Should You Be the First Franchisee?
Learn how to invest your IRA or 401k into a franchise penalty-free. ($50k min)
The benefits of being the first franchisee of a system can be summarized in three words: ground floor opportunity. Yet being a system's pioneer often means being a guinea pig, too. You're buying into a system before anyone else even hears of the opportunity, but you're taking on the risks of the unknown that, say, a McDonald's franchisee doesn't necessarily face.
It was a risk Laurie Radloffwas willing to bear. Radloff was a 24-year-old branch manager of a small travel agency in Cranbrook, British Columbia, with seven years' travel agency experience when Uniglobe Travel approached her in 1981 about being the first franchisee of its fledgling chain. Though she had no entrepreneurial intentions, Radloff was attracted by the idea of being part of a travel chain with global aspirations. "One of the concerns I had, being in a rather rural community, was access to things like training and supplier programs, and we'd gone from being part of a 17-branch chain to a three-branch chain," she says of her employer at the time of the Uniglobe offer. "At the time I met with Uniglobe, the fundamental things they planned on building were the very things I saw a need for."
Franchise Zone spoke with Radloff, who has been president of Vancouver-based Uniglobe Travel Western Canada since 1986, about whether it's a good idea to become a system's first franchisee.
How It Started
Franchise Zone:What kinds of concerns did you have about being the first franchisee for this system?
Laurie Radloff: Initially, I didn't realize I was going to be the first franchisee. I don't believe I was the first franchisee in terms of actually [applying] and being accepted, but I was the first to open my doors.
Obviously, I checked with the Better Business Bureau. I did in-depth research on the history of the founder, U. Gary Charlwood, and his past business successes. One of the things that comforted me was the fact that he had a travel background and he'd been successful in franchising. Being 24 at the time and entering into my first business venture, I wanted to make sure I wasn't making a mistake I'd have to pay for the rest of my life. I spoke to as many key people involved in the company at the time as I could and really tried to get a clear understanding of its long-term vision.
After checking all the references and looking at the business plans and really feeling comfortable with that, all my instincts were positive about this. There were a lot of times when people would say, "You don't want to be in a franchise" or "You don't want to get in on the early stages of a company," but I never hesitated. I moved forward.
Did you ever have any fears or concerns about the company folding?
I really didn't. I knew the reputation and the strength of the founder of the company. [Charlwood not only started Uniglobe in 1980, but had also started Century 21 Canada in 1977.] That made me feel secure this wasn't just going to go away. One of the advantages in the very early days of Uniglobe that has continued today is the company's communication with franchisees. We hit many rough spots, but they were talked about openly. From the very beginning, Uniglobe facilitated the start of a franchise owners' association and helped coordinate meetings where people could express their concerns. They would address those concerns and help us understand where the company was going and why there would be a bump in the road, and that went a long way to reassuring those of us who were there in the beginning.
When did you know this was going to work out for you?
From the first evening I met with the franchise's recruiter and heard about the company. It just clicked for me. I really liked the emphasis on networking and getting agencies together and discussing best practices. I believed in the franchisor's desire to build a strong brand, because I don't believe anybody had effectively done that in travel before. I guess for me, most important, being an expert in the travel agency didn't make me an expert in business, and I knew that's what they brought. If I were ever going to start a travel business, it quickly became clear to me that this was the way to do it.
Pros and Cons
What were some advantages and disadvantages for you being the first franchisee?
The disadvantages were that you talk about long-term goals and where the company wants to be, and it's very easy to think that's going to happen quickly. Creating a brand, doing TV advertising, getting that critical mass, being able to negotiate supplier programs-having those advantages for your clients and for your bottom line can't happen soon enough when you're there at the beginning.
All the programs, systems and tools we have today-all that's been developed in the last 20 years-were all just coming in the beginning. Everything was new, and it could only happen so fast.
While at times I was frustrated it didn't happen overnight, I also looked at it from the standpoint that this is my first business venture, I want it to be successful, so I have a choice: I can sit around and complain and be part of the problem, or I can see how I can help address the situation, move it along and be part of the solution. While I was always very outspoken and always let my concerns be known, I tried to do it in a constructive way, to always find a way to make sure our goals were mutual and help us get there faster. Had I not been there at the beginning, I probably wouldn't have had that opportunity. I wouldn't have had access to the founder of the company, and I like to think I played a part in how the organization turned out. That gives me a great deal of satisfaction. I don't think you get that same opportunity when a company has several hundred offices.
What was your relationship with the franchisor like in the beginning?
My relationship with the franchisor was always quite good. I was very competitive and aggressive in the marketplace. I was pretty clear on what the role of the franchisor was: to give me guidance and provide me with programs and systems. It was up to me to adapt [the systems] to my marketplace and do something with them.
What I got back from the franchisor was a gauge as to how I was doing. And that was invaluable, because you're working very hard and you have to know your energies are going in the right direction. Sometimes they weren't, and the franchisor would be candid with me, telling me I should be working on the business, not in it. It was very easy for me to fall back into the mode of booking travel, and [the franchisor] was very clear that my role was developing it, and, if I limited myself to the day-to-day booking, I would limit the growth and development of my business.
It was always an open relationship. I'm sure there were times [the franchisor] didn't like what I had to say and vice versa, but we always came at it from sort of a mutually positive perspective.
How did things change as more franchisees came into the system? Was your access to the franchisor limited?
No, it never really was, maybe because I had been there at the beginning, I could always pick up the phone and call anyone and get a response. I never felt it became more restricted. When they asked me to move to Vancouver and become regional president, that was sort of recognition [for me]. Because of the constant communication over the five years, we had a pretty solid understanding of each other's value systems and goals, objectives and ways we approach the business.
Because you were the first franchisee, did you feel you had any extra kind of power in dealing with the franchisor?
I don't know if I would call it "power," and I never really thought of it as being the first. I believe being there at the beginning and having that opportunity to be a part of creating something that turned out to be phenomenal is like going through any big event. I hate to liken it to a natural disaster, but you hear of strangers who are in an earthquake together who are afterward forever connected. It's almost been that kind of an experience.
If you had the chance to do it all over again, would you still be a franchisee that early in the system?
Absolutely. I can't think of anything detrimental in doing that. I can't think of any hardship, particularly, that I encountered, and the benefits were many. But, of course, I chose the right organization and that's a big part of why it worked that way.
What were some of those benefits?
Just being able to be a part of decisions, to help determine the direction, to have access to the senior levels of management when they were building the company.
What advice would you give to others who have been approached about being part of a new system?
I would say do your due diligence, meet as many of the people involved as you possibly can, check references, look at their past business practices and listen to your gut.
Are there any red flags prospective first franchisees should look out for?
If someone is trying to sell you too hard. One of the most important things in a relationship is the ability to communicate, and that's what I mean by listen to your gut. If you sit back and listen and don't get caught up in the excitement, you'll know. If it sounds too good to be true, it probably is.
One of the advantages for someone coming in later on in the system is they can talk to existing franchisees, and when you're the first one, you don't have that opportunity.