Franchaises

MnSue

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I may have the opportuinity to purchase a established FF. This would be a hugh step for me, and I'd like to hear some pro's and con's; which questions to be sure to ask; and any "if I knew then what I know how" senerio's. While I have been self-employed before, I have not had a franchaise "attachment" to be concerned with.

Feel free to email comments privately to protect the innocent (or not so innocent!)

thanks
 

Baer Charlton

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Think of a francise as an individual shop that has someone elses eye on your book and their hand in your pocket at all times.

For that, you get some advertizing, and name recognition. That will get them through the door. If you keep them, and more importantly keep them coming back, is entirely up to you.

Every francise has had thier share of the owners becoming dissatisfied and sues to get out, going BK, just quiting, turning around and selling for a loss, doing just fine, buying a few more francises they like it so much, doing fabulous and selling out to someone who pisssed it into the rathole before the first year was up.

So you can listen to the glory stories, the doom and gloom, or the same-ol' same-ol'; but the bottom line is your gut.

But no matter what you do, we have to give you your due for even considering ownership, Sue. Good on ya.
 

mickdermesser

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We have had a good experience with a startup franchise. We were able to get up and running in a fraction of the time that it would have taken us on our own. We pay a franchise fee that is reasonable for the support that we receive.

It seems to me that a lot of the value in a franchise is in the startup phase. If you were choosing between buying an existing franchise and an existing independent, the arguement in favor of a franchise becomes weaker.
 

Bill Henry-

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Franchises may be good for some people but it wasn’t for us.

Twenty some odd years ago we explored the possibility of a franchise. We got the contract and (wisely, we think) had our attorney look through it.

Some of the things that were disturbing to us were:

The Franchisor would hold the lease to our building and determine where the shop could be located. We would have to pay them and they would pay the landlord.

That gave them the right to “freeze” us out. At any time, if they chose, they could return our franchise fee, and place another franchisee in our location.

We would have been prohibited from leaving the franchise (whether voluntarily or otherwise) and opening any other store within a 10 mile radius for 5 years.

Regardless of what we sold (not just framing), they would take a cut off the top (not just from profits). If we decided to sell use airplane engine parts, they would still take their cut.

Our attorney returned the contract with his nose pinched.

Seriously, before you commit, have a lawyer look at the deal!

We set up our business how we wanted, where we wanted, and at a much reduce cost.
 

JbNormandog

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I would just wonder why the current owner is selling.

If it seems like a real reason look deeper into it before you go further.

All in all I didn't go that way because I didn't want anyone telling me what I can and can't do with my shop, paying an additional fee to them at the end of the month also didn't apeal to me.

You will hear positive and negative about it. Take it all in, hash it out, and then do what your lawyer, accountant and HEART tells you to do.

If those three don't agree go with the majority!

Best of luck to you.
 

MnSue

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Keep those "cards and letters" coming. Great to hear all the different perspectives. I do know in the end it is up to me, but a "broader" perspective is always a good thing.

thanks again
 

Cliff Wilson

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Before I opened I investigated both with and without a franchise. Ran business plans for both cases. There are clearly pros and cons to both. The biggest advantage to a franchise is the "system" which is setup and running. So, you know you don't have to reinvent the wheel when trying to figure out how to "run" a shop.

The more experience you have and the more you know how you want to run things, the more frustrating a franchise might be. I say "might" because different franchises are more or less restrictive. This is where looking at the contract and talking to other franchisees of the SAME franchise system will be the most benificial. I called and talked a fair amount of time to 36 franchisees as part of my investigation stage.

Make a list of questions and make calls!
 

J Phipps TN

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I made the choice not to buy a franchise because of cost. I was able to open my store for 1/5th of the cost of a franchise. Granted, I started with minimal equipment and a not so super looking shop and built from there.(slow going, dont' recomend it)

It really comes down to how much money you are willing to invest. You could probably have just as good a shop as a franchise for about half their cost.

Even though the franchise has great deals on marketing materials, they still charge you for it. Add in the cost of the monthly fees and the rent, because they always want the highest and best location, and you really are giving them alot of your proffit.

Figure the cost of doing it yourself and see if it is worth your while.

It's your money, If you have the "know how", why pay someone else. You are the one doing the work right?

I do beveive they are a good investment for someone who doesn't know much about the business up front. The problem is that you keep paying for that start up for years to come.

The question I would want to know is how much money does the current owner take home? Then decide if you are willing to make that kind of investment for that kind of income.

