Is a Business Coaching Franchise the Right Fit for Your Personality?

Is a Business Coaching Franchise the Right Fit for Your Personality?

Many people who look into buying a business coaching franchise do so because they love working with people. They enjoy entrepreneurship, counseling, coaching, and leadership. Business coaching is an excellent career for people with these gifts and interests. If you’re just beginning to decide whether or not business coaching is right for you, here are some important considerations.

First, understand what business coaching is. 

Business coaches help entrepreneurs and business owners improve their businesses. You teach them solid principles in sales, marketing, systematization, and hiring. You also identify and solve problems that are preventing your clients from being as successful as they can be. As you help them improve, you’ll be handsomely rewarded for your efforts.

Business coaching is a fast-growing industry with annual projected growth rates around 25%. And realistic earnings potential is as high as $100,000-$300,000 a year.

Is Coaching Right for My Personality? 

In my 15 years of experience helping business coaches succeed, I’ve discovered that there are specific personality traits that lead to success in coaching. It’s not enough to love people (although that’s critical). You also need to answer yes to each of the following questions: 

  • Do I dream of changing people, organizations, and systems?
  • Do I thrive on making decisions for myself and others?
  • Can I live with decisions I make?
  • Am I a good teacher, leader, and motivator?

If you can’t honestly say YES to each of these questions, business coaching might not be the right opportunity for you. I’ve seen would-be coaches with amazing resumes and tons of corporate experience fall flat because they weren’t gifted teachers or passionate about inspiring change. On the other hand, I’ve seen would-be coaches with very little experience find tremendous success in business coaching because it’s such a good match for their skillset. (In fact, I’m one of those folks: when I started out I had NO business/entrepreneurial knowledge, but I had passion for each of the questions listed above–and in four years’ time I’d built my firm to over $1 Million.)

Should I Buy a Business Coaching Franchise?

The question of whether or not you’re a good personality fit for business coaching is something that most sales reps for business coaching franchises will never raise with you–and yet in my experience, it’s the number one predictor of success. Please be sure to carefully consider whether or not business coaching is right for you before you drop tens of thousands of dollars into a business coaching franchise that might not pay off.

The question of whether or not you're a good personality fit for business coaching is something that most sales reps for business coaching franchises will never raise with you--and yet in my experience, it's the number one predictor of success.

And if it does seem that business coaching is a great fit for your personality, know that there are many ways to break into the business. Buying a franchise isn’t your only option: you could take independent training courses, hire your own coach, join a business coaching membership program like the Coaches’ Coach, or any combination of the above.

I recommend downloading our FREE ebookThe Business Coaching Franchise Buyers Guide. It takes you through all the questions (like personality!) that your sales reps won’t raise with you, but that are critical to consider as you decide whether or not buying a business coaching franchise is right for you.

Do You Really Own Your Business Coaching Franchise?

Do You Really Own Your Business Coaching Franchise?

When you buy a business coaching franchise, do you really own it?

This idea that your business coaching franchise is yours is, perhaps, one of the most common myths in franchising.

The truth is, as Robert Purvin notes in his book on franchises, a franchisee who has PAID for the right to own a business usually has fewer rights than most employees!

There are a couple of reasons for that:

First, as a franchisee, you can be restrained from competing with the former franchisor–while a terminated employee retains the right to work in his or her chosen profession.

Second, franchise manuals often dictate EXACTLY how you have to run your business, even if your local circumstances or business instincts would lead you to make another choice. That means you are bound to comply with your franchisor’s directives, no matter what.

As a business coach, this often means you are restricted from generating new business and leads in ways that you would otherwise pursue (such as certain online marketing strategies)–and can restrict your ability to run an independent business coaching practice after you terminate your agreement or allow your business coaching franchise license to expire.

Bottom line for you? It’s vitally important that you do your due diligence, and ensure the franchise you’re examining provides you plenty of autonomy and independence to run your business the way you see fit.

It's vitally important that you do your due diligence, and ensure the franchise you're examining provides you plenty of autonomy and independence to run your business the way you see fit.

Will you be hamstrung in this way? Check out your franchisor’s reputation online. Go to ripoffreport.com and type in the names of the business coaching franchises you are considering, as well as the names of the founder(s)/owner(s). This should help you get a sense for whether or not you’ll get the flexibility you need to run a business that can be successful. Next, Google the phrase “business coaches who have left” and get a sense of what people are saying about their franchise experience on the way out.

And when you’re done with that, check out our FREE ebook, The Business Coaching Franchise Buyer’s Guide. It’ll walk you step-by-step through the due diligence process as you determine whether or not buying a business coaching franchise is right for you.

Do Business Coaching Franchisors Support their Franchisees?

Do Business Coaching Franchisors Support their Franchisees?

How well do business coaching franchisors support their franchisees?

If you’re looking to buy a business coaching franchise as opposed to starting your own firm from scratch, it’s probably because you hope for the extra support and expertise a business coaching franchisor would bring to the table.

But is that a realistic expectation?

