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Discussion on Franchising or Expanding


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  #1  
Old 11-04-2005, 10:40 AM
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Hi Everyone,

I have been talking with Troy and Dan. They both own a lawn care operation and have been interested in learning how to expand or franchise their business.

Dan just recently wrote and said he has decided to start building a professional lawn care business with the intention of franchising in the future.

He has a background or maintaining high end golf courses.

Dan could you tell us a few things.

Why do you want to franchise your business?

What do you feel your franchise will be able to offer as opposed to other franchises out there. How will you stand out?
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  #2  
Old 11-04-2005, 02:36 PM
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My biggest problem for me is trying to get the money to get big. You have a double edged sword. You need to make money to get big, yet in order to be big, you have to have money.

I really want to get huge here in the next 2 to 3 years. The biggest problem I am facing though is personal and business debt. I would love it if in 3 to 5 years I was just in the office all day long. And 5+ years I would love it if I just had to come into work maybe 2 to 3 days a week.

I also want to expand beyond the state of Michigan and go south. I have in mind the Carolina's, Florida, and Texas as my choices.


Troy
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  #3  
Old 11-06-2005, 03:14 PM
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Franchising is an excellent idea, especially if you are interested in spending more time on the business side of things rather than in the field. The task should not be taken lightly though.

I am not an experienced franchiser however it is an option that I have investigated quite thoroughly.

The first thing I would say is that you must have your own operation streamlined and profitable. If you struggle with cash flow problems or fail to plan properly then these things need to be resolved before franchising or expanding or you are simply growing the problem. As well, if you find it very difficlut to produce quality work with hired help this could be a red flag.

Whether you franchise or just expand you have to have documented systems in place for everything. Morning procedures, after work procedures, job site procedures, year-end procedure... and so on. This must all be in place and running smoothly before making any other steps towards franchising. As Michael Gerber says 'People don't run businesses, systems run businesses and people run the systems'.

So when I mentioned that employees not producing the same top quality work as you is a red flag it's because you don't have systems in place. The new employee should know how to produce exactly the same as you because it's part of your written system. They are trained exactly how to do the job. Without this kind of meticulous training how will franchisees know how to produce the same outstanding results as the parent company?

So, in a nutshell... it's all about re-producable systems.

By the way, Gerber's book 'The E-myth Revisited' is a must read for anyone thinking about expanding.
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  #4  
Old 11-07-2005, 07:54 AM
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Troy,

There are three main ways I know of to expand your business. First is to find investors to help you fund your expansion. Second it to self fund your expansion. Third is to take on business partners.

Unless you know some close associates willing to invest in you, this is going to be a tough way to go.

Self funding is also tough unless you have money to do it.

My suggestion is based on the way Paul Orfalea expanded his Kinko's company. This wasn't a franchise. He would find people he knew and got them to partner with him to open up Kinko's in different areas. Read his book here.

Remember though the first thing he did was he got one store working and profitable. He had a business process that could be duplicated just as Joel stated above.

My take is you need to get this process working first within your company. Get something up and running and keep tweaking it until you make it as profitable as possible. Then possibly try to spin off a route into a partnership with the best employee you have. Give that employee a financial incentive to do the best job they can. There is a tremendous amount of unused energy out there in people that you can harness if you give them a direction and a financial incentive to follow it.

When you get one spin off partnership like that, you can then use what you learned from it and recreate it again and again. If you have proven results you can find others that will be looking to you to help guide them to their pot of gold at the end of the rainbow.

I am willing to help you create more of a plan on how to do this as I am sure others on this forum are. Let's hear some of your feedback.
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  #5  
Old 11-07-2005, 03:28 PM
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what I really want to do is expand the business myself, without the partners. I am afraid that the partners will not follow my ideas and run the business into the ground. I would rather do it myself to know that I did it all of my own. Yes, it's probably going to take me longer, but I feel that it's more secure that way.
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  #6  
Old 11-07-2005, 05:40 PM
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Sorry I'm late, I just received the link to this discussion.

I'm new to the lawn care business as mentioned above. I am a detailed person who is passionate about what I do. It boils down to wanting to be the best at what I do and doing whatever it takes to get there.

My goals with my new Lawn Care business are to provide top notch service to my surrounding area. Don't get me wrong, there are a few companies in my area already doing this, however, after speaking with many homeowners, these big companies lack an agronomically educated individual calling the shots and knowing whats best for a given grass.

Why do I want to franchise? Before I can answer this, I must state the mission statement of the business: To provide reliable, affordable, professional lawn care solutions to customers.