Just my 2 cents
 

FF_Hoboken

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Longterm benefits can include, the value of the brand itself, discount programs (increased buying power) and marketing initiatives and support.

Everyone has different experiences, so talk to many. Also talk to existing franchisees in markets similiar to the one you are considering.

We would be more than happy to share our experience with you (and anyone else) as long as you have already made contact with FF Corp.

Dan
201.217.1200
 

Jerry Ervin

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This topic is just like any other here on the G, you will get vastly different answers.

I still believe that a franchise with the right company in the right area can be a very good decision. I have met some operators that make a very good living.

Buying an existing location can be a great deal for the buyer. These locations are often sold at a lower price than the original franchise fee. However, what is the real reason it is being sold? Did the operator make a Million bucks and is retiring to Hawaii or are they going broke and trying to dump the store?
 

DTWDSM

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There are many pros and cons to owning a franchise, I should know.
It comes down to what you are comfortable with and what your goals are.

*********DISCLAIMER **********
When I mention the below points, I am not pointing out anything bad about anyone here or the way that they do business, to each their own.
*********DISCLAIMER***********

A franchise tends to do more sales than what the non franchise ownwer does.

A franchise tends to have better buying power behind it.

A franchise will tend to have better marketing materials than the non-franchise owner.

A franchise tends to have a better name recognition

A franchise tends to have better support for the owners.

A franchise tends to have a proven plan that makes the owners successful

**Notice I said "tends to" on all of these. I am not familar with all franchises and I also know that there are many non franchise owners that may have better or do better on these points.**

If you wanted to open a hamburger joint, would you open a McDonalds or Joes Hamburger Shack

Sub shop...Subway or Sue's Subs

Pack and Ship company... UPS Store or Pauls Pack and Ship

Oil Changes...Jiffy Lube or Olive Oyl's quick lube

I think you get my point but a franchise is not for everyone.
 

Baer Charlton

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Today I have been thinking about this very thread.. don't ask me why.

An other analogy would be an obese person. They want to lose half their body weight.

Non-Franchise: read all the books, work out the menu, see what works and doesn't work. Eat alone, because the rest of the world is out eating what they want. See the doctor once a year (IRS).

Franchise: Join Weight Watchers, and a Gym. At WW there happens to be a group that works out at the gym when you do. They do it all together. They call when you are late and sitting on your fatass in front of the TV. WW helps you with a menu that works for you; even when you go out. They are there when you're having a rough week, and they are there when you hit your goals to cheer you on.

Most of them have been there, and have real life stories that you can draw from.
 

Baer Charlton

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Paul, you told me that Paul's Pack & Ship was a tour company specializing in kids who wanted to backpack their way around Europe and get there by ship. :eek:
beer.gif
 

josephforthill

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I have been thinking about the franchise issue as well, and even though it has been discussed here before, it usually seems to be driven by what the framer wants.
I think the reply that discussed name-recognition came at this from customer viewpoint. Even though I sense that a majority of framers here would not go the franchise route, I wonder what a customer would choose? As I fumble my way to a decision, I am paying attention to how people (including myself) make purchasing decisions, and realized that I often would pick a chain or franchise over a standalone business. It would be interesting to think about whether there is enough customer appeal to make the franchise worth the expense.

Joseph
 

Cliff Wilson

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To add a little to Tim's post ... when I was investigating, the average independent shop was at about $150 and the average franchise was at about $230. That's a fair difference.

What I never could figure out was if that was the advantage of "the system" or that more "business people" tended toward franchises and more framer/artists tended toward an independent store.

Frankly, I found a LOT (this surprised me!) of independents that didn't want to make more than $100k!! Franchises that stay that small for a moderate extended time, close. That just isn't their goal going in.

So, is the higher average for franchises due to their "better opportunity" or is it a result of the nature of the operators that go that route?
 

MnSue

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Originally posted by Cliff Wilson:


Frankly, I found a LOT (this surprised me!) of independents that didn't want to make more than $100k!!
Please - Put me in the "more than 100K" catagory!

Great discussions, thank for all the impute - not only here, but directly too.

Grumblers Rule!
 

Jerry Ervin

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Originally posted by Cliff Wilson:
... when I was investigating, the average independent shop was at about $150 and the average franchise was at about $230.
I trust and believe you Cliff, but is that something we can prove? If so, my next addition, if I decide to open a second location again may be a Fast Frame.
 

josephforthill

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Is it possible (in Cliff's findings) that the difference is that a franchise company will look more analytically at the numbers, where an independent might be more swayed by, for lack of a better word, emotion? For example, open in a location, and make accomodations in their goals because they really like the area, etc. rather than analyzing only by traffic count, demographics, etc.
 

