Do Transitioning Corporate Executives [Really] Make Good Franchisees?

This question was discussed on Linkedin approximately a year and a half ago and there were some interesting responses. However, the further we drift from the onslaught of transitioning executives caused by the 2008-2012 economic downturn, maybe we should now pose a different question… How have franchisors fared since awarding focusing on transitioning executives?

We often look at franchise success as up to the franchisor, i.e. it’s the franchisor’s job to be sure franchisees succeed. But of course, we know that not all franchisees, including transitioning executives, are created equal. Some are better than others! People in transition may, in fact, not make very good decisions – maybe they may panic and jump into a franchise too quickly and they don’t do all the homework that’s necessary or possibly don’t ask all the right questions. Some actually have limited skill set to their former job.

It would be interesting for franchisors to reveal how “transitioning executives” have fared, though that’s probably asking a bit too much. Because again, even if the transitioning executives have failed, it doesn’t mean the franchise system is bad. Maybe the system is just not right for certain individuals?

It really doesn’t matter whether a candidate is a transitioning executive or an immigrant national or even a mom exploring business ownership instead of returning to the workforce. What matters is how well prepared a candidate is for franchising (and business ownership) and whether or not the candidate is a right-fit for a particular franchise, and the franchise for him or her. Because we also know that all candidates are not created equal. Nor are franchisors! It’s all the more reason to identify and develop ideal candidate profiles, and keep in mind, there may be several.

Any thoughts?

About Paul Segreto

Entrepreneur, Franchising & Small Business Professional, Top 100 Champion Small Business Influencer Awards 2014 & 2015, Popular Blogger & Podcaster
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4 Responses to Do Transitioning Corporate Executives [Really] Make Good Franchisees?

  1. Steve Lowrey says:

    Reference the question about “transitioning executives” making good franchisees.

    First let may say that Leslie’s comments are “spot on”.

    My experience in franchising has helped me realize that the other important factors that increase the probability of franchisee success,include but are not limited to the following.

    1.Working to determine that the skill set of the prospective franchisee (transitioning executive or not) is a good match with the attributes of existing successful franchisees in that system.

    The probability of that match is increased because of all the work and effort that Franchise Consultants put into understanding their client.

    2. The odds of success are further increased by the Franchisor truly understanding, and taking into account the background of their incoming Franchisee.

    For example most of Leslie’s input in reference to “transitioning executives”, as just one group, should be taken into consideration as a Franchisor creates or improves their training and support.

    In my experience the most successful Franchisors have already put a lot of thought into understanding the background of their incoming Franchisees, because they have learned that when it comes to training and support, one size may not fit all.

    Most Fracnhisors can honestly say “the success of their Franchisees is their highest priiority.

    Steve Lowrey

  2. Leslie Kuban says:

    Paul,
    This is an important question. I’ve seen transitioning executives soar and flop as franchisees. I believe that success can be achieved and risk of failure mitigated when expectations are set upfront around the unique challenges that former executives often face when they are dawning the hat of franchise owner for the first time. A few of these unique challenges are:

    1. A new and different management style. Executives are accustomed to leading teams of degreed (often advanced degreed),upper income, white collar professionals. Such is not the case when acquiring an automotive repair franchise or hair salon or residential cleaning service. They have to learn a new style of management of a workforce with different dynamics and motivations from what they’re used to.

    2. They are not used to wearing so many hats. They are accustomed to having teams of administration around them. One of my clients, a former executive, shared how he did not understand why his customers were not paying him until he figured out that he was not invoicing them. He never had to think about this in the ivory tower.

    3. Learning to trust the business system and embrace patience. Executives did not become executives by being passive and half-hearted in their endeavors. They are aggressive, results oriented people. I’ve heard too many executives set their start up expectations galaxies beyond what is suggested in the franchise system. Then, they are frustrated and disappointed when they are not reaching their targets.

    Whose responsibility is it to set these expectations? I believe the onus falls on both the franchisor and the transitioning executive. The franchsior needs to paint a realistic picture of what ownership of their franchise looks like. And it is the personal responsibility of the transitioning executive to clearly understand what to expect of their franchise ownership experience.

    Thanks for asking a great question.

    • Paul Segreto says:

      Leslie,

      Thank you for your comments and insight.

      In one of Linkedin groups, comments to this same discussion claimed that all franchisees are transitioning executives. So, I’d like to clarify my question as I’m sure others believe the same.

      I believe there’s a difference between “former executive” and “transitioning executive.” Sure, we could debate they are the same, and in many ways they are. However, in this case, transitioning executives should refer to the recent wave of corporate executives that are recently unemployed or know their days are numbered.

      Further, to the point, there are many franchisees that are not former executives as many transitioning military personnel have enetered the franchise ranks and many man-in-a-van franchises have seen skilled workers enter franchising as a career alternative.

      Personally, I believe there may be more non-executives entering franchising than ever before as new industry segments keep popping up with lower capital entry points. Former teachers, healthcare professionals, and government employees come to mind as they’ continue to explore Home Healthcare and Education franchises, just to name a few franchise growth segments with relatively low capital requirements.

      Actually, the B2B franchise sector has typically attracted more former executives than most other franchise sectors, and according to the recent Franchise Business Economic Outlook 2011, that sector is projected for a decline, while other sectors are projected to grow.

      So, back to my point about transitioning executives… As the current wave of transitioning corporate executives are almost “being forced” to consider franchising as a career alternative because their options of future employment are somewhat bleak, do they really have the right mindset to become a sucessful franchisee?

      Further, which has been the issue even before the recent economic downturn, do they believe franchising is beneath their skillset and corporate experience? As such, do they feel they know it all and tend to do things “their way?” On the flipside, are their skills and experience so specific, such as IT or HR, that they tend not to comprehend basic sales and marketing? And, if we take out of the equation the high end foodservice and hospitality franchises where more astute former executives seem to flock, looking more at balance sheets and ROI than actually desiring to operate the business, are corporate executives that enter other franchise segments willing and able to work in the trenches?

      With all that being said, I look forward to additional comments and discussion.

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