Franchise Opportunities; What's The Real Story Behind Those "Business Coaching" Franchises? (Part 2)

In the first part of this story, I showed you how one particular business coaching franchisor went about finding new franchisees. I ended it by telling you that I have known about low-cost opportunities like business coaching for a long time. And that I really know about them. It's time to share what I do in fact, know...

When I first started in franchise consulting-brokering, a local woman contacted me, and invited me to lunch. She was the Northeast Ohio Master Franchise owner of Action International, a business coaching franchise that I'd never heard of. (Here is what a Master Franchise owner is)

We had lunch, and she wanted to know if I was interested in helping her find local franchisees-coaches for her business. I told her "maybe," and left it at that.

My "maybe" was really a no. A big, fat, no. I didn't feel that tons of small business owners would pay for "coaching" services in our area. Northeast Ohio is a pretty conservative area. (Not politically) In general, it's not known as a huge risk taking entrepreneurial region, like say, California is.

Right or wrong, it just didn't feel like the right thing for me to present to my franchise candidates.

(Later on, the big franchise brokerage group I was with at the time, ended up taking Action International on as a client, and I presented the opportunity once or twice. One time was because the candidate said he wanted to "coach." The other time, the only thing the candidate wanted to to see were consulting type opportunities. So I reluctantly obliged. Neither candidate ended up buying the franchise. On one other occasion, I presented a different coaching franchise offering that my group took on, and that was only because he was already looking at yet another one, and wanted another choice. He ended up buying the original one he was looking at. Update; He is slowly moving away from the one he bought, and is going solo.)

Now to the part that I really know about. The lady that approached me ended up selling around 7 franchises. Six out of the seven went out of business within two years. One of the ones that failed is now my brother-in-law.

The other one is a friend of mine, and is also a terrific referral source. 

They both closed their Action International (Now called ActionCoach) franchises. But why?

Here is what they told me;

• It was a sales business
• There was not much support from the Master Franchise owner
• It was really hard to sell the coaching programs
• It was a sales business

The business model of business coaching requires one to go out and find small business owners that are willing to pay $2,000+ a month for coaching and consulting services. Of course most of them say no! Most small business owners say no a lot, when they are called on by salespeople. It's natural. The great salespeople can turn it around, and possibly even make a sale once in awhile. (20-30% of the time)

Here's the real problem with coaching franchises;

The franchisees may not get to coach a whole lot unless they are really strong salespeople! Folks, no "coaching" is going to be happening without small business owners who are willing to write checks for business coaching services! 

I'll go even further. It's my contention that the reason that lots of "business coaches" have failed in their franchise coaching businesses is that they never should have been sold the franchises to begin with. That's right. Some of these franchisors are selling their franchises to the wrong people.

On the confidential questionnaire that I have my franchise candidates complete, one of the questions pertains to their sales ability.They have to rank it. Their choices are;

1. Really strong

2. Strong

3. Pretty average

4. Below average

If any of my franchise candidates rank their sales ability as average, or below, they will not be presented with franchise opportunities that requires strong sales aptitude. This is not that hard!

So, why would any franchisor who offers business coaching, sell a franchise to a candidate that is not a strong sales person. One would think that they have similar sales ability questions on their franchise candidate questionnaires, right? 

This is the part of the franchise business that I can't stand. I will not work with any franchisors that don't have the courage to say no to a franchise candidate because he or she isn't the right fit.

So, there's what I know. Have you had a similar experience? Share it. Maybe you can save someone a little grief.

This is not the first eye-opening article on business coaching franchises. Look

Another one

Speaking of sharing what you know. Do you know a lot about a particular subject. Are you really good at a particular hobby? Are you good at a sport? Do you know a lot about real estate, taxes, or investing? Are you interested (Even mildly) in earning some money from your knowledge?

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