Cliff Wilson

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Jerry, the number I gave you was from a TGFU information statement from 2001. (Those numbers are in 1000s for those who weren't sure.)

If you inquire with FF I am sure they will give you data on there shop averages and distribution. If they don't, look at other franchises!
 

Cliff Wilson

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Joseph,

I was NOT impressed with the results of their "locators." I thought they failed miserably in analyzing proximity to competitors and other factors.

I really do think the difference is in intent. I know it's hard to believe, but a number of independents don't actually want to make money. At least, their actions (pricing, hours, lack of marketing) pretty much make that statement loud and clear!

Franchise owners seem to get into a franchiise because they want some assurance that they will make money, and they are willing to follow someone elses lead to help them to that end.
 

josephforthill

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Well, really, Cliff - if their intent is to not make money they can easily accomplish that by not opening at all. I think what you mean is that many independents are not business-like, which may very well be true. And I think that independent operators can, in many cases, allow personal values/tastes, etc. be a factor in business decisions, where an impersonal franchising company will be more "bottom" line. Not that one is better than the other, but I think you need to find out where you are comfortable.

My original question, however, is still, do customers perceive a value in a franchise over an independent? I just saw an ad in Boston Globe for another framing franchise company opening in this area, and wonder if it is the way of the future.
 

Cliff Wilson

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No, actually I think you'd be very surprised at how many independents are in it to "satisfy their artistic gravings" or to "pick up a little spending money" and really don't care if they grow their business AT ALL!

As for the future ... keep in mind that in NE alone we have seen franchise like Kennedy Studios, and Frame King Express come and go. I think we will continue to see them come and go. It's both the future and the past.

Someone mentioned sub shops. I think this industry isn't much different. Some operators will want to own a Subway and some will want Elsa's Bushel and Peck (a local successful sandwich shop).
 

DTWDSM

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I know that my opinions are biased here and the majority of Grumblers are not franchisees so please do not be offended here, these are my opinions on some of the things that have been said here.

Franchises are impersonal... I can not speak for all but, if all of them are, why do they keep on selling them???


Franchise owners are more business oriented than independants...Sorry to burst bubbles here but franchise owners are independants as well. I also have seen franchise owners that are not business oriented, and many non franchise owners that are business oriented.

Franchise owners get into a franchise for some assurance that they will make some money...Show me a franchise that will tel you that you will make any amount of money and I will buy in. There is no franchise out there that will make any such promise. Whe selling a franchise, by law the franchisor has to tell you the good, bad, and ugly.

There are many assumptions that when you buy a franchise, you do not have any decision making abilities at all, you must follow everything that a corporat office tells everyone to do.....Go to 10 different McDonalds in a couple different states, they do not look alike and they do not have the same prices, many times they may not even have the same menu. A franchise sells a concept and a brand name. Of the top 5 DTW stores in the country I can guarantee you that they are all different sizes(sqft), have different products, have different prices, use diferent marketing concepts, use different colors on their walls, different carpet, and it goes on and on, yet they all do at least 5 times the industry average.

Independants may be swayed by emotion...any business owner can be swayed by emotion, it does not matter if you are an independant or franchise owner.

To answer your queston Cliff...It is not just the system or that owners are business people, it is a combination of both and other factors.

As I said in an earlier post, there are pros and cons..to each their own
 

Cliff Wilson

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"It is not just the system or that owners are business people, it is a combination of both and other factors."

I agree completely Tim! But, we always leave something out when we're writing these quickie posts!

I spent many months analyzing both options. My final decision was personal and had no bearing on the pros and cons of franchisers in general or the particular one I studied hard. There are DEFINITELY advantages to either option.

I was speaking in generalities. And yes, I found specific exceptions to each example as you stated. BUT, 3 dozen franchise operators and 3 dozen independents later (not exhaustive, but a fair sample) I can say that the GOAL of making a profit is much "stronger" on average in franchisees than in independents.

I can not recall a franchisee saying "I just want to pay the bills and enjoy my work." I heard almost exactly that from a number of independents.

In addition to everything else a franchiser offers, they put goals and "carrots" out there that help the operator strive toward profit motives. So, even if an operator becomes a franchisee with the same goals on average as an independent (I don't believe this, but for arguments sake ...), the franchiser, in most cases, without being necessarily being "bossy," provides incentives and motivation to overcome some natural reluctance to profit.

"natural reluctance to profit" ... feels odd to write that, but I think it's true.
 
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