Whether it was a success, a failure, or a headache that barely limped along, give me your thoughts.

In the last four years or so, I've looked at several concepts. The couple concepts I liked were already sold out in my preferred territories. There have been more than a few concepts I couldn't make sense of the model/risk.

Also- If this horse has been beat to death here, forgive me.

complete and utter failure.

Our franchise went BK like Year 3. Thankfully the guy we bought from took mercy on us and let us out before it went into receivership.

Have had experience with two franchisors, one was very positive, the other an abject failure. Different industries with each. The failure was an F&B outlet, not very well run (couldn't tell at the time due to lack of experience and opacity of the organization) but provided quite the learning experience. Lucky to make it out without going bankrupt. The success was with a franchisor in the hospitality industry. Industry leader, lots of opportunity for training, education, growth, etc. Best-in-class organization.

What kind of questions do you have? I'd be happy to answer any you might have.

1. Is it accurate that most Franchisors are going to present their Item 19 data in the best light possible? Therefore, a potential franchisee should expect to incur additional/non-disclosed expenses and thus margins are likely thinner than projected?

2. Owner/Op vs semi-absentee: I've come to the conclusion that whatever level of franchisee input they say it takes, it's likely going to be more???

3. What did you do differently in the investigation process from the opportunity that failed and the one that worked?

4. Reputable Franchisor - I've come to the conclusion that with most things, you get what you pay for. If the opportunity has relatively low start up costs, it's likely to yield low performance. Agree/disagree? Would you consider a newer player/concept into the market with limited historical data? Or, would you prefer well established, proven brand(s)?

5. Outside of speaking with current franchisees, and thoroughly investigating the numbers... What other vetting tools were most useful to you?

6. In your opinion, is it better to choose the industry you have experience with? Or is it better to choose a top-level Franchisor, even if you have no specific experience in that industry (but do have small business experience)?

In light of No. 6 I would say some franchises in different fields use the same sales method. For instance gyms, karate schools and daycares are all based on subscription models. In order to thrive you will need to shake the bushes for subscribers.

Just something to think about.

Maybe Next Year said:

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1. Is it accurate that most Franchisors are going to present their Item 19 data in the best light possible? Therefore, a potential franchisee should expect to incur additional/non-disclosed expenses and thus margins are likely thinner than projected? I think it is a safe assumption that Item 19 is going to be disclosed in the best possible light. As a result, tightening up projected margins would be recommended

2. Owner/Op vs semi-absentee: I've come to the conclusion that whatever level of franchisee input they say it takes, it's likely going to be more??? In both of my scenarios, it was an Owner/Operator situation. However, the hospitality space has plenty of examples of successful absenteeism among the owner ranks. I think it really boils down to the specific business but any start-up is going to take more time than expected, just the nature of the beast.

3. What did you do differently in the investigation process from the opportunity that failed and the one that worked? Not a direct answer because the F&B experience was full start-up and hospitality was buying out one of the owners of a going business, so processes were different. However, if I had to do it all over again, I would be much more critical of the F&B opportunity. Maybe biased due to the result, also I was much younger and more nave, but talk to MULTIPLE operators, if possible. We were put in front of a franchisee that, in hind sight, was probably coached up on selling the concept to new franchisees.

4. Reputable Franchisor - I've come to the conclusion that with most things, you get what you pay for. If the opportunity has relatively low start up costs, it's likely to yield low performance. Agree/disagree? Would you consider a newer player/concept into the market with limited historical data? Or, would you prefer well established, proven brand(s)? I cannot agree or disagree on your first statement, primarily due to a lack of experience with more than two franchisors. If/when I do this again, I would give preference to the established, proven brands. You get to succeed on the trials and tribulations of those that came before and provided that learning platform. IF you are considering a newer player/concept, take a long look at their leadership team. What kind of experience do they have? Can you get deeper insight into their successes and failures? What is it about that new concept that you think makes it a winner? There are a lot of directions this topic can go.

5. Outside of speaking with current franchisees, and thoroughly investigating the numbers... What other vetting tools were most useful to you? Look at the market/industry in general in a SWOT format, run scenarios for that industry from best-case to worst-case outcomes, talk to competitors in the market if available, look at your market demographics where you are considering operating, talk to local Chambers of Commerce or others who might have experience with a particular franchise. Research. Research. Research.

6. In your opinion, is it better to choose the industry you have experience with? Or is it better to choose a top-level Franchisor, even if you have no specific experience in that industry (but do have small business experience)? Great question! In my personal experiences, the failure was in an industry I had a lot of experience in. I think the biggest problem was we picked the wrong franchise partner, but there were other issues, too. The franchise I had success with was in an industry I had no prior direct experience in (I say direct because I did have F&B experience in hospitality and I grew up near that industry but was not directly involved until the franchise opportunity). I don't think there is a sure answer for which is better because of the diversity of factors that can influence the success or failure of a business.

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Hope this helps some!

Very helpful. Thank you for taking the time!

You're welcome! Happy to help. If you have other questions that come up later, post them and I'll answer to the best of my ability.

Out of curiosity, what industry are you considering?

In the past, we have looked at a screen printing brick & mortar and a sign/graphics business. Currently, we are considering a subscription based residential and light commercial services, and a B2B coatings business.

Great thread and curious what others have done with this.

I am in the early stages of exploring to see if i find something that makes sense.

What are the key things you for due diligence outside from what is listed above?

My nephew in 1990 opened the first Chicken Express franchise. The franchisee was very hands on, that store is still standing and selling chicken today, albeit with an upgrade. Nephew at one time owned about 20 stores, buying and selling along the way. He's down to a small few now but financially has done extremely well. Based on his experience I'd say if you're thinking fast food I'd either pick something new and expanding (Layne's Chicken is Aggie owned) or a major that is needed in an underserved area (McD's...$$$).