(Add to Favorites | View All Articles | Resource Directory)
|
|
|
Using Business Broker In the Franchising Industry for Franchise Sales
Franchising companies often use Business Broker to help attain sales goals. Here is an interesting fact. Most large Business Broker Chains promote franchises and charge franchises money to join their network and programs. Not chump change either. Then the Broker Network takes all the logos and prominently displays them in ads and websites, and titles, meta tags and key words those pages. So as to attract customers, franchise buyers. But when a franchise buyer calls up, they are sent to the local business broker who secretly hates franchises? Why? Low success rate? No, high success rates, the broker cannot resell it in the future when it goes South, because it never does. Then he cannot get money to appraise it and put it back on the market and sell it again. In many places the same broker sells the same small business or company over and over again. Yep. That's right, who wins? The business broker's buddies in the Community Service Club, the attorney helping the deal along, the accountants doing the books and of course the broker who has an appraisal certificate and of course the appraisals happen to come out where? At the exact price for a quick sale and fat commission. How fat? Fat enough for the FTC to regulate the pills and ads of such that the broker takes. $20,000 plus. But the broker will say it is hard work? Really? Selling the same company twice, three even sometimes four times is hard work? BS. But of course with franchises, the franchise fee is used to help offset costs from the franchisor's administration costs so normally the broker can only get $10,000 to 15,000 commission. Gee Whiz whose business is he going to push first? The one with the highest commission, just like a stock broker or financial planner tries to sell insurance annuities first, the commissions are much higher, why, because they are not as good and are harder to sell? The Business Brokers, they are on their own team, not the buyer who they swear to help or the business seller who they listed the business. Nope, and then there is the franchisor. He/She has given them use of their brand name to use on a website and they take that and use that Federal trademark to attract buyers and then switch the buyer to a higher commission. And what about the franchisors who are only willing to pay a reasonable sum such as $4,000-$6,000 commission (actually finders fee) on a $20,000 franchise fee? Well those good franchisors businesses never get promoted and never get sold, yet they are being the most true to their team and systems by keeping commissions low and saving money to in turn better their franchise system. So the business brokers charge the franchisors lots of money, bait and switch call ins for a particular franchise for a dry cleaners or a car wash or something they can turn a huge commission and quick buck on. And they can give earnings claims since they are simply a finders fee player, if you do not believe this happens check out a recent FTC opinion on business brokers. Then the business brokers knowing the tough nature of the franchising industry tell buyers that the franchises are no good and to ask how much income the buyer will make and if the franchisor cannot answer don't buy it. But in franchising we have laws about earnings claims where as business brokers do not. They have accounting and books to show the buyers of businesses who come into the business brokers offices. But alas, everyone knows when the original owners of a business leave the volume drops a minimum of 20% because the new owner is not a familiar face, thus the old customers start shopping around and the excuse is they have no loyalty to the new buyer, since they always did business with Bob or Sam or the Smith family, you see? It gets worse the business brokers have a disclaimer that says when you buy a business that you realize they are not liable for any information given to you during the sale? Interesting since they are the appraisers, know the history, tell you that the franchisors are not to be trusted since they do not for the most part give comprehensive sets of earnings claims. Why? Due to lawyers and lawsuits and in adequate and unverifiable data and loss of proprietary information in disclosures. So the business brokers use this fact to entice franchisors to list with them take their money knowing franchisors have to sell with their hands tied behind their backs then use their band name to attract buyers, then bait and switch the customers and have them sign a form stating the information might be here say (standard in the industry) check it out, and then to top it all off sell someone something that will not work and then in a year or two it is back on the market with guess who? The same broker. I once had a discussion with some lawyers on the ABA Forum for Franchising discussing brokers and even they were unaware of this problem. You know more franchisors should be smarter and look into this. The FTC should not allow business brokers to do things that franchisors cannot. Actually they should let both do what the brokers do, but all should be truthful when doing so. Too many laws, too many loop holes, not enough jobs, not enough sales to build systems fast enough to build the economies of scale to compete with the Wal-Marts of the world. Franchising could deliver that level of fierce market competition regionally with economies of scale buying power and team work while giving back to the communities they serve and keeping the money local, but not with over regulation state by state and the inconsistencies in Canada, and with the FTC. We are allowing bad policies to dictate loopholes and never leveling the playing field, which shouldn't have been titled in the first place. How can every one not see what is so obvious. The business brokers are using extortion to get franchisors to sign up, because they can play by different rules. It would be like playing a chess match when the opponent has two queens, Yes if you are smart you can beat them, but not often. No one knows how to deal with this problem I have stated. But I do. Dust the over burdensome regulation and you will not find everyone trying to go around them. We are not helping consumers we are killing franchise systems and killing the franchisees (also consumer) and franchisors already out there trying to build back the job base, which is just over 2/3 of all people employed are employed by small businesses. You know the franchising model is a perfect way to build efficiency into the small businesses of the future so that they can compete with global products produced for less money and with big box stores supplying consumers with everything but giving little back to help the communities (in most cases). I hope this commentary was thought provoking, if you have any questions about it, go find out for yourself. I have had much experience with this and I know what is going on. Surely, someone in the government regulatory area has a clue? Well, maybe not so surely, but maybe one? I bet nothing ever happens over this issue. So you consumers should stay heads up and if you call a business broker because they say they represent a franchise system, you may want to call that franchise system directly if the broker starts trying to coax you into a non-franchise business, especially one which has had more than one owner over the years. Franchising works and there is a reason, it will continue to work as long as it is not killed like so many other industries in America. Look at the devastation out there being caused by horrible policy by the frivolous lawsuits by government regulatory bodies. To find out which business brokers are the most ethical and which business brokers the top franchises use go to; http://www.Franchising.org. "Lance Winslow" - If you have innovative thoughts and unique perspectives, come think with Lance; www.WorldThinkTank.net/wttbbs
