If you are thinking about buying into a franchise, how do you make sure you find the one that is right for you? Watch the "Godfather of Franchising" Terry Powell teach 6 steps to take to find the right one.Sign Up to Watch
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DANIEL MCKENNA: What is up, guys? My name is Daniel McKenna. I'm the executive producer here at Thrive 15 and a master of slam poetry. Take it very seriously. But today, we have Clay Clark and Terry Powell and we're sitting down talking about franchising, how to start a business and finding the right franchise for you. Don't know who Terry Powell is? Check this out.
When you're getting into the franchise world, one of the most common questions is, how do I find the franchise that fits what I'm looking for? Well, Terry is going to lay out for you specifically, the six things that you need to look for when finding that franchise that is just for you.
This could save you time, this could save you money, this could save you heartache. This could save you reasons to write more slam poetry, so maybe all that's not a good idea, but if you want to save time and money, listening to Terry is going to be a very good idea.
Here at Thrive 15, we believe that knowledge without application is-- meaningless. Meaning, if you don't take something with what you've learned today and then apply it to your life or your business, like, do something about it, today's lesson is going to be more meaningless than buying an extended warranty for your burrito.
CLAY CLARK: Terry Powell, how are you, my friend?
TERRY POWELL: Clay, nice to be here. Thank you.
CLAY CLARK: Hey, we are talking today about the six steps to find the right franchise. Now I know that that question, that idea of finding the right franchise might not even be right. But just work with me on this. We're going to get into this and we're going to see your expertise.
Now I know that you've worked with thousands and thousands of business opportunities and you've seen them all. And you've worked with massive amounts of franchise options, and so you've helped people coach them along the path to finding a business vehicle that can help them achieve their goals.
So where does one even begin to start when it comes to looking for the right franchise or how to start a business? I mean, there's thousands of them out there, right?
TERRY POWELL: Yeah.
CLAY CLARK: Where does one even start, in your mind?
TERRY POWELL: Well, the beginning is to realize that it's not necessarily about finding the right franchise. One of the myths is that if I find the right franchise, I'll be successful.
CLAY CLARK: Okay.
TERRY POWELL: So the idea is to help them understand that we need to have a plan that brings to the surface things that are important to you. So typically, someone will say, I really want something I'll know that I'll love and enjoy. So the question will be, well all the things you love and enjoy today, did you would before you experienced them? Obviously, the answer is no.
So we're helping them understand that that right fit is outside their current perception base, and it's likely outside their blind spots.
CLAY CLARK: So OK, so maybe I'll rephrase this. This might be the six steps to getting to the right place in your life through owning a franchise or something like that.
TERRY POWELL: Sure, absolutely. The franchise is the vehicle and there are steps that can help you get there.
CLAY CLARK: Now, step number one is you need to ask yourself, what's the goal of buying a business or what's the goal of investing in a franchise there? Terry, unfortunately, I often meet people who've started a business or who went out and purchased a business model without ever taking the time needed to ask themselves, what's the goal of even buying a business? What's the point? And why does every entrepreneur really need to take that time out and go, timeout! Where am I trying to get to before they buy that vehicle?
TERRY POWELL: Well it's important that you don't just jump from one thing that's become a frustration for you, let's say your job or your current career path, and you don't get to the point where you jump from one thing that you're dissatisfied with and not make a good choice about where you go.
And it's really about choices. I find that most people have made good choices in their careers and then gone to work to make those right choices good decisions. When you get the decision before the choice, that gets people sideways.
CLAY CLARK: Can you maybe-- and I don't mean to haggle about semantics, but when you say decision and choice, can you clarify what that means to you?
TERRY POWELL: Sure, absolutely. We deal a lot with individuals who are hung up one making decisions. And once you do that in an area they have no comfort or experience or knowledge in like owning a franchise business, it really equates in their minds to making the wrong or bad decision.
CLAY CLARK: So there's saying, hey look, I'm done with the corporate man. I'm tired of working for the man and now I want to work for myself and I'm going to just make decisions whether I know what I'm doing or not. I just want to make these decisions.
TERRY POWELL: Or I'm not going to make any.
CLAY CLARK: Or I'm not going make any.
TERRY POWELL: Because I'm fearful of making the wrong one or a bad one. So they get caught up in all this over analyzing of things that aren't important to what really are their goals, needs and expectations.
So the first step is to take them through a possibilities profile that really determines, what are your goals, needs and expectations if you were to own a franchise business?
