Executive Decision

Corporate execs are jumping into franchise ownership and experiencing a whole new side of business.

By April Y. Pennington

Opinions expressed by Entrepreneur contributors are their own.

Online Exclusive: Tempted to make the leap from executive to franchisee but don't know if your pocketbook can handle it? We have expert advice on financing your franchise here.

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."

Hands On

When he became a Volvo Rentsfranchisee in 2004, Pete Post had already spent over two decades as an executive in the multibillion-dollar rental industry and was the president and COO of Prime Equipment, a multimillion-dollar general rental corporation he helped to expand. He had watched the Volvo Rents concept develop and saw potential in the Houston market, so he decided to purchase a franchise in the area. Since he already had experience in the rental business, he was well-prepared when it came to negotiating contracts, hiring and training employees, managing budgets, and overseeing operations and new-business development.

Post found that going from president and COO of a major corporation to franchise owner in the same field was easy in some ways and challenging in others. But when it came to managing, the smaller operation suited him perfectly--free from the multilayered process of corporate decision making, he could call his own shots.

Because Post spent his time in the corporate world focused on one segment of the business, his customer interaction and employee management skills were a bit dusty. "It's a big change coming from more of a management/administrative perspective to take on the day-to-day running of a business," admits Post. "You deal with problems when you have them. A sick employee is no longer a statistic for the HR department."

Experience Necessary

Kirk Mathers has found a perfect way to put his corporate experience to use. As a Tempe, Arizona, franchisee for The Alternative Board, a peer advisory board that holds discussion groups for business administrators and entrepreneurs, he helps clients tap the knowledge he has gained firsthand. Mathers, 42, spent seven years as the CFO of a resort and has found his background allows him to offer more value to his clients, compared to other franchisees who don't have corporate experience. "Knowing how a company structure is established and the importance of writing a business plan, and [having] the credibility of having worked for a known company were helpful," says Mathers. He uses the skills and expertise he attained managing several departments in a large company to educate larger corporate clients and help small businesses face tactical issues.

With no corporate support staff to help him, Mathers had to learn to do many tasks he used to delegate to others, such as writing press releases and letters and scheduling meetings. He relies on business software to help him manage business relationships without an administrative assistant.

In his previous corporate life, Mathers had worked with salespeople, but had never been responsible for selling and had no sales and marketing background. Working outside his comfort zone, Mathers had to quickly learn the ropes. Reading books, attending seminars and getting support from the franchisor have helped him immensely.

Corporate culture usually involves being part of a team, but as a franchise owner with no employees, Mathers found himself alone. Psychologically, it can be difficult. "Not having the team players, you don't have the interaction and camaraderie anymore," Mathers says. He has remedied the isolation problem by volunteering with Junior Achievement, an educational program for children, and joining his local chamber of commerce. "The personal growth I've experienced has been tremendous," Mathers attests. "Before, I was helping one company. Now I'm helping more than 10."

A Different World

Want to make the switch from corporate drone to franchisee of the year? First, take a moment to realize you're entering a new business world, where your esteemed executive background may not fully carry over. Michael Seid, managing director of West Hartford, Connecticut-based franchise advisory firm Michael H. Seid & Associates, offers seven points to ponder during the transition:

  1. Understand that you left your corporate support on the 23rd floor. Now when you need to hire, fire, make photocopies, make travel arrangements, or determine salaries and bonuses, you are your primary support person.
  2. Work in a franchised or company-owned location for a week to see if you like it before you invest. The world may appear very different from the other side of the counter.
    If you are not a people person, don't invest in a franchise where you need to meet a lot of people.
  3. Be certain you can relate to the people you will be working with. Dealing with minimum-wage, entry-level or English-as-a-second-language staff can have its challenges.
  4. Realize that franchising is not akin to retirement. If you're leaving the corporate world to work fewer hours and decrease stress, you may be in for a surprise. In your early days as a franchisee, how you handle the hours and the stress determines whether you will be successful and happy.
  5. Know you're not exactly the boss. As a franchisee, you take direction from the franchisor and its field staff. Your primary role is to execute the brand strategy locally, not to create a new PowerPoint presentation on making the brand better.
  6. Make an audit of your lifestyle. Franchising can affect the time you have for your family, children's activities, evenings and weekends. Having the support of your family and friends is important during the transition period.
  7. Assess your finances. Make sure you have enough to live on until the business starts making a profit--and that you will not be taking a risk with your kids' college funds, etc. Making money in a franchise is not always instantaneous--indeed, it rarely is. You need to be realistic about where the money will come from.

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