No matter what industry you’re looking to break into, brokers can mean the difference between franchise success and franchise frustration.
Few know that lesson better than Chuck Prenevost. With over 21 years as a successful entrepreneur and owner of a service-based business that he started from scratch, Prenevost brings a unique perspective to the franchise industry. He developed his business into being recognized as one of the elite service providers in Canada with an annual ROI of 15 percent to 18 percent. He also knows and understands first-hand the value of effective business systems and what it takes to start and grow a successful business.
Now, as a franchise business consultant for FranNet in Vancouver, Prenevost is using that expertise to help others achieve their entrepreneurial goals. During his five years, he’s seen firsthand what works—and what doesn’t work—when it comes to pairing entrepreneurs with the right franchise opportunity. And according to Prenevost, it starts with asking the right questions.
Prenevost believes that when looking for the perfect franchise to invest in, it’s important to first address these three key topics.
1. What kind of franchise is the right one for me?
“The first thing people ask me is, ‘What kind of companies do you have available?’” Prenevost said. “That’s a good lead-in for me. So I reverse it, and I ask them what they’re attracted to and what businesses they’re aware of within the franchise industry. That way, I’m not feeding info to them, and I can get a better sense of what areas they’re interested in.”
Prenevost explained that when someone says they’re interested in a food franchise, he usually asks them to dive a little deeper.
“Sure, food has great brand recognition. But when I say that we represent nearly 75 brands and we represent only one in the food category, that’s always a pretty big surprise to them,” Prenevost said. “There are tons of other opportunities outside of the food industry that have strong returns on investment. That usually gets people thinking a little bit more and opens up the playing field. We always encourage people to explore other options.”
2. How much money will this franchise investment cost me?
“The money question is sometimes the toughest to answer. I always tell people that it depends on their comfort level. If I asked them right now how much money they’d be comfortable putting into a new business, they need to fully understand the various elements that go into calculating that number,” Prenevost said.
First, there’s the initial investment—the franchise fee. Second, there are the startup costs. If it’s a retail company, for example, costly elements like store buildout play a part. Third, there’s the working capital. According to Prenevost, it’s important that when the doors first open and sales are slow, the owner has enough money stored away to support his or herself before they hit the breakeven point.
“Sometimes, when a business is still ramping up, it’s important to let the entrepreneur know that they need enough money saved up that will cover monthly expenses, like groceries, a mortgage and schooling. Businesses are rarely profitable right off the bat,” Prenevost said.
3. How long will it take to get my business up and running?
“People will come to me expecting to open the doors to their business within a matter of days. I explain the entire process, and I let them know that a grand opening is usually 60 to 90 days out,” Prenevost said. “It helps to bring them out into the future a little bit—it makes it more real for them. I will always encourage them to take a breather, especially if they’ve just been laid off. That time to clear one’s head before making a major life decision is so important.”