Franchise Buying Guide

Executive Decision

Corporate execs are jumping into franchise ownership and experiencing a whole new side of business.
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You've climbed the corporate ladder and put in the time and toil to achieve success. But perhaps you've wondered if there's something else for you, and you've ultimately resolved to purchase your own franchise. Your experience in the corporate world should be more than sufficient to prepare you for this new career, right? After all, what's managing 10 hourly employees when you've spearheaded multimillion-dollar marketing campaigns or overseen the operations of a global empire? Well, making the transition from executive to franchisee may entail a lot more than you think.

But don't fret. All your knowledge and experience can give you advantages as a franchisee. Take it from these ex-executives-turned-franchisees, who reveal what their previous lives prepared them for and what they had to learn along the way in their great franchise adventures.

New Territory

William Kosti got his first taste of El Taco Tote Real Mexican Grillwhile on a business trip to El Paso, Texas, working as director of business development for a consulting company. He thought the food was excellent and, in the back of his mind, he kept the idea of bringing the franchise to his home in North Texas, where TexMex was the closest he could get to Mexican food. When Kosti, 44, was laid off in 2003, he made his idea a reality and opened an El Taco Tote franchise in the Dallas/Fort Worth area.

His corporate background proved beneficial: Kosti had the savvy required to develop a business plan, forecast sales, create a startup budget, and secure funds for operations before and during the launch period. And when he was working on getting financing from banks and SBA lenders, his corporate background seemed to put bankers at ease.

One of Kosti's most important advantages was his understanding of how vital information is to a successful operation. By opting for very extensive point-of-service and back-office systems, Kosti can keep track of sales and consumer behavior in relation to sales. He says analyzing this information on a daily basis allows him to "anticipate any future problems and take corrective measures, whether internal or external."

Kosti also felt setting up an effective marketing plan to "create consumer awareness and brand the name in the market" was another main objective. Because this franchise and its type of food were new to his region, Kosti got franchise approval to fine-tune menu items at his location, resulting in a trial-and-error stage. Since he was once part of the market he was trying to attract, he created lunch specials priced between $3.99 and $4.99, which he knew would lure the corporate crowd.

Kosti did find it somewhat difficult, however, to transition to a new type of staffing. He realized many of his employees would be hourly wage-earners in an industry with high turnover, but he also knew he couldn't let that compromise quality, cleanliness or superior customer service. By empowering managers to oversee operations and employees, Kosti gets feedback that helps him retool the schedule so it's more efficient and zero in on any problems that need attention.

Though Kosti's corporate experience couldn't completely prepare him for handling the customer-service issues of his new franchise, he says, "Customers are customers regardless of what business. You're going to have to deal with a variety of customer moods and expectations." He recalls observing one man who almost brought a cashier to tears when he was upset she couldn't ring up a misprinted coupon. Kosti intervened and calmly explained that the register had restrictions that would not allow the cashier to enter the discount. He offered to not only give the customer the lunch free, but also to honor the coupon for another time. "He became one of my best customers," says Kosti. "I didn't anticipate that [problem], but I dealt with it."

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This article was originally published in the July 2005 print edition of Entrepreneur with the headline: Executive Decision.

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