Adventures with lyrical - buying a business

Shonuff · Feb 7, 2012

prescient63 said:
I just quoted UT"s curve. UT doesn"t give C"s at the very least it doesn"t happen anymore so unless you can dig up some reference to this grade distribution I"m not buying it.

Edit: I"m not dispariging your school. McCombs is a great program. I"m just saying that the facts don"t support what you"re claiming.

Apparently that"s changed, or its the recommended grading for non-core classes. I know they talked about it before, it needed to be done. We all worked 20 hour days to keep up. You really couldn"t seperate a guy like a good friend of mine who already had two graduate degrees in engineering from top schools, or someone that had already been to a top B-school for undergrad, or someone who had a PhD in the sciences. How do you give an A or a C when all these people are going to give essentially the same output and are willing to study and work on projects one hundred hours a week?

prescient · Feb 7, 2012

Cad said:
That"s just shit ass grade inflation. If they are only going to give 4 grades, just make them A B C and D and then you can go more fine-grained with the +/-.

Don"t want to hurt any little ivy-wannabe e-peen by giving someone C"s, apparently. In law school they have forced curves that have to median out at 3.0/2.9 (not at Yale, and at Harvard they are starting to go more pass/fail... but they don"t give out rankings, so the grades are somewhat meaningless...) .. So having a 3.5 basically means you"re a badass.

At graduation, is everyone basically magna? That"s hilarious.

The thing people need to realize is that Bschool is not about grades. In a field like law most students go to law school straight from undergrad and therefore law firms don"t have any better predictors to base your performance on than grades. In business programs everyone has prior work experience so grades have so little impact on your future employment prospects that it"s hard for people in other disciplines to realize. Above average grades are simply a signal that you"re pretty intelligent, but that doesn"t go that far. Interviews tend to be technical in nature so that they can test what you actually know.

IE: My interview for a position in the treasury department at a major multinational started out with options greeks, moved to duration, dividend policies, swaptions, and ended up with how I would manage a multi-billion dollar portfolio and determine asset allocations. You learn about this stuff in classes but integrating all of it into something you can leverage in an interview doesn"t happen by getting good grades.

Also, companies have a much better predictor of performance, your previous work experience.

Anyhow, I"m going to stop gaying up Lyrical"s thread.

Shonuff · Feb 7, 2012

prescient63 said:
I just quoted UT"s curve. UT doesn"t give C"s at the very least it doesn"t happen anymore so unless you can dig up some reference to this grade distribution I"m not buying it.

Edit: I"m not dispariging your school. McCombs is a great program. I"m just saying that the facts don"t support what you"re claiming.

I emailed McCombs:

Q: Hello, I graduated in 2005, and someone told me that there is no longer a forced curve where 15% of class gets C"s in the core courses. Is this true?

McCombs said:
Below is thecurrentrecommended grade distribution for core classes:

Grade distribution guidelines of the MBA Programs Committee are A (4.0) 25%, A- (3.67) 20%, B+ (3.33) 15%, B (3.0) 35%, and B- or below (2.67) 5%.

Best,

(Name removed)
McCombs Admissions Committee

So apparently the whole giving out 15% of C"s is over. That"s fine, but my 3.6 GPA actually meant something, now it means nothing if I were to go looking for a job.

Shonuff · Feb 7, 2012

prescient63 said:
The thing people need to realize is that Bschool is not about grades. In a field like law most students go to law school straight from undergrad and therefore law firms don"t have any better predictors to base your performance on than grades. In business programs everyone has prior work experience so grades have so little impact on your future employment prospects that it"s hard for people in other disciplines to realize. Above average grades are simply a signal that you"re pretty intelligent, but that doesn"t go that far. Interviews tend to be technical in nature so that they can test what you actually know.

IE: My interview for a position in the treasury department at a major multinational started out with options greeks, moved to duration, dividend policies, swaptions, and ended up with how I would manage a multi-billion dollar portfolio and determine asset allocations. You learn about this stuff in classes but integrating all of it into something you can leverage in an interview doesn"t happen by getting good grades.