CLAY CLARK: Now step two here is you want to ask what business helps you achieve your goals? Now this is a little bit different, but Terry, can you tell us why it's important that every potential franchise owner keeps this question in their mind as they go out there and try to find the right franchise or the right type of franchise? Why it's important to keep in mind this question of, what business is going to help me achieve my goals?
TERRY POWELL: Well you could get caught up on the idea of what's the right business, meaning, in your mind, that there's only one that's going to be the right one, which is not the case. There are literally hundreds, if not thousands of franchise models that will accomplish your goals and expectations and even drive your income, lifestyle, wealth and equity. But it is important that you stay focused on making sure you validate that and you're able to discover that part of your process.
-Now, let me ask you this, because I think a lot of people who watch this maybe don't-- I did not grasp this until about seven years in business. But I'd like to get your commentary on this. The other day I was going to a franchise-- I won't say the name of the one particularly-- but I went to this franchise, and I was going to mail some stuff. And I go in there and there's one person working there, and it appears as though businesses is slow.
And I see another person who walks in, he appears to be a boss of some kind. And i said, hey, is this your business? Yeah, he says, yeah it is. And I knew I was going to be meeting with you, so I was just curious, really trying to explore the space.
So I said, how long have you owned this business? He said, oh, about two, three years. I said really, is business stay-- do you stay busy? He says, yeah, yeah, you know it's very-- and he says come on outside. So we start talking.
Long story short, he's explaining to me how he loves this business, because he has very few customers, they're mostly corporate, they ship a ton of stuff, and so he's able to have one or two employees, no stress, no drama. His life-- and he explained to me his goal was to have very little customers, customers that buy a lot of stuff, and very few employees, and he loved it. And to me on the outside, I was thinking man it must be a slow business, you must not be having any success, he's kind of in an obscure shopping center. And here he was happy as can be, he had low overhead, very few customers, no employees, he thought this was the best. And I thought-- I was thinking over here, going, gosh, this must be a slow business, this must be-- but he was loving it.
And I think it's important-- I think it's amazing, how he took the time out to figure out what he wanted. Very few employees, very little overhead, I just think that's amazing, I mean, do you think enough business owners do that, take time out to figure out what they really want?
-No, they don't, and that's why we talk about goals, needs, and expectations, because what he just defined to you was he established what his goals, needs, and expectations were from that business. What he wanted to have less of in his life, and what he wanted to have more of in his life. And he needed a model that would reflect that, so he actually worked from that premise. Most people--
-Goals, needs, and expectations.
-And what you just described he said to you really was a combination of some goals, needs, and expectations from what the business needed to do.
-That is so awesome. That right there--
-Even to the fact where one of the goals was not many customers.
-Yeah, I was totally shocked. I remember I was telling my wife, and I was like this guy has almost no customers, and I'm thinking he must be struggling. And he's like no, I have corporate accounts, it's recurring revenue, very few customers. I'm thinking that's awesome, because he knew so well what he wanted.
Now, Terry, step three is find the right type of business to match your management personality and skills-type, not your personal interests. Now, this is a little bit mind boggling for me, because I feel like a lot of people say, well, I'm going to buy the golf shop, because I love golf. Or I'm going to buy-- there's a business model out there I'm aware of where they basically teach personal training. Because I love working out, I'm going to teach personal training, that kind of thing.
And I'm seeing a lot of the most successful franchise owners have bought them, because they say, well, this is my skills, I'm pretty good at management, and therefore I bought this kind of business because it requires management. Or this particular-- I mean, it seems like people are matching it more so for there skills and their personality type, than their actual hobbies, or how do you find that balance? I mean, how are you supposed to do this?
-Well, it's difficult to have something you enjoy as a hobby, which is really a deflection away from what you do as a living. And that's why you enjoy the hobby, you need those to do something different in your life. You need that dichotomy of leaving your job and going golfing, or having your hobby. So when you want to go into your own business, you don't want to try to combine those two.
-So I love golf, so why don't I just go own Golf shop. Well, you won't get to play golf anymore, because you'll be tired of it by then. You'll want to have something else.
-So you believe that you should not focus on turning your passion into a profit center. In your mind, because you want to have those diversions.
-Not necessarily in a franchise system.
CLAY CLARK: OK
-Because you don't need to have that experience, or that passion, or that knowledge to succeed in the franchise.
