Do You Really Own Your Business Coaching Franchise?

by Eric Dombach | 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.

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?

by Eric Dombach | Business Coaching Franchise

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.

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?

by Eric Dombach | Business Coaching Franchise

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.

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?

by Eric Dombach | Business Coaching Franchise

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!

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.

What Training Can You Expect from a Business Coaching Franchise?

by Eric Dombach | Business Coaching Franchise

If you’re considering a business coaching franchise, the quality of their training probably has something to do with it. But what training can you expect from a business coaching franchise?

In the typical franchise, as soon as you sign the Franchise Agreement, you will be scheduled for the next available training date. This training is designed to deliver a lot of content and to justify the large franchise license fee that you just paid for. It’s usually one to two weeks of long and intense training, often taught by corporate instructors and occasionally by successful franchisees from the field.

You will be taught the history of the company and its position in the industry. You’ll spend some time learning how to interact with corporate headquarters and the franchisor’s policies and procedures. But the training is primarily designed to teach you the franchisor’s methods for running your franchise.

Remember, as a franchisee, you are not only representing yourself to the public, but you are also representing the franchisor. There is a vested interest for the franchisor to teach you how to properly represent their brand. Since the franchisor will continue to make money from your sales efforts, it is important for the franchisor to teach you about the products and services you sell and show you how to sell them effectively.

What Is the Training Experience Like?

For those readers who have large corporate experience, this training will be no different from what you  would expect if you were hired by a large corporation with one exception. You are paying for this training! So, participate in it as fully and unreservedly as possible. Who knows, you might end up saying later, as many franchisees have, that the initial training was actually the best and most valuable part of the entire experience, with the rest being a major disappointment.

Most franchisors hold training in a resort close by their headquarters. There are two reasons for this. First, it is in the franchisor’s best interest to get you into their headquarters as quickly as possible (if you haven’t already done so as part of your due diligence), where you can meet the staff and see the tangible side of the business you’ve just purchased.

The second reason is that if you are sitting in a fancy hotel overlooking the ocean or the mountains, you’ll equate the luxury with the quality of the training you’re receiving. It’s all part of the process to help you overcome any feelings of buyer’s remorse.

Once your training is complete, you will be handed over to some kind of manager who will handle your development from that day forward. These managers are usually employees or regional management types who have purchased the rights to manage entire territories, including the one you’re in. These regional managers are usually known as “Regional Developers” or “Master Licensees.”

From this point onward, the real work begins and your success is completely incumbent upon you. If you’ve made a wise investment, the people managing you will have a good track record of helping you get your business started. If not, you will be almost entirely on your own.

Want more insider tips and behind-the-scenes due dilligence hacks for purchasing a business coaching franchise? Check out our FREE ebook, The Business Coaching Franchise Buyer’s Guide.