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6 Lessons Learned From Franchisors Who Launched in 2020 In the days before Covid-19, a new crop of companies were just starting to franchise. Meet six entrepreneurs whose first year didn't go exactly as planned ... but who made the most of it anyway.

By Britta Lokting

This story appears in the January 2021 issue of Entrepreneur. Subscribe »

Davide Bonazzi

Launching a new franchise business is never easy. Launching and growing a system just as a pandemic has gripped the globe? That's a challenge no entrepreneur could prepare for. But these six business builders found new ways to survive and problem-solve - skills that will serve them long after the pandemic.

A New Yoga Chain Finds Zen in Chaos

Cindy Coats used to do yoga in a warm studio that relied on a space heater to climb past 72 degrees. It wasn't exactly hot, but people still showed up. So in 2012, Coats joined with two other cofounders to launch Real Hot Yoga, a studio built to deliver a serious burn to the residents of Knoxville, Tenn. The company initially grew by issuing licensing agreements to entrepreneurs within the founders' networks, but then total strangers started asking to join the company — ­­so Coats and her team decided it was time to franchise. They were just finishing the paperwork in February when gym closures scared away hopes of signing a franchisee — at least for now.

What cofounder Cindy Coats learned last year:

1. Cleanliness is always good business.

"Early on with Real Hot Yoga, we were talking about the most important thing people want in a business. We decided that it's a clean environment. You go to a restaurant or department store in a mall, and if their bathrooms are clean, you feel better about eating or shopping there. So while we don't have the fanciest hardware or the most expensive shower tiles, we have always kept our studios impeccably clean. We have a system that uses a UV filter to remove 99 percent of germs, bacteria, and viruses from the air. That was always good for business, but it feels especially critical right now."

2. Yoga's Zen can help out in business.

"There are things we can control and things we can't. It's useful to know the difference, so you can decide where to put your energy. For instance, when we first reopened after the pandemic, we had to ask our clients to wear masks even while practicing. That wasn't fun for anybody, but we had no control over it. So we lived with it. Now with the exception of one studio, customers no longer have to wear their masks on the mat, but there are still a lot of people uncomfortable going into public spaces. We can't change their risk tolerance, but what we can do is invest in targeting new clients."

3. Doubt is part of the process.

"It cost a lot to do a franchise. It took time, effort, and money, and sometimes I ask, Did we bite off more than we can chew? But then the moment passes, and I'm hopeful again. With the uncertainty of the virus, we might struggle for a few more months, but looking beyond the pandemic, I know that health will become more and more important in people's lives."

Related: COVID-19 Will Fuel the Next Wave of Innovation

A Silly Snack Business Does Serious Business

Years ago, Samuel Baroux, a European restaurateur, befriended a llama named Dolly. She lives on a farm near Baroux's home in the South of France, and like many llamas, Dolly is a soothing presence. She always seems to be in a good mood. So when Baroux began talking with his friend Eric Shomof (pictured), a real estate developer in Los Angeles, about partnering together on a waffle and ice cream business, they decided that Dolly should be their mascot. In 2017, the two founders opened The Dolly Llama, and Dolly's likeness, sporting a pair of teal sunglasses, appears on the marquee. After growing three successful locations in L.A., Baroux and Shomof decided they were ready to start franchising.

What cofounder Eric shomof learned last year:

1. Crisis is the ultimate stress test for an emerging concept.

"We began franchising in January, and by April, we realized the pandemic wasn't going to end anytime soon. The future looked bleak, and a lot of people were losing their jobs. So we made the tough decision to put the franchising on hold. Then, to our surprise, things started to pick back up. Thanks to to-go orders with online platforms, our numbers shot up to 30 to 40 percent higher than they were before, which is amazing. We're actually doing better now than we were before COVID, and we have even more confidence in people's appetite for waffles and ice cream. In early fall, we began franchising again."

