Franchisees' support systems

Nation's Business, Sept, 1988 by Nancy Kroft Baker

Franchisees' Support Systems

Franchising, in many ways, is like following a recipe. If the recipe is tried and true, merely following the instructions will yield a culinary success every time. But you can't do it without the right ingredients and the right tools.

Likewise, with the right mix of services from the franchisor, new franchisees find it much easier to build successful businesses.

Help with selecting a site, negotiating a lease and hiring employees are only samples of the kinds of support services that most franchisors offer new franchisees. But a much more important type of help for franchisees about to run a business for the first time is the reassurance that they will not be abandoned by the franchisor. Moral support from other experienced franchisees, along with access to franchise advisers, can be crucial for those about to take the plunge into franchising.

"Without the support we've gotten from the home office and other franchisees, we would not be as successful as we are--especially if we had started the business on our own," says Deborah Guggolz. Last year she and her husband, Carl, bought a Maids cleaning-service franchise on the Hawaiian island of Maui.

The couple, like all a Maids' new franchisees, is under the care of a veteran franchisee, who advises and guides new owners until they can manage on their own. This "big brother" program is perhaps the principal selling point in attracting new franchisees to the system, says Thomas Harrer, a longtime master franchise on Oahu, the Hawaiian island that includes Honolulu. He was named the franchise's "big brother" of the year.

"One of the main questions that always comes up is how much support can they count on," says Harrer. "I tell them to call other franchisees to find out." The response to such queries, says Guggolz--who in turn has answered the same question for prospective franchisees--is that you can call on your big brother at any time of the day or night.

Harer, for instance, has solved mechanical problems, settled labor disputes and given pep talks to new franchisees who, like Deborah and Carl Guggolz, had no previous business experience. Harrer recently saved the Guggolzes from probable financial disaster by helping them define the duties for which each would be responsible; their business-management problems had arisen when they began looking critically over each other's shoulders.

"Carl was criticizing my bookkeeping, and I told him that his quality control was slopping," says Deborah Guggolz. "We started doing each other's work, and that created a big conflict. The maids picked that up and didn't know whom to listen to."

Fortunately, Harrer stepped in and solved the problem with advice based on his own experience in running a maid service. "He probably saved our marriage, too," says Deborah Guggolz.

Another franchise that encourages franchisees to share their ideas and problems is the Car Phone Connection, a mobile-phone franchise in Parsippany, N.J. Every six weeks it throws a theme party at the corporate office for its 31 franchisees. Franchisees eat dinner together, play games and share ideas throughout the evening.

Larry Margolis, president of Car Phone Connection, also uses various incentives to motivate franchisees to build their businesses. For instance, for every phone that a franchisee sells, the franchisor puts $100 into the franchisee's personal advertising fund. While franchisees pay a 6 percent fee each month for the franchise system's regional advertising, a franchisee may wind up with an additional $1,000 to $4,000 a month for local promotions.

For many would-be business owners, extra services like these make buying a franchise an attractive alternative to starting an independent enterprise.

Matt Pesselato, for example, had managed several fast-food franchises and liked the idea of owning his own restaurant. After seeing the support system at first hand, however, he opted to buy a franchise instead of going out on his own. Pesselato bought a Fox's Pizza Den franchise in Cranberry, Pa. "Now that I've been a franchisee for three months," he says, "I realize that support services are very valuable during the start-up years."

One service that Pesselato particularly likes is Fox's commissary at the franchise's headquarters in Monroeville, Pa. The commissary is stocked with all the supplies that a franchisee needs to run a pizza shop--from premade pizza dough to cleaning materials. A franchisee need only make up one shopping list and pay one supplier. Fox's even delivers the orders to franchisees' door-steps. And because the franchisor orders supplies in bulk, the savings are passed on to franchisees. Of course, franchise owners have the option of buying from other suppliers, but they find they save more time and money at the commissary, says Pesselato.

In addition to providing support for his 145 franchise units in six eastern states, franchisor Jim Fox wants to take under his wing some franchisees who will need specialized attention. He has modified his pizza equipment and has designed a shop to accommodate physically handicapped owners.