Archive for February, 2011

the 28 years as a franchise attorney, author, trainer and recognized expert in Franchise, I helped give companies and success in the franchise industry – to any hope of the next “McDonalds” to their respective industries. On the way I met and worked with an interesting group of founders. Clothing industry in water treatment, were concepts franchisees also incredibly diverse. Some of them I was up to the point where I purchasing a franchise that interests me. In two or three cases, the discussions were initiated to discuss the possibility, but never went ahead. I could not find specific set of criteria to be my high standards. After all, I had hundreds of franchise buyers to advise and develop advanced radar to identify the good, the bad and the ugly in investment franchise.

In May 2002 my life changed dramatically when I took the plunge and became a franchise owner for the first time. I just did a project for a franchise for a company in San Francisco is preparing to give a franchise to develop the peninsula. Operated a very successful business from home improvement experts in a unique niche. Target Stores in the 1960s to the 1980s with old, flat, ugly interior doors installed, replaces the company raised all the interior doors in a house with a new, freshly painted designer panel doors, locks and hinges. Is your mantra of advertising “Changing America 1.16 billion interior doors.” have

After talking to a few interested candidates who frankly do not signed, the company began to worry about the sale of its first franchise. Sell the first is usually the most difficult task of a new franchise. There is no other franchisees for a potential buyer can speak on the financial performance, training, ongoing support and other issues of franchise relations. void this reason, the sale of the former difficult. After repeatedly asking if they could expect to sell their first franchise, my hand got up and finally I volunteered for the mission. My franchise agreement was signed 22nd May 2002.

Look at the assumptions and factors, which I assessed to my purchase of a franchise investment decision, and see how it works.

industry trend
As in the previous article stated franchise is a great challenge for a franchise in a leading sector that is doing well and should continue to do so publicly, despite an economic slowdown. From my experience in evaluating hundreds of franchises, I I watched the renovation industry has a stable segment. People are always looking for ways to customize the look and value to improve their homes.

Unlike other companies that focus renovation high up on a single ticket for the improvement (redo the kitchen, for example, which can cost 000 or more) (000-000) for a few thousand dollars, an owner give each room in their house while replacing their old flat panel doors a facelift raised new designer doors. After the 9-11 attacks, anxiety and high security of the country, I felt more people than ever would be nesting home. A house is usually the most valuable asset in the portfolio of the family. If the owner can train and motivate them to easily customize the look and value of these assets by improving a reasonable investment, and sales.

big home improvement chains like Home Depot, have understood and have been active for the replacement of interior doors. But they are not organized to meet the needs of the target market in a way profitable. The franchise had discovered and developed the “do-it-right” approach to this market, and welcomes competitive offers from Home Depot and other large home improvement chain. When I think all this bodes well for the renovation in general and this particular franchise company.

initial number FRANCHISE INVESTMENT
The company estimated first franchise investment franchise between 7.00 and 0.000 in its Franchise Offering Circular. Chassé, I was at the lower end of the scale. Including 000 in franchise fees and I have a line 000 cons mortgage was our investment of nearly 0.000. Incredibly, it was enough to win orders and customers, the critical balance point where the bar pays all bills . As stated in the article can reach many other franchise companies break even a year or two years or more.

Last operational happened pretty quickly. Since I signed the franchise contract at the end of May 2002, the property improvements completed mid-July 2002, the training started in August 2002 providing such a missile in the first week of September 2002, some four months have passed. We the break-even hit mid October 2002, barely six weeks after the start of operation and began to accumulate more balance in the affairs of the savings account.

When I sold the franchise in September 2003, our domestic economy was rocking and rolling the replacement of doors. Homeowners negotiated for our six to eight weeks increased waiting time for a list of their old, ugly, flat interior doors with new panel doors, interior designer and lock sets brilliant replaced. The new owner has to pay for our franchise to 6000, and I got 5000 after deducting the expenses of Escrow. Taking into 0000 of our investment will benefit agenda has left a 5000th Not bad for the operation of the company just one year, and that the operating profit performance a month ago, the company was sold.

Real Business
I operate a retail store with a shop window, as opposed to “work, your house” operation.

Franchise Management Expertise
The management team of the franchisor had no past achievements and experience in operating a franchise business. They had just started the franchise company and have learned in no time. It was certainly a big risk. However, I give them work detailed seminars on how you base a franchise management and franchise relations in my more than twenty years experience in the franchise industry, and had every reason to believe that if they followed my advice. And because I’m her vote for the first time, I also think they would do anything to make me a success. My goal was the first franchise from scratch to develop, build, then develop into other franchises for them or sell – based on what the franchise relationship. I decided to sell.

normal working hours and day, enough income – and the profitability of franchise FRANCHISE
The nature of this activity was normal for five days, forty-hour week. Our opening times are 9A-5P, Monday through Friday at the start. After talking with the owner of the franchise seconds at the beginning of 2003, I discovered and copied his idea of a working week of 40 hours over four rather than five days.

