While entrepreneurship is frequently thought of as starting a new business from scratch, there exist alternative ways to procure and own a business-such as by buying a franchise. However, keep in mind, not all franchises are alike and not all franchises are created equal. Evaluating a franchise opportunity as “right” or “wrong” often means determining whether the franchise opportunity is RIGHT opportunity for YOU. For example, the right franchise opportunity will ideally align with your passions, life goals and investment and risk tolerance. Seth Lederman’s company, Frannexus, has the proven process that can help you navigate the many variables that weigh into evaluating franchise opportunities and with a proven track record of success.
We interviewed Seth to know more about his thoughts on franchise acquisitions and his journey as a renowned expert in the space. Here are the excerpts:
Share with us about your franchise experience.
In my first career as a healthcare provider, I read a book that was extremely impactful for me. It was called the E-Myth Revisited, by Michael Gerber. Michael’s book shared basic and fundamental business principles, including one which refers to as the Principle of Life: the purpose of your business is to serve your life, not your life serving the business. In order for the business to serve your life, it can’t be dependent upon you, if it is dependent upon you, you don’t have a business, you have a job. Michael said in the book that the best way to look at your business is to pretend that it was one of 5000 work locations just like it, like McDonald’s. What systems and processes would you need to have in place in order for that to be a reality? What I essentially learned from Michael and that book were franchising principles and that was my initial indoctrination into franchising. Michael wound up becoming my mentor and I was one of the first independent consultants for his organization and helped business owners work on their business to get free of their business.
As an independent consultant, I worked with a variety of different industry business owners both in and out of franchising, and the fundamental difference of success in franchise businesses versus non-franchise businesses was monumental. However, when I did work with franchisees that were struggling, I noticed one common denominator. These were great people who were franchisees for a great brand, but it wasn’t a good skill set “match” and/or cultural fit. These people did not have any professional guidance or follow a methodical approach when they explored franchise opportunities, and they ended up making decisions without knowing things that they should have known. If they had known what they learned after they signed an agreement, before they signed it, they would have made a much different decision. It was at this point that I recognized the need for professional guidance to investors considering franchise ownership. When I researched and found out that there was an industry, I was unaware of, that provided this kind of guidance and expertise, I knew what I was meant to do.
How do you feel working as a franchise consultant? What have you learnt all through this journey?
I am extremely passionate and love what I do and know that this is my calling. I get the opportunity every day to work with a variety of different people from all walks of life, background and experience. I get to learn about all the different industry sectors and franchise brands and operating models which I find extremely interesting. I understand that the work that I do has a significant impact on the lives of the people that I work with and that it is extremely important and pivotal decision for them, and I do not take this lightly.
Why are franchise business owners more likely to succeed through COVID-19?
COVID-19 has created more options for investors. Interest rates are down, landlords are more willing to negotiate shorter lease terms and rent concessions, and banks are willing to negotiate on loans with better interest rates. These conditions are surprisingly beneficial for those looking to set up shop. Franchises are built with corporate assistance and come with an inherent network of support from other franchisees within the system. Franchisees are part of a large network of business owners. You can learn from each other and develop collaborative and effective solutions in conjunction with your franchisor’s support.
What according to you are the advantages of buying a franchise?
Franchises are businesses that are proven to be successful. Savvy franchise owners often view their franchise as an asset. Depending on how you staff and run your franchise, you can be the manager, or you can hire a manager and let the franchise make money for you without the responsibilities of day-to-day operations.
Every business that is successful eventually develops a system. You can do it by trial and error (the way many start-up entrepreneurs do), but with a franchise you don’t have to. When you get a franchise, you have a proven system ready to go to work right away.
A study by franchise expert, Scott Shane, found that in their early years, franchises have nearly double the success rate as new businesses that are not franchises. The risk that most businesses take when they start from scratch ultimately boils down to one thing: untested concepts and practices. This is where franchises really shine. One important quality of franchises is that they are based on tested aspects of every part of the business. Guesswork is reduced to a minimum, and the chance of lasting success and wealth creation is significantly increased.
The Franchise Expert
Seth Lederman, Founder and CEO
Seth went to New York Chiropractic College and started out as a chiropractor but his approach to life was transformed after he read the book, The E-Myth by Michael Gerber. He turned his practice into an enterprise which grew 10 times in size in a mere 36 months. This was the beginning of his entrepreneurial journey.
Today, he is a renowned consultant and advocate for franchise acquisition and development. He has appeared on ABC, CBS News, WSJ.com. NBC, Fox News and has written two Amazon bestsellers.
“Every business that’s successful eventually develops a system. You can do it by trial and error (the way many start-up entrepreneurs do), but with a franchise you don’t have to.”