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Exsisting Franchise or Independent

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Dough_Boy

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If you had the choice would you buy an existing franchise (open 1 year) that has been poorly run but still has some sales to get you started and is probably enough to just barley cover the costs of being opened and could do like a grand reopening/ under new ownership and offer a limited time special to get anybody that may have a bad taste in there mouth back so the can see that it has changed( & what kind of special would you recommend to get people coming back in the door? ) or start up an independent from scratch. which way would you go?
 
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My personal preference would to be an indy (because I like being the boss), however, I know from talking to many of my clients, it appears the franchise folks make more money and spend less time at their stores…Now my sampling is far from scientific and I have franchises and indys that are the exact opposite as well…
 
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I think it all depends on the market area and how saturated you are with competition. I also know indy shop owners that do very well and some that do not. On the flip side… I also know the same number of franchise owners that are doing both good and poor. This is pizza and non-pizza I am talking about. I have a very good friend that owns 3 Quiznos shops. 2 are very profitable and they keep the third open. Sad news is that he is locked into a long term lease at the third…sales are bad… high employee turn over… and he gets little if any assistance from corporate to help and he can not offer any specials that are not approved. Personally I see how having a franchise hand you a lot of your promotions and new ideas and even the concept can sound appealing… I just would hate to have my hands tied and not be able to make the final decisions myself. I have worked in a well structured environment and the hardest part was biting my tongue and not getting myself into trouble…at least not too often. I was also working for my father which opens up another can of worms. Basically you could relate that to working for a franchise. He directs and you do…and how often does the “franchise” listen to their owners… well he listened a few times because he knew I usually worked outside the box that his other management worked in and I would at least give a second opinion and an honest one. Just a side note…since I am kind of venting here a little…lol… I think he liked the honest answers he got from myself and most others…it was the major a.s.s kissers that drove him crazy. Well just my 2 cents. Good luck. :mrgreen:
 
When I started in this business I had the chance to buy an existing regional franchise store, open a second location for the same franchise or go it on my own.

I had just completed a diploma in business administration and had the luxury of free advise from my professors at the college. These are people who have MBA and accounting designations. Down to the last one they all advised against the franchise unless I was willing and able to open at least 3. Anything less in their opinion was just buying yourself a job.

After reading over the franchise agreement and comparing it to several others, I determined my course of action should be to go Indy. There were a number of things in the process that swayed my choice. I am not one to blindly follow the dictates of the corporation. I also find it a tough pill to swallow knowing the franchise had the FIRST XX% of sales before any other costs were looked after.
 
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There are pros and cons to franchising vs independent and it really depends on your personality, market, and the franchising company.

Having spent the last 16 years learning many things the hard way, I can appreciate the immediate corporate knowledge a franchisor brings, provided we share the same values. It would not bother me to follow another’s program, provided I am in agreement with it. But if you’re a trailblazer, you may eventually outgrow and resent the franchisor’s system, or at least the parts you don’t agree with.

I would not consider a franchise which did not have a vastly superior product relative to likely competitors or share my core values. The first should be a given, but the second is probably just as important. Like a ship’s captain, the franchise organization will reflect the character and values of the founder and prime mover. Is he/she still passionate? Do they have store operation experience? Are they even involved?

Chik Filet is known for their reputation, and it descends from its founder, who is still involved, as is his family. Other franchises are publicly traded or have been bought and sold more than once.

Everyone contemplating a business venture ought to take an inventory of their motivations and list them by priority. While we’d all love to find that pot of gold, if that were our only motivation, there are probably easier ways to do it. Like responses to another thread (Motivation?), we’re all in it for the satisfaction and fulfillment of working directly for free market. What do you really expect out of the business (and be honest)?

I would not want to own a Papas Pizza To Go in the market you’ve described (although I’ve heard the founders are good people).
 
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Not all franchises are created equal. I would never consider one that had less than 100 stores. I would also be looking closely to see what the marketing support is and what the savings in other areas might be to offset the royalties.

I will never understand why people pay someone else for a franchise when the seller has only opened a handful of stores themselves.

You should be getting a completly pressure tested model with numerous examples of success by new, unrelated franchisees. Otherwise save your money!
 
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Well they have to start off somewhere. Domino’s,PJ,McDonalds they just didn’t start off with thousands of locations they had to build it up from one store than another and another.
 
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gotta agree with bodegahwy on this one. Whilst knightwing you are correct that they had to start somewhere, when you join a small franchise what are you actually getting that you don’t get running your own indy business?
  • Help with design/fit out? (George can help you with this),
  • marketing ideas? (you’d get those from here),
  • buying power? (unlikely to be much and not likely to make you much when you take off your franchisee fees.
I’m sure there are some good small franchises but IMO the only reason you’d want to franchisee is to get a market leading name, access to a marketing dept and killers marketing rates, commissary food rates and deliveries.
 
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While I think most of the indys here are just that, independent, there are a lot of guys who like cookie-cutter, ready-made businesses, whether its a franchise or existing store. Some people prefer ‘turn-key.’
 
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By all means, go turn-key then. I think what we are saying is that the little outfits with only a few stores are not turn-key yet. They may have figured out how to run thier own stores, but they will not have a structure in place to make it turn-key for you.

It may seem mysterious to newbies, but recipies are not hard to come by. If you are goiung to pay for turn-key, be sure you get it. The biggies charge more because you get more!

BTW, I worked for Dominos before they hit 200 stores. (mid-late 70s) They were just really rolling out the franchise system but most stores were either company owned or were owned by one of the original generation of franchisees who pretty much all insiders. They added as much to the system as they took away.
 
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Having 218 stores after 14 years of business is one thing, having 100 stores after 2 or 3 years is quite another.

My comment about ‘turn-key’ really was about business in general. As you all know, starting a business, especially manufacturing or food from the ground up requires significantly more knowledge and skill sets than just buying an ‘existing’ or ‘established’ business.
 
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