Quit your job, buy a business?

By Sean Goldsmith

More than 300 franchise brands gathered in Fort Lauderdale, giving aspiring entrepreneurs a closer look at franchise ownership.

Inside the Huge Franchise Show Tempting Americans to Become Their Own Boss

More than 300 franchise brands gathered in Florida as would-be entrepreneurs searched for a route into business ownership. Sean Goldsmith looks at an event where visitors could arrive wondering whether franchising was for them and leave considering an investment worth hundreds of thousands of dollars.

There are plenty of reasons someone might walk into a franchise show. They may be fed up with their job, looking for somewhere to invest their savings or simply wondering whether they could make more money working for themselves.

At the IFA World Franchise Show in Fort Lauderdale on September 25 and 26, they had plenty to look at. More than 300 franchise brands gathered at the Broward County Convention Center, offering businesses ranging from restaurants and fitness concepts to education, care, beauty, pet services and home services.

The show was created through a joint venture between the International Franchise Association and Business Show Media. For the IFA, it meant getting directly involved at the point where people are deciding whether franchise ownership is something they genuinely want to pursue.

It also meant dealing with one of franchising's biggest problems. It is relatively easy to get somebody excited about owning a business. Making sure they understand what they are buying takes considerably more work.

THE MOST EXPENSIVE SHOPPING TRIP OF YOUR LIFE

Walking around a franchise show is an unusual way to spend a weekend because almost everything on display is potentially a business rather than something you take home in a bag.

Someone could spend half an hour discussing a restaurant, move on to a children's business and then find themselves talking about running a cleaning or home-services territory. Each conversation comes with different staffing requirements, operating costs and investment levels.

For someone who has spent years collecting a salary, the attraction is obvious. Instead of working to build somebody else's company, they can put their own money into something they own and potentially build an asset for themselves.

The numbers, however, can become serious very quickly. Some franchises can be started with relatively modest capital, while others require substantial spending on premises, equipment, stock, employees and working capital before the first customer arrives. Royalties, marketing contributions and other charges then continue once the business is trading.

Finding a concept you like is therefore only the beginning. A prospective owner still has to work out whether the business can produce enough profit to justify the money, time and risk involved.

THERE WAS HOMEWORK TOO

The organisers did more than fill an exhibition hall with brands. The programme included more than 100 seminars covering subjects including franchise selection, funding, operations and multi-unit ownership, giving visitors somewhere to learn about the less glamorous parts of buying a business.

Those conversations are particularly useful for first-time buyers. Someone may know exactly how much money they have available to invest but have little idea how much working capital they should keep in reserve, what to look for in disclosure documents or how long it might take before the business can pay them a decent income.

Speaking to existing franchisees should also be part of that homework. They can explain what happened after the opening excitement disappeared and normal business life took over. They know how difficult recruitment has been, whether costs have increased, how useful the support from head office has been and whether the business has performed as they expected.

That sort of information is difficult to squeeze onto an exhibition stand, but it can make the difference between somebody buying a franchise that suits them and buying one they later wish they had investigated more carefully.

WHY THE IFA WANTED TO BE THERE

The IFA has represented franchising in the United States for decades, so its involvement gives the World Franchise Show access to people who understand the practical side of the industry. Franchisors, franchisees, advisers and suppliers can all contribute to helping newcomers understand what ownership actually involves.

Its VetFran programme was also represented, helping veterans and military families explore franchise ownership. There is an obvious connection between military experience and some parts of franchising, particularly leadership, following established operating procedures and managing teams, although finding the right business still requires the same financial scrutiny as any other investment.

For the IFA, the opportunity goes beyond helping brands collect more leads. If somebody enters franchising with unrealistic expectations, the consequences can last for years. A poorly matched franchisee can lose money, struggle operationally and ultimately damage both themselves and the franchise system they joined.

Helping buyers understand the commitment before they sign is therefore good business for the wider industry.

THE REAL DECISION COMES AFTER THE SHOW

A good conversation at a franchise exhibition can get somebody genuinely excited about an opportunity. They meet the people behind the company, see the branding, hear how the business works and start picturing what their own location might look like.

That enthusiasm is useful, but the sensible buyer takes it home with them. The next stage is going through the financial information, understanding the franchise agreement, speaking to existing operators and working out whether the numbers still make sense if sales are lower or costs higher than originally expected.

The IFA World Franchise Show gives prospective owners something valuable by putting hundreds of businesses in one place and allowing them to compare opportunities that might otherwise take months to find. Its educational programme also gives visitors a better chance of understanding the questions they should be asking before they commit their money.

For an industry that needs a steady supply of capable new owners, that is the important part. Selling somebody their first franchise is one achievement. Having that person still running a profitable business and pleased with the decision several years later is a much better one.

What We Can Learn From This

Franchise exhibitions give prospective owners the chance to compare businesses, meet the people behind them and discover opportunities they may never have considered. The IFA has sensibly put education alongside the sales activity, particularly around finance, disclosure and choosing a suitable business. Anyone who finds a franchise they like should use the show as the beginning of their investigation, then speak to existing operators and work through the numbers before investing. A successful franchise relationship is measured years after the exhibition stand has been packed away.

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