Maybe you can't afford to retire. Or maybe you're like serial franchisee Bob Thomson, and you don't want to. At 91, he owns several restaurants within the Subway Sandwiches and Pancheros Burritos franchise organizations, with the latter having recently named him "Franchisee of the Year." Happily working decades beyond the magical age of 65, here are his words about how anybody can follow suit, and thrive doing so.
Rule 1. Use a positive cash flow to love the work you do.
The best guarantee for being miserable in business is to either not make money or not make enough for a comfortable living. A positive cash flow can make up for lots of little day-to-day problems in business. The absence of a positive cash flow will turn those little problems into an unending series of catastrophes. The result of that will be bitterness--at business and at life--and who wouldn't want to retire if that's the alternative?
Rule 2. Do everything you can to learn from other people's mistakes.
Yes, courage and perseverance are virtues, but in business they should never trump common sense. Those virtues can be a prescription for disaster and years of misery. If you're losing money, the market is probably telling you, "Hey, dummy, go do something else." There's no shame in listening to the market. It's called "learning." If you're embroiled in some business endeavor that's losing money, and the only way for you to make money is for a bunch very unlikely things to happen in just the right order, my advice is to throw in the towel. I know. I've done it.
Rule 3. Purchase experience from the experts.
I suppose there's a chance that I could--with enough time, patience and capital--have come up with the perfect way to sell sub sandwiches at a profit in my hometown of Charles City, Iowa. Why on earth would I do the experimenting on my own nickel when, for a collection of relatively inexpensive fees and conditions, I can purchase expertise from the recognized world authority on sub sandwiches, the Subway organization? I don't have to guess at how much mayonnaise to use or where to get the best Black Forest ham. I don't have to scout out the best advertising deals or the best point of sale terminals, which are tasks that would probably bore me anyway.
Rule 4. Vet the hell out of any franchise.
I am involved in two franchise systems now, and I love them both. But I've been involved in several others, and I have looked at literally hundreds as possibilities. I have learned the hard way that time spent kicking the tires of a franchise concept cannot be overemphasized.
If you want to succeed, you need to get into honest conversations with people high, low and in between in several regions where the franchise operates. What's the attitude of the line workers toward "corporate?" How many of the franchise owners currently in the system would make the same investment all over again? What does the P and L of that franchisee look like? How are merchandise "turns" supposed to work in the system? Who are the key suppliers, who picks them and are they reliable? Are there controls on franchisees to keep them from sourcing through competing, junky vendors? How does financing work for working capital, periodic upgrades, and the acquisition of new franchises? What do banks think about this franchise compared to its rivals? What does the secondary market for the franchise look like, and how does it work? What are the key indicators you can monitor daily to gauge the health of the business? Are there healthy groups of franchisees who come together to support the brand?
Rule 5. Make sure you want to be married to this job for the next several years of your life.
This is true for any business, but particularly a franchise.
Rule 6. Get a territory, or some similar protection against cannibals.
Rule 7. Never stop developing and reinforcing good habits.
Virtually every day since August 27, 1958 (the day of my daughter's birth, and the day I bought my first store), I have checked the sales of my businesses, reconciled the sales to the cash deposit, and reconciled the deposit to the bank balance. I do this because no businessman can stay in business if he does not constantly monitor the cash drawer. This started out as a necessity--because I had very little capital and even less margin for error--but now it's ripened into a good habit. Others that I recommend:
- Keep active in the community of franchisees, even if some of them are tedious.
- If there is a group of dissident franchisees, steer clear of them.
- Make a point every day of doing several things to make you a part of the local business community.
- Reward your trusted employees, especially with a sincere compliment.
- Keep thinking of new ways to reward your employees.
- Try to promote from within your organization.
Most importantly, never forget that all business is fleeting; the most important reckoning is the final one, with that Great Franchisor in the sky.