3 Key Considerations for the Modern Franchisee Learn how to make the most of the franchise model.
By Kalpesh Patel Edited by Amanda Breen
This story appears in the June 2023 issue of Start Up.
I was always interested in business as a kid, and I knew I would become an entrepreneur one day. What I didn't realize was that becoming an entrepreneur entails much more than just starting a business.
When I moved to Fort Collins, Colorado, back in 1997, I wanted to start a T-shirt business. I borrowed $30,000 from friends and family and found a location to lease in the center of downtown. I spent days completing paperwork and nights doing the tenant finishes, and I screen-printed T-shirts in between. I hired two employees, and it took me about two months to get the store up and running. It was a fun business, but I quickly realized I didn't have the knowledge that I needed to be successful as a business owner.
That experience eventually catapulted me into the hotel industry and then into real estate and inspections. Here are the mistakes I made along the way and the valuable lessons I learned during my entrepreneurial journey.
Related: Considering franchise ownership? Get started now and take this quiz to find your personalized list of franchises that match your lifestyle, interests and budget.
1. Leverage a proven operating system.
During my time running the T-shirt business, there were many aspects — such as accounting, human resources, and contract negotiations with vendors and suppliers — that I truly didn't understand. I didn't hire the appropriate people to help me, because I thought I could do it myself. Also, I dreamed about opening several more locations before I even got the first one going. A year and a half after opening, I realized I was going nowhere. I sold the store for what I had originally put into it.
I made a little money, but it wasn't even the equivalent of what I would have made as a manager of a retail store. Looking back, it's clear to me that being a part of a proven franchise system would have been the best way to prevent many of the mistakes I made. In hindsight, I should have either partnered with a successful franchisor or hired a consultant to help set up the systems that would have made me successful.
2. Get into the weeds.
In 1999, I decided to go into the hotel business. Along with a few others, I bought the franchise rights to build a Days Inn & Suites by Wyndham (at the time they were known as Cendant). I borrowed money from friends and family for my share and was on my way to developing, owning, and operating the property. This was my first true experience with a franchise system, and I thought it was the best thing ever. The franchisor provided training, procedures, property management systems, guidance, and an operating manual.
I thought this was going to be a home run — but within a year and a half, I realized that these systems wouldn't just take care of everything for me. I hadn't put in the work to learn what I needed, and I hadn't figured out how to use the systems properly. I ended up losing money on this venture, and I had to pay my friends and family back. This was a huge setback.
To anyone who is either in a similar position or is looking to become a franchisee, I advise that you understand the ins and outs of your industry. Ultimately, having a proven franchise system isn't enough. Not only do you need to immerse yourself in the business, but you also should be well-versed in the day-to-day operations. Visit several existing franchisees and shadow them for some time to fully understand the business.
Related: 6 Signs That Franchising Is Right for You
3. Plan for failure.
In 2003, I was looking for my next venture. My mentor told me about the real-estate inspection industry, and I was intrigued. After doing my research and taking on about $5,000 in credit card debt, I launched a company called 1st Ohio Inspection Services.
I focused a lot on marketing and networking, and that attracted a lot of customers. But even though I hired a few other inspectors, I still did a lot of the inspections myself. One day, about a year and a half in, I was doing an inspection on the roof when the ladder slipped, and I fell about 18 feet onto a concrete driveway. I landed on my right wrist and elbow and had to have nine surgeries over a period of several months.
During this time, both my mentor and my wife told me to shut the business down. After all, I couldn't physically do inspections anymore — so how could the business continue? But here's where all my previous failures saved me. This time, I had a plan: I'd been running the business under the presumption that I would one day franchise it, which meant I'd been building systems to allow the business to operate without me as an inspector.
This saved the business, and it also propelled its growth. I eventually dropped "Ohio" from the name, called it "1st Inspection Services," sold my Cincinnati corporate store to a franchisee, and continued to grow the franchise system. Today, I have 11 locations open and two more coming soon.
Now that I'm a franchisor, all my career experiences are coming together. I can provide a playbook for my franchisees to follow, and I provide them with the brand awareness and operational know-how that they need to succeed. Business is not easy; you will stumble and fall many times. But when you take a system seriously, and really put in the effort to understand the business you're in, there can be so much success ahead.
Related: 5 Essential Things to Know Before Opening a Business
