Q&A With the Authors of Franchise Management For Dummies
When Michael Seid, CFE, and Joyce Mazero asked me to write the Foreword for Franchise Management For Dummies, I jumped at the opportunity. Released in May, the book is a follow up to Franchising For Dummies, which Michael Seid co-authored with the late Dave Thomas, founder of Wendy’s. Franchising World offers this exclusive interview with the new book’s authors about what prospective franchisors and franchisees can learn and why it’s an essential to any franchise professional’s library. Find out more about the book by visiting www.wiley.com and searching "Franchise Management For Dummies".
By Robert Cresanti, CFE
CRESANTI: After an already successful Franchising for Dummies, why a new book now?
SEID: When we began to think of a new book, I spent quite a bit of time talking to you [Robert Cresanti] about what we were intending to do. Your advice was key. Franchising had changed since my first book was published and even though many of the changes were addressed in the second edition, Franchising For Dummies was still lacking in some respects — it could not address what was happening now. I wanted a book that the content could easily be updated between editions so it could remain fresh as franchising continued to evolve. The possibility of having a companion website with a new book was the perfect solution.
Two other factors sealed it — your agreement to review the book and write the Foreword, and Joyce Mazero agreeing to share the workload as co-author. Working with Joyce on the book has been a delight. Besides being a friend, she has a practical approach to the law that dovetails nicely with my view of franchising as a business first that is wrapped around by the law. I also wanted to write this book because of my involvement as a social franchisor and as the Chair of IFA’s Social Franchise Task Force. Social franchising has the capacity to contribute to wealth creation and economic opportunity at the Bottom of the Pyramid. It is one of the reasons that MSA started a social franchising practice and works with NGOs. There is no other book that addresses social franchising as a subset of business format franchising.
CRESANTI: How did you get involved with the popular Dummies series?
MAZERO: When the first book came out in 2007, I was an advisor and editor along with a couple other lawyers reviewing the legal section. A few years later, I wrote a supplementary edition that got folded in about women in franchising. A very important addition to the new book is this whole area of social franchising that Michael has spearheaded so well and shed a light on what I hope someday our government acknowledges is an economic tool for growth in other countries. There was an opportunity to do more from the point of view of the emerging franchisee who hasn’t expanded before, so we talked about it and thought it was a good idea.
CRESANTI: What are the elements of a good business strategy?
MAZERO: The franchisee should first go through the thought process and ask, “Is this the right strategy for me, personally and professionally?” Once you have made that decision, ensure that you have something you truly like doing, and can do well with others. Business strategy to me is Number One, don’t mess with the system. Once you come to grips with that, then discipline, organization and creating an infrastructure that’s going to support what you need in the different phases of your business life cycle is critical.
For some franchisees, it’s kind of like jumping from one thing to another as a need arises — whatever screams loudest — as opposed to organization. You need to put systems in place so that you don’t keep recreating the wheel. The franchisor is there to help you to a certain extent, but there’s so many things that are your responsibility. The franchisor doesn’t create your financial statements or accounting programs. You still have to put aside money for local marketing to supplement brand-wide efforts, for example, and surround yourself with good people.
CRESANTI: What characteristics does a person need to succeed in franchising?
SEID: There are many. Temerity and confidence is likely the most important — it is in any business. Being honest and ethical is essential. Patience is critical. Attracting, training and properly managing a workforce is certainly high on anyone’s list. To succeed in franchising, you need to manage both the business and the relationships with an understanding of that as a franchisor and a franchisee, while you share a common brand, your interests are not always in absolute alignment.
Having the ability to work through those periods where this naturally will occur can be difficult. A full list of attributes is mentioned in the book, but without these basic foundational characteristics mentioned above, the rest doesn’t matter all that much.
MAZERO: An unswerving belief in yourself. Just never give up. And that goes for a lot of careers, but if you’re able to transcend what would be a harsh reality from time to time and continue to believe in yourself, it can be done. Someone must lead and ensure there’s an outcome where people continue to believe in themselves.
CRESANTI: What info does the book containt for franchisees?
MAZERO: There are some issues that, in the past, franchisors and franchisees did not give much thought to, such as joint-employer status. Now the joint-employer liability discussion is ubiquitous, finding its way into a franchisor’s decision on how to structure the franchise relationship, the nature and extent of control a franchisor exercises over the franchisee’s implementation of the franchise system, and the franchisor’s enforcement of brand standards. The book addresses joint employer as well as its twin brother issue, vicarious liability. Franchisors remain mindful of how and why they exercise control, most remaining careful not to let enforcement of brand standards fall prey to fear of liability with respect to either of these issues. Creating, maintaining and enforcing brand and system standards needs to be job No. 1 for any franchisor, and for some prospective franchisees who believe that being a franchisee is the same as being an entrepreneur, this can come as a shock. Setting expectations in the franchise relationship is critical.