Robert Purvin is the Chairman of the American Association of Franchisees and Dealers (AAFD), a not-for-profit organization that is dedicated to promoting fair and ethical franchising practices.  Prior to being named Chair of AAFD, he had 24 years’ franchise law experience and is known for his skills in dispute resolution and mediation.

In his book, The Franchise Fraud: How to Protect Yourself Before and After You Invest, he tackles this very question.

And the truth is, according to Purvin–and my experience–if you decide to purchase a business coaching franchise, you can usually expect to adhere strictly to the franchisor’s operating system…with little or no actual support from the franchisor.

That’s because most franchise agreements are written to protect the franchisor, not you, even while restricting what you can and cannot do with your business.

Most franchise agreements are written to protect the franchisor, not you, while restricting what you can and cannot do with your business.  

Many frustrated business coaching franchisees have discovered that they actually have less control over their own operation and destiny than most employees–with fewer avenues for recourse in the event things get ugly.

How to Protect Yourself

During the sales process, many business coaching franchisors will try to sell you on the idea that you’re buying a “protective relationship” with your franchisor.  Watch out: once you get into court, they’ll probably argue the exact opposite–that they are merely sellers of goods and services and owe you no special duties of care or support.

Protect yourself before you enter into a franchise agreement.

First, read the fine print carefully. As a business coach, you don’t want to wind up in a situation where you’re expected to perform in the market, without any help or support, and owe a massive franchise fee each month.

Then, interview at least 10 current franchisees in the brand you’re considering and ask them whether or not they’re satisfied with the level of support they’ve received from the franchisor. Chances are, your experience will be similar to what you hear from them!

Finally, download your own FREE copy of our ebook, The Business Coaching Franchise Buyers Guide. It walks you step-by-step through the due diligence process of buying a business coaching franchise–so that you can be sure your investment is a sound one.

 

What Should I Expect to Pay Up-Front in Business Coaching Franchise Fees?

What Should I Expect to Pay Up-Front in Business Coaching Franchise Fees?

If you’re considering a business coaching franchise, one important thing to know is how much you should expect to pay in up-front business coaching franchise fees.

Typically, the Franchisor will charge you licensing and training fees up-front. Depending on the circumstances, this can amount to $25,000 to $50,000 for the license, and an additional $10,000 to $25,000 for the training.

Royalty fees begin almost immediately without exception. Royalty fees can be a fixed amount or a percentage amount. Make sure you understand the difference AND the due date. It is normal to see royalty fees in the $1,000 to $1,800 range, paid monthly. Percentage-based royalties are MUCH better. If you see this, it’s usually a good sign that the franchisor actually believes that franchisees can make money using their business model.

There are other costs, too. Most franchisors will charge you a “brand-building fee” which is usually 2% to 5% of revenue. This fee is in addition to your royalty payments and is used (they say) to build the brand locally, in your region. Whether or not you will actually derive any benefit from this is another question entirely and worth asking existing franchisees about.

Depending on the business coaching franchise brand you buy, you might also be required to buy software, a website, and marketing and branding material, including letterhead, stationery, and the like.

So What Exactly Can You Expect in Business Coaching Franchise Fees?

It’s not uncommon for a first-year business coach in a franchise system to spend more than $100,000 to set up their business and then go through another $50,000 to $100,000 in working capital while you’re trying to get cash positive by landing your first few clients. Some franchise opportunities require less and some much more. From my years of experience of selling business coaching franchises for several of the more well-known franchise brands, I’ve seen total start-up costs ranging from a low of $100,000 to as much as $300,000, with median start-up costs averaging about $200,000, including working capital.

Total start-up costs range from a low of $100,000 to as much as $300,000, with median start-up costs averaging about $200,000, including working capital.
 

For the inside scoop on everything you need to know before buying a business coaching franchise, download our FREE ebook, The Business Coaching Franchise Buyer’s Guide.

Do Business Coaching Franchises Create Critical Mass?

Do Business Coaching Franchises Create Critical Mass?

One of the most common reasons business coaching franchisors cite when pitching prospects is that business coaching franchises create critical mass.

In other words, when you purchase a franchise, you’re “joining a movement,” they’ll say.

You’re contributing to massive market penetration.

And as the movement grows, your franchise will enjoy a broad customer base and economies of scale in advertising as well.

At least, that’s how the argument goes.

But Is It True?

There’s no doubt that business coaching is a growing industry.  More and more business leaders are turning to coaches to help them navigate the complex realities of running a successful enterprise.

Unfortunately, most business coaching franchises simply don’t have the necessary units to make that big an impact. There aren’t enough to say that business coaching franchises create critical mass.

In fact, with recent shifts in the marketplace, there has actually been a widespread downturn in the performance of business coaching franchisees…and as a result, market penetration is actually SHRINKING for most business coaching franchise brands, instead of the other way around!

Overall demand for business coaching continues to rise. But franchising is proving more and more that it is NOT a reliable model for the industry.

That’s unfortunate, because overall demand for business coaching continues to rise. But franchising is proving more and more that it is NOT a reliable model for the industry. As always: buyer beware.

For more insights on whether or not buying a business coaching franchise is right for you, download our FREE ebook, The Business Coaching Franchise Buyer’s Guide.