2. Listening to customers can make you future-proof.

"During the early days of The Dolly Llama, when people would make requests about what they wanted to see on the menu, we'd listen. That resulted in more options for vegans, and it was so common for people to order a shake alongside their waffle that we started offering the duo as a combo order. Some of the suggestions even come from kids — a 6-year-old tells us we should add something, and we talk about it in our managers meeting. We listen to customers, and I think that has helped us keep sales strong."

3. A simple concept offers insulation from complicated times.

"Almost anyone could run this business. In fact, I initially operated it as a side hustle. My main business is real estate development, but when The Dolly Llama started taking off, I began approaching it more seriously. Customers were asking how many locations we had, and we were receiving interest from people who wanted to help us expand. That's when we decided to franchise. It's a very simple concept, so I'm confident we'll have franchisees soon."

Related: Pivoting During the Pandemic: How These Businesses Succeeded

A Barbershop Becomes a Powerful Communicator

Soon after John Hall launched The Ultimate Barber in Alexandria, Va., in 2010, the brand began winning local awards and topping "best of" lists. He opened up a second location, and after that one proved itself, he decided to start franchising last year. As a former franchisee himself — Hall ran a salon and spa business for five years — he had strong thoughts on how to acquire the best franchisees and grow quickly. But the pandemic proved to be a tough time to sell barbershops. For months, he couldn't even see customers.

What founder john hall learned last year:

1. A strong online presence helps manage a socially distant world.

"It's impossible to give a virtual haircut, so the demand is going to be here. But we're as virtual as we can be. We've always accepted appointments online, for instance. And because franchising during the pandemic has been a little slower than what we were expecting it to be, my marketing team is ramping up the digital efforts. They're focusing on social media and advertising in portals where people come to shop for franchises."

2. Customers like to know you take their safety seriously.

"Before the pandemic, we didn't have to screen clients. Now we do. 'Have you been in contact with someone with COVID? Have you experienced illness in the last 14 days?' At first it was weird, but now it seems like people are feeling more comfortable. And they'll volunteer information that can help us decide whether we can take them. I have one client whose wife is a nurse. For the safety of others, he didn't want to come in until his wife was no longer seeing patients."

3. You can't underestimate the power of a good mailing list.

"When the pandemic hit, the state mandated that we close our stores. But then we were allowed to reopen on May 29, so we shot out an email to more than 20,000 clients, letting them know. We said, 'Here's where you can schedule,' and that was it. Like that, we were back in business. We still have capacity restrictions and social distancing, so we can't have as many barbers as we did before the pandemic. But all the time slots we do have are full."

Related: What's Your Pandemic Pivot? 4 Key Steps for Startups to Survive Catastrophe.

A Tattoo Franchise Stays Small and Focused

Peter and Maria Joukov knew little about the tattoo industry. The married couple worked in the corporate worlds of consulting and tech, and originally they just wanted to find a parlor where they felt comfortable getting tattoos of their baby's name. Instead, they discovered that the modern ink industry was dominated by a culture built around bikers, sailors, and other tattoo enthusiasts. The Joukovs saw an opportunity for a clean, modern shop that catered to professionals and encouraged careful collaboration between artists and customers, so they opened Inq Tattoos in Virginia in 2019. In March 2020, they decided it was time to franchise. Two weeks later, nobody wanted to come anywhere near a tattoo needle.

What cofounder Peter Joukov learned last year:

1. New concepts present new challenges.

"People who are looking to get into franchising don't usually start by saying, 'Hey, I want to do a tattoo franchise.' That hasn't really existed until us. But the demand is there. Three in 10 Americans have at least one tattoo, up 21 percent from 2012. It's a huge untapped market of people who haven't had the right opportunity. Our challenge is to educate customers that we're not the stereotypical tattoo parlor. We're a premium boutique that caters to a corporate crowd."

2. Low overhead will buy you runway.

"It takes time to open a franchise, and that's especially true when you're a tattoo brand launching during a viral pandemic. It can take months for potential franchisees to commit to us and for us to commit to them. Then it can take months more to find the right real estate. For now, it's just the two of us. We're focused on keeping our corporate overhead low, so we don't have to rush. We plan on staying lean until we're able to bring in partners to help us scale."

