Thinking about a franchise

Jay Honeck said:
I don't minds doing the locks -- that's the easy part. However, I get REALLY torqued when they lose our awesome pewter airplane keychains.
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Tell me there's an extra fee for that.
 
When I think about starting a business from scratch, the one that keeps coming up is a question my business savvy Mom used to ask a serious question about when this subject would come up.

"Have you ever seen a salvage yard go out of business?"

Most of them only go out of business when the old guy keel's over from old age.... after he and his whole family are rich and they own acres and acres of junk. :redface:
 
As someone who mentors small business startups and owners, here are a few thoughts. Some simply reinforce previous comments.


  • Don't get into a business where you don't have any experience. If you want to run a QSR (fast food restaurant), spend six months or more working in one. Oil change franchise, same thing. If you buy not knowing what you're getting into, you could easily find yourself shackled to misery.
  • Franchisors vary all over the map. Research the hell out of whatever franchisor interests you. Talking to and visiting franchisees is mandatory. This might mean some travel as local franchisees will view you as a competitor.
  • Assuming a good and supportive franchisor, there will be fairly rigid and demanding operational requirements. These are designed to guide and support inexperienced franchisees into being successful. They might feel like a comfortable hammock to you or they might feel llike a straight jacket. How do you feel about a $50 fine if you do not report your last week's revenue to the mother ship by noon on Monday?
  • There are very restrictive laws on what franchisors can tell you about revenue, numbers, etc. Become familiar with the laws so you can understand why they won't answer many very reasonable questions. Most of those questions can be successfully asked of other franchisees if you develop good relationships with them.
  • Franchisee forums, franchisee associations, etc. are worth looking for and checking out.
  • Don't buy job. In addition to earning a market-rate salary for your work, your investment should earn a market-rate of return suitable to the risk you're taking. 25% annual return is probably a good number to start with. It your financial plan doesn't produce any return on your investment dollars, you have just bought yourself a job.
 
Jay Honeck said:
+1

Mary and I have traveled a lot. Not so much on business, mostly for fun. We have experienced card failure often enough to make us never, ever want to inflict those infernal things on our guests, no matter how much easier they are.

There is simply no worse way to start a vacation then to have key failure at the end of a long travel day. Inevitably, one of us (okay, me!) has to trudge back down to the lobby, stand in line, and have them make a new key -- all the while hoping that it was a key (not a lock) problem. Meanwhile, Mary is standing outside the room, with all of our luggage piled around her, waiting...

Case in point: Today we had guests lose keys to the Stearman and Charles Lindbergh rooms. They got drunk, lost them on the beach, or in the car, yada yada yada. (These were NOT pilots. I don't think we have ever had a pilot lose a key, in 13 years.)

Guess who was out re-keying those locks? ;)

I don't minds doing the locks -- that's the easy part. However, I get REALLY torqued when they lose our awesome pewter airplane keychains.
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As one who stayed in hotels (thanks Hilton!) 200+ nights a year for four years, I laugh at your hyperbole. :rofl: I'll give independent B&B's a few of those nights but the points for our family to use on holiday are virtually priceless. No independent one horse outfit can compare in that regard.
 
pilot_dude said:
As one who stayed in hotels (thanks Hilton!) 200+ nights a year for four years, I laugh at your hyperbole. :rofl: I'll give independent B&B's a few of those nights but the points for our family to use on holiday are virtually priceless. No independent one horse outfit can compare in that regard.
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I don't think Jay is after the business traveler market...


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pilot_dude said:
As one who stayed in hotels (thanks Hilton!) 200+ nights a year for four years, I laugh at your hyperbole. :rofl: I'll give independent B&B's a few of those nights but the points for our family to use on holiday are virtually priceless. No independent one horse outfit can compare in that regard.
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Have fun at the McHotels. They serve a vital purpose in the market, which is to give business travelers like you the exact, same experience, no matter where you are.

When you get sick of having to check the name on the soap (to figure out where you are, as we did, 25 years ago), you may want to start enjoying one of the many unique independent boutique hotels like ours.

