systems.
The true acid test of the “support promise” is what the franchisees in their network say. Ask them directly.
Many franchise systems have master franchisees in place . A master franchisee buys the area then sells of franchises to make money. Most of these masters have no experience in the industry or franchising.
They frequently are middle aged men who have no experience as franchisors, they may have a history as real estate agents, fish farmers, ex military or bankers. Interesting background but nothing to do with running the franchise they are asking you to invest your life savings into.
There is a recent trend of franchsiors being bought out by other businesses. In the mobile coffee industry public companies from been the purchasers . In the home service industry the trend has been for commercial cleaning businesses to takeover the “Home Service” networks.
Historically, every attempt for commercial cleaning businesses to enter the Home Service industry in Australia has failed. The two businesses maybe cleaning , but that is were the similarities end. The skills needed to educate franchisees and market a home services business is totally inconsistent with the commercial cleaning industry.
The Key Questions #2 “.
Ask Salesperson: Who is my support person? What experience do they have in running the business I’m investing in?
Can I speak to all franchisees that have been in the network , including the franchisees who have failed?
How many franchisees left the system in the last 2 years?Please supply contact details?
Ask Self. Can this support person add value to the fees I’m paying them ?
If you aren’t 100% happy with the answers, you could be better off as an independent.
Stay well clear of inexperience master franchisees and franchisors.
Strongly recommend you check 5 Reasons Why You SHOULD Start Your Own Business.
Mistake #3 Think You Are Buying a Job.
This is the most frequent trap for inexperienced franchisees. If you have been an employee for your life and think this is just a job you can’t be sacked from.
When you invest in a franchise you are an independent business owner.
If you want a job, then get a job.
Legally in Australia it is easier to terminate a franchisee breaching his franchise agreement than to sack an underperformed employee.
Beware the systems that sell on income guarantees. These guarantees are a sales tool first and foremost . They play on the understandable fears of the new franchisee . Remember that you are buying the proven systems of the franchise network.
Beware systems that have “vender” finance: Vender finance is when the franchisor or master franchisor gives you easy finance. Usually this is when you can’t get lending from traditional lenders. The danger here is the terms and interest are very unfriendly to the franchisees.
Even if your business fails you can end up paying this debt for many years. I am aware of a master franchisee in Far North Queensland whom openly bragged about how he made twice as much a week out of his failed franchisees than those actually working.
Take time to learn and understand the systems of the network you planning to invest in. If there are no documented systems, leave it well alone. Don’t buy any business because of a guarantee, all of these documents are “conditional”.
If you feel that taking the step of investing in the franchise is just a bridge to far for you at this stage, then take your time to think. Truly there is no need to rush ,when you find the business that suits you it will feel right. Some people are better off being employees, while others will thrive as small business owners. Decide which one you feel you are.
The”Key Questions #3 “.
Ask Salesperson: Do I get a income guarantee? If you get offered a guarantee, vital to ask “How many franchisees didn’t get paid under this guarantee ?
Please supply all these franchisees contact details?
Please supply the manuals of the documented systems that I will be expected to follow to collect the income guarantee?
Ask Self: Are you really just buying a job? Do you understand the differences between being self employed and an employee? Are you ready to be your own boss?
As a Franchisee you are an independent business owner, the franchise systems are the tools you use to fast track your business.
If the systems are valid, the income will come. You do have to use those systems of course.
Becoming your own boss is a very rewarding experience. Embrace that independence wholeheartedly. For more education on how to make your family business work for your family read Balance: How to make your family and business life work together.
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