How changes are affecting franchising

Nation's Business, Nov, 1991 by Meg Whittemore

Franchising's trend in the coming year will be driven by diverse conditions in the nation's economy and by a host of demographic changes as well.

Consumers' interest in education and employment security and their demands for convenience and value are all propelling the development of franchised businesses. In response to consumers' needs, franchised products and services are becoming more specialized and sophisticated.

Throughout all the changes and shifts in the franchise community, the clear winner in every case is the customer.

Corporate Belt Tightening

If you are a displaced corporate executive, are the sole supporter of your family, and have children living at home, you fit the description of the latest wave of prospects seeking to enter franchising.

The corporate downsizing trend of the 1970s and '80s taught many white-collar workers that their jobs did not come with lifetime guarantees. "During the last several years, U.S. corporations have announced over 500,000 white-collar layoffs," says Don Lacey, editor and publisher of Workplace Trends, an employment-trends newsletter published in Rocky River, Ohion, a suburb of Cleveland. The days of lifetime employment are fading fast, he says.

What lies ahead for these former executives? The answer for many turns out to be franchising. According to a 1991 survey of franchising companies conducted by S&S Franchise Marketing Consultants, based in Northbrook, Ill., franchisors report that 70 percent of their inquires now come from current or former executives, up from 20 percent in previous years.

Fortunately for those with executive backgrounds, franchisors are increasingly on the lookout for seasoned business people--especially professionals who have been through tough times and know how to manage during downturns. Franchisors are seeking such individuals both as prospective franchisees and as management-support personnel within parent companies.

"Franchise employers are now looking for maturity, stability, and the kind of experience you can't get in business schoo," says Lois Vana Marshall, president of The Marshall Group. The firm, headquartered in Salinas, Calif., specializes in executive searches for franchised companies.

"Franchising operations are successful because they combine the best of corporate know-how with the enthusiasm of entreprenuership," says C. Ronald Petty, president of Miami Subs Corp., an upscale quick-service restaurant franchise based in Fort Lauderdale, Fla.

Petty says that the Miami Subs franchisees who have been corporate executives are highly motivated self-starters. "Corporate managers often find they can easily adapt to the world of franchising, where the ability to follow corporate guidelines and keep headquarters in the loop puts them in good stead." he says.

Betty Hoeffner, vice president of S&S Franchise Marketing Consultants, agrees. "There was a time when a franchisor might have worried that executives, accustomed to delegating work, might not be willing to roll up their sleeves and dig in," she says, "but that hasn't turned out to be the case."

Steven Finch wasn't afraid of the extra work involved in business ownership, he says. He was concerned about the income reduction. "I decided to gamble on myself, even though I was afraid the world would come to an end once that regular paycheck stopped arriving at the bank," he says." But, guess what! It didn't"

Finch had been an accountant and divisional chief financial officer for Western Publishing Co., a book publisher headquartered in Racine, Wis. He became uneasy when the company was sold three times in eight years. In 1988, after 20 years with the company, he decided his employment was not secure, and he bought a Comprehensive Business Services franchise in Ellisville, Mo. Comprehensive Business Services offers accounting, bookkeeping, and tax services to small companies. Three years later, with 1992 projected gross sales totaling $130,000, he says, "I'm not wealthy yet, but I am well on my way."

Finch was most surprised by how much he enjoyed working for himself, even though intially it meant cutting his personal budget in half.

"I left a fine office [at Western Publishing] with a secretary and the latest equipment and moved into my back bedroom," Finch says. "But it was worth it."

Computer For Preschoolers

Mary Rogers, co-founder of Computertots, a franchise specializing in computer education for preschoolers, looks for franchisees who have backgrounds in education as well as business.

It is very important, Rogers says, that prospective franchisees believe in the concept of early education for children--and early computer exposure.

Computerlots, based in Great Falls, Va., offers computer-enrichment classes to children ages 3 to 5 in day-care centers. "It has been estimated that by the turn of the century, over 90 percent of all jobs will require some knowledge of computer technology," says Rogers. "For today's youngsters, growing up successfully in the 21st century will require varying degrees of computer literacy."