If a prospect truly wants to be an entrepreneur, truly does not want to be told what to do and is convinced that he has a better mouse trap for everything — the entire franchisor’s system including brand standards — then that entrepreneur should take a pass on being a franchisee. The prospect will be miserable trying to be a franchisee and the impact on the franchise relationship will be undeniably negative. The book does a good job challenging the prospective franchisee to ask: “Is this me, or am I really just trying to fit me into this opportunity because it sounds lucrative, exciting or different?”
SEID: Take your time and understand that franchisors are not all equal. To grow, a franchisor needs to recruit franchisees and franchising today offers so many outstanding opportunities that you don’t need to settle or be rushed. The one thing every prospective franchisee should understand comes from the IFA’s Statement of Guiding Principles. Item 4 states: “Prospective franchisees have the prerogative, at the start of the franchise relationship, whether or not to enter into any particular franchise relationship. Prospective franchisees may also choose to not become franchisees of any franchise system.”
Also franchisees should not get caught up thinking that the Franchise Disclosure Document is all that’s needed to understand any franchise opportunity. Prospective franchisees should invest in an experienced franchise advisor — a knowledgeable franchisee lawyer — and conduct proper due diligence on any franchise opportunity before making
CRESANTI: What does the book contain for prospective franchisors?
SEID: The question to ask is not whether you can franchise (anything can be franchised), but whether you should franchise. The book covers the basics of franchising and then pulls you into the weeds of understanding what needs to be done to become a great franchisor. For novices, it is a primer, but for experienced franchisors it’s intended to be a desk reference. Most important for prospective franchisors is to understand that there are consultants and lawyers that we call franchise packagers. They offer cookie-cutter services — and that is a serious problem. Pick your advisors carefully and talk to their clients to understand their reputations.
The same advice for prospective franchisors applies to prospective franchisees — you don’t need to settle or rush. There are many amazing franchise lawyers and consultants. Do your homework and select very carefully who you work with.
CRESANTI: What other resources do you recommend?
MAZERO: The book provides a lot of resources and direction to additional resources, including everything IFA makes available to franchisors and franchisees in general, as well as links to websites with other studies or directories. You can read stories and experiences from other franchisors, compare one franchisee to another, get FDDs and Item 19s, and more. There’s also a companion website (see link above) with supplemental information including forms, questionnaires, checklists, a workbook for prospects and how to view a business plan. It also covers finances and where to get financial resources. The website is a living supplement to the book and it will be constantly updated.
SEID: Read. Talk to lots of people in franchising, including the local franchisees in your community and existing franchisors. Spend time on IFA’s website. Take some of IFA’s courses produced by the Franchise Education and Research Foundation and attend some of the classes available at the International Franchise Expo conducted by MFV Expositions. Read Franchising World and other industry trade publications. Attend conferences. Become educated about franchising in general before making the decision to become either a franchisor or a franchisee. There is also a due diligence workbook available on the website called “Making the Franchise Decision,” a 100-page toolkit that includes questions to ask and information to know related to any franchise opportunity.
CRESANTI: What elements should you consider when seeking legal and business advice?
SEID: Franchise lawyers and consultants are unfortunately not regulated. Any lawyer can call themselves a franchise lawyer and literally anyone can call themselves a franchise consultant. It's a major problem in franchising because many newcomers don’t understand the importance of choosing one professional over another and often select advisors based on how high they rank as a paid advertiser on the search engines. Maximizing Internet exposure is not an indication of professional competence. To evaluate any provider — regardless of the industry — consumers should look to those that are asked by their peers to talk at programs or to write in publications read by the professionals. Before selecting any professional, do your homework. Read what they have written and see if you agree with their beliefs and approaches. Talk to their existing clients. Achieving professional stature is just one indication of reputation in any field — and generally well-qualified professionals don’t cost more — and frequently cost less. Becoming a franchisor or franchisee is an important decision and having the right assistance is essential at the start.
Released May 1, Franchise Management For Dummies is written by Michael Seid, CFE, of MSA Worldwide, and Gardere Wynne Sewell’s Joyce Mazero. Joyce Mazero is Partner and Co-Chair of the Supply Network Industry Team for Gardere Wynne Sewell. MSA Worldwide’s Michael Seid, CFE, is a member of the IFA Board of Directors.
Robert Cresanti, CFE, is President and CEO of the International Franchise Association. Find him at fransocial.franchise.org.