Also, companies have a much better predictor of performance, your previous work experience.

Anyhow, I"m going to stop gaying up Lyrical"s thread.

Its fine, I don"t care.

A point you are also missing, Cad, is that recruiters make it a point to know the grading scale at each school. So while a 3.67 might be be impressive at U.T., its flunking at Harvard. You"d have a hard time getting interviews from recruiters with a GPA like that.

Cad · Feb 7, 2012

Lyrical said:
Its fine, I don"t care.

A point you are also missing, Cad, is that recruiters make it a point to know the grading scale at each school. So while a 3.67 might be be impressive at U.T., its flunking at Harvard. You"d have a hard time getting interviews from recruiters with a GPA like that.

I don"t miss the point, I know they do. It"s the same in law school, some schools curve to 2.9, some curve to 3.3. Some don"t really follow their curves and end up with half the class magna. It"s just stupid grade inflation. Your "GPA" should be meaningless and all that should be cited is your class rank/percentile. Just because the recruiters know the scales doesn"t mean it isn"t stupid. Oh well.

Shonuff · Feb 7, 2012

Cad said:
I don"t miss the point, I know they do. It"s the same in law school, some schools curve to 2.9, some curve to 3.3. Some don"t really follow their curves and end up with half the class magna. It"s just stupid grade inflation. Your "GPA" should be meaningless and all that should be cited is your class rank/percentile. Just because the recruiters know the scales doesn"t mean it isn"t stupid. Oh well.

I understand what you are saying, not all schools are as bad as others, and really, Harvard is the worst. Last time I checked, 90% of the grades rewarded were A"s, so if you got an A-, you were in the bottom 10%. I think that is ridiculous. On the other side of the spectrum, I think its ridiculous to try to force a curve on people that have gotten A"s all their life, been to the finest of schools, and are at least a mid-level manager and then try to force some to get C"s. There"s just not a normal bell curve that exists when you sample from that subset.

Its like some professors said, they had to ask things in unclear ways so they could force out lower grades, or even worse, make the tests so long that they could give C"s to the people that couldn"t finish. Its like one prof said, he made his tests 25-30 pages long, so if you couldn"t get through it, you were the C. So if you were feeling under the weather for the day, guess what? You had a C. He said he knew there was a problem one day when the test was supposed to be four hours long, and no one got up to leave.

There are two extremes to it, I guess.

Dis · Feb 7, 2012

Getting into the whole franchise business seems to be the most daunting thing. I have the comfort of a good paying job with what seems to be pretty good job security, BUT I see what seems like are good opportunities/deals for franchises in my area (where I live).

I moved out to the Northwest side of Houston, and the population is booming out there. The main problem we have is the lack of restaurants in the area. I have ran into to franchises that I think would make out like gangbusters in my area:

The Original Fried Pie Shop

Egg and I Restaurants

The main problem with the two that makes me hesitate besides the obvious not knowing how much money I will make or will lose, while probably having to leave a good paying job is this.

The Egg and I has franchises already in Houston, and I believe the owners of said franchises have the right of first refusal. So if I say, hey I want to open a franchise here in X location, they can say, no we want that, and then proceed to open the new location. Not sure if that will cause me to lose money or not, but it seems like a lot of effort just to have the rug pulled out from under you.

The Fried Pie Shop seems like an inexpensive option, and having tasted their wares in Buffalo, TX (fucking amazingly good) it also seems like I would do well, I just worry that since it is a bit new and different, that while I might think it is a great idea, others may not. Then I proceed to lose the 100-150k starting costs, and am out of my good paying job.

So there it is, I am hoping someone can shed some light on what I would expect if I were to go the franchising route, or if I should even bother. I currently have two kids (3 yr old, and 3 month old) and my only debt is my two car notes (both are paid for by my job, but if I quit my job, yeah I have to pay for them), my house, and a student loan. My wife and I have excellent credit (800 +/-), and no CC debt. We do have investments (Roth, rollover IRA, 401K), but if we try to draw from them I believe we will get hit with penalties (not something I want to do).

