The CEO of Rita’s Italian Ice says franchising your business starts with finding the right partners.
Jim Rudolph, CEO of Rita’s Italian Ice, has been in the franchise business for over 30 years. He started out in the 1970’s by opening up a number of Wendy’s franchises with partners, which proved successful. His next venture, Rudolph became the CEO of an East Coast ice and custard shop called Rita’s Italian Ice founded in 1984 by firefighter Bob Tumolo. The company became a franchise in 1989 and has since opened 550 stores across the country. Inc.com reporter Matt Rist talked to Rudolph about what it takes to effectively franchise a business while keeping it profitable and bringing on the right partners.
How do you begin the process of preparing to franchise your company? The key is having a business that is very successful to begin with—and not everybody understands that. You also need to be able to package the business and be able to sell it to somebody. Most importantly, it’s important to make sure that what you are selling can be transported and that somebody else can do it. There has to be a business model that works and is easily transferrable. Next, you’ll need to work up a franchise disclosure document.
What’s the most important part of the process? Excluding what I just mentioned—the foundation of the business, the operations manual, the processes—absolutely by far the most important thing is picking the right partners, your franchisees. If you pick the best location and not the right partner you got a problem.
What do you look for in franchisees? You have to do what’s necessary to qualify the franchisee. Ask, do they want an area that’s available. Are they financially capable? We, at Rita’s, have a model criteria of what we believe makes the right partner. Nothing is perfect, but this is as close as we can get to. We look at that and if that person doesn’t match up, it’s unlikely that we will go forward with them.
Why is it important to have franchise owners that match your companies’ vision? If you don’t get the right people, you are not going to have a successful franchise. I think I can relate it best if I give an example: my brother, father, and I bought the Wendy’s franchise back in 1974 when there were only 23. We opened in 1976 with 100 stores. We were with Wendy’s for a long time and we were successful. Why? Because we were committed to Wendy’s and their brand and their people. When you step back, we were the right people to be the right franchisee.
What is the average investment for a business owner who wants to begin to franchise? A person will need anywhere from $200,000 to $500,000. That’s not what I would be focused on though. It’s really about the commitment your making and the time and work it’s going to take. No. 1, it’s going to cost more than you think. No. 2, it’ll take you more time than you think. No. 3, it’s a very difficult question because it depends on what you are franchising and the work you do.
What processes should you document along the way when you begin to franchise? All the right processes—everything that makes your business successful should be documented so that franchisees know what it’s going to take to be successful. Every business is different and it’s all about the business owner writing down everything.
What is the key to a successful franchise? I’ve been a franchiser for over 30 years. It’s not about the concept, it’s the person. Why is McDonalds so successful? It’s a hamburger, let’s not get carried away here. You’re going to find 100 percent of the time that a franchise is successful because of the people.