Home · Articles · Business Articles · Franchising: Is It A Good Fit For You?

Franchising: Is It A Good Fit For You?

| Business Articles
Today, Jernigan owns two U.S. Lawns franchises: U.S. Lawns of Northwest Mississippi and U.S. Lawns of East Memphis. He has thirteen employees and expects to gross $750,000 this year. His success has earned him numerous awards from U.S. Lawns. I dont think I couldve been as successful in the green industry without getting into franchising, Jernigan said.

Newman Dyer had no green industry experience when he lost his job last year as a regional manager in the trucking industry, but he, too, decided it was time to leave corporate America. I got on the Internet and began gathering data about franchising to make sure I would make the right move, Dyer recalls. I liked what I learned about franchising in the green industry, but one franchise I checked out was a little too expensive, while some of the others didnt seem to provide enough returns. I was impressed, though, with the Lawn Doctor franchise. Founded in 1997, the Holmdel, New Jersey-based Lawn Doctor, Inc., has 300 franchisees in 475 locations in 40 states.

Last March, Dyer tapped his 401K to get the money he needed to buy the Lawn Doctor franchise in Rockmart, Georgia. Dyers goal was to get 400 customers his first year, but in the first four months of operation, Dyer and Sons, Inc., has attracted more than 700 clients. For someone who was content working for someone else all his life, it would seem as if I was making a gutsy move, but I knew I had to take it, Dyer said. Lawn Doctor has relieved the stress by providing a lot of support. Im very happy.

Jernigan and Dyer are just two of the many green industry professionals who have found success through franchise ownership. In the U.S., franchises account for a trillion dollars in sales annually, according to the U.S. Department of Labor, and 7.4 percent of the private sector jobs, according to a recent study conducted by PriceWaterhouse Coopers for the International Franchise Association Educational Foundation.

Statistics provided by the U.S. Governments Small Business Administration (SBA) show that at least one in three new businesses dont survive their first two years, but these statistics dont reflect the state of the franchise industry. According to the last statistics I saw, four out of five franchises succeed, said Blake Smith, president of the Decor Group, a Lubbock, Texas, green industry franchise, which has 367 franchises in 48 states and Canada. Many businesses flounder and eventually fail because they dont have the safety net a franchise can provide.

The Decor Group operates two franchises: Christmas Decor, the largest provider of holiday and Christmas lighting services, and Nite Time Decor, a landscape and architectural lighting provider. Interestingly, 99 percent of Decors franchisees have other businesses from which they use resources, 80 percent of which are in the green industry, according to Smith.

"Our industry is seasonal and green companies often have to lay off workers, he explained. That can be detrimental to their business. He added, A lawn care business owner can be so focused on his business that he doesnt have the time to do the research and all the other things he needs to do to grow and take his business to the next level. The Decor Group can help him do that.

The entry fee for a Decor Group franchise ranges from $5900 to $20,000, depending on the size of the market, and the annual royalty rate is five percent of the sales volume.

The Decor Group isnt the only franchise that can help established industry professionals move in a profitable new direction. We provide training and support for anybody in the green industry who wants to add irrigation services to their business, said John Eggleston, manager of the Lansing, Michigan-based Service First Irrigation, which currently has seven franchises in four states. We are a service-oriented franchise, as opposed to the Mr. Fix It kind.

The price of a Service First Irrigation franchise is also size-dependent. An area categorized as rural will cost a one-time fee of $9,900, and typically involves a lot of driving, since the population is not as dense in that franchise area. The price for a franchise located in a major metropolitan area is $14,900. The franchisee then pays the franchise three percent of its annual sales.

Eggleston added, Our concept is similar to Decor Group and not at all like U.S. Lawns and Lawn Doctor, which are more geared to helping someone get into our industry.

Yet, even traditional green industry franchises can help someone already in the industry find success. Take the case of Ben Robertson who, in 2000, had a landscaping company he had owned for three years. Robertson was working long hours, but his annual income barely amounted to $30,000.

I wasnt going anywhere, he recalled. I knew I needed help, so I began to explore franchising. Robertson really liked the U.S. Lawns concept. I thought it would give me enough support so I wouldnt have to work all the time, he explained.

More than five-and-a-half years later, Robertsons company, U.S. Lawns of Nashville, Tennessee, employs 20 workers and is grossing $1 million annually. With U.S. Lawns help, I have been able to expand and grow, he explained.

Franchise support can include a website, on-going training, an annual conference where you can network and share ideas, marketing materials and even special software and equipment. We have developed a software program that allows our franchisees to handle everything-- marketing, accounting procedures, scheduling routes and customer and employee data, explained Scott D. Frith, vice president for marketing and franchise development at Lawn Doctor, Inc.

