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So you want to start a franchise?

Marketplace Staff Feb 26, 2009

So you want to start a franchise?

Marketplace Staff Feb 26, 2009


Kai Ryssdal: The number of people filing for unemployment benefits ticked up again last week. That bodes ill for the February jobless report we’re going to get next Friday. And it reaffirms what has become maybe the signature economic indicator of this recession — that millions of people are out there looking for work. Some of them have no doubt considered going into business for themselves. They’ll need an entrepreneurial spirit, money, and just possibly national brand name recognition to prop up sales.

Cash Peters wonders whether owning a franchise might be the way to go.

CASH PETERS: I know, franchising sounds like a world of exciting opportunity, doesn’t it? Alisa Harrison’s one of the organizers of the L.A. Franchise Expo.

ALISA HARRISON: If you ask people about franchising, they’ll think, “Oh, that’s fast food and that’s McDonalds.” They think that’s all there is. But it runs the gamut from automotive to food to lodging to child services.

Gyms, spas, prisons… Basically, you’re — actually, I’m not sure about the prison one — But basically, you’re buying into a proven business concept. Someone else has already done the leg-work — They have a brand, name recognition, and so on. You just come in and leech off their success. Hmm, I can do that, I thought. I can leech. Cynthia Abbott publishes Opportunity World.

Peters: I’m looking for an opportunity. Grr… I’m really excited.

Cynthia Abbott: Think about what you really like to do, what is fun for you.

Peters: You know what I really love doing? I love sitting at home, drinking coffee and eating cake.

Abbott: You can’t make much money doing that.

Peters: So I’ve found.

Abbott: Right.

Peters: Although it actually pays more than radio does.

Abbott: But maybe a coffee business?

Peters: Could you actually run a coffee business where you’re just basically eating the products yourself?

Abbott: No, no, no, you have to work.

Work? This franchise lark sounds hard. You work 60 hours-plus a week, and it’s not even your business. You’re still answerable to a dark corporate overlord — the franchiser. Julie Bennett’s written a guide book to franchising.

Julie Bennett: Not only do you have a corporate overlord, you have an operations manual. You have to paint the walls a certain way. You have to put merchandise on your shelves a certain way.

Peters: And what happens if you don’t? What happens to you?

Bennett: You may lose your right to operate that franchise.

You see? It’s not easy. Buying into a franchise can cost anything between $20,000 and two mill, which is another reason I won’t be doing it. One of the best ones at the expo, though, was Kelly’s Coffee and Fudge Factory, which sounded perfect for me, since it combines a unique business opportunity with the chance to eat fudge all day. Mary Gerlick, the franchiser, wanted me in.

Mary Gerlick: Definitely, if you’re interested to follow a proven system.

Peters: So if I took over a franchise of yours, and over a period of time I phased out the coffee and the sandwiches, but just kept the fudge?

Gerlick: No, that wouldn’t work. We need to have the coffee and the fudge together.

Peters: You should re-brand yourself and call yourself “Oh, fudge.”

Gerlick: “Oh, fudge,” but then there’s nothing about coffee in that?

Peters: I think nobody cares about the coffee. I think they just want to try your fudge.

Gerlick: They do. Would you like to sample?

Ooh, I thought she’d never ask. Currently, there are 3,000 on-going franchises in the U.S. One of the biggest ones right now is frozen yogurt. Swirls, for instance.

Swirls representative: Swirls is a self-serve yogurt store. So you come in here, you put the yogurt in your cup, you put the toppings that you want on the cup and you pay by weight.

Peters: So what’s to stop me just getting the yogurt and walking straight out the store?

Swirls representative: I’m not going to say “No one does it.” I’m sure people that don’t have morals and ethics will do it.

Peters: It’s a shoplifter’s paradise.

Swirls representative: Hahaha, probably.

Heh. Probably? The other hot franchise is senior care. Anything that helps old people through their wilderness years is a real money-spinner, apparently. Alisa again.

Harrison: We have an aging population, so…

Peters: Asian or aging?

Harrison: Aging. And so the services are multiple. In-home care, or you know, adult care services or transportation.

Peters: When my family got old and sick, I just moved to another country.

Harrison: Haha, well that’s an option.

Peters: I found that easier than franchising.

Harrison: That’s a personal issue.

Anyway, I ended up very confused. And I wasn’t the only one. I found this woman, Kelly Lee, exploring the booth of a restaurant selling environmentally friendly pizzas.

Kelly Lee: Oh, I’m looking for franchises for…

Peters: What kind of franchises caught your eye?

Lee: Green.

Peters: Oh, green? There’s a green pizza. I think they just left it out in the sun too long.

Lee: Hahaha.

But clearly, franchising’s not for me. There’s way too much effort involved. Julie Bennett.

Bennett: I interviewed dozens of people for my book, and I asked them, “What was the hardest part?” And most of them said, “Doing everything myself. I had a corporate staff before. Now I have to wash the toilet.”

See? I’m not doing that. But if you don’t mind, then try going to your local franchise expo. Cynthia Abbott.

Abbott: You really do need to do some soul-searching. You know, get the ground work done.

Peters: Well so far, I have narrowed it down to yogurt or old people.

Bennett: Haha. How about old people who are eating yogurt?

Peters: Well I thought, basically, if all else fails you could give the yogurt to the old people.

Abbott: You really don’t know what you are doing at all.

Oh, you think?

In Los Angeles, I’m Cash Peters for Marketplace.

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