Most often thought of as opportunities for new entrepreneurs to get into business, franchises are usually overlooked by seasoned business veterans. Established companies should think again, however, before they leave franchises solely to the newbies. Franchise companies are more than just start-up opportunities, they're also extensively networked buyers of products and services, and could be your ticket to a giant increase in sales as well as vast new markets you might not otherwise be able to tap.
That's the experience Dianne and Mike Dougherty had when they searched for--and found--a way to increase sales for their Atlanta business, Heavenly Cheesecakes Inc. Selling cheesecakes, key lime pies and other desserts to additional independent outlets wouldn't have boosted their revenues much beyond their 1992 level of $360,000. "To really grow, we needed a major account," says Dianne.
The account the Doughertys landed was Steak-Out Inc., an Atlanta franchise whose restaurants offer grilled meals. In January 1993, the couple signed a contract to supply 1,000 cheesecakes per week to the system's 50 franchisees. Within the same year, that one new account more than doubled Heavenly Cheesecakes' revenues to $893,000.
Since then, the Doughertys have developed similar vendor relationships with four other franchisors--Atlanta Bread Co., Italian Oven, Centra Archy Restaurant Group and Solomon Restaurant Group. The company's sales grew another 40 percent to $1.4 million in 1997, much of which the couple attributes to its franchise connections.
The story of Sol Arledge Jr., executive vice president of sales and marketing at Discount Labels Inc., his family's firm in New Albany, Indiana, is similar. In eight years, he has formed relationships with AlphaGraphics, Pip, Quick Print and 13 other printing franchise systems, propelling revenues from $5 million to $58 million.
Carla Goodman is a Sacramento, California, writer who covers small-business topics for a variety of national publications.