June 29, 2007
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Franchise Pick has a nice post on franchise due diligence.
Before Buying a Franchise, Don’t Trust, But Verify (Part 2): ”
(FranchisePick.Com)’ Way back in Don’t Trust But Verify (Part 1), I posted the comment of a franchisee-to-be of a certain fitness franchise chain who made the ominous comment that the concept was ‘too good to fail.’’ Several others provided some good insights that prospective franchisees of any concept - especially fitness chains - would do well to heed.’ The most important thing to know ahead of time is how you’re going to attract customers, how you’re going to retain them, and what it’s going to cost to do so.
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Roger of GymBuzz.com said:
…The fitness business is not a casual investment. The business will not just come to you because you are open.
All of the women’s fitness companies teach their franchisees that ‘beat the streets’ social marketing is what is absolutely necessary. However, it seems like the franchisees that are less than happy with their franchise purchase are those who are placing a great deal of expectation on their franchiser to drive business into their gyms via some form of advertising. No matter whether you invest $100,000 or $500,000 the reports from the successful gym owners all focus on the owner’s level of physical activity and not what kind of ad support they get from their corporate office.
Read the rest of the Franchise Pick article
Most prospective franchisees don’t read the UFCO carefully enough to find out how much real support they can obtain from the franchisor.
They also fail to review with other franchisees the appropriate information regarding startup expenses. Franchisors only “budget” for 3 to 6 months of expenses, and reveal what they believe it will cost to run the franchise for that period -but typically, a startup could go 18 to 24 months before earning income.
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