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Franchising the easy way

Today I witnessed a chain of local stores, all owned and run by the same man, turn magically into a national franchise. I saw with my own eyes the moment when the first franchise buyer from New Mexico confirmed that the loan had gone through for him to buy a franchise. It was the company's first, and the new franchise developer heard it over the phone on his visit with the local shop. This is part of the great American dream of expanding one’s business into a franchise chain. Here's the story..

 

I spent an interesting hour at my local automotive windshield shop last week. Having driven to the shop a few times because of the same problem with trucks throwing up rocks into my windshield, I was attracted by the low cost of repair advertised on the shop’s billboard. I found myself at this garage a few times. This garage had sister stores and each shop was a stand-alone garage with at least a couple mechanics and a receptionist.

On the phone next to me was a salesperson speaking with enthusiasm about how he had just closed the first franchise for the owner of this small local chain. After he hung up, I made it a point to speak with him. The man in his early thirties had just been hired from another chain.  A few months ago as he came over the mountain, his windshield had cracks that this store in the valley advertised to fix for $9.95. It was the right price at the right moment. While waiting for his car to be repaired, he noticed the point-of-sales software that the store used to help customers to be immediately reimbursed by their insurance companies. Thanks to their computer network, his windshield would be patched up for free, compliments of his car insurance company. He admired the cleanliness of the shop and the potential for business. He discovered that a single owner owned the small chain. Clearly, he smelt the makings of a franchise opportunity.

The salesman approached the owner and asked if he had thought about expanding the chain through franchising. The owner did not know how to do that. An opportunity was born in which the young man was soon hired as the new franchise development director, and I happened on to the scene just as he finished his first franchise sale.

He already had the original store model to emulate. Through a franchise lawyer, he then organized a Uniform Franchise Offering Circular (UFOC). He then contacted franchise brokers to leverage their sales resources and to provide franchise buyer leads that he himself would sell franchise rights to. With the right commission negotiated, his franchise broker began to feed him a number of leads. While one of those leads turned into a potential franchise buyer in New Mexico, he and the owner wrote an operation manual specifying shop standards that the soon to be franchisee could use.

And that was that. I witnessed the beginnings of a local store chain turned to a national franchise business that someone in an adjacent state had just bought into.

I admire both of them for their entrepreneurship. This is part of the great American dream of expanding one’s small business. I certainly wish both the franchise developer and the owner the best of success.

Yet, after the end of the tale, there I was, the lone customer in an empty shop of ten dollar repairs. Maybe the word just hadn’t gotten out, or maybe the cost of overhead was incredibly low. I don’t know. I do know this though. The ease of starting a franchise chain was undeniable, but keeping and growing franchisees to make a successful franchise chain would be quite another story for another day.

I spent an interesting hour at my local automotive windshield shop last week. It’s a needed place to spend my money, since I live in an area of rugged terrain. Having driven to the shop a few times because of the same problem with trucks throwing up rocks into my windshield and attracted by the low cost of repair advertised on the shop’s billboard, I found myself at this garage a few times, but usually without the company of other customers. This garage had sister stores. Each shop was a stand-alone garage with at least a couple mechanics and a receptionist. It was only natural to wonder how this small locally owned automotive chain could survive.

Then I heard the word “franchise,” something that definitely made me pay attention. On the phone next to me was a salesperson speaking with enthusiasm about how he had just closed the first franchise for the owner of this small local chain. After he hung up, I made it a point to speak with him.

It turns out that this man, probably in his early thirties, had just been hired from another chain in which he was a franchise development salesperson. His story of how he came to find this place and how this chain began to franchise was intriguing and worth repeating.

One day as he came over the mountain, his car developed troubles that this store in the valley advertised to fix for $9.95. It was the right price at the right moment. While waiting for his car to be repaired, he noticed the point-of-sales software that the store used to help customers be re-imbursed by their insurance companies. He admired the cleanliness of the shop and the potential for business. He discovered that a single owner owned the small chain. Clearly, he smelt franchise opportunity.

The salesman approached the owner and asked if he had thought about expanding the chain through franchising. The owner did not know how to do that. An opportunity was born in which the young man was soon hired as the new franchise development director, and I happened on to the scene just as he had finished his first franchise sales.

It was simple for him. He already had the original store model to emulate. Through a franchise lawyer, he then organized a Uniform Franchise Offering Circular (UFOC) to meet FTC regulations. He contacted franchise brokers to leverage their sales resources and to provide franchise buyer leads that he himself would sell franchise rights to. At the right price, his franchise broker soon began feeding him a number of leads. While one of those leads turned into a potential franchise buyer in New Mexico, he and the owner wrote an operation manual specifying shop standards that the soon to be franchisee could use.

And that was that. I witnessed the beginnings of a local store chain turned to a franchise business that someone in an adjacent state had just bought into.

I admire both of them for their entrepeneurship. This is part of the great American dream of expanding one’s small business. I certainly wish both the franchise developer and the owner the best of success.

Yet there I was again, the lone customer in an empty shop of ten dollar repairs. Maybe the word just hadn’t gotten out, or maybe the cost of overhead was incredibly low. I don’t know.

I do know this though. The ease of starting a franchise chain was undeniable, but keeping and growing franchisees to make a successful franchise chain would be quite another story for another day.

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