Franchise investment: all you need is love?
All you need is love? Is love of a brand enough to form the foundation of a franchise purchase? Not in Andrew Terry's opinion...
It is now 45 years since the Beatles, in the world's first live global television link, informed 400 million people in 26 countries that "all you need is love". It's a powerful slogan with a simple message and universal appeal.
Why then the question mark? Is love not all you need? Well, in the business context, probably not. Indeed, from the perspective of a prospective franchisee, definitely not.
Love, and its associated emotion - passion - underpin personal relationships. To some extent they are also the drivers of successful entrepreneurs. Richard Branson, the entrepreneurs's entrepreneur, has written that "If you can indulge your passion, life will be far more interesting than if you are just working. You'll work harder at it and you'll know more about it".
Hardly rocket science so far. It makes sense and it is a beautiful thing if we have a love for, a passion for, a labour that pays the bills. But Branson qualified his comment. Passion by itself is not enough: "First you must go out and educate yourself on whatever it is that you've decided to do - know more about kite-surfing than anyone else. That's where the work comes in."
The good part is that, in Branson's words, "if you're doing things you're passionate about, the hard work will come naturally".
The same sentiment has been expressed a little more floridly by Daniel Isenberg in a recent Harvard Business Review blog: "So, entrepreneur, leave your passion in the bedroom. And when you're launching your venture, let nothing stand in the way of sober, hard headed, objective assessment."
The message for prospective franchisees is pretty clear: you would be crazy to acquire a franchise or a business concept for which you have no love or passion or enthusiasm or drive or emotion.
But you would be equally crazy to let your passion for a concept blind you to the underlying business realities. Business success, whether as a franchisor or as a franchisee or as an stand-alone business is ultimately driven by the basic drivers of business.
Passion alone cannot pay the bills. It is not a substitute for the business fundamentals. It cannot compensate for due diligence and planning. It can nevertheless be a significant value-add to a business proposition that, even without the passion, makes business sense on its own.
There is little scope for sentiment in business. In the current challenging economic climate this is particularly true. Small business in Australia is doing it tough and the reality that we are not doing it as tough as most other countries provides little consolation.
What should provide some consolation is that the credentials of good franchise systems are more clearly demonstrated in such times. In good times even bad businesses can be successful. But tough times provide the opportunity for good and proven franchises to demonstrate the power of good systems, concepts, support, training, buying power, technology, management, networks and infrastructure.
The opportunities for business success for a franchisee with a passion for the business concept which is tempered by due diligence in relation to the business proposition and awareness of the dangers of letting passion get in the way of a sound business decision are very real.
Albert Einstein - who knew a thing or two - commented that "Nothing great in the world has ever been accomplished without passion".
Benjamin Franklin's codicil is nevertheless important: "If passion drives you, let reason hold the reins."
So, be passionate and follow your dream but be careful not to allow your passion to blind you to the business realities. Be fuelled by, but not fooled by, passion.
And remember that the word "passion" comes from the Ancient Greek verb 'paskho' meaning to suffer.
- Andrew Terry is Professor of Business Regulation at the University of Sydney, consultant to DC Strategy and a columnist with Franchising magazine
Images: alwaysgoingnorth.com/ thedigeratifiles.com/ cavalleticommunications.com