While success in our industry can be found through franchise ownership, it doesnt necessarily mean that the concept is for everyone. Both franchisers and franchisees candidly admit that many people may not be suited for the franchise experience. A reputable and viable franchiser, in fact, accepts only a small percentage of the applicants. So, sources in the industry advise that before applying for a franchise, you should take a good look at yourself.

We look for people who are entrepreneurial, but more importantly, they have to show us that they can work within our system, Frith said. This year, Lawn Doctor expects to receive about 7,000 inquiries, but will sign up only about 40 applicants.

Take note--owning a franchise wont necessarily make you successful. We provide support, but cant do everything for the franchisee, Frith explained. A franchisee needs a good business plan in place, and he must be disciplined to make it work.

Eggleston described his company as kind of weird, explaining, We are not the McDonalds of irrigation franchising. We are trying to build a certain type of franchise. Thats why we are so picky.

A reputable franchise will evaluate all candidates carefully. Two important questions they will ask: Do they have enough capital and what does their credit report look like? The Decor Group asks applicants to write a one-page essay explaining why they want to own a franchise and what they can bring to the Decor Group. A promising candidate will be required to meet with two of the companys three owners.

Someone considering the purchase of a U.S. Lawns franchise will have to complete an eight-page document and answer the question: What are your goals for the next five years? We want to talk to all candidates, so we will pay their way to our headquarters here in Orlando where we can check them out, explained Paul Wolbert, vice president of development for U.S. Lawns. We are looking for people who can add value to our company.

So before you even begin to look for a franchise, take an introspective and honest look at yourself. Some questions you will need to ask: What strengths can you bring to a franchise and what weaknesses do your have that can impact on your franchise ownership? What are your management skills like? Are you a team player? Would you be willing to relocate to own a franchise?

Also, how do you feel about selling and the sales process? Owning a franchise is not a turnkey operation like owning an ice cream shop, where you open the doors and customers come, explained Sallie Winfrey, the owner of Lawn Doctor of Buffalo Grove in Lake Zurich, Illinois. You will need to sell yourself to build a database of customers.

Robertson puts the challenge more bluntly: A lot of people may know how to cut grass well, but they lack professional polish in dealing with people. Yet Robertson, like our other sources, believes that professional polish can be developed.

If your honest assessment shows you have the right stuff, then you will need to follow certain steps to ensure that you choose the right franchise.

  • Keep an open mind and talk to several franchise owners. A franchiser should supply the names (of his franchisees) without hesitation, notes Ken Hutcheson, president of U.S. Lawns. We provide the names automatically. Then draw up a list of specific questions. Ask the franchise owners you contact what they like about the business and if they are happy with the level of corporate support, Winfrey suggests.
  • Practice due diligencethat is, ask the franchise probing questions about its operation. Get a copy of its Uniform Franchise Offering Circular (UFOC). Franchisers are required by law to give it to you. From the UFOC you will learn about the companys history, its support programs and the costs and fees youll be required to pay, and much more.
  • Use the UFOC to examine the franchisers long-term growth pattern, Frith advised. Look to see if its putting money back into the business. Some franchises reach the point where most of their money is going into profit and not enough into research and development. The UFOC, moreover, can also tell a lot about the franchises litigation history, perhaps a key to understanding its relationship with its franchisees.
  • Attend the franchises Discovery Day. All franchises have them and they should pay your way to their headquarters. In interacting with the companys executives close up during Discovery Day, you will get a good feel for their corporate culture, the type of people with whom you will work, and their philosophy, Wolbert said.
  • Take a close look at the market in which the franchise is located. Is there too much competition? Is there an opportunity to grow? Jernigan used his own franchise experience to show why this is important. His U.S. Lawns of Memphis is located in a big market where he has lots of competition, but the opportunities for growth are unlimited. His U.S. Lawns of Northwest Mississippi, however, is limited in growth potential because its location offers less opportunity for business expansion. Its going to be a real big challenge growing my Northwest Mississippi franchise, Jernigan conceded.
  • The last step is to make your final decision. This could have you filled with angst, but if youve done your homework you can be confident that you have made the right decision. You can now begin your exciting but challenging new business experience with the right attitude. The franchise is satisfied, too--knowing that, in doing its homework, it has brought the right person on board.

Remember, owning a franchise means that you will be building a partnership, Eggleston emphasized. It will take the franchiser and franchisee working closely and well together to make it work.

 
  • Currently 3.5/5 Stars.
  • 1
  • 2
  • 3
  • 4
  • 5
 
 
 

 

 
 
 
Close
Close
Close