Then, stop eating at chains. Ever.

You will be amazed at how your life on the road is enhanced by adopting those two simple rules.
:)
 
I can appreciate unique hotels, but sometimes when you're traveling, you just want....consistent. There are a lot of good B&B's, but a lot of crappy ones too. You never know what you're going to get.


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airdale said:
As someone who mentors small business startups and owners, here are a few thoughts. Some simply reinforce previous comments.


  • Don't get into a business where you don't have any experience. If you want to run a QSR (fast food restaurant), spend six months or more working in one. Oil change franchise, same thing. If you buy not knowing what you're getting into, you could easily find yourself shackled to misery.
  • Franchisors vary all over the map. Research the hell out of whatever franchisor interests you. Talking to and visiting franchisees is mandatory. This might mean some travel as local franchisees will view you as a competitor.
  • Assuming a good and supportive franchisor, there will be fairly rigid and demanding operational requirements. These are designed to guide and support inexperienced franchisees into being successful. They might feel like a comfortable hammock to you or they might feel llike a straight jacket. How do you feel about a $50 fine if you do not report your last week's revenue to the mother ship by noon on Monday?
  • There are very restrictive laws on what franchisors can tell you about revenue, numbers, etc. Become familiar with the laws so you can understand why they won't answer many very reasonable questions. Most of those questions can be successfully asked of other franchisees if you develop good relationships with them.
  • Franchisee forums, franchisee associations, etc. are worth looking for and checking out.
  • Don't buy job. In addition to earning a market-rate salary for your work, your investment should earn a market-rate of return suitable to the risk you're taking. 25% annual return is probably a good number to start with. It your financial plan doesn't produce any return on your investment dollars, you have just bought yourself a job.
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great summary, last point most don't consider.
 
Jay Honeck said:
Have fun at the McHotels. They serve a vital purpose in the market, which is to give business travelers like you the exact, same experience, no matter where you are.

When you get sick of having to check the name on the soap (to figure out where you are, as we did, 25 years ago), you may want to start enjoying one of the many unique independent boutique hotels like ours.

Then, stop eating at chains. Ever.

You will be amazed at how your life on the road is enhanced by adopting those two simple rules.
:)
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Absolutes, like "ever" and "never" are just sound bites. I travel about 70% for work, mostly Marriott and some Hilton. There are some towns I have been at where a chain restaurant is your best bet. I do try to avoid them, if there other options, but that isn't always the case. I try to stick with the chain hotels for the points, as mentioned, but when you are staying at many, many hotels a year, it isn't practical to research the best one in every town and when you are away from home a lot, tolerating a bad hotel experience is tiresome. Granted I don't get many great experiences, but I really value things that make me feel more at home, such as a little bigger room, a thermostat that is digital and actually works, a kitchenette (for longer stays of a week or more), outlets where you need them (by the bed), a refrigerator and a coffee maker in the room.

On the room key issue, I like the card keys. I have had them fail maybe a few a year, at the most. Usually the reason I need a new card is because I locked one in the room and then a trip to the front desk for a new plastic card is a lot easier than waiting for the maintenance guy to show up and let you in. Also, having to shove a big honkin key ring in your pocket is annoying. I already have to do that for the rental car (what's with the rental car company putting two or three huge keys with remotes on a ring you can't separate?). Ok, rant over.
 
Mistake Not... said:
Tired of software, and looking for a self employment sitatution (NOT software). Anyone have any experience good or bad, with buying / running a franchise of some sort? I'm thinking food related, but wouldn't have to be.
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Take a break. You've listed two separate problems that can have separate solutions.

If you can't afford a full-stop break, maybe find something menial to do that you won't "bring home" with you in your head for a while.

New restaurants fail at an amazing rate, even franchises. Be careful with that. The hours are WAY worse than anything in my worst nightmares in tech.

