FBR Emerging Franchises 2015

SPECIAL REPORT: Emerging Franchises
Franchisees who invest in an emerging franchise
get in on the ground floor, pay lower start-up costs
and are part of creating the brand model.
“The start-up phase of any new business
in any market is not for the faint of heart.
Starting a business is exciting, but never
underestimate the focus, faith and effort that
are required to succeed during the start-up
phase of a business,” says You Move Me CEO,
Brian Scudamore.
“You’re sticking your neck out and assuming
a lot of risk when you open a franchise.
It’s really important to have the funds available
and the grit to keep at it,” says Pinot’s Palette
franchisee Judy Alewel. “You don’t want to be
in a position of choosing between investing in
the business or making your house payment.”
To mitigate their risk, Judy stayed in her full
time nursing job for a year and worked on the
business at night while her husband, Reed,
left his job as a VP of Sales Operations for a
gaming company to work on it full time.
“First time franchisees need to be aware
that although they are buying blueprint to a
business, it is their responsibility to be actively
involved in their business and to take 100%
ownership of their successes and failures, “says
Stockeland of MODE. “They must have a willingness
to roll up their sleeves every day and
work with an ‘all hands on deck’ mentality.”
Do you have enough patience? From the
time you sign the franchise agreement to the
time you make a profit varies greatly from
franchise to franchise.
“We were in business for four weeks before
we got our first client who only needed four
hours of service a week. We got our second
client two months in, who also only needed
four hours of service a week,” says FirstLight
HomeCare franchisee, Feldman. “July 2015
was our best month. We had 2,100 hours of
service. Essentially we went from eight hours
of service after being open for two months
to 2,100 hours of service after 22 months.”
Feldman feels like he and his family have only
touched the tip of the iceberg when it comes
to growing the business and is shooting to
increase growth by 1,000 service hours a week
within a year. He finds the volatility in hours
to be very challenging since it impacts revenue
as well as his company’s ability to maintain
good employees.
“It will take time to build your business.
You must be patient,” says Pinot’s Palette franchisee,
Judy Alewel. “We opened in August
and did not have our first sold out class until
December. We started to break even six
months in.”
Can you follow a system? Most successful
franchise owners are able to balance their
entrepreneurial spirit with an understanding
that they must adhere to the franchisor’s
system.
“If I could offer one bit of advice to new
franchisees, it would be that you bought a
franchise for a reason. Do not join a franchise
trying to make it your own independent business.
Be part of the whole and participate in
the franchise system to its fullest extent,” says
Stockeland of MODE.
“We struggled our first year because we
tried to manage our existing signage business
and YESCO business with the same amount
of staff we had always had, which went against
the franchise model YESCO had laid out for
us,” says Deters. “Once we staffed up the way
YESCO had told us to, our sales exploded.”
Deters says his two companies share administrative
and HR staff, but that each has
dedicated sales people.
“If you think you know more than the
franchisor, don’t go into franchising,” says
Dale Wasem, who along with several partners,
owns seven Taziki’s Mediterranean Cafe
locations in the Nashville, TN metropolitan
area. “Taziki’s Mediterranean Cafe already
has best-in-class policies, procedures, recipes
and more in place. I came in and followed
the system and remain committed to doing
so.” His advice to prospective franchisees is:
1) Be hands on and engaged in your business.
2) Integrate yourself into the community since
building relationships helps your success more
than advertising. 3) Select the right location
since it will impact your profitability.
Can you handle a 24/7 job? Even though
many of the franchisees who were interviewed
for this report said their actual working hours
were similar to those they had when they held
corporate positions, several said the difference is
that as a business owner your brain is going 24/7.
“We enjoy more day-to-day flexibility then
we did in corporate America, but we think
about our business 24/7,” says Pinot’s Palette
franchisee, Judy Alewel. “Thinking about
work, however, can be fun. We plan events and
enjoy talking about how we are going to grow
the business.”
“The hardest thing is to shut off the business,”
says Mosquito Joe franchisee, Clark.
“My phone is always ringing and since my
office is in my home, employees come by.”
Clark says he believes having an office in your
home is a great way to start, but not good for
a work life balance since separating yourself
from work is harder.
Although people who invest in emerging
franchises come from all walks of life, we noted
that when we compared franchisees from all
franchise sectors with those in the emerging
sector there is a greater concentration of franchisees
with bachelor’s degrees or higher in
the emerging sector (75%) compared to all
franchisees (66%). This makes sense since
individuals who have worked in the corporate
arena, which many graduates do, may well
have more confidence in their ability to make
things work and therefore be less risk adverse.
The faith of emerging franchisees in their
business is also highlighted by the fact that
when asked to score the “long-term growth
opportunity for my business” in our Franchisee
Satisfaction Benchmark Survey they selected
“very strong” 40% more frequently than all
franchisees who responded across all brands.
SIGNING ON THE DOTTED LINE
When it comes to making the final decision
regarding which franchise is best for you, it
will come down to two factors: what you discovered
during the due diligence process and
your gut instinct. You will need to believe in
the concept, have faith in the team that is driving
it, and feel it will fulfill both your business
and personal objectives.
“Take your time and do your research.
Shop the business that you are interested
in and all its competitors,” says Midgley of
Crunch Fitness Franchise.
For more information on this report, visit: www.FranchiseBusinessReview.com | 9