I opened my first franchise in the summer of 2006. It was an Edible Arrangements in Los Angeles, serving the neighborhoods of West Hollywood and Beverly Hills. For 13 years before that, I’d been working full time as a motivational speaker for business leaders. I’d done well—presenting to leaders of many industries in all 50 states and around the world—but I wanted another stream of income. And more than that, I wanted a place to gain real-world leadership experience and develop strategies I could share with audiences. I didn’t want my presentations to be based purely on theory or the work of others, as is often the case with motivational speakers.
During the months between signing my franchise agreement and opening my store, I continued traveling and giving presentations. In every city that had an Edible Arrangements location, I stopped by, and I continued this practice even after we opened. I wanted to pick the brains of as many franchisees as possible. (Once, I was speaking in Jeddah, Saudi Arabia, and spotted an Edible Arrangements delivery van. I had my driver follow it back to the store so I could meet my Saudi counterparts.) Some of the franchisees I met were success stories, while others were cautionary tales. That’s been the case with every franchise brand I’ve worked with: In the same system, running the same business, some people crush it, and others get crushed. Why?
Decades of observation have led me to this formula, which I outline in my book, The Wealthy Franchisee:
C + O + H = R (Circumstances + Operations + Humanity = Results)
These three factors—circumstances, operations, and humanity—combine to determine how successful you’re going to be. Understanding how each of these factors impacts the rest of the equation is key to getting the results you want. Let’s look at each of them in turn.
Circumstances
Your circumstances are all the external conditions affecting your business. These include factors such as the economy, the competition, government regulations, taxes, labor laws, and commercial real estate’s “fair market value.” Some businesses are impacted by the weather. I’ve worked with an ice cream franchise in Canada that slows down when temperatures drop and a soup franchise in Michigan that slows down when temperatures rise. One emergency restoration franchise I spoke with thrives after natural disasters.
I faced plenty of tough circumstances during my years as a franchisee, some minor and others major (and some that were somewhere in between). Two weeks before my first Valentine’s Day at Edible Arrangements, torrential rains wreaked havoc on California’s strawberry crops, impacting price and quality. When a new Edible Arrangements franchise opened nearby with a territory that overlapped mine, my numbers dropped. The same year, the economy collapsed. There were power outages, increased fuel prices, and ever-changing labor laws. For a while, a high-profile florist two blocks away started selling fruit arrangements. And on particularly hectic days,
