Write The Wrongs

The Struggles

Sunday, 7 a.m. The ringing phone opens my business day. It's a customer who needs a car inspected. Most of the day will be spent working on tax returns, corporate motions, employee issues and banking.

We worked ourselves silly promoting our business; and with limited funds, we engaged in guerrilla marketing with a passion. We set up a booth at the local fair, created a newsletter, advertised in coupon books, sent the kids into mall parking lots armed with windshield announcements, called on auto dealers and advertised in the paper. We did what the franchisor told us to do, and our sales were climbing, but most of our business came from the Yellow Pages ad placed by the franchisor. Although we had become the sales leader for this young chain, we were still subsidizing our business when we realized things were worse than we'd thought: A fellow franchisee shut down because he could no longer exist on his income.

Failure has a bad reputation for hanging around and dragging down those surrounded by it. If you have ever been on a high school team that sadly never won, you can understand the interpersonal dynamic that occurs when blame is assigned. Accordingly, the strength of being engaged in a franchised business with other franchisees that pool their resources for adver-tising, assistance and national exposure can become your downfall when these synergies don't happen. I've seen this arise in mature franchise chains as older franchisees become comfortable with their success and quit caring about reinvesting their talent and finances into the company. Instead, they ride their cash cow to the detriment of others. When the franchisee down the street starts poisoning his customers, you'll feel the effect. That's why you want a franchisor that has fair rules and enforces them.

For a young franchisor, the domino effect of failing locations can be the fatal blow. Auto Exam couldn't get any further financing, and a rift soon developed between the CEO and the president. Soon, the management team parted ways, and the company was left to its founder, a well-intentioned auto mechanic inexperienced in fund-raising, management and the slew of responsibilities facing the typical CEO. Then, sensing the imminent death of the company, another new franchisee began withholding royalties. The resulting angst, confusion and miscommunication had devastating consequences: Our franchisor missed the Yellow Pages cutoff deadline.

It's a little hard to operate a business without anyone knowing you exist and, as the phone calls began to slow with the issuance of a new phone book, the impending reality of suffering for another year brought our business to a close. Fortunately, the closure of our franchise didn't destroy us financially. Yes, we learned an expensive lesson that was reflected in our credit card statements and foregone vacations for years to follow, but in making our investment, we'd stuck to the principle that we would not risk more than we could afford to lose. We covered our losses by pawning the equipment, and I had to drive a cargo van until our lease expired.

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This article was originally published in the January 2001 print edition of Entrepreneur with the headline: Write The Wrongs.

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