Recently, we came across an article on Forbes.com called “13 Mistakes New Franchisees Make — And How To Avoid Them”. We found this article to be particurally interesting because many of the talking points that are addressed within it are common franchising fears that we hear often. This article has a strong focus on “the dark side of franchising,” and although relatively factual when it comes to the corporate franchising system, we take some exceptions to what is being discussed, and have some points to be made in the opposing direction. When specifically discussing The Brothers that just do Gutters franchise and business systems, our franchise model is purposefully unique, and here’s why.
Here’s the summarized ideas we want to discuss from the article:
- Don’t buy a franchise to “be your own boss” or “control your destiny”
- Franchises fail with about the same frequency as independent businesses
- Seek out franchisee complaints online
- Understand that the franchisor holds all the cards
- Understand that franchisors can succeed even if franchisees fail
Don’t buy a franchise to “be your own boss” or “control your destiny”
The main points discussed within this category, while based on collective opinions, and partially true, takes a bit of an extreme approach. This idea is generated from the following comments made in the article.
“Franchising is similar in a lot of ways to joining the military in that you’re going to agree to follow orders, you’re going to wear the same uniform and you’re going to march up the hill together and try and accomplish the same mission. Buying a franchise in order to control your own destiny is akin to joining the marines in order to ‘do your own thing.’” Sure, there is a system, and yes there are certain brand guidelines and standards to be followed, but at least in the case of a Brothers Gutters franchise, you are not joining a dictatorship ruled with an “iron fist.”
Within the FDD, operations manual, and brand standard guidelines there are “rules” and operations we enforce. When it comes to branding, reputation, training, and attire, the franchisee must look and feel like the franchisor. Even with our systems, training and operational guidelines, individualism and ownership is highly encouraged. We encourage our franchisees to come up with their own campaigns, utilize local sources, get involved in their communities, share new ideas, and truly be their own boss. The purpose of our system is to help each franchisee succeed, and build their business to the point where they have the freedom and flexibility to eventually wear just one hat in their business, that of the owner.
Comparing a franchise system to the military is similar to comparing grandma to mom. The difference is simple. Mom strictly dictates what you can and cannot do, whereas, grandma suggests what you should and shouldn’t do. In a Brothers Gutters franchise system, we provide you with all the tools to build successfully and simply make suggestions on how best to operate, from our own experience.
Franchises fail with about the same frequency as independent businesses
In the article, they state “The myth that franchises are less prone to failure than other small businesses is simply that. The reality is that they generally go out of business at the same rate.” The more you dig into the statistics and data, the more they show a different story. For example, in an article published by Entrepreneur Magazine, it states “Some studies show that franchises have a success rate of approximately 90 percent as compared to only about 15 percent for businesses that are started from the ground up. The increased probability of success usually far outweighs any initial franchise fee and nominal royalties that are paid monthly.”
When researching some of these studies you will find statistics showing that, on average, franchise purchases have a larger rate of success than startups. In the Forbes article, they go on to discuss that the franchise you choose has a lot to do with your success rate, which we agree with. But, it is also important to consider that, as a franchisee, you are entering the business ownership role with a team of people, a support system, an already established brand, and a number of resources at your fingertips. Many of the pitfalls, challenges, and market dynamics have already been discovered.
As a startup, you start with an idea, and yourself. From the start, you own everything from the success to the failures. Every system, operation, procedure, calculation, coaching, consulting, and other granular business detail is owned by you. Although The Brothers that just do Gutters started out as a small business, it really was never our goal to remain there and the reason was simple. The idea was built upon the desire to own a business, instead of the business owning you.
It’s also important to state that whether you are starting your own business from the ground up, or purchasing a franchise model, business ownership is not easy, and success is highly based on you and the amount of work you put into it. Ultimately, statistics mean nothing if the wrong person is in the ownership role.