Even if it meant our team had four in ten hours a day, they were very receptive to the idea. installed from Monday and will receive all orders for the week to Thursday, everyone had a weekend three days a week, and not just a holiday casual. Of course I did not have to work ten hours a day. I arrived at 10 clock, and usually finished by 16 clock – Monday to Thursday. Supervise four employees work 24 hours per week and the weekend with three days off per week – try a different franchise in

see what the financial situation? Take June 2003, the tenth month of the operation when I started interviews a number of interested buyers. Revenue was, 000 less the cost of, 500, left an income of this month, 500 Of course, varies the other months, and the company also still in the initial phase of development with only a crew of four employees – but you get the idea. which multiplied with the help of the results of June at twelve, I crossed into financial performance only by a small group in the entire franchise industry is very appreciated.

LOW Number of employees
remember my central question here: can the business with six employees or less? When we began commercial operation in September 2002 we had two employees. A month later, we have another. When the company sold a year later, our team consisted of a part-time and three full-time employees.

LEASING AND LOCATION
Our interior door replacement business from a commercial area with low rents, high rents, if square foot triple net leased and operated n ‘have never been an issue. The 7,200 square foot warehouse and retail showroom, we in San Carlos, Calif., settled with a rent of 0.65 per foot for the first year, seemed almost too big (and expensive) to first. Renting a check for the owner of over 000 per month, by far the largest cost of start-up, made my heart race when I thought the whole thing will work and how long does it take to reach break even? “But as it turned out, our location was perfect, the turnover has never been a problem, and we achieved break-even in just six weeks after the start of operations.

Due to the size of the facility and the nature of the replacement of interior doors, three teams were possible and bring them in line would be a team at the time double, triple then came the end of the turnover. Also, because we are the first, the franchise system in force, we chose the most lucrative, exclusive area of Palo Alto, CA all the way to San Francisco, CA does. were Although we have never developed on the Enterprise crew one, these “next steps” in the evolution of society in such an area of the main selling points. The new owner of our franchise comes up with the next steps and has three teams with weekly sales figures from K to K -. Which is more than 0.5 million per year

ART AND LIFE
I need not return to the hamburger, ice or clean toilets. As co-owner with a franchise that was my main task is to create and maintain customer relationships. I put ads designed by the franchise company, responded to phone calls from clients, appointments, sent only estimates and contracts . Much of my work time trial spent to customers’ homes, meetings to explain to them over coffee, measurements of all of its internal doors, goes to our options and single-cycle production week – their old doors to get on Monday and installation of new doors here at Thursday.

Back in the office, estimate I give information in our computer and generate a contract offer. So I wait for e-mail or fax the contract to the client and for their deposit. About 70% of the text processing jobs. Customers that reminds me your payment information via credit card, fax the signed contract and took their week of production. When I sold the company in September 2003, house and apartment owners for the position on our six to eight weeks waiting for a list their internal doors negotiating replaced.

I have also ordered new doors, locks, hinges, paint and accessories. Finally I paid the bills. It was a very successful company, great cash flow, no billing and no expectation of payment. . When I look back, I saw some very nice houses and met very interesting people The recording, production, painting and installation managed directly by employees under the supervision of our sub-contractor, I was not involved in that aspect – even if I go with our team for about three months collecting and installation of doors. This is how I understand the process first hand, which contributed significantly to know, like jobs and risk coverage in the contract bid.

TRUE franchise value

I knew that investment is not disclosed to the franchise company has established a “Blue Chip” After I had bought their first vote and became the pioneer settlers -. provides a higher degree the risk that other franchise buyers to accept. In return, I was expecting a reasonable level of support from the franchise. Almost all the new franchises provide not only sufficient but additional support for its first franchise with a franchisee in the system pioneer new franchise and the additional risk they took to compensate. There is also interest in additional support -. Future growth hinges franchise network on the success of the first franchise

are the ultimate test of franchise value in November 2002 . I was in the road, driving our van, amount to burst with doors, power tools, locks, hinges, etc., under the direction of our work even more installation, our contractors, Scotty, of the monitored team and our franchisor approved been manager. Everyone was back in business, desperate planned cutting, sanding and painting the rest of the doors of more than 100 jobs for this week.

