The Franchise Experience
Advice from Franchisees Who Have Been There
Many of the franchisees we talked with had to make a decision first on whether they would open an independent business or a franchised one. A few of their stories follow.
Before a New Jersey man decided to buy a fast-food franchise, he asked himself this question: "How comfortable do I feel about going into the unknown?" He answered, "Not very." Although he was familiar with engineering, manufacturing and construction work, he knew very little about the food business. Even so, he purchased a snack foods business. Now, after nearly ten years of operation, he is ready to give up on the franchise. His current goal is to open and operate five independent stores that carry similar products. Not only has the ownership of the franchise system changed several times, but he believes that "the franchise system squashes the creativeness of the individual. You can be prohibited from bringing anything new into the system."
Barry Pasarew is a Voice-Tel franchisee in the high-tech voice message business. The business utilizes sophisticated equipment and elaborate service networks. Pasarew says, "It would be close to impossible to do this business on your own because of the necessity of a network. The franchise system allows you to get started immediately. It saves dollars and time so you can focus on selling and developing."
Jim Gendreau owns an independent distribution company, but he was still drawn to franchising. He owns multiple units of the Cost Cutters franchise in the hair salon business. When asked why he didn't start the business independently, especially since he was an experienced businessperson, he said, "The big difference between an independent and a franchise is the marketing and advertising clout and expertise the franchise brings. Secondly, all the bugs are out of the system by the time you buy it."
Linda Moore, a Ledger Plus franchisee, considered both an independent and a franchise business after leaving a position in a large corporation. She says, "Unless you have a very unique business idea, it's almost foolish not to buy a franchise. Success rates are not as good for independents. Most people have skills in one or two areas, but with a franchise, you can get help in areas outside your expertise."
Ken Wisotzky had an independent ice cream store prior to owning a Gloria Jean's and a My Favorite Muffin. The ice cream business was going well, so why didn't he continue? Wisotzky says, "The mall developer wouldn't renew the lease on my store. They wanted a 'name-brand' tenant." According to him, many developers, realtors and landlords consider franchises stronger tenants, and so the franchisee can get better space.
Bernie Wolff ran an independent photography studio in Florida before he took on two franchised units with Glamour Shots. Even though his day-to-day responsibilities have only changed slightly, he's happy he made the change. He says his old business had monthly sales from $16,000 to $18,000. When he switched to the Glamour Shots franchise in 1992, his monthly average for the first four months was $38,000 to $40,000. He attributes the increase to the impact of the franchise name.
When faced with making a decision on buying a mobile laundry and dry-cleaning franchise, Patrick McClune's wife and friends advised him to "do it himself." They told him, "You're smart and resourceful and you shouldn't pay for a logo that's not very well known." McClune asked the franchise system what he was getting that was proprietary. They said that he would receive training, the system for doing business and the logo. So, McClune went with the franchise and now concludes that the franchise did give him a "jump-start" and a good system for conducting business.
Franchise Disclosure Document for Dummies – Part 4
One key aspect of Item 12 is establishing how franchisees’ territories will be defined. This may be by zip code, population, population with certain demographics, or geographic or political markers (i.e. streets or county lines). For franchises with population-based territories, a franchisee in a busy downtown urban area may have a territory of only a few blocks, while a rural franchisee’s territory could reach for miles.
Get Your Franchise Audits and FDDs Done Early for Renewal Season
Renewal season means different things for different people. Here are a few important tips to keep in mind:
It’s Good to Be Popular (But Not Too Popular)—Choosing a Trademark for your Franchise System
For new franchisors, standing out from the crowd can be a task of epic proportions. Selecting a strong and memorable trademark is certainly an important (indeed, critical) first step, but for the relatively unknown, picking a trademark that is too abstract can occasionally be viewed as a step in the wrong direction—you want to stand out, but you also want people to actually know what you do or sell.