Seth Lederman is as strong an advocate for franchise ownership as they get. It’s not just because his company, Frannexus, provides consulting services for new franchise owners and people looking to develop franchises. Lederman is a firm believer in the model. He left a career in medicine to focus on the business side of his field before moving on to helping franchises troubleshoot issues with new owners.
“Brands saw the value in me going out and finding out why franchisees were not doing well that should have been doing well,” Lederman explains. “These were well-educated, established people and a good brand, and I kept finding a mismatch. These people are making decisions like – I like pizza, so I should buy a pizza franchise.”
Getting tired of rescuing people from their worst instincts and lack of knowledge, Lederman decided to start Frannexus and help pair people with a franchise that matches their abilities. He became the guide these people needed to ensure they’d create a thriving business.
Lederman’s career proves that the DIY myth in franchise investment is precisely what that is – a myth. People see franchises as fool-proof investments; all they have to do is put up the money, and the rest will take care of itself.
The reality is as far from that as it can be. Lederman would first say that not everyone is ready to become a franchise owner, and it takes a pro to sort out the viable candidates from the wrong ones.
“It takes 300 inquiries every month to yield three people signing a franchise,” he says. “So what we’ve gotten good at is our vetting process, eliminating the people that are not well suited, who don’t have the time, don’t have the resources. Disqualifying is more important than qualifying.”
After disqualifying is done, finding the right match is crucial. Through personal experience, Lederman has adopted an algorithmic approach to it, making sure that his clients get to choose from a selection of franchises they will be able to run successfully.
And they will have to run them because franchises don’t run themselves. “Everyone talks about franchising as a passive investment, and I tell them, only two things run on their own: a business and a car, and that’s downhill,” says Lederman.
Ideally, a franchise owner will need to have some time to devote some time every week to their franchise. It wouldn’t be on schedule, so they’ll need that flexibility in their life. Again, that’s not something a new franchise owner would have to know, and they certainly wouldn’t be able to make the choices necessary to minimize the effort it takes to run a franchise.
For his part, Lederman remains a steadfast champion of the franchise model, ready to help people use it for their financial benefit.
“They get the right business, just like they get into the right investment vehicle, whether it’s real estate or stocks or bonds,” he says. “But if you look at the long-term financial returns, dollar for dollar, the outcomes are much greater in franchising than traditional investment vehicles.” It’s just about getting that right business – and that’s what Frannexus is for.