3. In-person meetings are overrated.

"Travel has been difficult, but Zoom has kept us moving forward just fine. It's been good for meetings, but we've also been able to walk some candidates through virtual franchise discovery days. We use an iPad and give them a tour of the boutique, just as if they were here. Then we prop the iPad up on the table and let them fire away with questions. It's almost as good as in-person. We still follow an agenda, and I think the prospects end up with a good sense of the space and how things operate."

Related: 7 Franchisees Share Lessons from the Pandemic

An Auto Franchise Hits the Gas

After witnessing the success of Uber and other app-based services, Scot Wingo saw an opportunity to streamline car care with mobile technology. In 2014, he launched Spiffy, a van-based mobile service that performs routine auto work at its customers' homes and offices. At launch, Spiffy offered car washes and detail jobs, but it soon expanded to oil and tire changes. And the company happens to be well-suited for life in quarantine: Even as a new franchise, Spiffy is receiving about 40 inquiries per week, and it signed its first few franchisees right in the middle of the pandemic.

What CEO and cofounder Scot Wingo learned last year:

1. Prelaunch prep can vault you toward success.

"The inquiries began coming in even before we were franchising, so we started driving people to our website, which said, 'We don't franchise, but enter your name and we'll let you know if that changes.' We collected 300 to 400 names that way and discovered that a whole lot of people wanted to open in California. When we launched, we sent everybody a note letting them know we were entering the franchise business."

2. When the world slows down, you can, too.

"I take a long-term view of things, and I saw the pandemic as a short-term opportunity to take our time in defining our strategy. The registration documents, for instance, required us to describe our business in intimate detail, and we really thought that through. We're at a point now where we feel good with our mix of services — ­wash, detail, oil change, and tire change—and we're able to articulate how those things fit together for the franchisee."

3. Rising unemployment is a surprising boon.

"There's this counter­intuitive thing where entrepreneurship spikes during economic downturns. Some people at corporate jobs have been let go, or they're worried it will happen. They start looking for the next opportunity, so we've been a little overwhelmed with interest. We've had the luxury of being selective about who we work with. Most of the people who are close to signing have aspirations to run multiple units."

Related: 3 Major Opportunities That Will Come From This Pandemic

An Indoor-Lighting Company Plans Ahead

The San Diego–based Solatube is new to franchising, but the company has 30 years of experience bringing natural light and fresh air indoors. And the pandemic has been a boon for business: With so many people stuck indoors, demand for its residential fans and energy-efficient reflector-tube skylights has exploded at the three Solatube Home stores in California. In time, the company hopes to use franchising to expand globally, but for now, it's still working on its first franchise sale.

What director of retail marketing Tim Deming learned last year:

1. A good plan calls for unwavering faith.

"The way people think about franchising has changed a lot. A couple of decades ago, there were negative connotations. Companies didn't have the business model totally figured out. But that has changed, and now people see franchising as a road map to success. So despite the pandemic, we feel like the timing is right. When we finally do open a franchise, franchisees will follow our business model, use our systems, and be successful."

2. Slow growth provides time to build infrastructure.

"We're still waiting on that first franchise sale, but we're ready. We even have a University of Solatube set up. It focuses heavily on product and customer service training, but also marketing and lead generation. We have our success managers standing by, ready to begin working with our first franchisee. It just takes time — especially during the pandemic."

3. Exceeding expectations is the best way to keep sales strong.

"Our top priority is to treat customers with respect and do what's right even when they're not looking. We're very up-front with our pricing, and if we say we're going to be there, we're there. When people see that we're trying to exceed their expectations, they talk about us. We get a lot of repeat business and referrals. And that's led to a spike in installations during the pandemic. People are staying at home and calling us back up for more work."

To see our complete Franchise 500 rankings, please click here, or view more stories here.

Britta Lokting is a journalist based in New York. Her features have appeared in The New York Times, The Washington Post Magazine, MIT Technology Review, and elsewhere.

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