To know that we made on the busiest week of our young company, the contractor Scotty complained all week about his salary and said he was not paid enough. I kept saying, not our cash flow to support wage increases would be today, he had only worked me a little over two months, and his salary was just he asked, when I hired him Scotty not to listen to his complaints and sat down while driving along El Camino Real, the customer’s home we were stopped at a red light and waiting for a ride when Scotty suddenly announced..: “I’m out of here, I do. jumped Stopped open the passenger door, he, and walked quickly to the sidewalk El Camino Real, left stranded me in a van, which is slightly larger than a UPS delivery van. Scotty thought he was indispensable, and his theatrics were nothing more than a hard painted road power play money.

A look fresh on all the doors in the van, I knew there was no one person install it can. I turned my round finished and called our store with my phone. better our cut gate and employees , Brian, has confirmed what I already knew. He could go and meet me for the installation, but always go our full schedule this week.

Then I remembered something important “So I bought a franchise. “I said,” We have been in business for us but not us. “ Probably the franchise knows exactly what to do, and help us, their rights could to vote for the first time a problem, kill the cripples or the new company. They were there only a short drive of 20 minutes it . more teams, etc. I am the founder, interior door called

The first thing Mike said when I was with my situation: “Do you think Scott will set up a competing company? I assured him that it was not possible, even from a distance. Starting a business is usually cost upwards of 0000, requires a warehouse showroom size, power tools, trucks and other things. Scotty, in addition to his personal tools, had no assets. He had even moved into our warehouse for a day, so he would not have to pay rent and wages lived paycheck.

I quickly diverted the purpose of my call Mike and asked him for advice and assistance . Maybe a few of his door installers for the rest of the week, at my expense? Reply – not What is a person for the rest of the day.? Reply – not What is a person only for a few hours.? Same answer -. not It’s unbelievable, “said Mr interior door, he could not save a single person (including themselves) for a few hours to help us

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no help – but what about tips? as advice from Mike: Calling all our customers, including one where I am on my way to tell them that we do not this week and re-program all the work for another week. Since we had already booked other jobs in the next two weeks, it would have been a disaster, not only for our cash flows (salaries, rent and bills from suppliers this week), but also for customers who already off work had planned to be home as planned.

Then I realized we were in business for us. . . and us. After thinking about things in the van of silence, I called the store and told Brian to me the customer’s home for the installation to perform. I thought at least we had collected, 000 in order to do this job and to just see the rest of the week. was at that time, Brian and I finished over the day. We returned to the store to 16 hours – the time left for our construction workers. Our task for tomorrow is not close to completion. The crisis was finally upon us – I follow Mike’s advice, appeal to all our customers and try to move for the next week

I chose a different approach?. I held a small meeting, explained the situation and asked our staff if they would be willing to work overtime to ensure that our new company would not go out of business. I am also aware of the needs of our employees. They had worked very hard this week to help us, our ambitious goal. Our team leader, Scotty, was history, and they had to all the families and responsibilities at home. Under normal circumstances I would be the proverbial lost completely.

style of leadership to the rescue
From the beginning I treated our employees like family members. It was a very advanced version of the theory of style “Y” of management that I had studied in my graduate business classes. Every day, I bought lunch for all employees and we ate together, discuss what was new in their lives and their stories Goal Sharing. I have also provided soft drinks, coffee and snacks throughout the day in business. On birthdays, the person I would rather see a movie of their choice and dinner afterwards.

Fortunately I do not have that many employees, but every month has seen a total of more and more of these benefits on our profits and losses. I wondered about this thinking of Mr interior door only provided meals used once every two months for a special occasion. But I realized that if I took it one day, they are there for me. “

This style of leadership, the company was in business and on the right track in November. All staff immediately prepared to work overtime. I ordered pizza for everyone for dinner and they worked from 05.00 clock bis 1.00 clock in the morning. This commitment was repeated in the next two days, which is unbelievable since they all had to report to work 07.00 clock every morning. We have all the tasks planned for this week completed our money and our customers were very satisfied. Until next week, was the company is humming on track, and strengthened to overcome the distress.

Summary
Looking back, I found myself in the right place at the right time and was willing to take a calculated risk. I have no hurry, took a long time evaluating many factors, emotions and made the investment decision-free -. avoid the three mistakes most buyers franchise

really was an effort to restore luggage, finding the right place, the right of workers and navigate a new business on my own. But the challenges are a learning experience, and she is overcome very rewarding. Even though I get hundreds of individuals and companies on the in and out of the franchise knowledge and experience in the operation of my own franchise and interaction with the revised franchise learned my knowledge of franchise relations

© 2003-2008, Kevin B. Murphy, BS, MBA, JD -. visit all rights reserved

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