Got Laid Off? Buy a Franchise

Getting laid off may feel like an unhappy ending, but it could be where your franchise story begins.
Magazine Contributor
11 min read

This story appears in the December 2006 issue of Entrepreneur. Subscribe »

Fans of the reality show The Apprentice loyally tune in each week to watch Donald Trump eliminate candidates with two simple yet dreadful words: "You're fired!" Of course, we're not all candidates competing for the next golden Trump position, but every day, people are getting laid off and facing the harsh reality that nothing is quite as it appears. Some are given reasons, but even more are dismissed with barely an explanation.

Bob Higgins clearly remembers the day he was laid off from Chili's after 25 years. He says, "About all they would really tell me was, 'Bob, it doesn't have anything to do with you personally. It doesn't have anything to do with your job performance.'"

When the ax falls, it falls, regardless of qualifications, loyalty or age. The impact is painful, but the decisions the laid-off employee makes afterward will ultimately determine the severity of the wound.

We spoke with three survivors who were all in different stages of life when they were laid off. They each have different stories, but they all used their layoff as a catalyst to take back control of their lives and become their own bosses by opening a franchise. Here's a look at how they persevered and what their post-layoff lives are like.

Leap of Faith
Higgins is proof that nothing--not even outstanding job performance and the ability to grasp the big picture--ensures job security. After all, of the 17 regional directors at Chili's, he had the third-best key performance indicators, and throughout the years, he had consistently demonstrated his ability to oversee the budget, quality control and profit growth of 50 to 60 restaurants in regions that saw up to $200 million in sales. But when Higgins, along with five other regional directors and four vice presidents, were unexpectedly laid off in March, even he was at a complete loss for what to do next. "You lose that security you've had," he says. "Working hard, having the paycheck come in--you think you're working for this big corporation, so there's this security, and then all of a sudden, you get a severance."

Having to start from scratch after 25 years with one company wasn't quite what Higgins had envisioned for his life. Until then, he had followed a single path and lived a safe, conservative existence. But the layoff forced him out of his comfort zone and onto a new path of self-discovery. Higgins exercised more as an outlet to relieve the stress, prayed for guidance and heeded the advice of a friend who recommended he stay away from the corporate world and look for something he could get equity in instead. Most important, he had to not only accept but also embrace the hand that life had dealt him. Once he did, he was able to move on. It was then that he and his wife, Susie, started researching franchises with the help of a franchise consultant.

After considering several different options, the search came to an end in June, when the Higginses attended the Discovery Day for Liberty Fitness, a women's health club franchise. They were so confident it was the right opportunity for them that Bob, despite his conservative approach to finances, took out a line of credit against his stock portfolio and signed on to become an area developer, committing himself to opening one location and finding franchise partners to open 38 clubs in the Houston area over the next five years.

The Higginses, both 50, just opened their location this month. Since June, they've stayed busy completing the franchise training, finding a good site and networking at local events to make Bob's main task of finding interested franchisees a little easier. Married for 30 years, they are also getting used to the idea of spending more time together and have openly discussed the importance of scheduling separate personal time. They know their work is cut out for them and the financial rewards will be slim for the first couple of years, but so far, the transition has been a smooth one. They like being in complete control and have found comfort in having realistic expectations and being open to whatever the future holds. "It's strictly about the vision and just having a good feeling," says Bob. "It's just like starting your own company. You feel good about the basics and the foundation of it, and you say, 'OK, let's go with it.'"

Bob still isn't certain why he was laid off, but he has a good guess. "Maybe I was forced to get out of my comfort zone because I had more to contribute," he says. And buying a franchise is allowing him to do that.

Why Retire?

When Richard Rocco, 60, got laid off from his graphic arts sales job in January 2005, it was about seven years too early for him to retire. Not yet financially ready, he discarded the idea of early retirement and immediately went in search of a new job, only to find the cards were stacked against him in an industry that had undergone its own evolution. "I found the industry was continually [contracting]," says Rocco, who had worked in graphic arts sales for 27 years. "There weren't nearly as many competitors. There were a lot of mergers, people simply drying out of the business and so forth." His situation was dismal, and it became even more so when he looked outside his industry. Not only were the opportunities limited, but the pay was also far from adequate at his stage in life. "It took me awhile to come to grips with the fact that, regardless of my experience and talents, I couldn't find a suitable job," he says. "I was frustrated."

Five months into the job search, Rocco decided to open the door to one more possibility: a franchise. Owning his own business had been a lifelong dream, but Rocco had abandoned it when his wife, who has since passed away, made it clear that she preferred the safety of a paycheck every two weeks to the risks of owning a business. However, when the paychecks stopped coming in, Rocco figured he had nothing to lose. He researched opportunities that correlated with his experience and found PostNet--a franchise specializing in printing, shipping and graphics services. After several nights wrought with indecision, he chose to take the plunge and invest his home equity and 401(k) into the franchise.

