How I Started My First Franchise

What am I going to do after I graduate college with a business degree?  This question consumed me as I was nearing graduation.  This one question bred many other questions: Do I apply to anything and everything that is hiring?  Do I apply to only businesses I think I would love to work for?  Do I apply to places in other states?  Do I attempt to start a business on my own?  How do I start a business on my own with no experience?  My mind was restless!  I came to the conclusion I would go crazy putting so much effort into debating these questions and decided to focus this energy on keeping an eye out for opportunities that came my way.

Inspiration

In the winter of 2005 my parents picked me up on their trip across the state to watch my brother wrestle in his first home meet.  It was a great meet and if you know anything about wrestling, after a meet the athletes are starving!  My brother suggested we go to his favorite new place to eat, which was open late.  As we walked into the establishment I noticed right away there were a ton of employees working relative to the number of customers in the store.  I asked one of the employees why there were so many people working.  He responded by telling me that four of the people working were actually not employees but were in training to open their own franchises and were gaining hands on experience. I continued the conversation with some of these new franchise owners, trying to figure out what exactly it took to open a new business. It turned out that is was a relatively simple process, fill out a franchise application and if the company liked what they saw they would then interview you and see if you were a proper fit for the vision of the business. 

Initial Franchise Fees/Application Process

At this point the ball was in my court and I decided to put together everything I needed to apply for my own franchise.  Everything was going right on track but the first major obstacle, one that nearly all potential franchise owners face, was the initial franchise fee. I was fortunate to have started working in elementary school and despite being a full time student, had been able to save what I thought to be a large amount of money. However, despite it being a large amount of money for me, I only had about half of the money it would take to open a franchise.  I was in luck because on this same trip to watch my brother wrestle, one of my friends had come and was also interested in potentially opening a franchise. He had access to some money from his family, and with it was able to front the other half we would need to apply for a business loan.  With him on board we met all the requirements needed for the franchise application.  The franchise application included a complete financial profile, previous work experience, school history, and personal profile about who you are.  The franchise liked what they saw in our application and set up a face to face interview to get a feel for their newest franchisee prospects.  After the meeting we were fully cleared to pursue our new franchise in the location we desired.

Securing the Location

The first step was the most important for setting up future success, location location location! I had known from the very beginning that my ideal location for our franchise would be the town I went to college in. Coincidently it was also the last university in the state that did not already have this franchise in it.  Additionally because the town was so small, real estate prices compared to more metropolitan areas was very cheap to lease (approximately $.50 a square foot/month).  The first location I wanted was on Main street, and there was a vacancy available in one of the buildings. We asked the franchisor to fly in and view/inspect the potential property and we all agreed it was a great location for the business.  After negotiations with the building owner for a couple months, he decided at the last minute to sign a lease with another business, claiming they had more experience and were a better choice (they closed within a year of opening their doors).  This pushed me to begin investigating any vacancies that were within a small radius of my original location. I was able to find a storefront that seemed open but wasn’t listed for lease, with some research I was able to track down the owner of the building.  While losing the first location was stressful, the new location now placed me in direct sight of two of the busiest bars in town. I’d always planned on having a late night option, and being this close to those patrons was an exciting prospect. In addition the landlord for this location couldn’t have been any easier to work with. Part of the reason the location was not listed for rent was that it wasn’t in great shape, however in exchange for renovating and improving the property I was able to negotiate two free years rent. On top of that I negotiated that the 20th year in business (my final year under the lease agreement), I would still be paying less than $1 a square foot/month. My advice to all potential franchise owners when looking for locations is first to be persistent, there are often more out there than what a realtor might have available, and secondly to not underestimate your ability, with the right negotiating tactics you can secure deals that you might not think possible. 

Securing Financing

In the meantime while the lease was being finalized, I was working on securing the financing with a SBA loan.  The toughest part of financing was finding a bank to finance first time business owners.  We did not have many options of institutions we could go through.  Lucky for us the franchise had built a solid relationship with one bank that had funded quite a few locations, so this was a way to get our foot in the door.  We provided tax returns, asset lists, liability lists, typical monthly costs, bank account information and any financial documents they required.  Other than what seemed like countless documents the bank needed from my business partner and I, after finding the bank that would work with us ,the process of securing the loan was actually very simple.

Construction

Next in the process was finding the right contractor to do the buildout.  I believe it was due to my age, but of the three contractors I had bid the job, one of them bid logically, one bid very high, and one over bid drastically. Apparently he had forgotten that he had previously told me how much he had charged another franchise owner in a different area (one that he had said needed a complete architectural overhaul), when his bid came in $100,000 over that number, I knew he was trying to take advantage of our inexperience in the business.

At that point I accepted the proper bid from a company that built many of these franchises on the east coast. Working with a development firm that has already built a similar franchise can limit your options and they may not have the lowest possible bid, but they understand the business and you will avoid unexpected headaches both during the build and when the business is up and running. Despite my due diligence the buildout took six months longer than anticipated due to an internal dispute between the contractors, however once completed it was built to my standards, and we were ready to go. 

The Launch

I opened my doors for business on February 7th, 2007, four months before I graduated from college with my business degree. As a result in my last quarter in school, while taking a small business management class, I spent a fair amount of time educating in tandem with my professor, who asked me to provide the class with some of the hands on experiences I had learned thus far. The road I took to open my first business was long and difficult, but invaluable with all that I learned.  And to think it all began on a random night, in a town I’d never been in, on a recommendation to eat at a place I’d never eaten, to spark my journey to where I am today.

Looking Ahead

This experience has led me to believe that the key to business is seizing the right opportunities when they present themselves. I’m looking forward to joining the SMBReviews team as a featured contributor and look forward to provide its readers with many of the life lessons I’ve acquired while operating this franchise, along with some of the stories I’m actively learning while I open my next location.

About author

Josh Friedman
Josh Friedman 2 posts

Josh Friedman has been a successful franchise owner since 2007 and has a firm belief that the key to business is seizing the right opportunities when they present themselves. Josh focuses on providing readers with many of the life lessons he has acquired while running his franchise, as well as those he is actively learning while expanding and growing his business.

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