Can Franchisees Win Big Lifestyle Payoffs?
Refugees from the corporate world choose franchising to find a more satisfying way to make a living. But don't underestimate the importance of finding a good fit.
When Peter Levy told a fellow corporate tax attorney he planned to change careers and purchase a dog-training franchise, the colleague asked, "Is that you?"
"Yes, it is me," replied Mr. Levy, a Harvard graduate who spent 25 years employed by large corporations before losing his last job, with an electronics concern, in 2003. A long-time dog owner and lover, he liked the idea of working with dogs and also was attracted by the opportunity to reduce the incidence of strays abandoned because of behavioral problems.
Mr. Levy now owns a Bark Busters franchisee in Redwood City, Calif. and says solving difficulties people have with their pets is more enjoyable and just as satisfying as aiding a Fortune 500 company with a tax issue. Meanwhile, he enjoys the envious stares of Silicon Valley wage slaves who spot him tooling around in his car decorated with Bark Busters logos. And he's also glad he doesn't have to uproot his family by relocating for a new employer.
But even at $400 to $600 for a two-and-a-half-hour training session, the work doesn't feed his wallet as well as practicing law did. "It was great money while I was in the corporate world," Mr. Levy says with some regret. While he hopes the Bark Busters franchise will eventually replace 75% or more of that salary, prior experience with another franchise makes him aware that few things are certain in franchising.
He's concerned about the lack of repeat business--Bark Busters customers get a guarantee good for the dog's lifetime--and is still uneasy when making presentations to dog owners. Then there's the 8% franchise royalty fee and a prohibition against hiring other trainers, which severely limits the business's growth prospects. Still, says Mr. Levy, he's glad he made the move. "So far, so good," he says.
Getting a Good Fit
People who want an improved lifestyle should consider Mr. Levy's experience, says Michael Seid, managing director of a franchise-consulting company in West Hartford, Conn. "Pick a franchise based on what you like," says Mr. Seid. "Do a personal audit so you can wake up in the morning and say, 'I want to go to work.' That's something franchising can deliver."
Bette Fetter, who sells franchises for an Elgin, Ill., art school called Young Rembrandts, says the business, which costs $28,500, attracts people who enjoy the work and who are put off by corporate politics and competition. "You see these beaming, enthusiastic children who are delighted by your very presence. That's a lot different than what other people are experiencing," she says.
However, franchise work can be disappointing if people "forget what annoys them," says Mr. Seid, recalling a woman who bought a yogurt franchise despite having a phobia about dealing with strangers. Although the franchise was financially successful, the woman sold it soon because she disliked going to work. Other common complaints include long hours, the need to acquire new skills--especially marketing-related ones--and franchisers who are hard to work with.
Being Your Own Boss
Franchises also lack the support system of corporate life. "People don't understand that when they left the 32nd floor of their office building, they left their security behind," says Mr. Seid. "When they need a copy of something, they have to drive over to Kinko's, and when they need a mailing slip, they have to fill it out."
That's been the experience of Paul Calkins, who quit his job as marketing vice president for Cracker Barrel Old Country Store, a 487-unit retail chain based in Lebanon, Tenn., to become a Nashville franchisee of Fish Window Cleaning. "What I'm learning is, when you start on your own, you have to do everything," says Mr. Calkins, who was at that moment struggling with a glitchy computer modem. "When I worked for my old company, if your computer didn't work, you looked in the company directory and called somebody to come over and fix it."
Consultants recommend getting the franchise experience before paying the franchise fee. In fact, Mr. Seid says, "don't buy a franchise unless the franchiser will let you work in one of their operations for at least a week." Since many franchisees also continue to moonlight in their jobs while getting a young franchise off the ground, this can lead to some long workweeks during the process of selecting and starting a franchise business.
Despite some drawbacks and limitations, franchisees seem to generally report that their new enterprises are living up to their lifestyle demands. Alan Loucks, who sells franchises in Northern Illinois for Executive Tans and also has his own unit of the tanning-salon franchises in Plainfield, Ill., says the most common desire of franchisees is for a chance to determine their own future. That, franchising can deliver, he promises, while downplaying the chance to become wealthy.
"If you're getting into this simply for the investment to make a ton of money, you're getting into the wrong business," Mr. Loucks says. It costs about $225,000 to start a franchise of the Lakewood, Colo.-based company, and the business is competitive. "It's not something you spend a couple of hundred thousand dollars on and start making millions of dollars in a couple of years," Mr. Loucks cautions.
But many franchisees are more concerned about investing in themselves than in their business. And in that, franchising does seem to offer good rates of return. Mr. Loucks, who formerly worked in purchasing, says the corporate world was rife with negativity, while salon patrons are generally cheerful. After surviving three corporate restructurings, he no longer trusted his company's leaders. As an Executive Tans franchisee, his colleagues at work are his wife, daughter and son-in-law, which makes for a different atmosphere. He doesn't worry about layoffs, and most people who come through the door are wearing a smile. "It just makes my day being down here," he says.
Mr. Levy researched more than a dozen franchises in depth before choosing Bark Busters, in large part because everyone who owned one of the franchises reported loving what they did every day. "My expectation was that it was going to be a lot of fun to work with people and dogs to make their relationship more satisfying on both ends," he says. "And that's been absolutely true."
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