Franchise Players
Airpark entrepreneurs relish freedom & profits of proven business models
Source: Scottsdale Airpark News

By Kimberly Hundley
“Hey, I met this guy on the plane who’s got these Subway things,” Ken Clark said excitedly into the phone as soon as he landed at LAX.

Rick Ueable remembers that 1989 call from his business partner like it was yesterday. The brutal real estate market had gutted their profits as Scottsdale developers and brokers, and they needed a new venture.

But not this one, Ueable hoped. “My feeling was I can’t even spell restaurant, and I don’t want to run one. I had never heard of the brand before.”

Clark wouldn’t let the idea go. The pair borrowed $450,000 at 19 percent interest from an acquaintance to buy three existing stores from the franchisor, which was impressed with their business background.

Only a handful of Subways were in Arizona at the time, and the rest, as they say, is history. “We feel blessed that we got in when we did. Timing is everything,” says Ueable, who now operates 35 restaurants with Clark.
Finding a Match

Though Ueable makes it sound easy, building a multi-site empire is the franchising dream. Riches aside, many professionals are looking to opportunities in the franchise world for lifestyle reasons.

“No. 1 is control and independence; and No. 2 is flexibility,” says Harriet Moser, senior consultant for FranNet of Arizona & New Mexico, a recruitment service for about 125 of the 3,000 franchises out there.

Most of the people who turn up in Moser’s Kierland office these days are downsized mid to senior executives. “Many of my clients feel burned,” she says. “They’ve been with a company for 25 to 30 years, and it’s not easy to find a new position—especially if they want to stay in Phoenix. “It’s time for them to look at how they can put those skill sets to work for themselves.”

The trick is finding the right match for a candidate’s skill set, and that’s where someone like Moser comes in. She’s the franchise matchmaker who helps you profile your strengths and weaknesses, then delivers hard truths about how suited you are for the business you’re enamored with.

“Most of my clients, when I suggest franchises for them, they’ve never even considered them,” she says. It’s a classic misconception that franchisees have to have prior expertise in their new business. In fact, franchisors generally prefer a clean slate, an owner who can execute a proven business model with no baggage but lots of entrepreneurial savvy, according to Moser.

A fitness enthusiast may think they want to own a gym, for example, only to learn their primary function will be selling memberships and managing staff. Someone hoping to be the semi-absentee owner of a yogurt shop might realize the need to be onsite 24/7 for two years.
Untapped B2Bs

Moser is a big proponent of business-to-business franchises, which consumers tend to be unaware of. These have the most potential for profit, she says, because you don’t have to buy more storefronts to grow. Franchise territories are usually defined by business densities within select ZIP codes, and clients are willing to drive to reach you vs. sticking to the 3-mile radius where they grab lunch or deodorant.

In the business-dense Airpark where leases for industrial space are more affordable than retail, B2Bs are especially attractive, she adds.
Just as would-be franchisees hunt for businesses that ring their bell, franchisors are no less discriminating. They don’t sell to just anyone. Candidates need to meet their criteria because if the franchisee doesn’t end up making money, neither does the mother company.

That’s good news for laid-off or retired executives, as Airpark residents Borg and Ann Siburg of SpeedPro Imaging of Scottsdale recently discovered.

When Borg was laid off from his position with DHL Data Center, he says he fit the bill as a “displaced, disenfranchised, disenchanted corporate executive,” which turned out to be exactly what his franchisor was looking for.

Initially Borg hadn’t considered a franchise, but a light bulb went off during Moser’s talk at his company’s outplacement seminar. “I’d been laid off one too many times,” he says. “Now I love controlling my own destiny. I can be totally exhausted getting out of bed, but I’m still highly energized because no one else is going to get it done.”

Borg and his wife, Ann, took a battery of tests from Harriet at FranNet and were pleased to find a product they could finally agree on. Both wanted a B2B that emphasized service, and Borg was adamant about being in the light industrial sector. Large-format graphics satisfied both their needs. “It had to be something I thought was fun, creative and be passionate about selling. I really do think it’s cool stuff,” Ann says. “I’m proud of it, and when we hand it to people I love the ‘wow’ factor.”

The Siburgs now employ two technicians to execute orders while they focus on growing the business. Networking groups such as the North Scottsdale Chamber of Commerce and BNI, have proved invaluable, says Ann.
Supportive Parent

The support offered to franchisees is another important aspect of working with a franchisor. Part of the reason the Siburgs selected SpeedPro Imaging after completing their “investigative due diligence process” is the company’s U.S. headquarters are only a few blocks from their studio near 80th Street and Butherus. IT and technicians are standing by to help troubleshoot printer or computer problems, and the company recently invested heavily in improving the CRM platform their franchisees use to track customers and sales. Plus, an easily customizable website was provided.

