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All those options can make it hard for potential franchisees to choose their business sector. Franchise own- er Seth Berkman of Edgemont recalls a franchising expo he attended four years ago: “There were so many fran- chises I had never even heard of; it was mind-boggling,” he says. Before becoming a franchisee Berkman, 41, owned a tech company but “yearned for a situation where I didn’t have to be in charge of every last detail,” he says. “I wanted to deliver a product or service in the best way possible but have the pipeline for dealing with the product, the website, all that taken care of for you.”
His aha! moment came when his wife’s cell phone crashed. “We were in North Carolina, and my wife went to this place I’d never heard of, called uBreakiFix. She had a great experience. She spent so much money, like $500, and said it was fantastic. That was the start of it.” The company wasn’t franchis- ing then, but Berkman kept an eye on it. When uBreakiFix did become a franchise, he dove in, and now owns three stores in the county (in Scarsdale, Mamaroneck, and Mount Kisco) with plans for two more.
Like Magnus, Berkman is in love with his business. “I felt these guys were a lot like me, really passionate about servicing the customer prop- erly,” he says. “That is what is miss- ing from the tech service industry. You expect to deal with someone who will be mean or condescend- ing or dismiss you. That is the exact opposite of what I preach and what uBreakiFix preaches.”
Such passion is critical for suc- cess. But so is caution. “The biggest mistake people make is that they don’t engage in evaluation,” says Charles N. Internicola, a New York franchise attorney who also practices in Westchester. “They become at- tached to a particular brand or busi- ness they personally like, and as a result they short-circuit what should be a vibrant due-diligence process.” All franchisors must, by law, offer a Franchise Disclosure Document, which details the agreement and lists all other current and former fran- chise holders, Internicola points out. Prospects are able to contact those franchisees and learn all the good, the bad, and the ugly associated with the company. “If you don’t call them,
you are being absolutely foolish,” Kaufmann agrees. “They will be pleased to tell you if they are doing well and will tell you even louder if their experience is negative.”
Michael Lang couldn’t agree more. “Do your due diligence, no doubt,” says Lang, who opened a Signarama franchise in Hartsdale two years ago, after losing his job as a marketing ex- ecutive in 2010. “Don’t make a deci- sion based on a few conversations. Use all the resources you can get, and ask lots of questions. Look at many options. I looked at 12 to 18 different franchise systems in different fields.”
Financial due diligence is perhaps the most critical. “In the beginning
you are not making any money, so fi- nancial planning is very important,” Lang says. “Many businesses fail in the first few years from financial con- straints, so you need a business plan to cover that part of the venture.” Even with such planning, “The first year was really tough,” he says. But he doubled his business in his second year. “I can now pay myself, though not to the extent I was paid at the corporate level. Will you get rich fast [through franchising]? No. You have to work hard, maybe harder than before. But it is absolutely fun.” He especially likes watching the signage he creates pop up in the community: “You see the direct impact, the re-
Franchising Is More than Food
If you think all franchises sell are cheap hamburgers and coffee, consider this: While five of the top 10 franchises in Entrepreneur Magazine’s 2016 Franchise 500 rankings are indeed food franchises, there are only 10 food franchises among the list’s top 25. And, McDonald’s, Burger King, and Dunkin Donuts comprise only about 6 percent of the total franchise pie, says Frank Dunne of franchising consultancy FranNet. Here are Entrepreneur’s Top 10:
RANK
FRANCHISE NAME
STARTUP COSTS
1 3 5 7 9
Jimmy John’s
$323,000 to $544,000
2
Hampton by Hilton
$3.8 million to $14.1 million
Supercuts
$144,000 to $294,000
4
Servpro
$142,000 to $191,000
Subway
$117,000 to $263,000
6
McDonald’s
7-Eleven
$989,000 to $2.2 million
$38,000 to $1.1 million
8
Dunkin’ Donuts
Denny’s
$217,000 to $1.6 million
$1.2 million to $2.1 million
10
Anytime Fitness
$63,000 to $418,000
“Every time you buy a car, have it serviced or fill it
with gas; virtually every
hotel you stay in; most stores in the mall; most lawn-care or pet-care services you” use—all of these are predominantly franchised.
— David Kaufmann, Kaufmann Gildin & Robbins
Source: www.entrepreneur.com/franchise500
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