Anyways, any advice/ideas are appreciated. Thanks in advance.

Shonuff · Feb 7, 2012

I looked at franchising alot as a way to limit my risk, but I wanted to have guaranteed income. I was already making 100k+, but I wanted the freedom, my job required me to work 80-90 hours a week and no sick days.

I looked at franchising, and really, if you are serious about that, you can call up the franchisor and get their statements they have to file with the government. Most franchisors won"t make earnings claims, but they will give sales numbers, and also, if there are commissions, they have to be reported, and you can back out the annual sales per location from there. One time the Area Rep claimed that each location did $1 million in sales annually, I backed out the percentage of commissions, adjusted for new stores opening, and it was more like $173k per store LOL.

You could also conduct due diligence where the company allows you to conduct phone interviews with franchisees, and some of them will tell you their bottom line. Also, the SBA has failure rates. If your company isn"t financed from the SBA, its because they know a good portion of them are failing. If the franchisor gets preferred rates, you know the SBA knows that they aren"t failing.

Also, keep in mind that while many franchisors state they have a low failure rate, BE CAREFUL. I"ve more than 100+ page long contracts they have with the franchisees, and most of them say that they cannot close the location unless they go bankrupt, or sell to someone else. What does that mean? Instead of getting shutdown, the franchisee lies to the buyer about everything, and then the buyer has the same problems, and the hot potato gets passed down the road, and its not reflected in the failure rate.

I"ve conducted due diligence with some franchisees and their area reps, and some of their statements are outrageous. Don"t ever go by their statements, go by what they are willing to put in writing and sign, or even moreso, call other franchisees (with permission by the franchisor, of course). One company did their best to convince me that I"d be a millionaire shortly after signing up with them, but after seven to eight calls to franchisees, I was pretty sure I"d lose my 200k initial investment. When you have franchisees crying to you over the phone about the franchisor"s business model, and none of them have anything good to say, the picture is clear.

On the Egg and I, typically they are given 30 days for right-of-first-refusal, if they don"t exercise it, its yours and there is nothing they can do.

As far as taxes, I can show you how everything can be rolled into a trust, a c-corp formed, andtaxes not paid, but be prepared to pay out 5% of your total IRA/401K to lawyers and CPA"s to make sure everything is legally compliant. And you have to pick lawyers and CPA"s that do this 100% of their time, they"ll get it done much cheaper than a local guy. I tried to have a lawyer do it who dealt with retirement plans, but he already billed me two-three hours and didn"t have a grasp on the ERISA tax codes. The good thing about this is that you could buy a bigger deal with more cash flow, the bad thing is that if you are mistaken, you lose your retirement .

Start off with your due diligence of the franchises, even starting with the web. You might also sanitize the names of any of them you sign an NDA with. One franchisor I signed an NDA with purposefully looks up anyone talking about it, and tries to legally harass the site into giving out IP addresses, and its all cause the franchisor makes crazy statements and can"t back them up. Shoot, look at Quiznos franchisees, last time I looked, the business model was so bad that they were committing suicide in their restaurant bathrooms. Some of those guys tried to sell to me, and man, no matter how much they tried to cook the books to show a profit, there was no profit!

There are good franchises out with good business models, there are some with really poor models. And guess what? Some of the ones with poor models are really good at selling franchises (like Play N Trade games or Curves). If you want to play in this arena, you need to have/develop a really good b.s. detector.

Sorry if any typos or grammar errors, but I"m doing paperwork atm and am busy.

Shonuff · Feb 7, 2012

Here is a good site:

Unhappy Franchisee

You can"t believe everything written on the interweb, but was absolutely shocked at how much of the franchisee complaints on certain franchisors from this site could be verified through additional research. When you call up the franchisees and ask if this is true, or that is true, they say, yup, this franchisor is full of it and then they break it down.

Dis · Feb 7, 2012

Lyrical said:
I looked at franchising alot as a way to limit my risk, but I wanted to have guaranteed income. I was already making 100k+, but I wanted the freedom, my job required me to work 80-90 hours a week and no sick days.