-Now, what percentage of franchise owners buy a franchise in which they have no experience, no previous knowledge. What is it, most of them, half of them?
-Well, in our particular coaching model, our experience over 30 years is that 95% of our clients end up in a franchise that they admittedly would have not even looked at on their own.
-So let's say--
TERRY POWELL: That's a pretty high percentage.
-So the guy, under your model, who buys a franchise for pizza, a pizza franchise of some kind, he may not even like pizza. He may not have any experience with pizza making, and he just thought it made sense financially.
-One of the challenges of filing some of those what we call passions, or a lot of time it;s comfort level, is that you really end up becoming the technician in that business, rather than being the owner that managers markets and promotes a successful business model that translates into income, lifestyle, wealth, and equity.
-There is a book called "The E Myth" by Michael Gerber where he really talks about the rut of a technician, and then there's the business owner. And basically, the technician-- for those of you who haven't seen this before-- the technician is somebody who has unbelievable knowledge of, let's say, making pizza. They make pizza. It's their family tradition. They love pizza. They eat pizza all the time. They know good pizza.
And that's great. But if you get stuck, if you're not careful, you're going to be spending all your time making pizza if you buy a pizza business. You might just focus all your energy there and your time, and that's all you do. Whereas a business owner says, you know what? I'm not going to spend all my time necessarily making pizzas, but I'm going to make a pizza making business where I have hundreds of people that make pizzas as part of my team, or that kind of thing. So you're saying, don't get stuck making the pizzas.
-And one step further-- the franchisors aren't going to recruit a franchisee who is a baker and wants to bake into a Dunkin' Donuts, nor are they going to recruit a mechanic that likes to fix automatic transmissions into an AMCO transmission franchise. Because they know they will not grow the business. They'll just become a technician.
-That is shocking to me. Bam. That's awesome.
OK. So step 4-- working with franchise coaches. Terry, would you consider yourself to be a franchise coach or kind of a franchise Yoda? What would you consider yourself to be there?
-Well, our whole model of the Entrepreneur Source model is based on a coaching methodology that's been devised over 30 years where we've created a science out of understanding how to help people see the possibilities beyond their blind spots as it relates to using that business as a vehicle and going from employment to empowerment.
-So if I'm the average-- let's say I'm a third grader watching this. For some reason, I've hacked into my parents' account, and I'm watching this, and I'm thinking at a third grade level. That's how I tend to think. Can you describe for me in your mind-- and I'm not Sheldon-- what does a coach exactly do? They help you understand the business model, or what exactly?
-Actually, a coach is someone that helps you facilitate making sure that you're preparing your journey of discovery and education in a way that doesn't allow you to make pre-judgments, doesn't allow you to quickly make decisions, and really looks at it from a standpoint-- let's talk about what it needs to look like from a why standpoint from what your goals, needs, and expectations are and how we apply those to using the business as a vehicle.
-How does a franchise coach differ from maybe what people might consider as a broker or somebody who-- let me give you an example. If you're watching this, you maybe don't know. Let's say that I own a bunch of franchises, and Terry connects people like me who own franchises to franchisors who sell franchises. And then the typical-- in a broker scenario, someone makes a commission to do that.
How is it different, what you do as a coach, than what just a traditional broker does who just goes out and bridges the gap between the franchisor and the franchisee?
-Great question. That's how I actually discovered the niche in the market that needed the coaching, was being in a broker situation. Big difference is that brokers are looking for the 5% that are ready, willing, and able that are going to jump and do something and likely buy themselves a job, and they want to be part of getting in the middle of that so they can earn a commission. OK
What drove me to discover the Entrepreneur Source niche was my dissatisfaction with the lack of value that created for the relationship. And I start exploring all the people that we qualified out as brokers other than the 5% and found that there was a need there for someone to educate, inform, create experiences in a safe space for what we call seekers, people seeking information, so they could learn about what it's like in the life of a franchise.
-OK. So coaches are more interested in helping somebody develop this seeker mentality where they're looking for something, and a coach helps mentor and coach these people more so than a broker, who's just trying to close the deal with the person who wants to buy right now?
-Yeah. For example, in a broker situation, I'll ask you what kinds of businesses have you been looking at or what do you think would be interesting to you, and that's exactly where they're going to take you. In our situation, 95% of the time, we're going to create an opportunity for you to shift your paradigm on how to use that business and end up in something you would have immediately not looked at.
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