Video Transcription

We’ve been discussing the different general types of costs that a franchisee has to incur in that he or she must look at before purchasing a franchise. Looked at initial fees or costs, the fixed fees, we’ve looked at ongoing royalty payments, and we’ve looked at advertising fees. We really haven’t examined them, but we’ve identified them. Another issue with respect to training costs that a franchisee has to look at has to do with ongoing training, whether a franchisor is gonna provide training for a franchisee after the franchisee has been operating for several months, six months, or a year. There’s a lot of issues that a franchisee hasn’t necessarily anticipated that need some advice, and guidance, and training. And the question is, whether the franchisor is willing to or has the capacity to provide that ongoing training, and if that franchisor does, what are the costs gonna be? And that’s something that needs to be determined upfront.

Now the question as to whether support staff is available for troubleshooting as the franchisee goes on is a related issue. Many times the franchisor will say, “We’re not gonna provide an ongoing training program, per se, at our headquarters, but we’re gonna have a franchisor employee ready to answer questions at some sort of help desk,” for instance. My experience is that those are close to useless. So if you hear that, that’s an indication that either the franchisor’s got a problem with commitment to training or you need to go look someplace else to provide yourself with ongoing training, and have it lined up and ready to go because any franchisee is gonna need ongoing training regardless of how much aptitude the franchisee believes he or she has.

Now the support staff, whether they’re gonna be the initial training people, the ongoing training, or the support staff, franchisee needs to look at the qualifications, and the credentials, and background of that person from the franchisor who’s gonna provide the training. You need to look at the record of consistency of employment, of how well the franchisor’s employee has been able to communicate the issues to franchisees. And many times the franchisor employees don’t necessarily have the background in that particular industry to be able to teach other people franchisees, so that somebody from the past who was in the industry for a year taught somebody else who then taught somebody else, and the other two people left, and you’re left with somebody who doesn’t have any experience out in the field but read something from two prior training people. So those are issues that you need to examine as well.

The question of support staff would also involve whether the franchisor’s going to send somebody to your site, and as I said, there are a lot of problems with you having to incur the costs and actually get on a plane to go the franchisor’s headquarters every time you’ve got a problem. So the franchisor who says, “Well, we avoid the help desk issue because we send people directly to your site.” Again, you need to know how many times a year that they usually send people. How many people? If there’s one person to cover the entire East Coast, then you know that it’s not a valuable program or service. And so there are a lotta questions that need to be asked with regard to onsite support. Many times you’ll have a franchise advisor allocated to your particular franchise by the franchisor. You wanna look at the credentials again, you wanna look to the stability in that position, how many advisors have been in that position over the last year, two years, and you also wanna take a look at the…at your ability to communicate with and relate to that advisor because the advisor’s gonna be the link between you and the franchisor, which is the mothership, and if you’ve got a guy or a woman in there who you just have no relationship whatsoever, it may seem like a small thing, but it could end up and I’ve seen it end up in a termination based on something as little as a personality conflict.

Thanks for being with me today. And if anybody has any questions, feel free to give me a ring. Thanks again.

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