-An Insider's Guide to Buying A Franchise-

By now, you’ve seen this process of buying a franchise up close, closer than most ever will. You’ve heard about CONSULTATION – PRESENTATION – DUE DILIGENCE – DECISION and the way we use it to hone in on a person’s preferred business model. I’ve used this same process for myself, with the exception of the CONSULTATION part since I’d probably get some pretty funny looks from the family, sitting there talking to myself.

And I’ve made it through the PRESENTATION part, whittling down the franchises that were a close fit, finally hitting on one that may show promise. Now it’s time for the DUE DILIGENCE.

And to finally let you guys in on what the franchise is exactly.

But I promised to keep these posts short, so now’s as good a time as any to start making good on that. More later.

Well, we’re getting close to June so I’ve been at this franchise selection thing about a month and a half now. That’s a little bit of a sprint compared to most people that go through this but, as you know, I’ve been in franchising a while and already have a good idea of what concepts are out there.

There’s another concept that has been on my radar for quite a while now. In fact, I just recently helped someone in Houston with their purchase and that brought it even more to my attention. It’s a concept  that uses a new technology to make custom apparel, T-shirts mostly, and other garments like Polo shirts, aprons, hats, bibs, you name it. Instead of silk screen like most custom shirt makers use, this franchise uses an ink-jet printer that prints any image you can think of onto a garment using fabric dyes. The image becomes part of the fabric instead of sitting on top of it like with a screen print, so nothing flakes off and the image lasts as long as the garment.

The business seems simple enough and it’s also small in scale. It takes about 1,000 to 1,500 square feet for a typical store, has 2-3 employees in the store at any given time, and doesn’t need a super-expensive shopping center in order to work.

The funny thing is that I’d been thinking about this concept so much over the last few months that I found myself looking for potential sites when I was out and about. One day I was running some errands and I found an ideal site that’s near home and the university, right in the middle of plenty of retail action, etc. So now my wheels are really turning – I’ll have to check further into this one.

So, back from OC and excited about what I learned about the sign concept. Meanwhile, I started working with a new client the other day that may have some interest in it as well. He and his wife are both very accomplished in business and many of their criteria match up. It’s time to put them in touch with the company’s rep and see if it’s a good fit. They’re also looking at a retail sports nutrition business, a retail shoe business, and a few others. We’ll take them through our process and see how it works out for them.

That’s the way our process works – remember; CONSULTATION – PRESENTATION – DUE DILIGENCE – DECISION. Works every time.  I just have to be sure not to miss any of the steps for myself.

So, how did the sign concept fare for me? Well, it definitely was a franchise I could see myself having a lot of fun with – relationship building, sales, some high tech gadgets thrown in for good measure. But there was a big problem – the time necessary to grow the business would be significant. Not really a semi-absentee play. I’d really need to devote myself to this one full-time/all-the-time, as that was pretty evident from talking with their owners.

At another point in my career this would have an excellent choice for me but I ultimately have to pass. Not to say I’m not excited about it though. In fact, I referred my Southern California client to them today. It may be just the right thing for him.

I’ll write more soon about another concept that has piqued my interest – will it be the right one???

I was in the OC the other day. As in Orange County, California. Land of beaches, sunshine and choking traffic.  I’d gone there as a guest of a sign making  company to attend their “Discovery Day”, the day when they invite potential investors to come and see what they’re all about. I made the trip from Tucson that morning and by noon was sitting having lunch with the franchise owner, several of his representatives, a few prospects, a store owner or two and a couple of brokers like me.  We were all getting acquainted and hearing about some of the company’s recent successes. This particular company has been around 22 years and specializes in helping people create a business out of making signs of just about any kind. Mostly the high end, digital stuff – a really nice concept. They sell you the equipment you need, train you on everything, and then provide support while you’re learning the ropes.

After lunch, we visited the corporate training center, heard from their support staff, and got all of our questions answered. I was pretty impressed with their store results and with the way the business is run in general. Again, a really nice concept – and it got me really enthused.

Was I right for the business? Pretty much, I decided. It’s done best by someone who knows how to sell and network and I had a fair amount of experience with this type of business when I sold AlphaGraphics franchises. So I start investigating further. The investment is $185,000 so that’s a check. Recession proof – maybe a little less than some others, but businesses always need signs. The average life of a sign is 30 days and that means a lot of repeat business. Their owners had reported some decline in sales but nothing at all like with other industries. We got to meet a new owner and visit their location and they were ecstatic with their results.

I could really see myself in this business. You’re mostly selling to business owners, white-collar stuff; the hours are great, no weekends, 9 to 5, weekdays only. And you don’t need a large retail store or a huge staff.  Could this be the one?

Stay tuned to find out. Right now, it’s back to the broker side of things. A client from Phoenix needs a call back so I’ll write some more later.

