You've been talking about buying a franchise for years. Your spouse, family and friends have heard it all-from last year's plans to purchase a sandwich shop to your latest interest in mobile auto detailing. But this year you're really serious-whether it's because your boss is getting on your nerves or because you're just feeling the urge to be your own boss.
Whatever your reason, if you're considering becoming a franchisee, chances are you're wondering, Will owning a franchise be all it's cracked up to be?
"It was scary," says Dick Shea, describing his first few nerve-racking months of franchise ownership. After 23 unfulfilling years in real estate sales, a recent divorce, and the realization that he was quickly nearing age 50, Shea decided to purchase a franchise from McLean, Virginia-based Chesapeake Bagel Bakery. "It was a major undertaking," he acknowledges, "but I finally decided I was going to do something that made me happy."
It's this yearning to take control and head toward the future with something you've built that's yours-all yours-that leads many entrepreneurs into franchise ownership. When Shea and his 46-year-old partner, Tim Parker, opened the doors to their Richmond, Virginia, bagel store on March 17, 1994, they joined a long history of entrepreneurs who, just like them, decided being a franchisee was exactly what they wanted. But what actually happens after you buy a franchise?
Hats For Every Occasion
For most, being a franchisee means rolling up your sleeves and getting down to business. It means setting that alarm for 5 a.m. to get the store ready for the morning rush, cracking open the phone book and making cold calls for five hours straight, and skipping dinner with your family to pull together a last-minute proposal for a crucial client.
"Probably the most important characteristic of a franchisee is a [strong] work ethic," says Calvin Haskell Jr., president of Portsmouth, New Hampshire-based franchise advisory company Franchise Solutions. "It's the ability to get up and, day after day, work harder than you've ever worked before."
As a franchisee, you'll need to put your entrepreneurial drive to work to grow your business. And at no time will a franchisee work harder than during start-up. It's not unusual for new franchisees to pull 16-hour days, including weekends. Often, new franchisees handle sales, marketing, accounting, hiring and much more all by themselves. And for those who mistakenly think buying a franchise means customers will just roll in with little to no effort on their part, the harsh reality often kicks in-quickly.
After working in an office job for just over one year, 25-year-old computer science graduate John Brown was yearning to be out on his own. So in 1994, he purchased a franchise from Union, New Jersey-based Oil Butler. Today, Brown's Charleston, West Virginia, homebased mobile oil-changing business services about 70 accounts with the help of one part-time and two full-time employees as well as three family members who provide part-time assistance. While changing oil and checking tire pressure isn't something he relishes, Brown says he knows that's what it takes to succeed-and he plans to continue the grueling routine.
"It's really tough some days," Brown admits. "You're on call 24 hours a day, and sometimes you wake up early in the morning, it's pouring rain, and you really wonder why you're doing this. But I know that in the end, it will all pay off."
Indeed, along with the hard work, sweat and tears a franchisee puts in can come some invaluable rewards: recognition, success, rewarding friendships, increased income and a feeling of self-respect. But long hours and pressure from the daily grind can also place a strain on family relationships, say many franchisees.
Ann and Jerry Swanson, franchisees of Bradenton, Florida-based sign-making franchise Signs Now, worked many 12-hour days when they opened their first Tulsa, Oklahoma, store in 1989. Since then, they've added two more Signs Now stores, one in Tulsa and the other in Wichita, Kansas. But with the addition of a well-trained staff, improved computer equipment and stronger customer service, Ann, 52, and Jerry, 53, only spend eight hours per day running their business. "The knowledge we've gained from running our prior stores, plus the new equipment we've purchased, have helped our business tremendously," says Ann.
Like the Swansons, most franchisees find there is a learning curve before operations begin to run smoothly. "When I started my business, I saw an opportunity to be very creative," remembers David Hotle, a franchisee with Stevenson, Maryland-based Sandler Systems Inc., a sales and management training franchise. "But I discovered very quickly that all my creative juices and time were being [wasted on] things that weren't making me a penny."
