Entries tagged with “franchise”.
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Should young people in their Thirties or even Twenties buy franchises?
The Wall Street Journal reported recently that franchisors are targeting young franchisees to replace the old fogeys Baby Boomers who are nearing retirement age. The thinking is that younger franchise buyers, if they can raise the capital, will have have more energy and a fresh vantage point from which to attack a business plan. The naysayers include franchise experts like The Franchise King of Ohio, a franchise broker, who says to the youngsters:
“You just don”t have enough business management experience under your belt, yet. You have not enough stress yet. You have not experienced enough in the business world. It’s nothing personal.”
Wow! What’s that about? My feeling is: bring ‘em on! I think young entrepreneurs are amazing. In my own franchise network, there are “kids” like Claudia and Rodney, a wonderful couple in their Twenties, who are tearing it up selling smoothies and leaving no stone unturned looking for new business. In my coaching practice, I have thirty-and-younger clients who are smarter, more aggressive, and more resilient than you’d think given their years. When I was a bit younger, at 42, I was president of a company whose CEO was around 28. He sold the company for $750 million a few years later. I worked for another 20-something who’s promotional products company is now doing $25 million+ a year in sales. And have you read the Crains NY Business Top Entrepreneurs list? Look at those pictures–some of those guys (and gals) don’t look like they shave yet. And remember Bill Gates and Michael Dell–both started their businesses in their dorm rooms.
Whether a young man or woman starts a franchise business or some other type of business isn’t the point. Younger people (I’m 52 now, so I think I can say this with some authority) have a view of the world that is entirely different from the Boomer generation. They are less patient, more collaborative, less hierarchical, as a rule less materialistic, more environmentally conscious and in many other ways a breed apart. So sorry fellow old timers, you can no longer credibly say that the youngins can’t do it bigger, better, faster and cheaper than wise old you.
For people thinking of starting a business but hesitating because of the recession, you’re out of excuses: a new study by the Kauffman Foundation finds that about half the Fortune 500 and Inc. fastest-growing companies were founded during recessions.
The study has three main findings:
1. Recessions and bear markets, while they bring pain and often lead to short-term declines in business formation, do not appear to have a significantly negative impact on the formation and survival of new businesses.
2. Well over half of the companies on the 2009 Fortune 500 list and just under half of the 2008 Inc. 500 list began during a recession or bear market.
3. Job creation from startups is much less volatile and sensitive to downturns than job creation in the entire economy.
While the Inc. list is dominated by tech-oriented startups, the study notes there will be service innovations in fields as old-school as retail and food service. I can attest to that: read Dane Carlson’s Business Opportunities blog for a mind-bending look at what entrepreneurs are coming up with every day of the week in industries as traditional as house cleaning and deck-building.
Need more inspiration? Read Leah Grant’s blog (The New Business Mentor) and sign up for her newsletter. Check out Pam Slim’s recent book, Escape from Cubicle Nation. And if you’re considering a franchise, there’s a very good new book on that subject here.
Posted by Mitchell York under Franchising, Uncategorized
As many of you know, I own a franchised business in addition to being a coach for people who are considering franchises or other business startups. My franchisor refers people to me regularly for what are known as “validation” calls. Prospective franchisees call around to existing franchisees to do research on the franchise and learn what it’s like to be in the system. If they ask good questions, they can come out of the process with a much clearer decision path (pro or con). The trouble is, 90% of the people who call me ask the wrong questions! Read more…
Posted by Mitchell York under Franchising
Who came up with that phrase? Anybody know? I really like it. I was on the phone yesterday with Michael Haith, CEO of Maui Wowi International. I became a Maui Wowi Hawaiian franchisee seven years ago. Michael and I haven’t talked in over a year. A few days ago he left a comment on my blog and we got back in touch. We got to talking about how my franchise was going (the answer: great), and about the book I have just finished writing, called Franchise: Freedom or Fantasy, which will help people make better decisions about whether to buy a franchise. (The book comes out in June–if you want to be notified when it’s available on Amazon.com, send me an email.)
