Healthy and Fitness

Most startup franchisors spend the $35,000 it takes to create the required disclosure documents so they can franchise. In fact, they believe once they do this, that they can pretty much keep going, and not have that expense again. However, as a former franchisor I can tell you that it makes sense to upgrade and revisit your franchise disclosure document every two years. Why is this you ask?

Back in the late 1990s The International Franchise Association had a program where franchisors would volunteer their services in the event of a natural disaster helping those regions of the country in their time of need. Each franchisor would make a list of the things that they were able to do, such as use their fast food restaurant to feed FEMA, first responders, or firefighters. Many of these franchisors were able to do all sorts of great things using their economies of scale, supply chains, and manpower to come to the aid of victims of natural disasters.

Before retirement, I was the founder of a franchising company. I like to think of myself as successful, and I often considered myself one of the most knowledgeable franchisors, but that’s not really saying much because there are only about 2000 – 3000 active franchisors in the country at any one time. That’s because franchisors have a failure rate in the first five years; a 5:1 ratio. That is to say all the new startup franchisors that you see in the franchising directories, only one in five will still be expanding their franchise operations after five years.

In retirement, I do a little bit of micro-consulting to help startup businesses. One of my areas of expertise happens to be franchising, because before retirement I had franchised the company that I founded. One question I get quite a bit from small business owners that have a great business model, and lots of customers is; “should I franchise my business, how do I know when I’m ready?” Well, there are a lot of things that you must have in order to make a successful franchising company.