After purchasing his franchise in 1992, the former marketing executive spent most of his working hours coming up with new marketing ideas instead of getting out of his St. Louis office and selling his services. When he realized this was hurting his business, Hotle changed his focus and now spends more time hosting seminars and attending networking events. He also hired people to handle the long-ignored filing, record-keeping and bookkeeping.
Are there some people who just effortlessly fit into the franchising formula, while others don't? Experts say you can bet on it. "Some problems occur when people who buy franchises have previously been in high management positions," says Don Foltz, senior consultant for The Franchise Centre, an Englewood, Colorado, franchise consulting business. "All of a sudden, it dawns on them that they have to follow a system and everything has to be done by the book."
Franchisees who have a penchant for breaking the rules or doing things their own way often have problems with their franchisors. These franchisees frequently complain about lack of control over management decisions and policy changes.
While a natural instinct to think on your own can be to any entrepreneur's advantage, it's still necessary to work as a team player, say franchise experts. After all, the reason you buy a franchise is to take advantage of the franchisor's years of expertise and tried-and-true systems.
Haskell says the best franchisees are those he likes to refer to as 'intrapreneurs.' These people are driven by an entrepreneurial desire to be profitable, yet also have the ability to work within a franchise system. "The ideal is for people to be able to work within a structured environment," says Haskell. "People who are too entrepreneurial just won't follow systems."
Do you have what it takes to be a successful franchisee? Do you think you're ready to take the franchise plunge? Despite the inevitable hard work and long hours, many franchisees say the hassles are well worth it. Because for them, becoming a franchisee has been the fulfillment of a lifelong dream.
Do you have what it takes to be a franchisee? Take this test and find out.
1. You own a company. How much operational detail are you comfortable with?
a. I want direct control over all operations.
b. I delegate less than half.
c. I delegate more than half.
2. You have three job offers with comparable salary and benefits. Choose one.
a. Small company but high management responsibility and exposure.
b. Midsized company with less personal exposure but more prestigious name.
c. Large company with least personal exposure but very well-known name.
3. You reach a major stumbling block on a project. You:
a. Seek help from others immediately.
b. Think it through and then present possible solutions to your superior.
c. Keep working until you resolve it on your own.
4. Which investment sounds most appealing?
a. Five percent fixed return over a period of time.
b. From -20 percent to +50 percent loss or return over a period of time, depending on changing economic situations.
5. Which business arrangement is most appealing?
a. You're sole owner.
b. You're in a partnership and own a majority of the stock.
c. You're in an equal partnership.
6. Your company's sales technique increases sales 10 percent per year. You used a technique elsewhere you feel will result in 15 percent to 20 percent annual increases, but it requires extra time and capital. You:
a. Avoid the risk and stay with the present plan.
b. Suggest your new method, showing previous results.
c. Privately use your system, and show the results later.
7. You suggest your system to your boss, and he says, "Don't rock the boat." You:
a. Drop your different approach.
b. Approach your boss at a later time.
c. Go to your boss's boss with the suggestion.
d. Use your own system anyway.
8. Which would mean the most to you?
a. Becoming the president of a company.
b. Becoming the highest paid employee of a company.
c. Winning the highest award for achievement in your profession.
9. What three activities do you find most appealing?
a. Sales and marketing
10. What work pace do you generally prefer?
a. Working on one project until it is completed.
b. Working on several projects at one time.
Scoring: 1: A=5, B=3, C=1. 2: A=3, B=2, C=1. 3: A=1, B=5, C=7. 4: A=2, B=6. 5: A=7, B=5, C=2. 6: A=1, B=6, C=10. 7: A=1, B=5, C=8, D=10. 8: A=8, B=2, C=5.
9: A=10, B=1, C=3, D=3, E=8, F=2, G=5. 10: A=3, B=6.
20-33: You're a corporate player, happiest in a structured environment.
34-71: You're a potentially good franchisee.
72-85: You're an entrepreneur, preferring total independence.
Source: Franchise Solutions