A convenience store with fuel sales in the right location would be a far better franchise to buy than fast food. Same long hours and staffing problems with low skilled labor, but better margins if done right and no one is stealing from the till or the merchandise.
 
The other side of this is are you able to make the financial commitment? One of our other local success stories, Zaxby's requires this of a franchisee:
Prospective Licensees must meet the following criteria to be considered:

  • Collective net worth of at least $700,000, with liquid assets greater than $400,000 (liquidity being defined as cash or any asset that could be converted to cash within ten business days).
  • Ability to satisfactorily pass background checks for the following: reasonable credit worthiness, no criminal convictions, no history of extensive litigation, and satisfactory motor vehicle report.
  • Willingness of all investors to personally guarantee any obligations that are required under the license agreement.
  • Willingness to make a commitment to this venture within 60 – 90 days of signing a license agreement.
  • Belief that guest service is of critical importance in restaurant operations.
The Zaxby’s Mission Statement — Consistently Create Encore Experiences That Enrich Lives One Person At A Time — recognizes the value of all individuals. ZFI is committed to developing a diverse community of licensees and, in that regard, the Zaxby’s franchise opportunity is open to all qualified applicants, regardless of age, gender, race or ethnicity.
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It looks to me like you'd need about $300,000 cash to open a store, and depending on the size, would need to borrow another $100,000. You'd also need working capital to cover costs until you break even.
 
Henning said:
The only franchise I would buy is a Snap On truck.
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Horrible choice. A HS buddy bought one. They have no protected territories. Snap-On puts other ones in the same area any time they want.

Definitely buying a job, and even worse, a job trying to collect on financing contracts from mechanics making payments.
 
JoseCuervo said:
Horrible choice. A HS buddy bought one. They have no protected territories. Snap-On puts other ones in the same area any time they want.

Definitely buying a job, and even worse, a job trying to collect on financing contracts from mechanics making payments.
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I haven't seen a poor Snap On guy yet, and the best part is, no employees. Any business that requires employees is is. Non starter for me anymore. I am no great fan of any franchise anyway.
 
Henning said:
I haven't seen a poor Snap On guy yet, and the best part is, no employees. Any business that requires employees is is. Non starter for me anymore. I am no great fan of any franchise anyway.
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Unless you wanna work 90hrs a week stay away. Hunting down your deadbeat techs takes up most of your time. I'm a tech and also know lots of tool dealers, it's not for the weak
 
Henning said:
and the best part is, no employees. Any business that requires employees is is.
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A one man operation isn't really a business although you can and should run it like it is. It's basically a job; if you don't physically perform nothing happens and no business occurs,
 
airdale said:
As someone who mentors small business startups and owners, here are a few thoughts. Some simply reinforce previous comments.


  • Don't get into a business where you don't have any experience. If you want to run a QSR (fast food restaurant), spend six months or more working in one. Oil change franchise, same thing. If you buy not knowing what you're getting into, you could easily find yourself shackled to misery.
  • Franchisors vary all over the map. Research the hell out of whatever franchisor interests you. Talking to and visiting franchisees is mandatory. This might mean some travel as local franchisees will view you as a competitor.
  • Assuming a good and supportive franchisor, there will be fairly rigid and demanding operational requirements. These are designed to guide and support inexperienced franchisees into being successful. They might feel like a comfortable hammock to you or they might feel llike a straight jacket. How do you feel about a $50 fine if you do not report your last week's revenue to the mother ship by noon on Monday?
  • There are very restrictive laws on what franchisors can tell you about revenue, numbers, etc. Become familiar with the laws so you can understand why they won't answer many very reasonable questions. Most of those questions can be successfully asked of other franchisees if you develop good relationships with them.
  • Franchisee forums, franchisee associations, etc. are worth looking for and checking out.
  • Don't buy job. In addition to earning a market-rate salary for your work, your investment should earn a market-rate of return suitable to the risk you're taking. 25% annual return is probably a good number to start with. It your financial plan doesn't produce any return on your investment dollars, you have just bought yourself a job.
Click to expand...