So many franchises, which one to choose? I had a couple of concepts that I was excited about. In fact, if anything I was too excited about too many of them. I tend to be passionate about franchising because I see a chance to really help my clients. The right franchise choice for the right person or couple can change their lives – get them out of the humdrum routine of a corporate job and put them in control of their lives! But now to do it again for myself, that’s a different animal altogether.

It’s important to know that we have a process we use with our clients that makes this process pretty simple. It’s all spelled out on our website in an article we call INVESTIGATING FRANCHISES – THE PROCESS . Take a minute to read this article and you’ll see it all boils down to four steps – CONSULTATION, PRESENTATION, DUE DILIGENCE, DECISION. Simply put, we consult with people until we get to know what would work for them, present several concepts for them to consider, teach them how to do their due diligence, then help them make the final decision. Here are the criteria I outlined in my previous post:

• Simple structure to allow for semi-absentee management
• Small staff & overhead
• Investment in the $100k to $200k range
• Recession resistant
• FUN!

Someone else might have other criteria, like a certain level of income, but these were mine. I’d already consulted with myself and decided what criteria best fit me. So the first concept I “presented” myself is a one-on-one in-home tutoring concept. It’s a really simple business that owners run from their home, directly competing with more traditional retail-based tutoring concepts. Pluses included a better product – customers like the convenience of having the tutor come to the home and also the one-on-one attention – and much lower overhead since they have none of the rent or expense of a physical location.

Profit margins in this franchise are great and the company is growing like crazy. In fact, I’d recently started working with a referred client in Portland. At the time, there were none of these franchises there but by the time the client signed on, he was the forth new franchisee signed for that market! Four new franchisees all opening at the same time in the same market. The competition won’t know what hit them!

So how well does this one “fit” me? First, I know how to sell and, even though the franchise says no prior selling experience is necessary, I thought I’d have a real advantage there. The total franchise investment is very low – a total investment of around $65,000 and you’re ready to start marketing and selling – so it’s actually lower than our stated $100,000 to $200,000 range. And from what I understand, it’s the kind of business that does well whether there’s a recession on or not. Parents may cut back on a lot of things in tough times but their kids usually come first. The proof was there since most of their franchisees started up and are flourishing during the current recession.

So that left semi-absentee management. Would I enjoy the daily activities of an owner and could I easily turn over daily operations to an employee in a few months? After talking with their representative and reviewing their materials, the answer came back loud and clear. Most of their successful owners were hands-on operators who did the sale & marketing and tutor recruitment themselves. And, at the end of the day, I didn’t have a real interest. Yes, I have a child that might be a client, but other than that I didn’t really see it as being fun for me. I decided that even though I had a high regard for the concept, ultimately it wasn’t for me.

It’s important to note here that just because a particular concept doesn’t meet my specific criteria, I’m in no way meaning to be negative about that concept. In fact, in the few months that I’ve been making my decision, I’ve sold three of these franchises to people who it did fit.

So for now it’s on to the next concept.  More later…

There have been a lot of changes in how we do business over the last 30 years or so, but the process of opening a business has stayed relatively the same. First you do your research on the concepts you’re considering, and then, when you narrow that down and become a franchisee, it’s on to financing, site selection, lease negotiation and so on.

In my case, which concepts I’d choose from was relatively straight forward. I’d already decided that I wanted a concept that was simple enough in structure not to require my full-time efforts. It might take six months or so of my complete attention but then I’d be able to turn over some of the day-to-day tasks to a manager. Also, a small staff and low overhead were important. I loved the team we had at our furniture business but a large staff pretty much means full-time if for no other reason than you’re always recruiting, trying to keep ahead of turnover. Also, the investment level should be reasonable – something in the $100,000 to $200,000 range was the target. Then there was the work itself. My last franchise was in something I had no real connection to – furniture and interior design – so I wanted this one to be in something that would be fun for me, something I’d really enjoy doing. Lastly, due to the economy’s ups-and-downs recently, it should be something fairly recession proof. I’d already seen what the recession had done to my friends who remained in the furniture business and I wanted no part of it.

Believe it or not, the next step was pretty simple. Simply go through the 3,200 franchises out there and figure out which was best for me! Keep in mind that I have a tremendous advantage over most people who go through this – I’m in the business of evaluating franchises so I already had an idea of what was available. Our company is pretty selective in who we represent.  There are simply too many franchises that are either a bad investment or are of the types of concepts that we don’t want to handle. Fast food franchises, for example – we simply don’t deal with them. The investment levels are generally high, competition for sites and staff are high, the hours bad, the margins worse – well, you get the idea. The same goes for the automotive after-market for the most part. They can be great investments if you own a large number of units but it’s better for us to refer our clients to other brokers for this if they’re dead set on these industries.