I looked at franchising, and really, if you are serious about that, you can call up the franchisor and get their statements they have to file with the government. Most franchisors won"t make earnings claims, but they will give sales numbers, and also, if there are commissions, they have to be reported, and you can back out the annual sales per location from there. You could also conduct due diligence where the company allows you to conduct phone interviews with franchisees, and some of them will tell you their bottom line. Also, the SBA has failure rates. If your company isn"t financed from the SBA, its because they know a good portion of them are failing. If the franchisor gets preferred rates, you know the SBA knows that they aren"t failing.

Also, keep in mind that while many franchisors state they have a low failure rate, BE CAREFUL. I"ve more than 100+ pagelong contracts they have with the franchisees, and most of them say that they cannot close the location unless they go bankrupt, or sell to someone else. What does that mean? Instead of getting shutdown, the franchisee lies to the buyer about everything, and then the buyer has the same problems, and the hot potato gets passed down the road, and its not reflected in the failure rate.

I"ve conducted due diligence with some franchisees and their area reps, and some of their statements are outrageous. Don"t ever go by their statements, go by what they are willing to put in writing and sign, or even moreso, call other franchisees (with permission by the franchisor, of course). One company did their best to convince me that I"d be a millionaire shortly after signing up with them, but after seven to eight calls to franchisees, I was pretty sure I"d lose my 200k initial investment. When you have franchisees crying to you over the phone about the franchisor"s business model, and none of them have anything good to say, the picture is clear.

On the Egg and I, typically they are given 30 days for right-of-first-refusal, if they don"t excercise it, its yours and there is nothing they can do.

As far as taxes, I can show you how everything can be rolled into a trust, a c-corp formed, andtaxes not paid, but be prepared to pay out 5% of your total IRA/401K to lawyers and CPA"s to make sure everything is legally compliant. And you have to pick lawyers and CPA"s that do this 100% of their time, they"ll get it done much cheaper than a local guy. I tried to have a lawyer do it who dealt with retirement plans, but he already billed me two-three hours and didn"t have a grasp on the ERISA tax codes.

Start off with your due diligence of the franchises, even starting with the web. You might also sanitize the names of any of them you sign an NDA with. One franchisor I signed an NDA with purposefully looks up anyone talking about it, and tries to legally harass the site into giving out IP addresses, and its all cause the franchisor makes crazy statements and can"t back them up. Shoot, look at Quiznos franchisees, last time I looked, the business model was so bad that they were committing suicide in their restaurant bathrooms. Some of those guys tried to sell to me, and man, no matter how much they tried to cook the books to show a profit, there was no profit!

There are good franchises out with good business models, there are some with really poor models. And guess what? Some of the ones with poor models are really good at selling franchises (like Play N Trade games or Curves). If you want to play in this arena, you need to have/develop a really good b.s. detector.

Sorry if any typos or grammar errors, but I"m doing paperwork atm and am busy.

Thanks bro. Last question, do you think the risk is worth it at this time since I just started my family. Montessori is a HUGE expense, 20k /yr, not to mention that without my yearly income it would hurt. I am not trying to get out of my job for your reasons, I actually love my job, but I would LOVE to own my business (like you do) with the opportunity to make more money that I do now.

So think I should investigate and wait until the kids are at least in kindergarten (losing that expense or at least lowering in dramatically) or ???

Shonuff · Feb 7, 2012

Dis said:
Thanks bro. Last question, do you think the risk is worth it at this time since I just started my family. Montessori is a HUGE expense, 20k /yr, not to mention that without my yearly income it would hurt. I am not trying to get out of my job for your reasons, I actually love my job, but I would LOVE to own my business (like you do) with the opportunity to make more money that I do now.

So think I should investigate and wait until the kids are at least in kindergarten (losing that expense or at least lowering in dramatically) or ???

I don"t know, man, people need to live their own life. I signed my separation papers and took a buyout from the corporation I worked for 12 yearson the same dayI found out my wife was pregnant with our first child. It was time. Sometimes you have to have faith, and it takes faith to do that with babies that want to be fed all the time.

