Posted on Mar 07, 2012
Interview with First Choice Business Brokers Franchisor Richard Giannini
FranchiseHelp interviewed Richard Giannini, President and owner of First Choice Business Brokers, a business sales franchise with offices in the U.S. and U.K. FCBB assists clients with the purchase or sale of businesses by matching businesses, buyers, and sellers, and providing other expertise. Richard describes his franchise and the business brokerage industry in today's economy, and advises potential franchisees on what to look for when buying a franchise.
FranchiseHelp: How did the idea for FCBB form? What opportunities did you see?
Richard Giannini: FCBB was in existence as a single location for 12 years prior to franchising in 2006. The infancy of the industry and the massive demand that we saw coming from the Baby Boomers retiring and the cultural changes happening in the world (especially regarding children no longer taking over the family business in European nations) were just some of the opportunities we saw. Growing the business exponentially through franchising was a way we could see us achieving the vision of becoming a world-wide brokerage firm.
FH: How does FCBB help business buyers and business sellers? What sets the franchise apart from similar businesses?
RG: Our processes have been refined and systematized after listing more than $4 billion worth of small- to medium-sized businesses. We have an extremely professional method of representing sellers and assisting buyers. In smaller businesses, documentation is often lacking and to determine a real value of a business and assist a buyer to see what is really going on in a business became a staple of our professional approach.
Many of our brokers joined as a result of selling their businesses with other brokers and realizing there must be a more professional way to do this - that is when they discovered First Choice and joined the team.
FH: What are some of the key characteristics or skills of successful FCBB franchisees?
RG: Being outgoing and driven are very important traits. Having good people skills - especially being able to work with business owners and the ability to set and achieve business goals are necessary characteristics. Our brokers come from varied backgrounds but the most successful have some form of business experience.
FH: For potential franchisees, what background or skills are necessary to be a FCBB franchisee?
RG: A franchisee can be someone who wants to be a single person operator however most of our franchisees build teams of Associates. So those franchisees need the ability to lead and inspire others. To be able to attract, recruit and coach Brokers to become successful using the First Choice system are paramount skills. Our training is comprehensive and we do not need people to have any specific knowledge - we cover all the aspects of the business and have trained people to be successful from all different walks of life. Our training is mandatory not only for the franchisees but also all the Brokers (Associates) that work for a franchise office.
FH: How has the economy affected FCBB's business? Are you seeing any trends with the businesses being bought and sold?
RG: Many business owners struggled to change or adapt their methods of doing business when the economy changed - namely being efficient in its operations to remain profitable - thus we had many owners looking to sell. Buyers completely changed their outlook: they became a lot more reticent to jump in, so they were much more careful about all the details before buying a business. The high unemployment forced many high-salary job seekers to buy a business. So the balance of buyers and sellers did not change greatly, but the way the buyers and sellers thought and acted certainly did.
Financing, interest rates and credit did not have much effect. Even in the best of times, it is very difficult for a buyer of an existing business to get a loan. Namely because many business owners do not keep good enough records for an institution to lend a prospective buyer money against. Thus we have always had a very high percentage of all funding done by the seller - and we have always had good success doing so.
FH: What should buyers look for when purchasing a franchise or business?
RG: The best advice I can give in buying an existing business it is best to look at what the business is currently doing or can prove has been done in the past. Avoid buying an existing business on "potential." The value of a business is generally based on its current profitability.
When buying a franchise be careful. There are good franchisors and not so good ones. Just because you buy a franchise does not mean automatic success. The key that makes a franchise great is its ability to eliminate (or reduce) the guesswork a new owner makes at each phase in establishing a business. For example there should be marketing systems already tested and ready for you to implement. Every aspect of the business from how to hire someone to how to clean equipment should be detailed so you are not wasting time discovering the wrong way to do it. You want to spend the maximum amount of your time making profit and minimal time making mistakes. A good franchise will give you the framework to do this - but beware because some do not!
Finally, with a franchise get to know the key people that you will be working with at the franchisor. Do their beliefs and values match yours? Do they provide the training and support that is needed? These points are much more important than many realize. It is a long term relationship - make it a great one!
FH: What are your expectations for the future of FCBB and the business brokerage industry?
RG: The industry is still in its infancy with massive growth to come. I believe that within 15 years, business brokers will be as common as CPA's or real estate agents and business owners will use them as a critical part of their business exit (and entry) strategies. Within five to ten years, I see in the US that many States will start to create a Business Broker Division and regulate the industry more and more as a result of the increasing popularity in what is now still a ground floor opportunity.
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