Rude Awakenings May Await New Franchisees

Tweet

Before Kelly Waddell, 31, and his wife, Sandra, 35, opened their Pop-A-Lock franchise in Dayton, Ohio, they went to bed at 11 p.m., and assumed everyone else did, too. "The biggest shock," says Mr. Waddell, "was that our phone would ring as often at 3 a.m. as [it would] at three in the afternoon."

Pop-A-Lock, based in Houston, has 107 franchised locations whose operators open up locked cars, change tires, deliver gasoline and provide other types of roadside service.

"People work night shifts, or have to leave their suburbs at 5 a.m. for jobs that start at 7 a.m., and need their cars opened then," says Mr. Waddell. "My wife and I spent those first months sleeping in shifts."

Mr. Waddell's rude awakening as a new franchisee was, well, literal. But thousands of other franchisees also encounter the unexpected about the businesses they've just bought, just at more reasonable hours. In some cases, the surprises are operational. Others may concern ownership issues and franchiser support.

Mike Hannon, 49, for instance, is surprised that the fate of the Mail Boxes Etc. franchise he purchased last year, is so uncertain. The company, which was acquired by United Parcel Service of America Inc. in early 2001, is still deciding what to do with its 4,000 world-wide franchisees.

Franchise consultant Mark Siebert, president of The iFranchise Group in Chicago, says the biggest rude awakening for new franchisees typically is the nature of the business they're getting into, as was the case with Mr. Waddell.

Supervising Surly Teens

Restaurant franchisees are always amazed at two things -- lettuce rots and teenagers aren't reliable. "They think operating a restaurant will be glamorous, then find out they have to clean the toilets and supervise surly teens," Mr. Siebert says.

Doug Benham, chief financial officer of RTM Restaurant Group in Atlanta, the world's largest franchisee with 1,049 restaurants, including hundreds of Arby's and a couple of fried-chicken chains, once said, "My partners and I know our futures are tied up in whether 15,000 18-year-olds decide to show up for work."

Franchisees of Jani-King, Coverall and other commercial-cleaning outfits have to do 90% of their work at night, when offices are empty. And people who love travel buy travel-agency franchises and then discover they must spend all their time behind a desk, making sales calls and booking other people's trips.

The second most common surprise is the nature of business ownership, Mr. Siebert says.

"Some people aren't temperamentally suited to sweating out payroll every two weeks," he says, or to keeping records, paying taxes and hiring and firing employees.

Mr. Hannon has avoided the latter because he and his wife, Mary, 46, are the only workers at the Mail Boxes Etc. they bought from another franchisee in a strip center in Glenview, Ill. The former sales manager of a construction-supply company says he looked at lots of different franchises and settled on Mail Boxes because the company had been acquired by shipping giant UPS. "The new owners seemed to have a lot of good ideas and were taking the franchise in the right direction," he says.

Decisions From the Top

That direction is still uncertain, though. Richard Hallabrin, director of corporate communications at Mail Boxes in San Diego, says franchisees will have to wait a few more months. "We're conducting tests on three different models to determine whether franchises will stay as Mail Boxes/UPS sites,become UPS stores, or co-brand with yet another company," Mr. Hallabrin says. Franchisees should hear about the test results, and their own futures, some time next year.

Mr. Hannon eyes the shelves of boxes and bubble wrap in his crisp red, white and blue store and says, "If they change us over to UPS brown, I just hope the paint cost doesn't come out of my pocket."

Mr. Siebert categorizes Mr. Hannon's dilemma under "surprises about the nature of franchising." "People get into the business thinking they'll be entrepreneurs," he says. "They don't realize that their franchiser has a greater level of control and that they have little or no influence on the way decisions are made."

Just ask the 400 or so Baskin-Robbins franchisees who had a simultaneous rude awakening one day in 1999 when during a conference call from headquarters, in Randolph, Mass., officials told them their stores were "no longer in strategic markets" and that their franchise contracts wouldn't be renewed when they expired. Tommy Joyce, who'd operated a Baskin-Robbins ice-cream store in Lake Charles, La., for 13 years, is one of 40 franchisees suing the franchiser. The trial starts Nov. 12. "If what Baskin-Robbins did wasn't illegal," says Mr. Joyce, "it was one of the most immoral acts I've ever seen in my life. They don't care how much we've invested in our stores."

 1 | 2  NEXT 

Read more:

Sign-up for our Start-up Newsletter

Email Address: