Pete Lindsey began his career in franchising as an owner—so he understands the process from beginning to end. As the Vice President of Franchising, he recalls the 24-year journey that led him from owning a single business to helping thousands of people become owners themselves. His journey has resulted in extensive insight that he now offers to franchisees.
Until 1991, he was a franchisee for Mail Boxes Etc. He excelled at his business, so corporate made him a part of the operations department. Here, he was instrumental in one of the largest franchise transitions in history: when UPS bought Mail Boxes Etc. He moved to Sport Clips in 2011 for a simple reason:
“I saw the direction Sport Clips was heading and wanted to be a part of it. I respect what Gordon Logan [Sport Clips CEO] is doing with the brand and am ecstatic to be a part of a family-run organization.”
Due to his extensive experience, Mr. Lindsey shared what he would look for in a franchise if he were starting as a franchise owner in 2015. His insight is an invaluable look at what franchisees can look for when evaluating business opportunities that come their way.
Check out his advice below!
Consider the Franchise’s Quality of Life
Potential owners should understand the quality of life the brand offers. Certain businesses provide different levels of potential profit margins and revenue. More importantly, is to make sure the goals of the brand are in line with your own goals. As long as those are aligned, long-term prosperity will be much more attainable—and enjoyable.
Company Store Operations
Learning how a Company Store operates is a powerful insight into the business, and sheds light on the revenue potential outline in Item 19 of your FDD. In addition, you'll learn about the financial prospects of the potential business.
See How Many Franchisees Are Buying Licenses
Franchise expansion is a good sign. When existing owners are spending their resources on expanding their business, that means the local market is healthy. Check your franchise’s records for any signs of robust growth, particularly the purchase of licenses.
Review Item 20 on Your Franchise Disclosure Document
Item 20 on your FDD should be examined closely and carefully. While every item is important, Item 20 will reveal how many franchises opened, transferred, renewed, or were terminated in the prior 3 years. This will give you a clear look at whether your opportunity is growing, and how it’s growing. For example, if there are hundreds of openings but even more non-renewals, that’s something you’ll want to investigate thoroughly. How does the company handle non-renewals?
Check the Franchise’s Transfer Rate
If a brand has an 8-10% transfer rate, it could be a concern. That’s a high rate of people leaving the system. Like above, try to figure out if transfer purchases are being made by outside buyers or by existing franchisees. If existing franchisees are buying them, that's promising. Otherwise, it may not be a healthy sign.