Survival Of The Biggest In the war against category killers, franchises provide entrepreneurs with secret weapons: a big company brand and the specialized service of an independent.

There's something to be said for not starting a business,but rather jump-starting one by buying a well-knownfranchise--especially if you're surrounded by massive retailchains. For entrepreneurs in certain industries, it's becomethe only realistic way to not get killed by category killers and toeven gain a competitive advantage over retailers 100 times biggerthan you are.

On their own, Stephen Adams, 44, who runs a pet-supply store,and Jeff McCoy, 36, a consumer electronics entrepreneur, might nothave had a chance against the category killers in their respectiveindustries. Fortunately, they didn't even try. Last year, Adamsbought a Pet Valu franchise from Valu International, based inWayne, Pennsylvania; in 1996, McCoy purchased a Radio Shackfranchise from Tandy Corp.

Prior to buying his Pet Valu franchise with a $10,000 downpayment and a bank loan, Adams was the night shift manager in asteel-fabrication factory. "After 22 years in the same job, Iwas tired of making money for other people," Adamsrecalls.

But Adams wasn't about to make any snap decisions. He andhis wife, Taisa, 40, a co-owner, went to franchise shows andinvestigated local franchises. Pet lovers and part-time Rottweilerbreeders, the Adamses easily discovered their ideal business:selling pet supplies through a Pet Valu franchise in Levittown,Pennsylvania.

Although they investigated other companies to get a feeling forthe franchise business, says Adams, "It was really an easydecision because the business was so compatible [with ourpersonalities]. We love pets and enjoy talking to petowners."

The price you pay for owning your own franchise--hard work andlong hours--didn't faze Stephen in the least. "In thebeginning, I was putting in 80 hours a week," he says."Now I'm down to 60 hours and have five part-timers,mostly teenagers, helping me out. But the hard work doesn'tbother me because I love the business, and pet owners are easy andfun to deal with. We relate to them because we're pet owners,too. Our customers like dealing with people who share the samepassion."

All the Adamses' hard work--and their decision to buy afranchise rather than start a business on their own--paid off. Theywere profitable a few months after they opened for business andwere able to comfortably make their monthly loan payments withplenty of money left over to meet their expenses.

You'd think a 3,000-square foot pet store would be outgunnedby the giant category killers like Petco and PetSmart. Not so,according to Pet Valu International Inc.'s vice president offranchise development David Wheat. "We have 82 stores in theUnited States and 400 worldwide and nearly all of them aresuccessful."

Apparently, category killers or not, there's still room formore entrepreneurs in the growing pet industry. "Fifty-ninepercent of Americans have pets, and the demand for pet supplies isconstant," says Wheat. "Pet owners are always buyingfood, toys and other accessories for their pets."

It's not like every Pet Valu store doesn't facecompetition, however. "But when you consider what each of ourstores offers, there isn't as much competition as you'dthink," says Wheat. "We see ourselves as category killersin the pet supply business. But not in the conventional definitionof the term. We describe our stores as neighborhood stores withsuperstore prices."

Actually, Pet Valu prices are competitive with those of thecategory killers. But the real draw, according to Wheat, "isthat Pet Valu offers customized services, which you don't getin the large stores. The large stores can't offer personalizedservice," he says. "Every time you visit one of them, youhave a different salesperson taking care of you."

That will never happen at the Adamses' store. "We knowour regular customers on a first-name basis, and they enjoy comingin and chatting about their pets," he says. "Youcan't do that in a big store." And that personal attentionseems to be working--the Adamses' sales are up 46 percent sincethey bought the franchise last July.

Bob Weinstein is the author of 10 books and is a frequentcontributor to national magazines.

PartyLand Of Opportunity

Most franchisees agree that in a fiercely competitive industry,it's almost impossible to put a value on personal service."This is where our franchisees have [an advantage] over large[discount] store chains, which also sell party supplies," saysJohn L. Barry, vice president of franchise development at PartyLandInc. in Plymouth Meeting, Pennsylvania. "Nobody else is reallypushing the service button. That's why 97 percent of ourfranchisees succeed."

Started in 1988, the PartyLand franchise currently has 103stores throughout the United States. Likewise, the party-supplyindustry has grown aggressively over the past decade, according toBarry. Ten years ago, it was a $5 billion industry; today thattotal is $20 billion, according to trade magazine Party &Paper Retailer. "According to our research, the averageAmerican has a party eight times per year," says Barry."Because the economy is good and unemployment is low, peopleare spending more on leisure than they [used to]."

But despite increased spending on parties, Barry says theindustry has felt the effects of category killers and consequently,has consolidated over the past five years. "Larger chains arepushing small [independent] stores out of business. This is why wego out of our way to give customers extraordinary service and whywe're so careful about picking people who'll besuccessful."

King of the Mountain

For some entrepreneurs, franchising offers an opportunity notjust to compete with category killers, but to actually become one.In Fredericksberg, Texas, population 9,500, InTouchElectronicsInc./RadioShack hasn't faced much competition yet. And ifcompetitors did come to town, Jeff McCoy says he wouldn't loseany sleep. After all, McCoy benefits from the power of RadioShack's strong national brand name--stores are strategicallypositioned across the United States so 94 percent of Americans liveor work within minutes of a RadioShack.

Unlike Adams, McCoy didn't investigate other franchises.He'd already spent 10 years working in a RadioShack owned byhis in-laws in Van Horn, Texas. He liked the business and, in 1996,figured he was ready to branch out on his own. When he found outabout the availability of the Fredericksberg location, he jumped onthe opportunity and purchased the franchise for $60,000, whichincluded a franchise fee, merchandise and fixtures.

McCoy says he was up and running pretty quickly. "Namerecognition means a lot because it brings in customers who knowwhat they're going to get as soon as they walk through thedoor," he says.

In a fiercely competitive business environment, franchisingoffers start-up entrepreneurs quick entry into an alreadyestablished industry. It also offers the best of both worlds. Youcapture immediate acceptance by having the brand recognition of awell-known chain while still offering the personal service of anindividually owned store. You also stand to recoup your originalinvestment a lot faster than if you started a business fromscratch. All told, that adds up to a compelling combination greatlyenhancing your chances of success.

Contact Sources

PartyLand Inc., (800) 778-9563, jbarry@partyland.com

Pet Valu, (888) 564-6784, http://www.petvalu.com

RadioShack, (800) 844-3870, http://www.radioshack.com