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Rebuilding Michigan Through Franchising

Juggling work and a degree is no easy task. But that didn’t stop Timothy Rice, a serial entrepreneur and owner of multiple franchises. He studied at the University of Michigan for over 10 years to earn a degree in consumer behavior, economics, and public relations. Upon graduating in 2005, Rice entered the corporate world, but quickly found that it was not a match with his skills or his lifestyle.

His prior experiences as a manager at Krogers and Northwestern Mutual helped him discover his love for sales, he decided to become an independent business owner. “You are capable of doing the right thing when you are the owner and have the ability to make a change”, he said. An entrepreneur at heart, Timothy eventually launched multiple businesses including a laundromat and tailor.

As an experienced business owner, Rice realized the value of owning a franchise. While initially expensive, considering the franchise fees required, franchises are usually much easier to kick off. Since the business model and pre-marketing would have already been taken care of, the long term returns were more than worth the investment. The opportunities and expanded network with other franchisees made Rice believe it was worthwhile to buy a franchise.

Rice had wanted to own a franchise since he was in his 20’s. He believed that franchise businesses would help enrich his community by helping retirees earn money, and giving young people valuable exposure to the business world.

He had noticed that many of the locals who excelled in school and in their careers tended to leave Michigan for better opportunities elsewhere. This effect was amplified after the recession in 2008. Rice saw that fewer and fewer potential business owners were left to provide vital services to the community, and job creation was stagnating. “I wanted to rebuild South East Michigan. It’s not just about buying the franchise and making the money, it’s about rebuilding the community.”

Just as a 10-year contract was up on his last business and Rice had begun to consider making changes in his life, he received a series of emails from FranchiseHelp, that introduced him to several franchise opportunities. “The emails came at a perfect time,” he recalled.

After considering several industries and investment levels, Rice found his match in two different franchises: Transworld Business Advisors (part of United Franchise Group) and Mr. Appliance (part of Neighborly). He reached out to several existing franchisees before making his decisions, and credits their positive reviews and advice as a major reason he decided to open his own. In the end Rice invested in both franchises, starting with Mr. Appliance.

Today, with multiple businesses under his belt, Rice hopes to buy more franchises, potentially other franchises in the UFG or Neighborly systems. He has been conducting interviews for employees in his franchise, and hopes to provide more business opportunities to the students in Michigan, eventually expanding the local talent pool.

The grand opening of his Mr. Appliance location took place in November 2018.

Capital Formation Strategies For the Growing Franchise

One of the most difficult tasks faced by the leadership team of a growing franchisor is the development and maintenance of an optimal capital structure and access to the resources that the franchisor will need to stay strong and maintain its growth plans. Access to affordable debt and equity capital continues to be a problem for the growing franchisor even though franchising has matured as a viable method of business growth.

Quantifying Yelp's Impact on the Restaurant Industry

Luca studied the effects of Yelp ratings on the revenue of restaurants and discovered several interesting findings. Studying the relationships of restaurants' revenues to their Yelp reviews in Seattle over a period from 2003 to 2009, he found a significant relationship between a restaurant’s average rating and revenue. One star’s worth of improvement on Yelp leads, he found, on average to an increase of between 5 and 9 percent in revenue. The average rating is more important than the review, as many Yelp users are overwhelmed by the sheer number of reviews on manyrestaurantpages and find it easier to consult the star rating. Luca also found two features which exacerbate the effect on revenue Yelp has. First, the more reviews a restaurant has, the more impact an increase in its Yelp rating will have on its revenue. Second, the more reviews by Yelp “elite” members, the more impact; “elite” reviews have almost twice as much impact as other reviews.

Debunking Franchise Myths

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