Why Smart Franchisees Fail? Rose-Colored Glasses
Jim Lager’s success as a franchisee was due, in part, to the fact that he never researched franchising or studied the entrepreneurial publications that completely misrepresent the franchise relationship. Lager warns that new or prospective franchisees who believe in the Kumbaya version of franchising are in for disillusionment, frustration and, likely, failure. By Sean Kelly
I’ve been interviewing Jim Lager to get his hard-earned advice for new or prospective franchisees.
This is the second of the series called Why Smart Franchisees Fail.
Jim Lager has been a successful franchisee for the past four decades, and a top franchisee for two national brands.
Jim Lager claims that being a franchisee provided him with an invaluable business education that he is now using to build his own independent, non-franchised entrepreneurial venture.
He credits his success as a franchisee, in part, to the fact that he was never exposed to the industry hype and misinformation that sets some franchisees up for failure.
He never became disillusioned, he says, because he was never “illusioned” in the first place.
“I took a sales job with a major mobile tool franchisor right out of college,” says Lager. “By the time I was offered the opportunity to own a franchise after 6 months, I understood the franchisor’s priorities and business model.
“While they wanted their franchisees to succeed and, in my opinion, gave them a system to do so, their priority was their own success as a corporation. Like all franchisors, they see the franchisee as a means to that end.”
“I saw a lot of franchisees start off being very enthusiastic and eager to follow the system. They became disillusioned and angry when they realized the franchise system was designed to put the franchisor’s interests first – sometimes at their expense,” says Lager.
“They lost faith in the company and the system. Once they started second-guessing the system, they spiraled downward.”
That franchisors and franchisees are each motivated by their own, sometimes conflicting, interests is neither good nor bad, says Lager. It’s just the way it is.
“Your success is your #1 priority. The franchisor feels the same way. When those interests conflict, the franchisor’s interests win,“ says Lager. “It’s their ball. Their field. Their rules.”
I explored one of these situations in another article prompted by my discussions with Jim Lager.
Says Lager: “Ignore all the nonsense about Being Your Own Boss, Taking Control of Your Future or Joining a Franchise Family… Don’t read franchise magazines or the articles on their websites.
“If you want to know the truth about the relationship you are entering, read the company’s Franchise Disclosure Document and your Franchise Agreement. That’s the reality, in black and white. Understand how they make their money and understand your role in that process.”
“With a franchise, don’t assume you’re in this together. This is business. You are using them and they are using you,” says Jim Lager.
“If you start suspecting that what you are getting from the relationship isn’t worth what you’re giving… find a way to get out. The quicker the better.”
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