Why Stop at Just One?
Need money to grow? Try franchising.
It seems that no matter how hard college entrepreneurs work, they always encounter the same dilemma: Big plans for growth, and a short supply of time and money.
Franchising 101: Nick's Top Tips
1. Be marketable: Your concept needs to be unique, or at least differentiated from the competition. Just adding the word "College" to your name is a start.
2. Provide adequate returns: A franchisee is going to pay you 4% to 8% in royalty fees, and they need to be able to make a return of 15% to 20% on top of that.
3. Establish credibility: You need a track record of profitability and ideally some good press or public recognition.
4. Set up a good system: You need documented operating procedures and the ability to teach someone to run their franchise within three months.
But Nick Friedman, co-founder of College Hunks Hauling Junk, hit on a brilliant solution: Franchise your business.
After just two years, Friedman's junk-removal company employs more than 100 students and expects sales of $10 million this year. At the ripe age of 26, he holds the title of youngest franchisor in America, after successfully franchising the business he started at Pomona College in 2004.
"It would have probably cost us about $100,000 to open up in each of the different markets that we now operate in," Friedman says. "But franchising actually gives us a capital injection each time somebody buys a franchise from us."
Armed with a detailed franchise plan, a heaping dose of ambition and a partner (Omar Soliman, a friend and student at the University of Miami), Friedman launched 20 franchises across the country in less than two years. "Landing the first franchisee is extremely difficult, as they are essentially taking a leap of faith," he says. "So to sell your concept, you need some type of credibility."
For Friedman, an economics major, that credibility came from winning a college business plan competition. "That was our main marketing angle," he says. "When we pitched the franchise, we would leverage the credibility of being the 2004 Rothschild Entrepreneurship Competition winner."
Then Friedman took advantage of the army of business experts at hand--also known as professors and students.
"Instead of paying a consultant to evaluate your model to determine if it is franchisable, you can meet with a knowledgeable professor," he says. "For marketing materials, computer programming or PR, look to students taking applicable classes who will work for a fraction of the cost that companies would charge."
When it comes time to land initial franchisees, Friedman again started right on campus: It was another student who bought the first $35,000 College Hunks outpost.
"Find fellow students who have an interest in business but don't want to start something from scratch," he says. "I think now, more that ever, parents are more supportive and willing to give funding to help launch a franchise."
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