Triangulation is a Good Thing
Hardly a day goes by that I do not have a conversation where I am told, “I’m interested buying a Dunkin’ Donuts, or Chic-fil-A, or Starbucks, et al.” Most people have a great imagination and they can envision themselves as the proud owner of one of these great brands. They also love the product, see the lines at the drive-thru and start to imagine all the money they are going to make. There is nothing wrong with this as a starting point because we all at one time or another have imagined ourselves as successful business owners.
But If you focus on one brand you could be heading for trouble and here are 3 good reasons why:
- Compare and Contrast – There are pluses and minuses to every decision you make but if you focus on one option you are severely limiting your flexibility and choices.
- Confirming Your Bias – You are intelligent and have always found success in whatever you do. In your industry, you have great instincts and are seldom wrong. But, when you focus your attention on a brand you love, you tend to only see what you want to see. Sort of like a couple with a new baby, they do not see the Jimmy Durante nose!
- Limiting Your Options – By only looking at one franchise brand, you may be missing some other great opportunities that are better suited for your expertise or market area.
Buying a franchised business is not like purchasing a car, where you decide on the model, test drive it then negotiate with a couple of dealers to try and get the best price. I think the analogy of buying a house is closer to the truth.
If your company is relocating you to a new town, you are probably going to start on Realtor.com or Zillow.com to get a feel for the market. You are going to see a great house, in your price range and save it to your “likes.” Is that the only house you are going to look at? Of course not, that would be silly, we all know appearances can be deceiving and I can tell you with certainty, what you think a franchise looks like from the outside as a consumer is very different from what it is like being an owner. What most smart buyers will do is some online research, then contact a Realtor in the market, explain what it is they are looking for and let the Realtor be your guide.
So, the smart play when looking at a franchise is to make sure you explore at least 3 franchise brands in-depth to compare and contrast the models. For example, comparing the terms, conditions, and costs of 3 franchise investments by reviewing their Franchise Disclosure Document (FDD) is a good thing. Otherwise, how are you going to determine what is reasonable? I also think it smart to build a team of advisors to help talk you through your decision-making process. You CPA, attorney, spouse should all be engaged, and I suggest you talk with an expert in the field of franchising. Like the Realtor in our example above, you need some help identifying your needs, wants, personal strengths and weakness when deciding what franchise brands to look at. A qualified, experienced Franchise Consultant will do a thorough analysis, only introduce you to the most suitable brand for you and guide you through the discovery process.