“We didn’t have to invent all that ourselves,” Borg says, adding the freed-up time is spent where it will bear the most profit—on sales and customer service.
Revenue Avenue

Successful franchisees who also have what Moser calls “V.P. marketing-type skills” can find an additional revenue stream as “masters” or “area developers” counseling other franchisees in their areas to get established or to perform better. Last quarter, the Siburgs became master developers for the state of Arizona, signing their first franchisee in December. Part of their duties is talking to prospective franchisees to see if they’re a good fit.
 

Nelson and Pam Crespo, who helped introduce Elements Therapeutic Massage to the state, own a single franchise location at The Promenade. As Arizona Area Developers they field phone calls from candidates investigating the studios, which specialize in affordable therapeutic massage with discounts for members. Once a new franchisee signs on, the Crespos share in-depth guidance on operations, marketing, training and even finding a location. They then receive a portion of the royalties by providing a continued support system and liaison between corporate and the studio.

“It’s rewarding and exciting to help them get their doors open,” Nelson says. “We get to watch them live their dream to become a business owner.”

The Crespos—who admit they knew nothing about massages other than they liked to receive them—were drawn to Elements because they “fell in love” with the corporate support system. Previously they owned a graphic-design company.

“It’s a fantastic program because most of the time, it’s a system that works,” Pam says. “If you go into it with that concept, then it will work for you. If you’re trying to reinvent the wheel, then a franchise is not for you.” At this point, Pam, a self-described people person, can often tell over the phone if a candidate has the personality to follow the program and build relationships with clients.
Cost

The total investment to get into a franchise ranges from $55,000 to $65,000 (home-based business) on the low end to millions of dollars. Most of FranNet Arizona’s clients are in the $125,000 to $180,000 range, which would finance two or three employees and a non-retail location.

Finding financing can be tough. “If it’s your first store, you’ll have to have outside net worth or get an SBA loan,” says Stephen Schwanz, president of Airpark-based Franchise Capitol Investors.

Sometimes franchisors will assist owners in finding funding. The Crespos went the SBA route in 2007, and say the average cost to get started with an Elements studio today is a $45,000 franchise fee plus about $200,000 in working capital.

The Siburgs financed their studio with their retirement funds, an option Moser introduced them to. “We poured our lifesavings into this business,” Ann says. “Our retirement assets own this company; it’s called a C Corporation and we are employees of our company. The advantages are we service no debt; the disadvantage is we risk losing it. We’re betting on ourselves.”

Moser urges anyone interested in learning more about franchises to contact FranNet. “All of our education programs are free. Most people don’t know we exist,” she says, adding that, as a recruiter, the franchisors pays her, not the candidates.

Moser acknowledges that some of her clients who have been downsized are afraid and disoriented. “But I can tell you for a fact that the best things that have ever happened to me are a direct results of the worst things that have happened to me,” she says. “Maybe the downsizing will lead you to keep your mind open and get you into something that will be the best thing you’ve ever done in your life.”

The Siburgs are happy they’ve taken the risk. Borg uses the word “nirvana” to describe working so close to home and having a flexible schedule to see his family.

“Follow your dreams,” Ann advises. “When you finally get to the end of your research and the talking, you either do it or you don’t. It’s not for everyone. It’s a lot of hard work. But for those willing to invest a couple years of very hard work, it pays off.”
Is Franchising Right for You?

Find out in a free monthly seminar presented the third Saturday each month from 10am – Noon by FranNet of Arizona & New Mexico, in the Kierland, Scottsdale Corporate Center at 7047 E. Greenway Parkway, Suite 250 (building one block west of Scottsdale Road; number not visible from street).

RSVP: www.FranNet.com/hmoser or call Harriet Moser at 602.301.6576
 
Topics Include:
• “Hot” Trends for Today’s Challenging Economy
• Financing your new business
• Survival Rates of Independent vs, Franchised Businesses
• Average Income of Franchise Owners
• Average Investment
• Correlation Between Income and Investment
• What to Expect for Your Franchise Fee
• What to Expect for Your Royalty
 
FranNet also hosts a monthly webinar “Franchise 101”

For a full listing of our events calendar, click here
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Harriet Moser
FranNet Arizona & New Mexico
(602) 301-6576 cell
(602) 307-5962
hmoser@frannet.com
http://www.frannet.com/hmoser