BUSINESS: Franchise owners pay the price for success

By Michele Deluca<br><a href="mailto:delucam@gnnewspaper.com">E-mail Michele</a>

April 28, 2008 02:17 pm

— It was steak, for goodness sake.
Thin-cut steak, chopped and flash fried, covered in cheese and placed on a fresh-baked roll. Her parents raved about the product, so she took a chance.
About 10 years ago, after Linda Bruno of Grand Island made herself a little bit of money co-founding a pharmaceutical company, she began casting about for something different to do with her life.
She shopped franchises and eventually settled on Steak Escape after her parents were impressed by the franchise at the Philadelphia airport.
“That’s how it all started,” said Bruno, standing in her sharply appointed new store on Niagara Falls Boulevard in Wheatfield.
Back then, she met with company representatives at their headquarters in Columbus, Ohio, sat through a very “stringent” interview and plunked down $25,000 for the franchise fee.
Rather than opening a new restaurant on her own, she had joined forces with a national company and received the rights to use their name and sell their product. Who wouldn’t want to be part of a business that’s already successful?
Whether it’s selling steak sandwiches, doughnuts or car parts, joining a franchise gives small business owners the chance to run with the “big boys” of business. National marketing strategies, schooling and support are standard services provided in return for thousands paid by franchisees.
Is it worth it? Like anything else in life, sometimes yes and sometimes no.
You have to know what you want and, of course, you have to do your homework, according to local franchisees and experts in the field.
The ride has been challenging for Bruno and her partner, Rich Lyons. The first Steak Escape that Bruno opened was at the Fashion Outlets of Niagara Falls, and it cost her more than $200,000 to “build-out,” which is a term that means creating the store space.
That was the first lesson she learned
“Make sure your build-out cost doesn’t supersede your projected income,” she cautioned when asked if she had any advice for franchise shoppers.
She spent 10 years at the mall selling mostly, she said, to tourists. After the mall struggled through three owners and the franchise earned no profits, she invested thousands more to build a new location.
Another lesson: She discovered that her time at the mall had deprived her of name recognition among the local population.
As franchises go, hers has been a long series of lessons. She wishes for more guidance and support from the Steak Escape company, but after all her investments, she and Lyons are staying with the company, hoping that the quality and variety of fresh foods on the sandwich and salad menu will eventually win them support at their new location.
In the franchise industry, dreams can come true — but always for a fee. Fees can range from $5,000 to hundreds of thousands, which is the price of raising one’s percentage for success, according to one local franchise expert.
“A little over 90 percent of franchise businesses are still going to be up and running after five years, while 80 percent of independent start-ups have already failed” said Andy Klie of Clear Creek Development, a franchise consulting company in the Town of Tonawanda.
With franchises, “a whole lot of the guess work is removed,” he said. “Most franchises, if there's a mistake to be made, they've already done it. The franchiser can point those out and steer you away.”
Buying a franchise may sound easy, but Klie cautions that franchises, like any new business, require the same amount of diligence. “You absolutely have to find the right partner and then a good location, and then you have to go out and execute.”
Klie helps people find franchises that fit their checkbook and their personalities.
“I like the piece of the business where you can work with a person who’s been doing something they don't really like. They're doing it for somebody else and they’re not building equity,” he said. “When you can find that person and help them to take a little control of their own destiny, that's the part I really enjoy.”
Stephen Rodgers took control of his destiny when he decided to leave his family’s business and purchase a new AAMCO franchise on South Transit Road in Lockport. He said he made a “substantial investment” between the franchise fee and the purchase, renovation and equipping of his building.
“One of the reasons I bought AAMCO was its name recognition,” he said.
He noted that the company provided him with a strenuous three weeks of training,and also provides marketing support, but added he finds other AAMCO franchise owners locally have a stronger grasp of the local market.
His goal is to bring to life AAMCO’s national marketing slogan for its nearly 12,000 North American stores: “I got a guy.” Rodgers wants to be “the guy” in his community.
“My hope for this place is to be an honest, trusted auto repair place,” he said, adding that business has picked up since he opened in September and referrals are starting to come in — to him, a sure sign of growth.
Rodgers has also learned a lot since he opened his doors at the South Transit location, which was selected by the franchise company.
“It was a good decision, but I wish I would have gotten more involved and understood more,” he said, noting he was storing away everything he’s learned thus far “for the next time.”
Niagara-area residents can learn more about local franchise opportunities at a Franchise Seminar and Trade Show being held Thursday at the Conference Center Niagara Falls.
The show is being coordinated by the Small Business Development Center of Niagara County Community College as part of its continuing effort to stimulate the local economy through entrepreneurship.
“We'd love to see more franchises open up, particularly in the area of Niagara Falls, which would benefit from nationally branded franchises,” said David Curtain, an SBDC business consultant.
“As with any of our seminars, we want people to leave the seminar with the sense that, ‘Wow, I know so much more about this subject than I did a few hours ago,’ and feel like they got enough information to move forward with the next step,” he said.
Contact reporter Michele DeLucaat 693-1000, ext. 157.

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