I’ll start working on this some more later but for now, I’ll put on my broker’s hat and call my new client in Southern California and see what I can do to help him and his wife in finding their perfect franchise.

One of the things you’ll find if you’re a franchise broker for very long is that there are a lot of great concepts out there. And if you have a little inside knowledge of how things work, you can’t help but see opportunities to build a business and make money. After all, I’ve already done it once and there’s nothing like having a business up and running, with skilled employees, producing revenue and growing. There’s a real freedom about it that I’ve had a hard time finding elsewhere. Don’t get me wrong; the brokerage business is fun and rewarding. I really enjoy helping people find the right business. But I really wanted something to do beyond a few hours per day of simply talking on the phone.

So, one day I mention to Rebecca that I’m thinking of getting back into a business. I’d gotten the itch to pursue a business that I could run along side my brokerage business, one that would be substantial enough to make it worthwhile but semi-absentee enough that it wouldn’t overwhelm my brokerage efforts. Knowing me, she wasn’t surprised at all. She thought it would be a good way for me to exercise my creative side, the part of me that enjoys building a business.

And this is where the story actually begins. Over the next few months I’ll outline what it’s like to research, buy, open, and run a new business – just like my clients do all the time.

Newsflash. Tucson, AZ – 2010. Business type guy sells franchises for 25 years and then decides to buy a franchise business of his own. So someone mentioned that blogging about it would be interesting, and here we go.

I’ll try to keep my postings brief and interesting but a little background is necessary first.

I’m 54 years old, married almost 20 years, have one 10 year old daughter and have lived in Tucson the last 15 years. I cut my teeth in business starting out in retail – cameras actually, back when they were the film variety – nothing digital about it. Then in 1984, a good friend mentioned he was going to take his small chain of camera stores and make it into a franchise. Well, I barely knew what a franchise was but agreed to join him in the venture and we were off and running. One thing led to another, and before I knew it, 25 years had passed and darn if I hadn’t spent that entire time in the franchising industry. I’d worked with franchise companies large and small in industries as diverse as eyewear, printing, furniture and veterinary care.

And most of that time, I had specialized in the “selling” of franchises – actually helping people who want to become business owners use franchising as a way to shortcut the process – to use someone else’s concept to create a business for themselves, even becoming a franchisee myself in 1997 when my wife, Rebecca, and I decided to open a furniture and interior design franchise shortly after moving to Tucson. I was selling franchises for AlphaGraphics (a printing franchise) but felt that owning a business would be my ticket out of Corporate America –you know, master of my own destiny and all that. That franchise was hugely successful and in 2000 I left my job for good and became an independent business owner.

While running the franchise, I also began helping franchisors on an independent basis, taking on the odd consulting job when it came along. Fun work if you can get it and it helped offset the day-to-day routine of the furniture business. Everything went great for about 9 years then, just prior to our having to renew the lease on our building, the recession starts to set in. To make matters worse, our franchisor had tons of red ink on their books and I wasn’t’ sure they were going to survive- -a real problem since they also made the furniture we sold! Selling was out of the question – I couldn’t leave someone with a shaky franchisor. So rather than renew, we chose to liquidate, which turned out to be a brilliant (read lucky) move. A few months after a successful exit, the economy completely tanked and our franchisor went belly-up after 107 years in business!

Luckily the consulting side of things had recently picked up. Then last year, in the midst of the worst recession in decades, a long-time friend and I decided to start a new franchise brokerage firm. I’ve known Rick Shampaine for over 25 years and both of us are veterans of the franchising business. While I started business in other endeavors along about 1976, my first gig in franchising was in 1984 with a small company called CameraAmerica. Remember 1-hour photo labs? Well, CameraAmerica was that plus a few 35mm SLR cameras. Anyway, Rick and I met there when he came to sell franchises for us and we’d stayed in touch ever since.

So, as I was saying, the economy tanks, people are scrimping on everything from vacations to car repair and lattes, and we, geniuses that we are, decide to open a new business. Actually it wasn’t as crazy as it sounds considering people were being laid off in droves and we were in the business of offering them an alternative to finding a job – buy a franchise and take control. The American Dream, as it were.

And take off it did. Well, not exactly right away. But once we had the initial kinks worked out things really started happening. As franchise “brokers” (or consultants, another common term), we basically are in the business of helping potential investors find the right franchise. We take them through a process of self-discovery which includes a lengthy questionnaire and interview process until we know enough about them to be able to recommend and present a few franchises possibilities to them. Then we act as their advisors through the entire process. It’s a bit more complicated than that but for more details, our new website– www.shampainebish.com – will fill you in.

So that pretty much brings us to the present day situation. I’m now working from home, have complete freedom over my schedule, no boss, no worries for the most part. What’s not to like, right?

Stay tuned because some people just can’t leave well enough alone.