Some very good points. I will add that a good franchise attorney is very important. Seek out an attorney who is well versed in franchise law not just any attorney. A good franchise attorney will often have the inside scoop about bout which Franchisors are good to work with and which ones stick it to their franchisees.

People complain about having to pay franchisors fees but remember they will usually handle all the advertising and supply chain issues etc. I have a friend who was a furniture salesman and went to a website to help identify good franchises for him. He ended up buying a Budget Bind Franchise and he is very successful and his product is high quality and priced well. I thought he was crazy but he has proven me wrong. Find something that fits and like others have said educate yourself.
 
Henning said:
I haven't seen a poor Snap On guy yet, and the best part is, no employees. Any business that requires employees is is. Non starter for me anymore. I am no great fan of any franchise anyway.
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That's because they sell the day before going totally broke.
 
Indian and pakistani families seem to do well in the Dunkin Donuts franchise organization often ending up with multiple stores. I suspect their ability to bring in family members or others obligated to them as employees has a lot to do with that success.


Oh, and I rarely have problems with hotel keycards. The chain hotels seem to do a good job at keeping the batteries in the locks changed and I just ask for an extra-key at checkin.
 
weilke said:
Oh, and I rarely have problems with hotel keycards. The chain hotels seem to do a good job at keeping the batteries in the locks changed and I just ask for an extra-key at checkin.
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And the $30 re-key fee charged by the Luddite hotel owner would cause me to never return.
 
JoseCuervo said:
And the $30 re-key fee charged by the Luddite hotel owner would cause me to never return.
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And the people who casually "lose" (AKA: "steal") my pewter airplane keychains are welcome to never return.

Some customers aren't worth it. These people desperately need to stay somewhere else.
:)

Edit: This brings up an interesting point that the OP needs to consider in any new business: What kind of customers do you want to serve?

From Day One, 13 years ago, we made the decision to aim for a higher caliber of customer. In a hotel, this means weeding out the questionable people who occasionally try rent a room.

Most hotels (and retail stores) do this with high pricing, under the theory that anyone who can afford to pay top dollar isn't a dirtball. Although there is some truth to this -- our customers who pay $199/night (season) seem nicer than the ones we charge $69/night (off-season) -- we also decided early on that we would be a family-friendly establishment and that we would not needlessly rip people off with uber-high prices.

How do we make sure jerk-asses and scumbags aren't ripping up our aviation themed rooms? It's never a 100% sure thing, but we have never had anything major damaged. Here's what we do:

1. Collateral. You either have a valid credit card or cash deposit before I give you a key. No skin in the game? No room. No exceptions.

2. Experience. After four businesses, working with the general public, Mary and I can usually smell trouble. If I don't like the looks of you, you aren't getting a room.

(Our daughter struggles with this. A 21 year old college student simply doesn't have the life experiences to weed bad people out. Of the tiny number of people I have had to physically throw out, over the last 5 years, they were all checked in by her or my other younger employees.)

3. Over the top customer service. We will do things no other hotel does, like deliver breakfast, and provide complete daily maid service. (Believe it or not, that's unusual on the island.) Not only does this level of extra service give us an edge on our competition, it gives us something the customers don't fully realize: More complete access to what is going on in our rooms.

This means, unlike other hotels, it would be completely impossible for a guest to be mixing up meth in one of our bathtubs, for example. Not so, at the Travel Lodge down the road.

Like I said, some people desperately need to stay at the McHoliday Inn. We are glad for that.
 
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Oh, and know something about the business you are getting into. I know three people who got into the coffee shop business, 1 of them made money.

#1 retired from the phone company. Bought franchise for 'Moxie Java' and opened a store in a location that all the GIS mapping and retail consultants said should be good for a store. He didn't spend much time in the store, had a gal that worked as manager. The place had all the franchise required elements, the perfect square footage and decorations. It never saw much business and he lost a good part of his retirement assets before he closed it down. A different, non-franchise coffee shop took over the space, re-decorated with their theme and gave it a go. They lasted maybe two years in that location before they dropped out. It is now a Dominos pizza.