My only regret is that I waited until I was 35 to go this route. I have a secretary and two managers, so I come and go when I please. If I want to sit at home playing the latest MMO, I can do it. When I worked for corporations, they owned me six days a week, and if they want to call me at 2 a.m. during a weekday, they did. I never worry about getting downsized anymore, that sure is a benefit.

Sometimes I wonder if I show both sides of it. I"ve made 25k net in a month, I"ve lost 25k in a month. In such a seasonal business, and everyone thinking they can do it, if things start to get busy, 20-30 companies will pop up in the area to compete against. When everything is going great, you feel like a genius, when times get tough, you wonder why you left your job. But overall, I"d rather be doing this than working for somone else.

In contrast, my best friend (whose parents were self-employed) started a business right out of college, and has done well at it. He thinks people that work for others are morons. Its like we came from different upbringings, he was taught if you want to live well, you work for yourself. I was taught if you want to live well, you work for someone else. My parents worked for companies at the time also.

In the end, the reality is that most millionaires don"t work for other people in a corporate setting, the hard data is that outside of doctors, lawyers and athletes, the rest are self employed. If you are shrewd and tough, you can do well, if you are weak, you"ll lose it all. That"s life.

I really prefer owning my own schedule. No one tells me when to come to work, leave work, what to do at work, what meetings to go to. I decide all of that. Sink or swim, I get to march to my own beat. When I worked at the exec level for two companies, 80-90 hours a week I had things dictated to me, and would have meetings or business stuff on weekend nights and Saturdays, or have to do quick reports for the V.P. on Sunday with no warning. No thanks. To me, wealth is being able to be there for your kids, or having time to workout, etc, and not just financial. And really, until you get an established reputation, you"ll be working harder than you ever have. Most people can"t afford to start up and have a secretary and two managers, you"ll be doing it all yourself at first.

If you want my advice, take your time until you have a deal you really think you can run and make a profit at. Life is like double dutch jump roping. You have to wait for a certain time to jump into the fray, and if your rhythm is wrong, you trip and fall flat on your face. Everything in life has its rhythm and timing, just keep educating yourself, learn everything about franchising, being self-employed and learning about different companies, and then jump when its time.

Dis · Feb 7, 2012

I may PM you from time to time. I think you had mentioned you were from Texas, maybe you have some good CPA referrals. I am thinking real hard about this Fried Pie Shop deal, but they seem to be real new to the franchise game, most franchisees are in East BFE. Definitely going to dig a little deeper, see if I can get some email addresses. Just to be clear, I have to get permission from the Franchiser before I can talk to the Franchisee?

Thanks Lyrical.

opiate82_foh · Feb 7, 2012

Dis said:
So there it is, I am hoping someone can shed some light on what I would expect if I were to go the franchising route, or if I should even bother. I currently have two kids (3 yr old, and 3 month old) and my only debt is my two car notes (both are paid for by my job, but if I quit my job, yeah I have to pay for them), my house, and a student loan. My wife and I have excellent credit (800 +/-), and no CC debt. We do have investments (Roth, rollover IRA, 401K), but if we try to draw from them I believe we will get hit with penalties (not something I want to do).

Anyways, any advice/ideas are appreciated. Thanks in advance.

My pizza restaurants are part of a franchise. There are arguments on both side of the fence in regards to this. Obviously you get the instant name recognition, the start-up support and much better buying power. But you do lose a lot of freedom and are at the mercy of leadership.

I was a very happy franchisee until about 5-7 years ago. We got new leadership who are frankly incompetent and have dragged our whole system down with them. Where we use to have a lot of freedom on how we operated our business, we now have quarterly inspections where they nitpick our operations right down to how we seal our dough-bags (doesn"t matter that it"s sealed, you MUST seal it this way and only this way).

They are in control of the majority of our advertising. Their advertising plan for the last 5 years has been exactly the same, has been ineffective, and has ignored new platforms such as social media, SEO, mobile, etc. We are powerless to change this.

