Skeletons in the Closet

Established brands have history. The trick to determining whether it’s a good brand to invest in is how it handles its skeletons.


Skeletons in the Closet

The history of a franchise is rarely a simple tale of inspiration, determination and innovation.

Like any business, it can be pockmarked with tales of failure, short sighted-ness and greed. But it’s that history – the good, the bad and the ugly – that future franchisees will scour when deciding where to put their money, time and effort.

Each new hire to the franchise executive team, each major marketing campaign or product offering will be a new chapter in the story of how the company stated their goals and then set out to achieve them.

A potential franchisee must do their homework before they commit to any brand. They will be trying to get an honest reading of how the brand got where they are and what they expect to achieve in the years to come. That’s the basis on which they can determine whether it’s worth it to invest.

It takes a mountain of exciting future plans to overcome even the smallest molehill of past franchisee neglect, no matter how far in the past, when it comes to attracting a new franchisee.

When seeking a franchise, look at its history. Look to past and existing owners in the system for advice on experience in the stores, customer comments, magazine and newspaper articles, expert opinions and anything else in the public sphere you can get your hands on.

Boxes to tick

  • Does the brand focus on quality products and services?
  • Is it successful across the board or regionally?
  • Is there leadership in place to push the brand into the future?
  • How valued is franchisee fit with the brand over financial position?

Digging deep for history

When you’re looking for answers as a prospective franchisee, a good place to start is the franchise’s mission statement. How did their goals match up with the actions they took to achieve them?

If the goal is to be the ‘number one product of choice’, is the brand aligning itself with the right suppliers, making appropriate arrangements for future growth and introducing new ideas and menu items in a controlled and effective way? The old adage that actions speak louder than words is true.

Each franchise has its own vision of a perfect potential owner, including desired experience, financial security, market location, and competence.

That does not guarantee a good fit, but it should help their overall track record. A franchise with a history of too many bad fits is a red flag. However, it’s up to the potential franchisee to recognise that pattern before falling into the trap.

The documents a franchise hands out to attract the coveted potential owner tell part of the story, but to obtain an accurate history a potential owner needs multiple sources.

Luckily the story is out there to be found. With a little work, you can create your own future aided by your relationship with a franchise, and free of all those scary red flags.

When to run for the hills

  • When the company has a history of backing out on franchisees
  • Inability to secure locations
  • Inability to provide operational support
  • The franchisor is unable to answer for their past.
Joe Prusha
About the Author
Joe Prusha is the owner of Erbert & Gerbert's in Milwaukee, Wisc., serving Eastside, Shorewood, Murray Hill, Riverwest and Downtown. As a young man, Prusha worked at Erbert & Gerbert's to pay for college then worked at a variety of restaurant concepts in order to evaluate their strengths and decided to open his Erbert & Gerbert's because they were the best he'd encountered. His Milwaukee location opened in 2009 and has been thriving since.

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