Every so often someone says something to you in a business discussion that is a WOW Instant learning epiphany moment. Recently I had one of those conversations…
The context was that I had a successful business owner candidate looking at what might have turned out to be one of the biggest deals done in the franchise industry this year. What made it interesting for the candidate was that it was hundreds of under-performing units in a simple streamlined operational space and he had the solutions to their problems.
He, in this case, was the whale.
The candidate was more than qualified to run the businesses being acquired, they had an infrastructure that would be an instant solution to the problems that this pool of locations was having and the seller (a public company that will remain nameless here) would experience huge financial benefits in this problem being solved for them. Not only was it what the executives in the selling company wanted, it was a potential for success that their board of directors had demanded.
How could it possibly go wrong?
When big opportunities are discussed it often comes down to the buyer getting very cautious that causes a deal to fall apart no matter how good it might look. Big deals cost big money and that can be scary, even to the most experienced operators.
Even with all the perfect pieces on the table this deal died, but it wasn’t the buyer that took it there.
The core of the challenges seemed to be that the seller was used to dealing with candidates in one to three unit franchise packages, not hundreds of units on one contract. The seller is a very respected franchise company with a lot of happy franchisees, I have known their key franchise development executive for nearly 15 years and he is a solid professional. These under-performing units were company stores that essentially got lost in the woods, but there are many more that are performing just fine. In theory all they needed was time and attention to turn around.
In terms of a sales process, the leap to selling hundreds of units to one buyer can be much like a high school football team that finds themselves playing against the New England Patriots.
In trying to figure out how to help the buyer and seller get back on track, I called one of my mentors and the first thing he said was “In all of my years in this industry I have learned the hard way that you can’t catch a whale with a bamboo fishing pole.”
The clouds parted, the light shown through and the choir sang. That was it! Not a fix for the problem but rather clarity on the real issue.
The buyer was right for the deal, the deal was right for the buyer but the seller’s process to get it done… Bamboo Fishing pole.
It doesn’t mean the seller or their franchise offering is bad; it means they simply did not have experience in getting these kinds of deals done and it was my bad for not realizing where the disconnect would happen.
So given that very few people reading this are involved in franchise development, how does this apply to you?
As a franchise owner you will look at a myriad of ways to build your business. What if you buy a heating and air conditioning franchise and have potential business in residential accounts and commercial? To pursue those commercial accounts you may need a different license for those large commercial units. You will have to put together competitive bids and sell them. If the franchisor is solely focused on residential business, you may not have the resources to go after those big commercial fish.
If you go into an automotive repair franchise, say auto body, you may want to know that the franchisor has experience capturing insurance business and even be able to funnel that revenue to you.
If you want to open a portfolio of restaurants you will need a lot of support with site selection, lease negotiation, construction oversight and assistance with grand opening hot buttons like training staff and marketing. Working alone makes it hard to move fast enough to grow a robust restaurant portfolio.
Every kind of franchise out there has “big fish” opportunities. You will want to make sure that the franchise is more than just a brand; make sure they have the infrastructure and support you will need to go after those big opportunities. Even if you are capable of handling your part of the process with big fish you will need the system behind you to be ready to handle their role.
I have had an ongoing advisory conversation with a very young restaurant franchise company. They currently franchise in two states and they are looking to build a national footprint. In their discussions they are learning what they need to provide franchisees for their success and it is as eye opening for them, as it is for every new franchise company. They are learning what they need to be the right machine for their franchisees to pursue success with.
When it comes time to go whale hunting in your business, whatever that means within your industry, you will want to make sure that as soon as you throw your line in the water that you have the right tools to get the job done. Everyone wants big revenue, big accounts and big deals. Pursuing them without the right tools could be frustrating at best.
One other small bit of advice: a bamboo fishing pole will catch fish. It may not be a bad idea to get good at fishing for those smaller fish before going after the big fish. Even when you do go whale hunting make sure that you or your team are fishing for the smaller ones all along the way; they pay the bills.
What is your success story? Let’s go find it!
George Knauf is a highly sought after, trusted advisor to many companies; Public, Independent and Franchised, of all sizes and in many markets. His 20 plus years of experience in both start-up and mature business operations makes him uniquely qualified to advise individuals that have dreamed of going into business for themselves in order to gain more control, independence, time flexibility and to be able to earn in proportion to their real contribution. Contact the Franchising USA Expert George’s Hotline 703-424-2980.