They have also forced us to run ultra-aggressive specials that have cost us a lot of money. Even though we told them these specials were going to kill our bottom line they didn"t care because the specials boosted net sales which is what our fees that we pay to them are based off of.

Our owners association also suspects that our franchiser has been negotiating kickbacks on products in exchange for exclusive use. The franchiser is suppose to use our combined buying power to get us better pricing, instead they are getting us a worse price and are taking a rebate from some suppliers. This is in violation of our franchise agreement, but they have tried to work around the agreement by basically laundering the kickbacks through their company owned stores. It"s looking like our owners association is going to have to fight a big legal battle over all of this.

All of these moves have basically been cash-grabs because they were in danger of going under.

This is kind of a horror-story scenario on dealing with a franchise. And how much of these types of things you are willing to deal with all depends on what you are wanting to do with your business. Rigid structure can be good for some people and obviously very profitable (McDonalds). Also the franchises you are looking at might give you a lot of lee-way on how you are able to run things and will be amicable to new ideas.

The support structure you get (especially when starting off) can really be a great crutch to lean on to get your feet wet. But you are ultimately at the mercy of a higher up. You hope that they act in the best interest of the entire system, because that should benefit everyone overall. But you do lose some freedoms in how to operate your business and can be at the mercy of malicious or incompetent leadership.

If you are really nervous about striking out on your own and would like the support structure a franchise provides, what I would do if I were you is I"d try to talk to other owners of the franchise you are interested in and see if you can get some candid thoughts on how they feel about the system. Most likely they have an owners association they can get you in contact with which would be a great resource to do some research to figure out if it"s a company you would want to be involved with.

opiate82_foh · Feb 7, 2012

Just of couple of other kind of nit-picky things we have had to deal with.

Our sausage arrives frozen and pre-cooked. We then put it in our walk-in refrigerator to thaw and it has a shelf life of 7 days at that point. A very small number of stores have been having issues rotating their stock so they kept having expired sausage on their shelves during their inspections. Rather than just get those bad operators to do a better job at rotating their stock, they have decided to mandate everyone in the system buy freezers to keep their sausage in. And not just a $150 chest freezer, they are requiring we all buy $2000+ industrial freezers.

Also we have our own local Facebook page and website. I"m constantly getting emails telling me to delete updates I put up. For example, they have decided (just recently) that they don"t want any references to alcohol on our website/facebook page. So even though there is a huge market for craft beer up here, I am basically not allowed to advertise it. Nothing about happy-hour or Superbowl beer specials, nothing about us doing growler fills to-go, nothing about how we offer local breweries beers in 22oz bottles.

Gravel · Feb 7, 2012

prescient63 said:
Pedigree > GMAT when it comes to apps. I would do a lot of reading at poetsandquants.com if you really want to get an MBA.

I think it"s funny you mention poetsandquants, and this immediately devolved into something about affirmative action. There are a bunch of "would I get in" things on that website, and the lady (who was an admissions head) would always be like "if you were a woman, you"d get in," or "you"re a black woman? congrats, you"re in!"

Although, that seems like forever ago since this thread just had a fuckton of posts today.

OneofOne · Feb 7, 2012

Before my dad bought an independent tax office, he was looking at getting involved with a national chain. After spending a lot of time finding a great location for a new office, he approached the chain, which agreed it was an awesome location, and then one of their current owners opened an office there. Fuck them.

About a year after he had owned the current office he bought, he started getting calls from all 3 of the major chains asking about buying us out, while retaining him as the manager. He politely told them to shove it up their ass. Now just over 2 years into the business he"s looking at buying another independent tax office, to expand.

I guess what I"m saying is, what Lyrical is saying is 100% true. It"s a risk vs reward thing. It can be scarey as fuck to know everything is riding on you, but at the same time, the rewards can be outstanding. I mean hell, the first 6 months we were in business it looked like we got screwed out of most of our money clients (which turned out to have been the plan all along by the previous owner"s employees), but between their incompetence and the fact the office had previously been running at only a fraction of its potential, we went from "fuck we"re going to have to rebuild our client base" to "let"s open another location!" in only 2 years.