In early 2002 when I first was investigating Maui Wowi, Michael asked me whether I was running toward something by starting a business or whether I was running away from something. I thought that was a great question. Turns out I was running away from something, namely my being burned out on corporate life and my lack of will to keep at it. I didn’t care what I did, as long as it didn’t involve corporate structure, a boss, and airplanes. And voila, or perhaps a better word would be “Aloha!” I became part of Maui Wowi’s ‘Ohana (Hawaiian for “family”).
In our chat the other day about running away versus running toward, which, by the way, is the subject of a chapter of my book, Michael said, “Well, maybe you didn’t make the right decision, but you made the decision right.” Man, every seven years or so this guy gives me a line I can use for the next seven years! I’ve been thinking about that line since we talked on Friday. It really fits what happened to me in my franchise. I was running away from what wasn’t working for me. I landed in something that was completely different from what I thought it would be: I thought I’d be opening a retail store every six months or so until I had an empire of 10 or more stores generating sales of $500,000+ each. And I’d be directing my minions to do the work while I counted the cash.
Well, it turned out a little differently. There were no good locations at reasonable rents, so I launched the business with a portable kiosk at Yankee Stadium, and then more kiosks at other stadiums and similar facilities. The work was profitable but back-breaking. Despite the heavy lifting, I did enjoy, as one former franchise colleague put it, having my “man license” and driving a trailer around with 900 pounds of stainless steel inside–at least for a while. I realized I could not sustain this unexpected business model for very long (though some in our system do it and love it). I had to, as Michael said, make the decision right. Walking away–as some other franchisees have done–wasn’t an option for me. And do what? Go back to corporate America? Not a chance.
So I changed my business model from retail events to catered events with smaller, portable equipment, and focused on corporations, private parties and colleges. I am solidly on my way to a multimillion-dollar business and have no intention of stopping, and no desire to. I am having too much fun and too much success. All because I didn’t make the right decision, but I made the decision right. If you know who said that first, let me know.
Posted by Mitchell York under Uncategorized
In Summer 2009, I will publish Franchise-Freedom or Fantasy? How to Know if a Franchise is Right for You After Your Corporate Career. The book is based on my seven years of experience as as a successful franchise owner and coach for entrepreneurs.
In my coaching practice, I work with executives who are considering entrepreneurship–which often includes an evaluation of buying a franchise. In the book, I lay out for the experienced business person a process for understanding whether franchising is a potentially viable alternative and, if it is, how to move forward. The book includes critical information including:
- Knowing whether you are pursuing a franchise for the right reasons
- The critical skills you need to be successful in franchising
- What reserves you need before you start
- How to negotiate with franchisors
- How to evaluate non-franchise alternatives
If you’d like to be notified when the book becomes available, please email me with BOOK in the subject line, and I will let you know.
Posted by Mitchell York under Franchising
Browsing through my Google Reader this morning I came upon The Franchise King blog, which is written by a franchise broker (someone who is paid by a franchisor when a prospect he brings in buys a franchise). The post starts with a photo of a family (above). The headline:
“Microsoft is getting into the downsizing game, and in a huge way. When Microsoft fires 5,000 of it’s [sic] workers, all of us need to take notice….”
It goes on,
“Do you realize that 5,000 families have been impacted? This is the real story. I remember the 3-4 times when it happened to my dad. I remember the look on his face, each and every time it happened. It was a mixture of anger, sadness, and worry. As kids, (3 of us little munchkins) it was quite scary. Now, there are 5,000 families feeling what our little nuclear family felt. They are feeling it today. The question one needs to ask themselves [sic] is this: “How many more times will I have to feel this way before I get the courage to start owning what I do?”
Can you hear me over the movie soundtrack of the King’s melodrama? I’m hearing a John Williams-y score reminiscent of gathering storms: timpani drums, brooding cellos, a French horn perhaps. I give him credit for going after the laid-off ‘Softies – if anyone has money to spend on a franchise, it’s probably those folks.
The King’s line of reasoning plays on the emotions of potential readers. It is very appealing to say to oneself, “This time I’m gonna stick it to the man and be my own boss!”