#2 Was an engineer who made good money during the dot-com bubble and when some 'restructuring' happened in the company, he took a severance and moved back home looking for a change. He always wanted to own a coffee-shop but didn't like any of the established franchises so he decided to come up with his own concept with an eye on franchising it if it worked. Got some consultants involved, located a space in a retail area where all of the mapping told them that a coffee shop should make good money. Well, it didn't, he spent 5 years and most of his nest-egg on running the one shop. One day, one of his customers told him 'this is a waste of time, why don't you come work for us as an engineer'. He finally shut down the place walked away from his investment and now works again for an avionics firm.

#3 Is a realtor in as small resort town. He always thought that the town needed a coffee shop but by all traditional measures, it was too small to sustain one and none of the chains had a location. He bought an old creamery, built it out over the winter using second hand restaurant equipment and started offering coffee and some sandwiches during lunch time. His wife was a teacher with the local school district and along with his daughters worked in the store in the afternoons. He uses the store for meetings with clients and is very generous towards local civic groups who want to use his store for meetings. Over a few of years, the place got very busy and he now has a lady who manages it day-day. As a business, it is now a hands-off affair and according to him very profitable.
 
I would consider a $30 charge for a $1.05 key a rip-off.
 
I thought one of the reasons most hotels discontinued metal keys was that they could be copied.

I occasionally have trouble with the swipe card. I recently had a problem where the battery in the lock was dead. I never thought about how those things are powered. Maintenance came with a key-card/shaped charger. After about a minute it had charged enough for the key to work. Then he replaced the battery. Good thing they had round-the-clock maintenance as it was 0200 (2 am).

All that doesn't make me want to back to metal keys. I sometimes lose the cards or leave them in the room, and I often walk away with one in my pocket.
 
Boutiques sound great depending on where and when...but the mainstream hotels do tend to give a good run usually. When can get a 600sq ft suite for 150/day...kind of hard to venture into the unknown.

As far as franchises: most fast food is franchised these days right? I remember back in Utah about 16 years ago I worked for a Wendy's owned by Wendy's...I guess those don't exist anymore.
 
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dans2992 said:
I can appreciate unique hotels, but sometimes when you're traveling, you just want....consistent. There are a lot of good B&B's, but a lot of crappy ones too. You never know what you're going to get.
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I've been interviewed by two companies(maybe more, but 2 stand out) which put me up in 'Boutique' hotels. Both failed the whole 'dark' part of a hotel room, one with horrible blinds and one with an exterior light pointing right at the window. One of the two my room was right next to the dumpster they emptied at 6AM.

Now, maybe this was deliberate so I was off my game for the interviews, but I didn't end up working for either of them.

Now, all my personal or business travel I stick to chains. I want: Dark, Quiet, Working A/C and an Ice Machine.
 
Jay Honeck said:
It's not for the key. It's for the pewter key chain you just stole.
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It's not theft if you inadvertently lose the thing. Seriously, nobody wants your keychain.

Oh, and my time to change the lock.
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You wouldn't have to change the lock if you had a professional master-key system.
 
Jay Honeck said:
And the people who casually "lose" (AKA: "steal") my pewter airplane keychains are welcome to never return.


Here's what we do:

1. Collateral. You either have a valid credit card or cash deposit before I give you a key. No skin in the game? No room. No exceptions.




This means, unlike other hotels, it would be completely impossible for a guest to be mixing up meth in one of our bathtubs, for example. Not so, at the Travel Lodge down the road.

Like I said, some people desperately need to stay at the McHoliday Inn. We are glad for that.
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I am not a thief. I am not going to steal your trinket tied to the key chain. If you want me to steal stuff, you are going to lose a lot of towels off your maid's cart long before I steal the trinket. (Oh, and by the way, you can find your towels over on the beach where I left them....)

Every hotel I have stayed at in the past 20 years has swiped my credit card for "incidentals and mini-bar charges".... You aren't doing anything other than following the McHotels processes.

