The American Repossessor

Franchising… Is It All That It’s Cracked Up To Be?
By Susan Marston

I have been asked numerous times by company owners/presidents from varying industry sectors about franchising and what it entails.  One of the main questions asked is ‘can we make money?”  And my reply to that is….yes subject to the franchise.

There are many things to consider when considering becoming a franchisee, including the fact that you truly are ‘never your own boss’ as the franchisor usually, through contract, dictates the do’s and don’ts of the business.  You are bound by that contract to deliver a service/product in strict accordance to the contract.  Also, you have to pay a fee for the privilege of becoming a franchisee and thereafter, a monthly ‘royalty’ fee.  In addition, many franchisors tie you up in contract as to where you can purchase your supplies and indeed, how much you pay for them, often having to buy through them and pay extremely high prices for them.  Well, the franchisor has to make their money somewhere!

Geography plays a fundamental part in this too, as usually as a franchisee you are designated an area that you can do business within and you cannot overstep that boundary.  This factor can limit your income potential greatly and therefore, it should be one of your main considerations during the franchising  research process.  Ask the franchisor for a list of existing franchisors in your immediate and surrounding areas, as this will give you a good idea pre-purchase of your capabilities to do good business.  Obviously subject to the franchise you are looking to purchase, geography can curtail your income and profit levels.  Unfortunately, there are many franchisors, that look to maximize in selling too many off-shoots of their franchise in order that they make more money on each franchisee.  If the market place is saturated, then that should tell you not to invest in that area and look to another if you have the freedom of no geographical restrictions.

Did you know that over 80% of companies in the US are franchises? So it is a huge industry sector that many consider as an alternative to starting their own business from scratch.  In many instances, you are governed as to the clients you can have via the  franchisor’s ability to capture and retain clients.  And in my experience, many are poor at this.

Franchising is most definitely not an easy option to starting your own company, as there often are so many restrictions that even though you may have some good ideas yourself to maximize on profits, you will be limited to what you can do to add value to your own  franchise.

So beware of the glitzy marketing and the promises of making that fortune as  remember, there are many like you out there, fighting for the same business.

Another area to consider too, is purchasing or leasing equipment, vehicles etc., from companies associated with the franchise as again, their prices will be exorbitant in comparison to a free market supply.

Those are some of the negatives….now for some positives.

There are many franchises out there that are more than worth buying, so long as you have the money.  Take McDonalds for example.  I have yet to date to meet a franchisee that has purchased a McDonalds franchise that is not making money but their initial investment usually runs into hundreds of thousands for that privilege. 

You don’t have to worry about branding, your marketing, your site layout, your food suppliers etc., as this is all part of what you are purchasing with a reputable franchise such as McDonalds.  Also, your training and that of your employees  is met through the franchisor and all pertinent HR factors will be covered too. 

People need to eat and eat they do at McDonalds as their slogan of ‘serving 1 billion meals a day’ comes into play and that equates to a lot of money exchanging hands in all the franchises.

All I would say to you, is consider all your options before you go into this element of business as I have met as many unhappy franchisees as I have happy ones, and you certainly don’t want to be working hard, when you could be working smart – but smart for you!

Just as in any business sector, there are sharks  and you most definitely need to be aware of those, so to minimize risk and maximize on investing your hard earned money, do your homework and do it thoroughly.

Unfortunately, there are those unscrupulous characters out there that don’t have any  integrity, honesty and are less than professional in all that they do, so don’t fall victim to their smooth talking ways. 

Request the franchisor to provide you with at least 3 years of the most recent financial accounts and 3 years of future projections and let an independent professional such as a CPA, Business Advisor and/or Business Consultant review them.  At the same time, let them review the franchise contract that the franchisor wants you to sign and get an itemized breakdown of exactly what your monetary investment will buy.

Have  a business attorney that specializes in franchising, review all contracts, related documents and basically, any associated documentation relating to the franchise purchase.  Yes you will have to pay a fee for that, but it will be a small fee in comparison to what you are looking to invest – but well worth it to give you piece of mind.

With all that done and you still want to proceed…. Congratulations and welcome to the business world!

Rural Recoveries
By David Branch

Recoveries in an urban setting as opposed to those in a rural setting are two very different birds. While the end result is the same, I find those done in the country to be far more dangerous and difficult than those done in the city. There are those that would argue the issue, but in my opinion, there are far too many variables to think otherwise. However, that’s not my point. This is a story about a rural recovery.

