Featured Coaching Excerpt - Notes & Transcript, Part 1
The 7 Myths Of Franchising : 6. Franchises stifle creativity.
The 7 Myths Of Franchising: 7. I can't afford a franchise.
Lesson Nugget: The goal isn't finding out if the franchise is affordable, it's determining if the return you would get from the franchise would be worth the investment into the business.
Lesson Nugget: You can be creative when owning a franchise but first you must show that you can follow the system.
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-All right. Terry, we're talking about myth number six here. That franchises stifle creativity just in general. Franchises stifle creativity. Terry, why do many entrepreneurs believe that they won't be able to be very creative within a franchise system? Why do they believe that?
-A lot of times, there are people that are looking at franchise systems and trying to learn how to start a business that really aren't truly entrepreneurs. And they're not quite as concerned about that as more entrepreneurial people will be. But all of them have concerns that they'll be stifled from being able to add their personal side to it, their creativity to it. And the beauty of franchising is that they understand that about the relationship between the franchisor and the franchisee.
So they actually factor into the business model areas where that franchisee and their team can actually customize marketing, promotions, business development, community involvement, all types of things beyond most people's ability that be creative to allow them to express and exercise that.
-So you've worked with thousands of franchise owners. How much does corporate really kill creativity or does it even kill creativity in your mind?
-What's the limits here?
-The reality is, some of the greatest improvements to every franchise system in existence came from franchisees being creatively minded, but not just jumping to implement it without working with the franchisor to test it first.
-So there's a lot of room. The example of McDonald's menu board, if you take off hamburgers, cheeseburgers, fries, Coke, milkshake, everything that's left came from franchisees looking to improve the business. Every one of Ray Kroc's ideas failed. In fact, the idea of going into breakfast in McDonald's was an interesting creativity aspect where a lot of franchisees were really pressing this issue, but most didn't want to do it, because it meant they had to be open longer hours.
So they took a vote and 96% of the franchisees were against breakfast. But McDonald's had already done the research and determined that if they didn't make this shift, that the franchisees' revenues would continue to decline. One year after they implemented breakfast, I think it was 93% said thanks for not letting us make that decision, it's the best thing we've ever done.
-In that case, a lot of franchisees didn't want to switch over to this new model, but corporate had done the research and tested it said, we're going to go with it. And then later on they came back and saw the value in that decision. So it sounds like you can be creative, but corporate's going to try to make the best decision for everyone to be successful. They're not going to allow you just to set your own building on fire just because you want to exercise your ability to set fires, right?
-The key is most people talk about best practices. In a franchise, there are no such things as best practices. There's only the current license model to do business in. Everything else would be considered next practices. So it's testing, making sure before they're implemented, that they're being research as being a next practice. So that'll be the next version of the improvement of the model.
-Now, myth number seven, our final myth here is I can't afford a franchise. Terry, we have some specific additional trainings up here on thrive where people can really learn about specifically how to finance their business. But as a general belief, how prevalent is this belief that I can't afford a franchise or to get in the franchise business. When you meet somebody who expresses interest, how common is that belief? How widespread is it?
-It's very common. When I do this session at the national franchise shows, I ask them why they're all there. And they kind of laugh. Where here looking for an opportunity. So how long have you been doing it? And they'll talk about-- I'll say, what's holding you back? The number one thing is money. So the perception is that I don't have enough or it's going to be difficult to obtain or that it takes far more than I could ever afford when the reality is just the opposite of that.
-It's a broad question, but how affordable are franchises to the average person in your mind?
-Well, you know, the affordability aspect is really not the important factor as much as it is looking at it from a standpoint of how do I invest properly to get a maximum return. So when I'm thinking of affordability, I'm typically thinking of things that are commodities, that don't appreciate in value. Usually, I spend my money, once it's spent, I get some value out of it, but it usually diminishes over time. Where investing in a business or spending my money by investing into a franchise business is going to be an appreciated value and asset.
So it's a major concern of how you do that. But the fact of the matter is with the right amount of education, awareness, and discovery, you can come to realize that there's multiple ways to fund a franchise business. And lots of times, it'll be using two or three different funding options consecutively for that investment that'll make the difference.
-Well Terry, I appreciate you dealing with these myths. I think these are things that a lot of us, they get in the way of our being able to take that first step when it comes to buying a franchise. We have these myths. And obviously you having been in the business for 30 years, you know what these seven are. I appreciate your time, more than you know, my friend.
-Great. Thank you, Clay.
-Thank you. Good talking
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