I have never made meth in a bathtub, so, if you are putting in processes and procedures that make it more difficult for myself and fellow guests to make meth, I am going to go find a nicer chain that doesn't have to resort to putting in obstacles to meth making for their guests.
 
Everskyward said:
I thought one of the reasons most hotels discontinued metal keys was that they could be copied.

I occasionally have trouble with the swipe card. I recently had a problem where the battery in the lock was dead. I never thought about how those things are powered. Maintenance came with a key-card/shaped charger. After about a minute it had charged enough for the key to work. Then he replaced the battery. Good thing they had round-the-clock maintenance as it was 0200 (2 am).

All that doesn't make me want to back to metal keys. I sometimes lose the cards or leave them in the room, and I often walk away with one in my pocket.
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The other nice thing on the keylock is that I don't have to stand in line to check out the next morning. Nobody cares if I take the $0.05 disposable key.

And, it avoids me standing in line for 10 minutes while the clerk tries to do the checkout of the party in front of me.
 
I would prefer to stay at an independently owned lodging, just as I prefer independent restaurants. But I'm not interested in vetting them all and experience has shown they're more aggravation than they're worth, seldom professionally run, catering much more to the owner's preferences and quirks than to the desires/needs of the customer.

I don't want a dang metal room key with some oversized key ring or lovingly crafted pewter trinket that gets the owner's rocks off.

I don't want my morning interrupted by the delivery of a processed crap continental breakfast.

I don't want maid service every day because somehow the maid always manages to arrive when I'm in the room, either before I head out for the day or after I've returned.

I don't want to smell the owner's personal cooking or be overwhelmed by air fresheners and fuzzy toilet seat cozies.

I don't want to have to match my comings and goings to the owner's whims.
 
Seems there are some awesome pewter key fobs and some awesome meth within blocks of each other.

I LOVE AMERICA!
 
JoseCuervo said:
I am not a thief. I am not going to steal your trinket tied to the key chain. If you want me to steal stuff, you are going to lose a lot of towels off your maid's cart long before I steal the trinket. (Oh, and by the way, you can find your towels over on the beach where I left them....)

Every hotel I have stayed at in the past 20 years has swiped my credit card for "incidentals and mini-bar charges".... You aren't doing anything other than following the McHotels processes.

I have never made meth in a bathtub, so, if you are putting in processes and procedures that make it more difficult for myself and fellow guests to make meth, I am going to go find a nicer chain that doesn't have to resort to putting in obstacles to meth making for their guests.
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And you are welcome to stay away. I don't care. :)

We have grown double digits for 5 straight years. The people who appreciate what and how we do things come back again and again.

For those who don't get us, there's always Days Inn. Different strokes for different folks.

Which ties back to the O.P. Before you open a business, decide what sort of customer you want, then set a standard and stick to it. Your good customers will appreciate it more than they can express, and you will never regret catering to only those whom you want to cater to.

For us, it's been private pilots. Despite what you may read on POA, they're a pretty good bunch. ;)
 
JoseCuervo said:
The other nice thing on the keylock is that I don't have to stand in line to check out the next morning. Nobody cares if I take the $0.05 disposable key.

And, it avoids me standing in line for 10 minutes while the clerk tries to do the checkout of the party in front of me.
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The standard checkout process was #3 on our list of pet peeves, after "breakfast in the lobby" and "magnetic swipe keys". We eliminated that process 13 years ago by doing all of charges at check IN, with everything else free after that.

Check out is therefore a 2-second process, although we usually end up talking airplanes for a few minutes. Simply drop your key and go, nothing to sign, see ya.

If the office isn't open yet, just drop the key in the lockbox and be on your way. Easy peasey.

What always amazes me is how much in tune with public sentiment our original list of "hotel pet peeves" has been. That simple list became our business plan, and has led to our success. It ain't rocket science, yet few hotels have actually figured out that many people hate what they're doing.
 
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