Franchise Players: An Ex-Convict Starts Life Anew as a Franchisee After serving six years for bank fraud, John Rusnak seems to have found redemption in franchising.
By Kate Taylor
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Franchise Players is Entrepreneur's Q&A interview column that puts the spotlight on franchisees. If you're a franchisee with advice and tips to share, email ktaylor@entrepreneur.com.
Do you believe in second chances? John Rusnak does – it's the only way he's been able to make a comeback after being incarcerated for bank fraud. In 2003, Rusnak was sentenced to 7-1/2 years in prison for covering up $691 million in losses at Allfirst Financial, a former unit of Allied Irish Banks. Since his release in 2009 (he served less than his full sentence), franchising has become his chance to do things right. Today, he operates four ZIPS Dry Cleaners, making an effort to employee individuals out of prison and rehab.
Name: John Rusnak
Franchise owned: My firm owns three ZIPS Dry Cleaners, which are located in Pasadena, Glen Burnie and Columbia Maryland.
How long have you owned the franchise?
I am the president of Pilgrimage Development which is owned by four investors. Pilgrimage is the franchisee, which signed a development agreement to build twenty ZIPS Dry Cleaners in February of 2011.
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Why franchising?
My lead investor is Harvey Rothstein, the CEO of DavCo Restaurants. DavCo owns and operates 156 Wendy's in Maryland, Northern Virginia, and the District of Columbia. In 2001, I was convicted of a federal financial crime related to a banking scandal at Allied Irish. Harvey was very kind to me and offered me a second chance to work with him at DavCo upon re-entering society.
I was able to learn a great deal about franchising while at DavCo, as I focused on automating the business in order to provide remote oversight, operational metrics and streamlined reporting with predictive capabilities. After a few years, Harvey suggested that we find a new, appropriate brand for him to invest while I become operator.
Ultimately, franchising offers an established brand, a proven process, and a team of franchisee "experts' who offer insights and knowledge.
What were you doing before you became a franchise owner?
I was a managing director of a financial markets trading operation focusing on currency derivatives prior to my incarceration in 2001. Once I was released in 2009, I worked as the senior director of Automation & Efficiency at DavCo.
Why did you choose this particular franchise?
We explored several concepts including: quick service restaurants, car washes, concierge, medical, and business services; however, dry cleaning stood out for two reasons.
First, dry cleaning is one of the last retail segments that is not yet been commoditized. The competition is primarily Mom & Pop operations or small family owned chains. Second, it offers an unusual combination of a low cost-of-goods-sold and low labor rates.
Most businesses with a low cost-of-goods-sold are services with highly skilled and well paid staff. The ZIPS discount model stood out when compared to other concepts.
How much would you estimate you spent before you were officially open for business?
$700,000: Equipment $350,000, leasehold improvements $150,000, working capital $60,000, initial ZIPS fees $60,000, signage/branding $50,000, initial marketing $20,000 other $10,000.
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Where did you get most of your advice/do most of your research?
Harvey Rothstein is my mentor and has provided his counsel throughout the entire process. From the initial investment to the daily operations, I am able to turn to Harvey for encouragement and accountability.
Other than standard business decisions, Harvey has also encouraged me to follow my desire to help others by giving a second chance to men coming home from incarceration or those living in drug rehab houses.
What were the most unexpected challenges of opening your franchise?
When I first took on the franchise effort, it was a challenge to find and on-board a staff that was loyal, trustworthy and dedicated. I now have an established, core team who carry the heavy weight of the operations, and with whom I've trust to manage daily processes, but it took far longer than expected.
I firmly believe in empowering my team by giving them a clear picture of what success will look like in both the short and long term. Once the paradigm is established, I allow freedom to make decisions and mistakes so they experience true ownership of the operational tasks.
What advice do you have for individuals who want to own their own franchise?
Conduct extensive research; understand the time and monetary commitment. Base your models on worst case scenarios rather than pie in the sky hopeful forecasts. Find someone who is good at what you want to do and utilize their insight. Humility in business is rare and thus usually well received.
What's next for you and your business?
Expansion—we have 17 more stores to build or purchase in order to fulfill our development agreement. We are considering a slight change in the model for our next location by building a drop store rather than another processing plant. We are also exploring ancillary products and services we can offer that produce fee income and limited liability.
On a more personal level, I plan to continue my work assisting young men and women in adult prisons and those in drug recovery programs find employment.
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