Most franchise contracts last longer than the average length of a marriage

average length of a franchise contract

Why franchise consultants are pivotal for a long-lasting union between franchisor and franchisee

The success of any partnership, whether it’s a marriage or a franchisor-franchisee relationship, is based on a solid relationship, shared goals, and mutual interests. While some successful unions start with love at first sight, it’s much more strategic to call on a trusted advisor, especially for a franchise purchase. Enter the franchise consultant. This is the person to call on to ensure a strong match. Taking a person who is interested in owning a franchise and finding the best concept for them is a process akin to an executive recruiter or a matchmaker. In all scenarios, there is a process to follow.

Each candidate is unique, and it is the job of the franchise consultant to understand their motivations for owning a business followed by their passions. The goal is to ensure that the candidate will wake up each morning excited to run their business and do it all over again with the same enthusiasm the next day and the day after that.

Having candidates rank various industries is a strategy many franchise consultants use as a starting point. If a person does not like children or pets, it makes no sense to review concepts in those areas. Like Vegas, what is told to a consultant stays with a consultant, so it is perfectly acceptable to admit that you do not like animals or could never work with kids. Creating that safe, trusted space is an integral part of the overall franchise consulting process. 

According to Brides.com, the average marriage in the United States lasts eight years. That is shorter than the average length of a franchise contract which is ten years. There are concepts that offer five-year agreements and others that offer twenty years, but typically you are looking at a ten-year commitment.  

Like any marriage, in running a business there are roller coaster moments of sheer exhilaration, and if speaking honestly, ones of quiet regret.

Another key component of the consultation process is to review the difficulty of business ownership. Like any marriage, in running a business there are roller coaster moments of sheer exhilaration, and if speaking honestly, ones of quiet regret. It takes tremendous work ethic and focus, especially in the first few years. You are laying the groundwork for building a successful business, and that does not come easily. Business development is essential, and all of this takes time, commitment, and patience.  

Planning an engagement 

Once you are introduced to a few franchise concepts then the franchise process takes place. This ensures that both parties can learn more about each other. Every franchisor varies in their exact process but typically they will start with an introductory call and give an overview of their brand. The next calls might be about their financials and marketing/operations and during this time they will send you their Financial Disclosure Document (FDD).

A review of the FDD can occur, and then you can start validation, a process where you speak to other franchisees in the system and ask in-depth questions about their experience with the franchise. The last step is to attend Discovery Day either in person or virtually. If applicable, you get to meet the team, see facilities in person, and then receive the Franchise Agreement. This is a great time to have an attorney involved. If all goes well, the contract is signed, and payment is exchanged for ownership in the franchise. 

When the honeymoon is over

There are several options available to franchise owners when the terms of the contract come to an end. An owner can ride out the terms of the contract and then in writing inform the franchisor that you no longer wish to continue the business. In this scenario, the franchisor will take the business back and attempt to resell the territory as well as the physical location if one was involved. In many cases, there may be a non-compete in place so the franchisee may not be able to open a competing company for a specified amount of time in that area. 

Prior to the contract expiration, you may choose to hand the business over to another party. That person could be the general manager who has been running your business for several years or a family member who has been intimately involved in the operation. It is important to note that this person must be approved by the franchisor. The franchisors will ensure that this person is a strong candidate and has what it takes to keep the business afloat just like they vetted the original owner. 

Many franchisees opt to sell their businesses at the end of their contract. If you are an avid watcher of Shark Tank, then you have heard about valuation. According to BizBuySell.com, the average business in the U.S. sells for around 0.6 times its annual revenue. You can choose to sell the business through the franchisor with the terms outlined in your contract or you can opt to sell it on your own using a business broker. The last option is to re-up. Renew the terms of the agreement and continue the contract for a specified period of time. 

Taking a leap of faith

It is daunting to think that every 13 seconds, another divorce occurs in America, yet people continually fall in love and make the ultimate commitment. Business ownership has sky-rocketed during the pandemic, whereas marriage rates hit a historic low in 2018. Align yourself with a great matchmaker and help increase your odds of a successful union.  

“Success in marriage does not come merely through finding the right mate, but through being the right mate”

– Barnett Brickner

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With an entrepreneurial spirit that ignited over a decade ago, Lisa Linkowsky embarked on her journey as one of the pioneering BirthdayPak franchise owners. Serving as a pivotal member of the Franchise Forum, she took on roles as a trainer and mentor, laying the foundation for her expertise in the franchise industry.

Today, Lisa is the CEO of Milestone Franchising, her second venture born from invaluable franchise ownership experience. A Certified Franchise Consultant and proud member of the The International Franchise Professionals Group (IFPG), Lisa brings a realistic approach to business ownership. Her work spans across the nation, offering hundreds of candidates an objective understanding of franchising and introducing concepts with a solid foundation.

In addition to her leadership at Milestone Franchising, Lisa hosted the weekly TV show, Franchise Focus, for two years. The show spotlighted 100 industry experts and franchise owners, showcasing Lisa's commitment to sharing knowledge within the community. As a monthly contributor to FranchiseWire, Lisa continues to contribute her insights to the franchise landscape.

Lisa currently serves as a membership committee member for the Princeton-Mercer Chamber of Commerce, earning recognition with the prestigious Fred Young Champion for Business award in October 2022. Acknowledged as one of the Top 10 consultants with the Rep'M Group in 2022, Lisa also participated as a panelist in the annual IFPG Retreat in 2023, engaging with over 800 attendees. You can hear more about her entrepreneurial journey on numerous podcasts.

A visionary business builder, Lisa aspires to inspire and influence positive change in the world through her work and dedication to the franchise industry.
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