In the summer of 1996, I was dropping a unit at one of my used car lots in Greensboro when I walked into the office to find the dealer on the phone, screaming at some poor soul on the other end. I turned to leave when he motioned for me to stay in his office. He finished and told me that he was talking with a debtor who had purchased a 1983 Dodge P/U from him a year back and still had a few grand left on his note. He said that this debtor had been refusing to talk to him for about 2 months when he finally reached him at his parents house. The debtor, a 25 year old guy, told him that he wasn’t going to pay him another dime on the truck, that he had put too much money into it for him to surrender and that he would burn it before the dealer ever got it back. Needless to say, my guy wanted the truck back and wanted it right away. As he was getting my paper work together, he told me that this guy had lifted the truck, put some MT’s on it and it would have to go on a roll back. I told him no problem and he said if I had it back to him tomorrow, he’d double my fee.

I got back to my office and started looking the account over. This kid hadn’t paid anything on the truck for over 90 days and his payments before that were sporadic at best. I called the last work number they had for him and when I asked for the debtor, they said he hadn’t worked there in… you guessed it, 90 days or so. I won’t go into all the details for this story, but about an hour later, I had skipped the kid staying back at his parents house in Caswell County. I had another address that had to be checked in a small town in that County so I planned my route for the night to include a swing out that way.

A fishing buddy of mine had been going out with me every so often over the last month to see what field work was like and for the few bucks I’d throw his way. I called him up and told him to grab some dinner. I’d be by in a while to pick him up. After grabbing a shower and a quick bite myself, we set out to make the Dodge our first stop of the night. Caswell County is a fair sized place with just a few small towns and plenty of tobacco and other farm operations. Our target was about 8 miles from the Virginia line and we arrived there just as the Dodge was pulling into the address. I drove past him without slowing down. After the exchange on the phone with the dealer, I knew that a demand scenario was out of the question. At least not at first. I turned around and drove past the property getting a good look this time. It was a large farm with a long, tree lined, 300+ yd. road leading up to the main house. At the front was a large barn that had a scattering of 6 or 7 mobile homes around it that had to be housing for the field help. The main house was too far from the road and it was way too dark to see the truck from the road, so I decided to go run my other address out here and come back later in the night after everyone had a chance to settle in. I knew my unit was there.

The address on the other account turned into a dead end and we returned out to the farm about 0:100 a.m. My plan was to just walk down the property’s road and drive the truck out. I parked at the edge of the front pasture and walked the fence line down to the drive having told my friend to get in the drivers seat and wait for me to pull out. As I was edging my way past the door on the large barn, some dogs at the trailers started barking and a light came on in the one closet to me. I stood in the darkness for a few minutes while the dogs quieted down and then continued on down the road. I got about halfway to the main house when I saw some headlights come on and start down the drive towards me. Not wanting to be seen, I jumped over the fence into the tree line and hugged the ground. The headlights came down the road and I could make out the shape of an older pick up and it slowly went to the main road and stayed there for about 5 minutes until it turned around and went back to the main house. I can only assume that one of the farm hands called the house when the dogs got stirred up and they drove up to take a look around.

I stayed lying where I was until about 10 minutes after I saw the headlights go out and started out towards the house again, staying inside the fence. I made it about 20 yards when I heard what I thought was the friend I had left in the truck running up behind me. When I turned around, I could just make out the silhouette of a bull coming right for me. Like an Olympic sprinter out of the blocks I was off, running faster than I had since High School. I came to a fence and scrambled over it just ahead of the bull. Continuing to run, I made about half a stride and ran right into a barbed wire fence, flipping right over it. I tried to stand up and started getting electrocuted. I was tangled up in the barbed wire and a hot wire. A hot wire is an electrified strand of wire used to keep horses and livestock contained and from eating wooden fences. So here I am, cut and bleeding, my pants and shirt caught up in the barbed wire and every time I move to untangle myself, I get a pretty good zap, not to mention a rather large bull is snorting in my face two feet away. Finally, after much muffled cursing and an eternity, I get myself free and try to focus on the task at hand.

I climb yet another fence and am back on the driveway and can see the Dodge. I get the key out of my pocket and focus on the door to the house. I get maybe 10 feet from the truck when I sense the dog before I hear him. He’s big, has a snarl of teeth to match, a low, throaty growl emitting from beyond his fangs. I half rolled my eyes back, making a dash for the truck, praying it’s not locked up. I make it inside and the dog is on his hind legs, paws on the door, and barking his fool head off. Lights come on from inside the house. I slide the key in the ignition, praying this time that it works, and the engine roars to life and off I go down the dirt road.

Out on the main road, I stick my head out the window and tell my friend to come on. He said that it took me a while and asked how it went. I just laughed and said;

"Pretty routine!".