How to read a Franchise AD

(FranchisePick.Com) In Butterfly Life Franchise Offer: 10 Franchises for $65K. I posted an email solicitation from a women’s fitness franchise called Butterfly Life. Butterfly Life is the same as Curves for Women, except with 9900 fewer locations and a name befitting an entomology superstore. You can tell it’s the same as Curves for Women by the amount of space on its website devoted to proving it’s not anything like Curves.

Question #1: Why is this woman frolicking so?

The email ad features a colorful and engaging photograph of a barefoot woman bounding through a field trailing long, flowing, silky banners.

While the immediate impression is that this woman is a Butterfly Life Area Representative franchise owner who is extremely happy with her decision, don’t rule out other possibilities. She could be:

• Fleeing creditors
• Fleeing mental health professionals with butterfly nets
• Running, headlong, for a cliff
• Living La Vida Butterfly

Question #2: Is the “investment” really $65K?

In franchising, the term “investment” generally refers to the total estimated initial investment that is a required disclosure item in the Uniform Franchise Offering Circular (UFOC) document. This investment amount includes all expenses, including developments costs, initial advertising, 3 months working capital, etc.

My guess would be that this “65k” is solely a fee paid for the right to sell and support a 10 club territory. A review of the Butterfly Life Area Developer agreement indicates your “investment” will actually include the costs associated with advertising & selling 10 franchises ($50k - $100K), making 430 club visits and other support for 10 clubs over their ten-year terms.

Mark down red flag #1 in your due diligence notebook: Use of “investment” instead of “fee.”

Question #3: Why is this a “limited time offer”?

What possible reason would there be for this offer to be for a limited time? If this company truly is interested in having you as part of their “team” for the long run, why would Tuesday be one price and Wednesday another?

The answer: The same reason that infomercials urge you to call “before midnight tonight” if you want to get the free Cap Snaffler with your set of Ginsu Knives. It’s called “Creating a Sense of Urgency.” There’s nothing wrong with that in moderation. But when it’s a blatant, pushy and even cheesy sales tactic, it could indicate that the company would rather you make the largest financial decision of your life without taking the time to think about it.

Red flag #2: Sales copy ala Ron Popeil.

(FranchisePick.Com)  A FranchisePick.Com reader who is investigating franchise opportunities sent me an email they received from Butterfly Life woman’s fitness franchise. 

The email come-on offers the Area Developer rights to 10 franchises for a fee of $65,000.

The email listed the strict criteria it takes to succeed as a Butterfly Life Area Developer:  Detailed.  Organized.  Sales Oriented.  Financially Astute. 

If you have those qualities and $65,000, “you’d soar as a Butterfly Life Area Representative.”

The email includes a testimonial by one such Butterfly Life Area Representative, Mary Bauer, who writes: “…I questioned my ability along the way but my Butterfly Life team at corporate never did.  They were and are there for me every step of the way…”

  The Butterfly Life Team is even willing to provide a “Limited time offer,” to provide free airfare, hotel & transportation to the Butterfly Life corporate office.

If you get out a magnifying glass, the fine print at the bottom includes this disclaimer:

Travel voucher offer may expire without notice.  Roundtrip transportation from Oakland or San Francisco airports to and from hotel, one night stay at hotel.  Airfare credited up to $500.00 with purchase of franchise within 30-days of Discovery Day…