Why I Talked to Struggling Franchisees Before Buying My Franchise Before becoming a FranNet franchisee, Stacy Swift talked to franchisees who loved the company – and franchisees who weren't doing so well.
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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 firstname.lastname@example.org.
Before buying a franchise location, Stacy Swift recommends doing one thing: calling franchisees who have already invested. That means not only calling successful franchisees recommended by the franchisor. You also have to call franchisees who are struggling, to find out why they aren't doing as well – and if you might have the same problems.
Here's what else Swift has learned over the last two decades in the franchising industry.
Name: Stacy Swift
Franchise owned: Currently I am a FranNet franchisee in three territories covering Colorado, Wyoming, Montana, Utah and Nevada. Previously, I was a Mr. Handyman franchisee in three territories in the Denver metro area from 2001 to 2003 and a Fantastic Sams franchisee with two stores in the Denver metro area from 1995 to 1996.
How long have you owned a franchise?
I bought first two in 1995 and have owned my current FranNet franchise since 1996.
I previously owned a deli/corporate catering business in downtown Denver as a sole-proprietor. It was successful eventually, but the first few years were definitely a struggle! Once I discovered franchising and the support systems in place, I was hooked and decided that was the direction I needed to go from that point on. I also liked the idea of being part of a bigger "family" -- sharing ideas and helping each other to be successful.
What were you doing before you became a franchise owner?
I owned my deli/corporate catering business for six and a half years prior to owning franchises. Before that, I worked in retail management for a women's clothing company.
Why did you choose this particular franchise?
I actually came to FranNet nearly 19 years ago as a client looking for help finding a franchise that I could buy. Long story short, I ended up buying the FranNet brokerage/consulting franchise from the gentleman who owned it at the time and who was helping me look for that "right" franchise! He was having some changes in his life and wanted to go in another direction with his own career.
How much would you estimate you spent before you were officially open for business?
I spent approximately $75,000 for my first FranNet franchise. The franchise license fee was $25,000 and the balance was spent primarily on initial marketing/advertising, my lease deposit and office rent over the first six months until I started generating revenue. The marketing/advertising was in the $40,000 range and the rent and other incidental expenses were about $10,000 for those first six months.
My second and third franchises in Nevada and Utah had franchise fees of $12,500 each (discounted for multiple-unit ownership). I have contractors in those markets who operate the businesses, so they pay the majority of the operating and marketing expenses. They pay me a percentage of the revenues they generate so it's a win-win opportunity for all of us.
Where did you get most of your advice/do most of your research?
I had a franchise attorney review my franchise agreements but I also did the majority of my research on my own. That's really the beauty of a franchisee: The Franchise Disclosure Document provides all of the contact info for franchisees in any given system, so I could randomly call others who already owned the franchise and validate the pros and cons of the company with them.
What were the most unexpected challenges of opening your franchise?
Patience! I think just the overall learning curve in the beginning was my biggest challenge. There was so much to learn while simultaneously getting out in the community every day to network, market and start building my brand. It sounds easier than it is! As with any business, it takes hard work and dedication to get things off the ground and growing. I wanted everything to happen much more quickly than it realistically could.
What advice do you have for individuals who want to own their own franchise?
Keep an open mind and do a thorough due diligence. Don't expect perfection in your research — there's no perfect company out there that I know of. You need to hear the good, hear the bad, and hear the middle of the road.
Make the effort to speak with some of the top producing franchisees in the system you are interested in. Learn how they have become so successful! You also need to make yourself talk with franchisees in that system who might be struggling. You may not want to hear it, but it is valuable information to compare to the top producers. It can definitely help you know what to do and what not to do if you become a franchisee of that system. Bottom line: Ask any and all questions and be realistic in your expectations.
What's next for you and your business?
My Nevada and Utah franchises are both still in their first year, so I am focused on supporting them and helping them both build strong, successful businesses in those markets. I've built a fantastic team to work with me in the five states that my franchises cover and I am very excited to continue working with all of them so that we can all benefit from the growth and successes in 2015 and beyond. FranNet is truly my dream business and buying the additional two franchises last year has definitely given me a renewed motivation and excitement!