Shonuff · Feb 7, 2012

Dis said:
I may PM you from time to time. I think you had mentioned you were from Texas, maybe you have some good CPA referrals. I am thinking real hard about this Fried Pie Shop deal, but they seem to be real new to the franchise game, most franchisees are in East BFE. Definitely going to dig a little deeper, see if I can get some email addresses. Just to be clear, I have to get permission from the Franchiser before I can talk to the Franchisee?

Thanks Lyrical.

No problem, this stuff I actually find intellectually stimulating. Pretty much most of the people trying to sell you a franchise/business is hiding something. If they are really profitable, they hide it from you and the IRS. If they are in trouble, they hide it from you. Its a cat-and-mouse game. If you lose, you lose everything, if you win, you win BIG. Literally I"ve had months where I"ve made almost a year"s salary at any of the companies I"ve worked at (all time high, netted 75k on 150k in service fees, did this twice).

I no longer live in Texas, but was in Austin for five years (when I was in school). There"s actually a company I used to that did my trust, formed the C corp etc. and it was near Austin.

You can try to talk to frachisees, but they won"t usually talk to you unless you have permission from the franchisor. And the franchisor is going to want to interview via phone, and make sure you have meet the net worth requirements before they start sending you audited data and franchisee lists. That stuff is not too hard to get, but if your net worth is significantly lower, they won"t talk to you. Its like the time I wanted to look at a franchise and the net worth requirement was $300k sitting in the bank. They wouldn"t talk to me.

Feel free to email me anytime, I won"t break NDA"s. Just make sure you do your legwork first, if its your deal, you need to own it. I can"t tell you how many people want me to do their business plans for them so they can get funding. If you can"t do your own business plan, don"t bother.

Shonuff · Feb 7, 2012

opiate82 said:
stuff

Listen to this man, he"s pretty much telling you the pro"s and con"s, as he"s been through both. I"m not trying to steer you one way or another, you"ll need to make your own choice. It used to be accepted that franchising was so safe that any moron could follow the ops manual and prosper. Like I said, from the things I posted before, there are ways to sniff out problems before you spend a dime. There are franchises right now that I"ve investigated that I would jump on if given a chance, but the really good ones, the owners exercise their right-of-first-refusal and a new owner has no chance at getting one.

Anyway, here"s a good link from Forbes:

Ten Good Reasons Not To Buy A Franchise - Forbes.com

Something that"s hasn"t been mentioned is that some franchises will try to dictate to you how much you"ll work. Trusted employees or not, some of them are going to get pissed if you decide you are taking off to go to your kid"s ballgame. I think some of them even say you can"t own any other business interests, like Chic-Fil-A. With them, it used to be that you had to be there FT and couldn"t own any other businesses. And then you can"t make changes in ops with franchises, that"s a good way to lose it for "violating the terms of the ops manual."

Aetos_foh · Feb 7, 2012

Just open a subway and forget about it

opiate82_foh · Feb 7, 2012

I wouldn"t be in the pizza business today if I didn"t start with a franchise. I wouldn"t have had the first clue about things like developing a dough, setting up my supply chain, etc and probably wouldn"t have made it long enough to build a customer base on my own.

With that said, franchising has changed a lot in the last 20 years. It"s gone from using combined buying power to get better prices and build a brand name to basically feeding the pockets of CEO"s/board of directors. Obviously this is a generalization and each circumstance is unique.

In my situation I won"t be signing any renewals unless the current leadership is gone. I may fail on my own, but I feel I will certainty fail if current leadership remains intact. I have a plan in place to go independent at basically the drop of a hat depending on how some things pan out internally at the corporate office this year.

I"ve been approached by a couple of different chains started by owners who used to be in my system who have offered me sweat-heart deals to drop my signs and join them. But at this point I"d be more interested going independent and maybe down the road developing my brand into a co-op concept that gets back to roots of what franchising used to be about.

Even though I"m much more confident in my ability to succeed on my own now, and I have the experience, the industry connections and the community roots that weren"t there when I started, going independent is still a very scary prospect.

Adventures with lyrical - buying a business

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