Interview with FranchiseMart

WEST PALM BEACH, Fla. (Blue MauMau) - Franchise consulting has gone retail. FranchiseMart, a new concept, has launched several franchised retail locations. Those interested in their own franchise business can walk into a local storefront and sit down with a local expert for a face-to-face discussion. The company has an inventory of about 100 different franchises in a wide variety of industries, with investments as low as $20,000 up into the millions.

Gary Lengel shows off a video introducing a franchise matchmaking business at the International Franchise Expo in Washington, D.C. A subsidiary of United Franchise Group, FranchiseMart’s sister companies include Sign-A-Rama, EmbroidMe, Billboard Connection and Plan Ahead Events. The store's lobby is a comfortable place where prospective franchisees can sit down in a relaxed atmosphere, have a cup of coffee and spend quality one-on-one time with a franchise consultant. Blue MauMau talked to FranchiseMart’s Gary Lengel, Executive Vice President, recently.

Blue MauMau: What makes your concept so different from other franchise broker services?

Lengel: We don't act as franchise brokers. We are a service to the customer that comes into our stores. We believe in meeting people to do business face-to-face.

We are different than a franchise broker. We’ve put pretty much all our franchisors on an even playing field. By that I mean that our commission is based on a fixed, flat fee. Typically brokers get a percentage of the sale, so in many cases they lean towards the franchise with the highest commission because that’s the only way they make money.

We have multiple income sources in FranchiseMart. Some of the key ones are:

We are retail locations and inside the location we have advertising space available via posters featuring the companies, we have a 42-inch flat screen TV with videos that rotate with different franchises, we have a website where franchisors can have links to generate leads. Because we are a retail store, we’re selling real estate within the store. We have people coming in who are obviously looking to buy businesses.

Seminars are held on a regular basis in the stores. We invite franchisors to come and speak about their concepts. We have someone to speak about finance, real estate, site search, demographics. The goal of the seminar is to educate people looking for businesses.

Typically we have 20-30 people at a seminar, and if we ask for a show of hands on what is the proper way to look for or investigate a franchise, no one really knows. If we ask, they may say they go on the Internet, buy a magazine or attend a trade show in their area.

We've done trade shows for 20-some-odd years. What you actually see at the end of a trade show is somebody walking out with a big bag filled with brochures and scratching their heads because they’re very confused. They’ve talked to 50, 60 people. Everybody’s trying to sell their product and not really caring so much about making the proper match. They just want to sell the franchise.

We’re doing things very differently. I will tell you one thing, which is because we’re set up as a franchise company, we are not necessarily looking to sell franchises to people that have experience or are brokers.
We’re looking for somebody with a good personality, somebody that can meet and greet people, somebody that’s sharp enough to go through the list of questions that we kind of hand feed our franchise owners and somebody that just has good follow-up skills.

We’ve been in franchising over 20 years and we’re very particular on who we bring into the business. We’re attracting very, very strong, high-profile people that when you would meet them and shake their hand you would get a good feeling, like, “I’d like to do business with this person.”

We’re also offering all the different services, it’s not just showing prospects franchises that can match them. We have a company called Franchise Real Estate that helps out for location site search. We can help them with financing and we also have three other service divisions of United Franchise Group.

We’ve had customers coming into our store that we didn’t expect, they’d walk in and they would say, “I’ve had a business that I’ve had for five years and I’m doing very well with it and I would like to franchise this business. Because of all the inquiries we got, we sat back and said, “We’ve been doing this for many, many years, why don’t we have a service division?” So we formed a company called Accurate Franchising. All that does is take a company, we sit down and have a strategic plan that we put together for the customer to decide if their company is franchisable or not. We’ll do all their legal documents, their disclosures, all the marketing materials, videos, but the one thing that we’ll do that I don’t know that anybody else in the industry does, is we’ll help sell that business for them. Because the key to being a franchisor is not just to become licensed and have good materials, now what do you do with them? So we’re going to help market for those people, which they all need because they’re new.

Then we started a second division, because we found there were so many new and emerging franchisors out there that really weren’t experts in selling and developing their companies. And we are. The company is called Franchise Greenhouse, where we actually take all the leads that a company has, no matter where they get them from, and we make the calls, we follow up, we meet the people, we set up discovery days. We’ve been doing that since we started this company because it was another need. Those people also go into FranchiseMart stores.