The learning curve has been steep, but Rocco has risen to the challenge, with a bit of assistance. He was able to find a good location in Voorhees, New Jersey, with the help of his fiancée; negotiate the lease with the help of the franchisor; and get the store ready to successfully pass the franchisor's final inspection. He opened his store this past March.

These days, the hurdles are fewer as Rocco's life has settled into more of a routine. He spends two days each week making sales calls to local companies to generate business. Otherwise, he can most often be found at his store tending to customers and the projects at hand. His goal is to be in the black by the end of the year, and eventually open another location.

For Rocco, the layoff gave him the courage to reach for his dream, while the franchise's business model and support (which he still uses often) gave him the ability to make it a reality. And he has no regrets. "If there's something you really want to do, make your plan and do it," he says. "Otherwise, you'll just regret it forever."

Starting Over
Judi Cogen, 43, never saw herself as an entrepreneur. "When I think of entrepreneurs, I think of Steve Jobs in the garage coming up with this amazing new idea," she says. "I never thought I'd come up with the big idea, and I never really saw myself running a business." But when she got laid off in December 2005, right before the holidays, she gave entrepreneurship a second thought.

Having worked in a variety of organizations--including a Fortune 500 company; a dotcom; a small, family-owned business; and most recently, a nonprofit organization--Cogen had a wealth of experience in strategy, operations and project management, yet she had also encountered a mountain of problems. The dotcom had gone under and the family business had downsized, so when the nonprofit, which was plagued by politics, let her go, she had had enough. "I was frustrated," admits Cogen, "frustrated with working for others who wanted people to tell them how amazing their ideas were rather than encouraging employees to give different perspectives, frustrated with the lack of stability I found in the jobs I'd had, frustrated with not owning the success I brought to each organization."

Wise with experience, Cogen had reached a point in her life where she was ready to analyze her goals and embrace the idea of going out on her own--a process she believes is crucial. "I don't think anybody who's not really ready [can] make the decision to buy a franchise," she says. "You have to go through the process of thinking about who you are and what you're going to do and whether this is the right opportunity."

After extensive work with three franchise consultants--during which Cogen researched various opportunities, spoke with franchisees, visited locations and, most important, listened to her intuition--she changed her mind on the brink of purchasing the franchise she first selected because it just didn't feel right. She finally decided on Designs of the Interior, an interior decorating and home furnishings business. Cogen purchased her franchise in April, and she plans to officially open her location in a Cincinnati suburb this month.

Cogen admits that she doesn't possess an extraordinary eye for design, but she does know about marketing; hiring, training and motivating people; and business development. "It took a long time for me to understand that running a business is not necessarily [about] coming up with the big idea," she says. "It's being able to translate everything I've done and bring that [to the business]. I don't think any of the jobs I've had were wasted. I learned something from every single one, and all that combined makes me feel very comfortable that this is the right place for me right now." To start her journey off on the right foot, Cogen is focusing on maintaining a positive attitude and establishing short-term goals.

Getting laid off brings a mixture of emotions and presents a life hurdle that can be difficult to overcome. But as with the others, Cogen's fall from corporate life was softened by a franchise that enabled her to quickly get up again and start down a new path. Now, with so much to look forward to, there's no reason to dwell on the past. "My perspective is more of a going-forward perspective than a looking-back perspective," says Cogen. "I can look back and say all these things in my life have brought me to this point, and without any one of them I wouldn't be here, but now I'm here, and I need to go forward."

Switching Gears
Bob Higgins, Richard Rocco and Judi Cogen are among a growing number of mid- to senior-level executives in their 40s to 60s who have been faced with the blow of a layoff and have found new purpose in franchising. In fact, this trend started in the '90s and has been steadily growing ever since, according to Jeff Elgin, a franchising expert and founder of FranChoice Inc., a company that provides free consulting to consumers looking for franchise opportunities. "Franchising appeals to them," says Elgin, "because the risks are normally lower and much more measurable due to the disclosure that's required in the franchise industry."

So how can you turn the seeming misfortune of a layoff into a franchising opportunity? Elgin suggests these simple steps.

  • Determine whether franchising is a good fit for you by researching franchising's risks, rewards, pros and cons.
  • Ask yourself what you want your life to be like. Do you want to work normal business hours? If so, this will automatically eliminate franchises that require evening and weekend hours.
  • Figure out which industry most appeals to you, then narrow that industry down to the specific franchises available.
  • Be as objective as possible, and seek help from a consultant if necessary. "Most people aren't prepared for a layoff," says Elgin, "so they're kind of reeling from that. If they have a logical strategy, it will help them avoid making mistakes instead of just rebounding."

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