The King will probably make some good money this year selling franchises to families on the rebound. I am a franchisee myself, in addition to being a coach to entrepreneurs. I bought my franchise when I was rebounding from a lay-off and a bunch of other things that had me very low. I have been in my franchise for seven years and have been highly successful—I would guess I am the most profitable franchisee in my system—but my decision-making process was all wrong. I was running away from something, not running toward a vision of my future. And I was highly susceptible to the sales pitch of a franchise broker who was a little more subtle than the King, but just as effective.
If you have been laid off, there is a process you can go through to get to a place where you can make good decisions about what to do next, and to evaluate whether getting another job or starting a business is the best solution. The first step is to ignore the pleas of people trying to make money off your hardship. If you want to know other steps in the process, get in touch with me. If you have advice of your own on this issue, please comment here.
Posted by Mitchell York under Franchising
There’s a provocative post on one of StartupNation.com’s blogs. The title is, “Out of Work? Consider Buying a Franchise.” The writer cites the downfall of Wachovia Bank and addresses the 5,000+ workers in Charlotte, NC, who have already lost their jobs.
The author writes, “When the unemployment rate is high and large corporations are downsizing, buying a franchise is typically a good alternative for someone with the entrepreneurial itch.”
Nooooooooooooooooooooooooooooooooooo!
Buying a franchise isn’t good for an itch. In fact, franchising can make you want to scratch that itch until you have a huge rash. An infection. Gangrene. Amputation! You get the point.
When you get laid off (and I know whereof I speak, I was there once seven years ago courtesy of Ziff Davis Media), you may not be in the best psychological frame of mind. Your confidence is shaken, your routine disrupted. You’re disoriented. To distract yourself, you start Googling and clicking and, before you know it, you’re a franchisee. You’re still hurting from what happened in your job as you embark on something that will test your limits as nothing has before.
You are not running toward something as much as running away from something. And it’s just a matter of time before you can’t run fast enough or far enough to get away from yourself.
If you find yourself laid off from a financial services job or any corporate job amidst the economic chaos that is unfolding, and you are fortunate enough to have enough cash in the bank to even think of buying a franchise, my advice is to wait a while. Consider taking a few months to do some things completely unrelated to work. Travel, spend time with your family, read–whatever pleases you. Even if you’re a “Type A” with a short attention span, resist the urge to jump too fast into something else. You may not be the franchise or entrepreneur type, and if the itch goes away by itself, that’s a lot better than spending your nest egg on a dubious prescription.
Have experience with buying a franchise before you were ready? Or one that totally contradicts my point of view? Let me know.
Posted by Mitchell York under Franchising
I had lunch the other day with a franchise consultant who helps people find a franchise that’s right for them. He is a franchise veteran in addition to being a consultant. We agreed that for the past half-decade or more, franchising has been driven to some degree (I think a large one) by middle-aged Baby Boomers who grew tired of their jobs in corporate America and found an easy way to buy themselves a job through the equity in their homes. They bought an unprecedented number of franchises, writing checks from easy-to-get equity lines of credit.
I knew some of those people personally–the ones who would have been better off spending $10,000 on a Club Med vacation, rather than $200,000 on a franchise, because all they really needed was a change of scenery for a while. Now, many of those people have closed their businesses because they did not find the success that their franchisor and their own fond wishes had promised them. Along with shuttered businesses, many have lost homes and/or their kids’ college savings.
I’m not one to look for silver linings in bad news. The stories I have heard are harrowing. There’s no “Oh, well, it’s a learning experience” to be said when someone loses their house.
The future landscape, which became a reality in the last month but has been taking shape all year, looks very different. My friend the franchise consultant is already seeing it in the people who come to him looking for a business to buy. The people who were going to buy a franchise out of boredom, or because they couldn’t find a job after a layoff, are gone. They are being replaced by people with maturity, management experience and cash.
It turns out that not everyone can or should own their own business. Entrepreneurship is not something everyone can do. That’s why, when I’m asked by prospective franchisees about whether the particular franchise I own might be good for them, I do everything I can to get them to run for the hills. If they’re crazy enough to be entrepreneurs, they don’t need encouragement from me. They’ll go ahead and do it anyway.
Posted by Mitchell York under Franchising
I like to think I walk the entrepreneurial talk. In addition to writing about entrepreneurship, I do it. I’ve been doing it for over six years in a national franchise. It’s been a long, sometimes painful, but now increasingly rewarding experience.
