Are Business Coaching Franchises a Safe Investment?
A common question we get all the time is this: are business coaching franchises a safe investment?
It’s a great question–an important question. And there’s some wisdom I’d like to share from a fantastic book, written by expert franchise law attorney Robert Purvin, entitled The Franchise Fraud: How to Protect Yourself Before and After You Invest.
Robert Purvin is the Chairman of the American Association of Franchisees and Dealers (AAFD), a non-profit organization dedicated to promoting fair and ethical franchising practices. Prior to being named Chair of AAFD, he had 24 years’ franchise law experience and is known for his skills in dispute resolution and mediation.
In The Franchise Fraud, he dispels the myth that franchising is an inherently safe investment.
No Investment is “Safe”
The truth is that NO investment is “inherently safe.” You need to make sure you’ve done your due diligence ANYTIME you’re asked to part with your hard-earned cash…especially when you’re looking at spending 6+ figures, like most business coaching franchise systems will require of you.
The truth is that NO investment is "inherently safe." You need to make sure you've done your due diligence ANYTIME you're asked to part with your hard-earned cash...especially when you're looking at spending 6+ figures, like most business coaching franchise systems will require of you.
Perhaps you’re familiar with the statistic that claims that only 5% of franchises fail after five years? Before you buy that hook, line, and sinker, keep in mind that this is because the majority of franchises sold in the United States are what Purvin calls “blue chip” franchises–solid, respectable, enduring brands. In contrast, most smaller franchises–including every one of the major business coaching franchises–are unproven and unrecognized systems whose value is suspect, to say the least.
After 20 years in the business coaching industry, I’ve seen franchisee failure rates as high as 80% to 90%. That’s something you probably haven’t heard from your franchisor’s sales rep! So before you buy into all the far-reaching claims about franchises in general, make sure you investigate the particular franchise you’re considering…and that the numbers you have truly reflect reality.
I don’t say this to discourage you. There are reputable business coaching franchises on the market. Not to mention the fact that there are multiple ways to become a business coach without taking on the exposure for a 6-figure investment! (I’m biased, but our own Coaches’ Coach business coaching system is one such option.)
The point is that you need to think through a decision like this carefully. You might just save yourself a lot of heartache.
For a comprehensive guide to doing your franchise due diligence, check out our FREE ebook, The Business Coaching Franchise Buyer’s Guide.