Our third division, which has been in operation about four years, is called World Franchisors. That’s typically for a more mature franchise company that wants to expand internationally. The reason that we decided to do that for franchisors, is that UFG companies currently are in 52 countries. So we felt that if we have the opportunity and the know-how and the people to be in 52 countries, why can’t we help other companies expand?

All these three that I just mentioned are additional income to a FranchiseMart franchisee because we felt that they’re going to get the same types of customers that we had coming into our pilot store. We wanted to encourage that and put it on a commission-type basis where they can earn money.

Q: How do you identify the customers’ skills and what franchises might be suitable for them?

A: We have proprietary software that we wrote, and we wrote them based on our experience, knowing the questions to ask somebody, such as, “What hours would you like to work?” Some people say, “It doesn’t matter, I’ll work 24/7.” I’ve had other people say, “I’m looking for something with Monday to Friday business hours.” I’ve had other people say, “Kind of looking for something part-time, I want to put my husband, my wife, my son or my daughter into a business."

We have all those types of opportunities. People are almost embarrassed to say they only want to work limited hours because they think of franchising and owning your own business as working a thousand hours a week. It’s not that way. It is in some businesses and industries, but I can point them into different areas. I have some people say, “I have young kids at home. I want to be able to eat dinner with my kids every night and be with my family on the weekend. Do you have anything like that?”

We do. So those are questions that we open up to people to make sure we’re on the same page and once we get down to the financial side, if anyone says to me, “Listen, I have $25,000 that I can invest in a business and I have other money that I can get through a loan,” I’ll put them in businesses within their range.

Conversely, if someone says to me, “I have $250,000 to invest in a business,” I’ll show them things from $250,000, but I’ll also show them things that are from $25,000-$50,000. Just because they have that amount of money doesn’t mean we have to put them in a business for that amount of money. I want to give them the variety.

What we’re looking to do is to make the best match possible, so somebody could look back and say, “This is a great business for us.” That’s our goal.

Q: How is the franchisee paid? Is he paid for providing leads?

A: They get paid a couple of different ways. They get paid for providing leads to franchisors and they get paid once the franchisor makes the sale. We act as facilitators/matchmakers because we have software in the store that asks about 75 different questions of somebody, and from that point we can narrow it down based on somebody saying I have $100,000 to invest, I want to open up a business in Las Vegas, NV, and I want it to be in the food business because that’s what I grew up in, etc.

Q: If someone came in asking for McDonald’s, you don’t represent them, so you wouldn’t be pointing them in that direction. You have your own portfolio of companies that you are selling and they pay for the lead once you match them up, is that correct?

A: Right, we’re an advertising source for that franchisor and an arm for them. The average franchisor has between 50 and 100 units. The companies with that number of units do not have the facilities, dollars and people to meet interested prospects face to face to represent the company. We are creating that common link in between someone walking into the store and then walking them through based on what their needs are and handing the franchisor a prospect that would be a good match for them.

Q: Where do you think the more traditional franchise broker market is going? How will FranchiseMart be able to tap into those trends?

A: I think the way we’ll tap into that is, interestingly enough, one of the questions to our prospects, which is, ‘Have you ever worked with a broker?’

I would say that less than 1% answer "Yes." We’re getting in a whole new group of people because of our retail locations. It’s a high profile retail location in typically a strip shopping center. People understand what we are just by driving by and seeing our sign, “FranchiseMart,” and the tag line, “Own your own business.”

You don’t normally drive around and see a sign that says, “Franchise Broker.” The typical broker normally does not have a sign, “Franchise Broker.” They typically work out of their homes, or some have offices in an industrial-type area. It’s a whole different way of helping people find businesses, so I don't look at the franchise broker as competition. In many cases franchise brokers are focused on selling resales, or existing businesses that people have already, whether they’re franchises or not.

We’re strictly doing business with franchise companies. It’s neater, it’s cleaner, you’re not getting involved in the emotional side of somebody selling a business, the other guy buying a business . . . .

Our business is just about a franchisor looking for somebody to open up a business in the area who meets certain qualifications. So we don’t really look at that as competition. In many cases we welcome it because the few people that have dealt with brokers sometimes get frustrated because the broker doesn’t have 100+ businesses or opportunities that they could show. They may have an independent pizza store or some kind of a retail business . . . . It’s a tougher thing to put together.

The average person doesn’t really understand franchising, so we want to teach them what franchising is really about.

Q: How much is the investment?

The total package is between $110,000 and $115,000. We will finance about 75% of that, so the initial investment is $30,000-$35,000. The franchise fee is $29,500.

--

Related readings:

Find the Right Franchise for You in Your Local Store