The franchisee base of which I am a part is a bell-curve of success–some people are killing it, some are getting killed by it, and most are somewhere in the middle. In the past week there has been an email thread going around from some of the people who are on the left side of the curve. One asks if anyone is interested in initiating a class-action lawsuit against the franchisor for selling them “a bill of goods,” for “disclosure issues,” for lack of support.
Over the years, many prospective franchisees have called me and asked my opinion of the franchise. They want me to tell them whether it’s a good idea for them to become a franchisee. My answer is always the same. I try to discourage people from buying this or any franchise. Not because I don’t like the business–I love it and it’s a big success for me. But people who seek affirmation from strangers to make the biggest financial investment of their lives are getting themselves in too deep. So it’s easier for me to tell people who are interested in this franchise (or others), one or more of the following things:
- Why do you want to buy this franchise? Are you running away from something?
- You’re going to invest $300,000 or more (for those who decide to open a retail store). How long will it take you to make that back, and what percentage return on that investment do you expect? How does that compare to taking the same money and buying a no-risk Treasury bill? Are you just bored? How about getting a job you like better than the one you just took a buyout from?
- Have you ever in your life done anything entrepreneurial? If not, what makes you think you will be successful with a franchise? And if you fail, what happens then? Will you lose your house? Your 401(k)? Your marriage?
One franchisee, who has become a valued business partner of mine doing profitable projects together, saw the email exchange and asked me, “What the hell is going on!?” I told her this: “Ignore stuff like this. Negativity = Failure. Positive attitude + action = Success.”
It is incredibly easy to psych yourself into a tailspin when you own a business. Or to raise yourself up and keep going until you find the formula, the business model, the customer set that works.
I’m a collector of franchising stories, so if you have one, good or bad, feel free to share.
Posted by Mitchell York under Uncategorized
If you are a newly minted entrepreneur, you will need to stop caring what your former work colleagues and your friends think about what you are doing. When I started my business in 2002, my friends and ex-work associates thought I had gone completely nuts. I began as a franchisee of a company with the unusual but catchy name Maui Wowi. To go from being a bigwig at the likes of Ziff Davis, LendingTree and other respectable employers and plunk down a big hunk of cash to wear a Hawaiian shirt and sell smoothies for $5 apiece at events is rather a change of professional pace. Hey, no wonder my friends thought I was nuts!
Within weeks of completing franchise training in June 2002, I convinced the New York Yankees to allow me to run a concession in the Stadium. By early August, I was at Gate 4, right at the entrance, dressed in my wacky shirt, selling smoothies (with rum, lots and lots of rum) from my tiki hut to the well-heeled season ticket holders who sit in the good seats. I was so busy getting my business up and running that I hadn’t gotten around to telling a lot of my friends what I was up to. I will never forget the day my buddy Scott showed up at the stadium. The astonished look on his face when he saw his former publishing industry colleague slinging smoothies to hordes of rowdy Yankee fans was, well, astonishing! Not only that, but I had also recently memorialized my break from the corporate world by getting a tattoo on my left forearm. When he saw that on top of the tiki hut, blenders, and me in my shirt, well, I don’t think his eyes could have widened any further. I was immensely entertained by the look on his face as my one employee and I frantically made drinks, hundreds and hundreds of them, for $8 apiece ($3 extra for rum). For me, this business was the perfect rejection of corporate life. Rather than selling advertising programs for $100,000 or $1 million, here I was selling instant gratification in a cup. I felt not the least embarrassment for trading in my suit for jeans and an Aloha shirt.
The business has morphed almost entirely since then. I have shifted it from a high labor content/moderate margin to much lower labor and very high margin by dealing only with catered events and getting out of retail completely. I have hundreds of customers, including over 50 colleges, dozens of event planning firms and corporate clients, and countless individuals who book our services for parties.
It’s a perfect business for me. It offers nothing in the way of status, though. For many corporate executives looking to do something else, status is still important. In many businesses you might get into, after corporate life, you can count on your friends not “getting it” and wondering what’s up with you. If you care even slightly what other people think, my advice is not to go down the entrepreneurial road.
