April 2007 SCORE Expert Answers

Expert interviews featured in SCORE Expert Answers give how-to advice and provide inspiration for business success. Send your business questions to a SCORE expert today.

Betty Otte is an entrepreneur who owned and operated multiple franchises in a network spanning Southern California. She is a noted expert on www.score.org. She owned, operated, grew and sold her franchises over a span of 16 years. She is a marketing and management expert serving as a SCORE leader and marketing advisor. Below, Betty shares her real-life secrets on the reality of franchise ownership.

Q: What makes franchise ownership an attractive option for prospective small business owners?
A: The obvious answer is that it lets you be in business for yourself without being by yourself. The franchisor provides a tested and proven business base structure of the, freeing the franchisee from having to invent the operational wheel. Franchisors also provide guidance, innovations and tested marketing materials on a regular basis.

Q: Does owning a franchise require a unique set of skills?
A: Much of the skill set is usually provided by the franchisor through training. However, if a person is going into a market-specific business, such as automobile lube and tuning, it is good to have an appropriate background. There are hundreds of different kinds of franchises, and some do require training in the given area. That is one reason why fast food franchises are so popular; the skills required are very trainable.

Q: What else is essential to successful franchise ownership?
A: As with any other type of enterprise, you need to be genuinely interested in the type of business you’re considering. If you want to buy a tax preparation franchise, for example, it is best to have excellent math skills and a long attention span. Remember that you will be living the business 24/7. You need to be certain that you can accept some level of sacrifice in your personal life, and that your family will support this kind of commitment.

Q: What are some common misconceptions about franchise ownership?
A: The biggest mistake is believing that franchises never fail. Although the failure rate is much lower than that of independent business, the franchisee still must have the necessary commitment and drive. Also, franchise owners have no special legal protection after they purchase the business. The Uniform Franchise Operating Circular (UFOC), a legal document that lays out the rules and requirements for full disclosure, only protects the buyer before the sale. Finally, a common misconception deals with the goals of the franchisor and franchisee. The one common thread between the two is building the brand. Other than building the brand, the franchisor and franchisee may not have congruent goals.

Q: What are some musts to consider in evaluating franchise opportunities?
A: Prospective franchise owners should conduct the same thorough research that any new business owner should do. Franchisors cannot research each individual market, so it is the responsibility of the prospective franchisee to do his or her homework. The Internet is a wonderful source of information, but it’s also helpful to literally “walk the street” and ask people if this kind of business is needed in the neighborhood. You should also study the competition. Find out what they are doing, and figure out how can you do it better. After all, you will have to do it better to succeed.

Q: Is it also helpful to visit other franchisees as well?
A: Absolutely. Make arrangements to visit their locations and examine their processes. Ask them if they would buy the franchise again, if the franchisor is providing enough support, if the experience is living up to their expectations, and if they are meeting their business goals. These relationships will also be helpful should you decide to move forward with the franchise purchase. You can develop a network of friends that have the same base knowledge and abilities. It’s a good feeling to know that you can call any of them with questions or good ideas to share.

Q: Should a franchise owner have a growth strategy in mind from the outset?
A: A business plan is as crucial for a franchise as it is for an independent business. Where do you want to go and what is the best way to get there? Will you make the money you wish with only one unit or territory? And how does the business fit with your personal goals? A person looking for a major career will have different objectives than a semi-retired person who wants to keep active and busy.

Q: How important is it for new business owners to work with a mentor like SCORE as they explore franchise opportunities?
A: It couldn’t be more important. By working with SCORE counselors who have “been there done that,” you can potentially avoid many of the mistakes that we all made. SCORE’s resources are outstanding whether you work with a counselor one-to-one, through a workshop, or via the Internet with our online counseling through Ask SCORE.

Q: What is your best bit of practical advice to prospective franchise owners?
A: Spend time up front doing the research. There is no hurry. Once the franchise is yours, you own it. Make sure it fits into your lifestyle—and that it is something you will enjoy doing—and it will make the money your business plan projects.