Franchising What are some of the worst Franchises ??

Financial freedom is the lure.

 

Only one EB for 100km? They were the only ones to deliver in the area etc.

Not only franchise fees jut the ATO wants their pound of flesh too.

 

Until the next 5 competitors open up and do the same.

 

Those rooster rolls are alright but they always remind me of an old granny's arm. So floppy.

 

I don't understand why people do it either, drop half a mil on something you have no control over basically. It's all good if the franchisor is on the ball and are able to change with the times and keep pushing the business ahead but you only need a couple of blind parasites up top and the whole thing can fall over.

 

They smell a bit of old granny too, but still taste good...
I try not to think of old tuck shop lady's floppy arms while eating them, but now you have cursed me and I probably will feel a bit sick if I eat one next time

 

oh cmon, not everyone thinks like you,

imagine youre a guy who might be know how to make a good pizza becuase you worked in a pizza shop as a kid, if youve never done any form of business, and want to do something

with all the glitzy marketing and perceived sucess,
i dont think $the price of $100k vs $300ks $500k to me would matter that much if its justified and based on existing turn over,

id buy a maccas for $2m if I could afford it in the middle of nowhere as long as the figures justify it

 

Buying something based on current figures is ok but what a business needs to be successful long term is a vision and plan to implement it, then you need someone will balls and commitment to execute. If you're beholden to a bunch of suits somewhere in an ivory tower who don't understand the challenges you're facing locally then you're in big trouble. You're not steering the ship based on what YOU need.

Of course, many people don't think like that because they don't have business experience. Lambs to the slaughter basically.

 

i get what you are saying.

going from "oh I know how to make a great pizza" to owning your own pizza shop is a massive step

they say being the best chef doesnt mean you will be the best resteranteur.

I can easily see why people think franhcises are so attractive. it just seems to take out all of the hard work out of the admin side of things

when I was young I looked into a dominoes, kwik kopy, pizza hut, aust post, poolworx franchises,
but didnt do it because honestly half of the franchises were jobs I couldnt see my self remotely enjoying doing every day

 

Most of them are just junk. The franchise will start out well, acquire some good A grade sites and go even better, than they want to expand and it's onto B and C grade sites, before they know it they have created a monster that needs to be fed and they start taking on anything.

My Mrs works in centre management, she's seen them all come and go, the ones that manage to survive are the franchises with the owner working in it every day, mind you they are only pulling a wage if that, working 6 or 7 days morning till night. The dreamers who think they can put a manager in charge and head off to Bondi beach generally go belly up in a few years.

 

My observation of franchises is the best time to get into it is when the franchise itself is in the startup phase and expanding. The cost of entry is generally quiet low and you ride the rising wave of the franchise as it becomes a household name. When a franchise is well known they tend to sell for a premium. Like anything, that's when you should be betting out, not getting in.

The problem is like any business, most businesses that are franchising also fail. A fast growth phase can be just as dangerous to a start up phase.

Frankly I think the reason people choose franchises to start a business are those who want a business but don't want a risky option. Risk and reward are two sides of the same coin. If you're not willing to take some risks then the rewards are going to be limited.

I also see a lot of people trying to buy an established small business. They often pay quite a bit for the 'good will' of the business, not realizing that this is very intangible and in most cases completely worthless. As soon as the previous guy leaves, the good will leaves as well.

If you want to start a business, I think there's essentially only two ways. The first is to buy into an established business as a partner. The second is to start your own business from scratch.

 

Exactly.
They want to grow the pyramid bigger and bigger until...

 

look im not saying any of those businesses are good or bad, they may be good or bad now,

if I recall, I remember doing basic maths (maybe I was wrong)
but what I did was worked out rent, overheads, rough costs of goods, wages using casuals, and myself, paid myself zero and saw how much profit they were making or mre importantly, how much I needed to sell eg 10 pizzas per hour

and most of the figures I found were a bit unrealistc

I have been told that some franchisors are in the busienss to make money by destroying franchisees, which if true is pretty disgusting.

I firmly believe that its most benefical for the franchisor to have heaps of successful franchisees for reputatio nand profitability
so I dont get why head office wouldnt do everything to support and help their franchisees unless the company was struggling

i would have thought closing a franchisee down would do far more damage than the $100k -$300k it might make by selling ti someone else

 

It isnt thaaat big a step really. You can buy a lease on a struggling pizza shop for as low as 25/30k sometimes that will often have most/all necesaary equipment with the rest able to be hired.

For not a lot of money you can have a crash course with a limit on how much you are willing to lose, if any etc that will be a lot cheaper and a lot more beneficial from a learning pov for the operator, vs a franchise.

The inherently risk averse nature of so many aussies is what leads to this unhealthy obsession with overpriced franchises, which ironically is very often riskier.

Ultimately it isnt hard to break it down mathematically. Calculate how much the average franchisee really loses, including not drawing a proper full time wage in line with hours soent.

For well under half the sum, probably a quarter, you could prob buy into an existing business and make the deal attractive enough to include full access to everything and learning the ropes. Or offer many a strugfling operator 20/30/40k and some free labour for the 6 month exercise.

So many ways to skin a cat other than paying more than a mba would cost at harvard to learn bugger all

 

Then we should work out how more people can be taught to think like biz insteqd of how more people can make bad decisions.

 

Is there any law against some of the big established franchises opening up their own competition franchise under another name to get even more market share and shaft existing franchisees even more?
Like coffee shops for example.
Start a new name, make a few changes with completely different image, but use almost identical existing operating systems and take it to the market to lure in more suckers.
New ventures are usually always more appealing than old established chains, as the victims feel like they're getting into a growing opportunity early.

 

dunno, ive done this before and i find it still quit a daunting process,

never heard aussies being called risk adverse, but thats an interesting point,

im sure you are aware that when it comes to reporting figures, they can be maniupluated, even franchises, thats why these franchises seem to sell so well. the figures show huge potential and/or current figures

I consider mbas to be the most overrated degrees on the face of the earth. at least the arts degress people know how useless their degrees are

 

Australia traditionally has been extremely risk averse. Thats not all bad and is imo partly explainef by the fact that its one of the best places in the world to be an employee. We have good labour laws, a generally robust economy goung back decades barring a few blips, its genuinely achievable for large % of the population to he a high standard of living even if working "average" job etc.

In many other countries unless youre a professional getting well above median wage or a business owner etc its a lot harder for many to live alone/own their home, go kn regular holidays, go out socially, buy a new phone every year or 2 etc and as a result the motivation to take risks is higher.

Re mba comment that was a purely throwaway comment and ive no interest in getting into debates on mba worthiness but ultimately a harvard mba costs 200k. Many people who have bought crap franchises have lost more than that.

Hell id argue a kilo of cocaine and a lawyer on retainer is a better use of 200k than buying a franchise that is statistically highly likrly to overwotk and underpay you and hoping to learn by actually removing the most important things to learn imo.

Unless youre talking a highly chef/owner driven apecialist operation (which ultimatelu no franchise would be) then the cooking and serving arent the important lessons, the hairy bits that the franchisor often handles/mishandles are where the important busineas lessons would and should normally occur. Granted there would be good intro to dealing qith staff and overall budget/royalty responsibilities.

I still maintain that you could probably offer don meij that 200k to show him for while and get a lot more out of it instead of buying a dominos

 

Muffin Break/Jamaica Blue rings a bell.

 

Two of our local Gloria Jeans stores are closing, not because they aren't turning a profit, the shopping centre's won't renew leases.

Second Gloria Jeans franchise ordered to close