MORE RESOURCES: News provided by Yahoo! News and Google News Business Barometer®: small biz confidence leaking oil in December - Canada NewsWire (press release) Defense authorization bill changes small biz contracting - Washington Technology Small Business Owners Need to Stay on Top of Legal Issues Even in Light of Optimistic Outlook On Deck Capital: Big IPO for Small Biz Lender - Investorplace.com Small biz employers approaching Obamacare deadline - Crain's Detroit Business Small Business Economy Continues To Grow Modestly SurePayroll Small Business Scorecard(R): Optimism, Profitability Soar |
|
|
|
RELATED ARTICLES
Small Businesses With Work Trucks; A Warning If you are a non-operator owner of many work trucks, you should keep your business credit card with you not leave it in one of the trucks. You should not issue them to employees without strict guidlines. Dispute Resolution of Territory for Mobile Franchised Companies Franchisors of home based and mobile businesses need to carefully watch their franchisees who innately try to hunt in their fellow franchisees territories. The most important advice a franchisor should give the franchised outlets in this case is to work it out themselves. Get Out Of The Rut And Back On the Track Do you sometimes find yourself just going "through the motions" of your business from day to day? Has the excitement gone out of your daily routine?What happened? Remember way back when you began doing this? You were excited and enthusiastic about what you were going to do. What went wrong? Where did the excitement and enthusiasm go? More importantly, how do you get it back?Of course, this may be a signal that it is time for you to make some changes or to "move on. Yeah, It IS Lonely At the Top Sometimes when you run a business you feel as lonely as the Maytag repairman. Loneliness and isolation are very common problems for business owners. 10 Cardinal Rules for Business Growth After over 30 years of participating in hundreds of businesses, competing in at least as many different industries, with companies marketing both products and services, you begin to develop and accumulate some fundamental businesses axioms or "rules of thumb" that seem to make more sense everyday and gain more value in business practice as your career continues to advance and evolve.You like to think what you have learned and the business knowledge you have retained along your long and varied career path is unique, proprietary, or even "original", but somewhere deep inside you know that most of the things you hold near and dear to your own business self identity probably were already developed, practiced, and taught way before you ever entered your first business conference room. Explode Your Consulting Income Here are just a few ways to increase and diversify your income from your consulting business.1. Image of Your Franchise Automotive Outlet is So Important Image of your franchise automotive outlet is so important. Some say image is everything, well then if you buy a franchise you should be constantly thinking of image and cleanliness. Finding the PERFECT Alliance Partner Where do you look for the appropriate alliance?One of the most asked question is "Where do you find a good alliance partner?" It is actually fairly easy. You can find potential alliances by taking some time to research potential partners. Venus Transit - and Small Business? On June 8, 2004, the world witnessed what no one living today had ever seen.. The Skills Gap: It Pays to Use Experts By outsourcing to skilled professionals you'll be able to grow your business without adding overhead.Here are some of the costs associated with growing a business through acquiring staff:* recruitment* payroll and tax obligations* national insurance* employers liability* benefits (pension, car, medical, dental)* holiday pay / sick pay / maternity pay / water cooler pay!* office space* equipment or general office supplies* legal responsibilities that include employee policies on working hours, sexual harassment, sick time, leave of absence, holidays, benefits, performance reviews, grievances, terminations* training* managementDo not underestimate the time and money involved in recruiting and retaining staff. Motorcycle Detailing Procedures Manual Sample Outline If you are a motorcycle detailer and need to expand your business you will need to have several crews working for you. Each team will need a team leader and/or manager. How to Compete with the Big Guns?! Many small business startups fail within the first 2 years of existence. There are several different factors reason for the failure. How to Raise Your Fees and Thrill Your Customers Think the best way to get more customers is to have the lowest prices in town? Think again. Think the best way to create a successful business is to try to appeal to everyone? Wrong again. Find Your Niche & Follow It - Part 1 In this series of articles I'm going to show you how to find out if there's a hungry crowd for your information product BEFORE you write a single word.Mark Twain once said: "Find out where the people are going and get there first". The feast-or-famine roller coaster A solopreneur I know disappears from my radar screen for weeks on end when she's actively engaged on a project for a client. During this time she is heads down, totally focused, and immersed in delivering her service to her current client. Starting A Concrete Cleaning Pressure Washer Business Concrete cleaning can be a lucrative business to start. Here are some tips which will help you do it right. Perfecting Your Pitch Why should you describe your business to others in 5 to 10 seconds?How long do you think you have to get anyone's attention? 5 minutes? 2 minutes? 30 seconds? It is actually 10 seconds. I know it does not seem like a long period of time but you will be amazed what you can say in 10 seconds. Successfully Adding a Service To Your Business There will come a time in your business where you feel ready to add another service offering. To make this successful, there are ten tips to consider before moving ahead. Small Business Debt Collection Laws In your small business debt collection laws will eventually become important, as your debt grows and some clients do not pay. To collect small business debts legally, you must send a written notice that collections have begun, within five days of first contacting the debtor for collections. How to Remove Stress from Owning a Business... Forever! I meet and talk to hundreds and hundreds of business owners every year and do you know what I've discovered? Virtually all of them are regularly suffering from stress.It dawned on me while running a seminar one day.
|
| Home | Site Map | Privacy Statement | More Articles |
| © 2006 |