Reliable service is a huge factor in this business. Do you care enough about your customers property to make it shine? Will you mow it twice in one week if you have to? Can you keep and maintain a sound maintainence schedule? Do you present a professional image in all aspects of what your doing? Do you respect the money of your customers? I do, I can, and I will! This ties it together prestty well. Many companies offer a lot of services but preform them in blue jeans and tank tops, NOT ME. Many people can't confidently answer routine "grass related" questions, I do and can. If someone were to do work in or around my home, I would much rather a clean, professional looking individual versus a "grimmy" looking one. All of my customers love the fact that I am reliable, knowledgable, honest, and professional.

Ok, so it seems like people really like what I have to offer, why re-invent the wheel? This is what people need, and this is what people want. Everyone needs a reliable, knowledgeable, honest and professional lwan care provider. More importantly, everyone wants their property to stand out. It's a winning combination.

I think I answered why I want to franchise and how I will seperate myself from the pack. If I didn't, let me know.
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Old 11-08-2005, 08:28 AM
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Troy,

I know many people hate the concept of having partners but whenever you use someone else's money to grow they do become a partner in a sense. Many many people have been able to take on partners to grow their business and later buy them out. There are ways to set up a business system where everyone works together. The first thing is to create a a functioning model of this business system with one person.
Please ask around and investigate this but I think you will find more people have been successful by building a business with partners than by doing it all on their own.
I think many people are afraid when they take on partners, they will lose power and control over their business. It's this fear that keeps them from growing or expanding. The more you know how to run your business. The more people will come to you and need you to help them run their business. This is how you could grow.
You can also learn from other people things you might never have learned on your own.

Tell me more of your thoughts. What is your next step?
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Old 11-08-2005, 08:40 AM
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Hi turfman007,

If you get a chance, read Copy This. It is a book about Kinkos and how they expanded. In the book Paul "Kinko" Orfalea talks about how a grad student wrote a paper on how he would like to expand Kinkos in Japan, where he is from. He sent this paper to Paul.
Paul contacted the student and they met. Later Paul flew to Japan and met with the company who sponsored this Japanese student college studies. The person at this company Paul met with asked him with all of Kinko's success, how come they didn't use the franchise model to expand? Paul responded by saying something to the effect of this. Do you know what the franchisee / franchiser model is like? He then, with each hand, gave the other hand the middle finger. The Japanese businessman was stunned. Paul went on to say to describe how their relationship was always at odds. One located in itís ivory towers was telling the other, located in the field how to run things when it was the ones in the field who knew better how to run things.
So instead of franchising his company, he had different business partners open stores under his company name Kinkoís. The partners invested their own money to buy into the winning formula and owned 40% of the store while the parent company owned 60%. There is a little more to this, but this is the basics of it.
The Japanese businessman was so impressed with Paul that they help get Kinkoís Japan started and the graduate student who kicked off this idea was employed to get it going.

Now my question to you is. If you do plan on expanding your business, why use the franchise model?
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  #9  
Old 11-08-2005, 04:05 PM
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Team Gopher:

To the best of my knowledge, a franchise model is similar to a an outline, steps that are followed to achieve a certain goal. These steps become systematic for everyone to follow guaranteing a desired product. For example, all Burger Kings probably have the same "instruction posters" hanging up detailing how to construct the Whopper right! It's what works.

Certain things need to be done in routine fashion for maximun productivity. Rules are meant to be followed.

Now getting back to your question, why use the franchise model? I'm not sure I would at this point. I like the way "Kinko" did it. Once you have a well oiled machine, why wouldn't people want to take advantage of the name you built? So, if I live in PA and I comminicate with a collegue in MD and convince him/her that my business is a success and they should open one, boom away we go. Being that it is an established company with a reputable name, customers are more likely to choose it versus a new "start-up" with no background.

I may be off-track as to what the franchise model. I have spoke about the way I feel is the "better way" to achieve growth. If I'm way off, please inform me.


Dan
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  #10  
Old 11-09-2005, 03:09 PM
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Hi turfman007,

This is good. You are thinking out loud and considering your options. I am with you so far.

Something next to consider is this. When Sam Walton started Walmart, the one edge he felt he had over other retail stores was that he could keep his expenses lower than theirs. So as long as he could keep his expenses lower, he could charge the consumer less and therefore attract more business. Attract more business he did.

Now apply this to you. How are you going to keep your expenses lower than your competitors and reach out to a larger market? Will you do this or will you go for a premium services that charges a premium as well?

How will you compete against a start up who's only expense is a truck and a mower or maybe even just a mower? Will you offer services which require additional skills or a license?

How will you stand out?

How will you profit?

How will you keep your expenses low?

Let's hear more of your thoughts.
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