Seek out franchisee complaints online
Now here is one that we totally agree with. Prior to purchasing a franchise, we highly recommend speaking with current franchisees. Who better to tell you the woes and wins of purchasing a particular franchise system than the ones who already have done so, right? Trust their input, ask a lot of questions, and make sure what the franchise system promotes is real, and not just smoke and mirrors to get you in the door. In the Forbes article, Sean Kelly says, “The complaints of franchisees past and present indicate which aspects of the franchise deserve careful scrutiny, and what prospective franchisees can expect.”
Understand that the franchisor holds all the cards
Within this section, it is discussed in detail how, again, the franchisor plays the part of dictator. “Franchisees are not part of a larger collaborative relationship and they are not part of a team. They have essentially taken on a master and that controlling force has the upper hand at all times.” Again, this is a bit of an extreme approach. At the end of the day, each franchisee’s reputation reflects on the overall brand. As the franchisor, every franchisee is a part of the team and needs to reflect the team positively.
As far as The Brothers that just do Gutters franchise system, if you ask our franchisees, we do everything to treat each of them like a team member. Our approach is different than most systems. The purpose of our system isn’t to just dictate, but to train, support, and educate. As one example of this ongoing support and training, we meet every month with our franchisees to discuss the results tracked within 3 different systems. Using very industry specific KPIs, they can see where and how they need to improve. Our efforts center around identifying the challenges to help them become more effective and efficient.
We give them a lot of freedom to run their business. The Brothers Gutters franchisor, not only allows collaboration, but often does so with each franchisee to take their feedback and address any issues they may have, while also allowing them the freedom to create their own campaigns and uniquely run their business how they best see fit for their operating area. It may surprise you to know some of our younger franchisees are outperforming our older franchisees. The difference is in the attitude. The more a franchisee owns and operates using our coaching and tools, the more successful they become. The proof is in the narrative and our data.
Understand that franchisors can succeed even if franchisees fail
This may be more truthful for over saturated food franchising systems, or franchises with an overwhelming amount of location competition, but for The Brothers that just do Gutters, it is not. Being in a niche trades industry with large service areas, our reputation is the glue that makes us successful. One franchisee failing to meet the overall expectations of our reputation affects the brand as a whole. Their failures will directly affect each location’s success down the road. If there is one “bad apple” we all are hurt.
Although a location in Texas may not directly hurt a location in NY initially, the internet spreads news quickly, and if one guy is doing it wrong, we’re likely all doing it wrong, right? Whether that is wrong or right, a bad reputation or huge failure of a franchise location will quickly create a negative brand image for the franchisor and place doubt on the entire system.
It may seem only logical for a franchisor to take control of the franchise and negatively punish the franchisee, or even worse, close the location down. However, like much of the narrative in this statement, it just isn’t the reality. Contrary to the statement of “churning” a franchisee, most franchisors work with their locations to make them successful. It is much easier to support an owner to help them succeed than it is to resell a location to another interested party. In fact, reselling is more of a franchisee’s responsibility than the franchisor. It only becomes the franchisor’s responsibility in the case of neglectful ownership and many franchisors would rather be expanding then recycling.
Overall, when it comes to franchising, doing your research is the key factor in avoiding “the dark side of franchising.” Spending time with a franchise, speaking with as many current franchisees as you can, and utilizing professionals (lawyers, accountants, coaches, etc.) to help you make your decision can be huge in avoiding wrongly picking a franchisor system that is a money-hungry “dictator” vs. making an educated decision and choosing a franchisor that not only cares about your success, but your overall success impacts them too.
Although the talking points addressed in the article may have begun from a fraction of truth, they are largely misleading. For The Brothers that just do Gutters, we have gone well beyond many of the points in this article. In fact, we provide coaches sitting in the very seats of the corporate headquarters for the sole purpose of supporting our franchisees. Our system is more like that of a small local business coupled with a service specific marketing team, coach, and support system crowd funded by the success of each and every individual franchisee. Because of this, our business model is purposefully unique and custom built. Are you still not certain franchising is right for you or want to learn more? Contact Ken Parsons, head of our Franchise Sales to get a deeper perspective into the good side of franchising.