Three KC-based companies have launched franchises that are popping up across the country.
Title Boxing Club started as a unique gym down the street from the Sprint campus. It’s now considered one of the fastest-growing franchises in the country.
Shear Madness Haircuts for Kids began when a savvy business owner set out to improve the haircutting experience for children and parents in Leawood. Now her ideas, philosophy and even wacky graphics are key ingredients for her franchisees in several new cities.
Spin! Neapolitan Pizza found success with high-quality pizzas and customer service at store after store in the Kansas City area. The company took the franchise leap this spring when its first franchise location opened in southern California.
National success might seem like a given for these local franchisors, but success in Kansas City hardly translates to San Antonio, Minneapolis or New York. Repositioning an established business into a franchising operation is a business in itself that is neither fast nor cheap. Franchising consultants often hear from customers who expect to drop only $15,000 on the entire franchising system and start selling franchises.
“No, no, no,” said Lizette Pirtle, co-owner at Expansion Experts, a firm that creates franchises. “You’re going to be selling the franchise for about $25,000. Something goes into that.”
You Need Time, Money and “Secret Sauce”
Anyone thinking about starting a franchise should begin with these basic questions:
» Would your existing business still make money if you had to pay a royalty fee?
» Do you have a well-defined marketing, administrative and operational system in place?
» Do you have the time, money and passion to devote to franchising? That includes recruiting, training and ongoing support.
» Do you have a “secret sauce” or a competitive edge on other businesses in the same industry?
There are several reasons to franchise instead of simply expanding on your own, Pirtle said. It’s the right move for people who either don’t have the capital or don’t want to invest it to expand on their own.
It’s also the right move for someone who doesn’t want to take on the responsibility of significantly more employees and buildings.
“You’re using someone else’s capital to expand,” Pirtle said. “You’re training them and giving them all your secrets, passing on all the things you learned over the years and through all of your mistakes. You’re going to license your name and your system to them.”
Pirtle tells her clients to expect to spend a minimum of $85,000 and six months to get the fran-chisor operations and legal
Finding the Right Fit
It’s easy to see why franchising is alluring. About 85 percent of independent businesses fail within the first 10 years. Conversely, about 85 percent of franchisees are still in business after 10 years, said Marcie Olinger, a career and business coach who specializes in franchises.
There’s a reason for that, she said. Franchises are built upon the success of others. There is a strong team of people coaching and working together to build on the brand. That group spends considerable time working on the business, not necessarily in the business behind the counter.
It’s why finding the right fit for franchisors and franchisees is critical.
“You have to really have a good, strong fit with the culture of the franchisor,” said Olinger, who owns The Entrepreneur’s Source, a franchise itself. She uses a detailed process to match potential franchisees with franchisors. If it sounds a little like a dating service, Olinger doesn’t entirely disagree. It’s a highly personalized service, which is free to potential franchisees.
“One of the questions I hear more than anything is, ‘What’s the best franchise?’” she said. “What is best for you could be totally different than what is best for me.”
Experts early on advised Shear Madness owners Jim Otto, Janon Otto and Paula Thurman to choose their franchisees wisely. Prospective franchisees need to have the financial wherewithal to survive and a style that works with the overall franchise philosophy.
“We get to know them, and they get to know us,” Jim Otto said. “I know it’s corny, but it’s like family.”
The three owners worked together to turn the local business, which Thurman started in 1997 and which has locations in Leawood and Olathe, into a franchise operation. They also have franchise stores in Lee’s Summit and San Antonio. A franchisee in Albuquerque is in lease negotiations, and a second store in San Antonio is in the works.
Sweat the Details
Anyone considering a franchise needs to sit down and determine exactly what makes their brand unique, said Jim Otto. What gives the business an edge over a competitor?
Those critical details cannot be negotiated even slightly with a franchisee.
At Shear Madness, one of those points is a child’s first haircut experience. Everything—right down to the certificate with before and after pictures for the baby book—is carried out so the experience is memorable and consistent.
Traditional styling chairs have been replaced with cars. There are TVs and PlayStations at every station. Bright colors that decorate the salon are critical to the brand, the owners said.
“It’s kind of wacky. It’s kind of crazy. It’s kind of fun. It’s directed at our age group of clientele and their parents,” Jim Otto said. “If we have a franchisee in Albuquerque, and they’re designing all of their own things, it’s going to hurt (our) brand.”
Consistent images were so important to the owners that they hired a full-time graphic designer. The owners point out that sometimes franchisors pinch pennies in the wrong places. And Pirtle, who helped Shear Madness set up its franchise operation, said amateur fliers or websites can doom a franchisor early.
Getting a process in writing is sometimes the hardest part for existing business owners. Their personality is often ingrained in aspects of customer service that can be hard to document.
At Shear Madness, that meant documenting Thurman’s customer service.
For instance, Thurman’s policy about unhappy customers—something every service business confronts regularly—is part of the franchisee system.
Build a Support Structure
Ingredients—right down to a single tomato or onion—are part of the Spin! Neapolitan Pizza brand.
The Spin! owners, who have six local corporate-owned stores, had discussed expansion strategies. Yet the ultimate decision to franchise “kind of arrived at us,” said Gail Lozoff, who co-owns the business with Richard Lozoff and Edwin Brownell.
An established and sophisticated restaurant group in southern California approached Spin! about buying a franchise for the concept before the Lozoffs and Brownell finalized any franchise agreement. The first franchise store opened in Orange, Calif., this spring, and several more are planned.
But getting the doors open isn’t an overnight operation, even for the Spin! owners, who have experience in large multi-unit expansion, franchising and operations. “We had a lot of legal work to do, and then we had to develop a support structure so we could help a franchisee design sites, build stores, train their people, provide their materials for them to operate their stores up to our standards on an ongoing basis,” Lozoff said.
Being a franchisor is not for the disorganized, she added.
“We set very clear expectations about how the store is run, down to we have checklists for our managers for opening our restaurant and closing the restaurant, and they’re very specific,” Lozoff said.
It includes a list of what fresh foods to begin prepping first each morning and what to think about before coaching employees for the day. No detail is too small.
Have Somebody in Your Corner
Title Boxing Club has expanded rapidly since it became a franchise “We’re one of the fastest-growing franchise concepts in the country
right now,” said Kevin Farley, director of marketing at Title Boxing Club.
The first location opened about five years ago near the bustling corner of 119th Street and Metcalf Avenue in Overland Park. People immediately begin stepping up to train like a boxer. (Though actual fighting isn’t allowed in the clubs.)
About two years ago, the original owners decided to franchise. They brought experts on board to help and had 30 clubs opened by September 2012. They have since opened 447 franchise locations in 40 states. Of those, 100 were opened in 27 states by May.
“And through the end of this year, we’ll probably add another 100 locations,” Farley said.
That kind of growth brings its own set of challenges, he said. There are more franchisees to train, coach and support. The franchisor itself must add employees to keep up. That’s why Farley and many others recommend getting expert help through the International Franchising Association and from other franchisors.
“Even within the same market areas, people within franchising want other franchisors to be successful. It’s a very open environment,” he said. Farley’s company backs that up with action. Title Boxing Club President John Rotche is part of Franship, a mentoring initiative in the International Franchising Association.
“They’ll be very open with their advice and support,” Farley said. “It’s a very giving community.”