Franchise... What do you think?

Discussion in 'Franchising' started by jd boy, Apr 14, 2005.

  1. jd boy

    jd boy LawnSite Member
    from nw ohio
    Messages: 173

    Our business, currently, is strictly landscape design / construction. A lot of hardscapes, water features, etc.

    I am seriously considering opening a franshised lawn application business as an extension. Anyone else go this route? I am just thinking in this aspect of the industry there is more competition than in construction, so name brand recognition would be helpful.

    Obviously it would probably be cheaper and easier to simply start offering it to existing customers, but I really think I like the notion of national name recognition. The trade off is the expense.

    What do you think?
  2. nelbuts

    nelbuts LawnSite Bronze Member
    from SW, FL
    Messages: 1,053

    You will do the work and they will get the money.

    May be a slower go on your own but everything will be yours with no strings attached.

    Remember with their name also comes bad and good experiences and when they see you they will have no way to seperate the two.

    You can always try it on your own and if it does not work out then go the other route. What is the franchise anyway?
  3. Tscape

    Tscape LawnSite Bronze Member
    Messages: 1,370

    I thrive competeing with so called "national companies." Save yourself thousands and do it on your own.
  4. MacLawnCo

    MacLawnCo LawnSite Bronze Member
    Messages: 1,847

    ive been researching these and they want a minimum of 8% of your gross revenues annually. none have produced proforma financials justifying their initial investment or royalties yet. I will be surprised if they do.
  5. Duramax99

    Duramax99 LawnSite Member
    Messages: 203

    I think you need to do it on your on. Franchises want too much money and there are alot of strings attached. They want to see your books and want a piece of your revenue. Some of the larger franchised compaines have a bad reputation. You don't want that image surrounded your company.
  6. cemars

    cemars LawnSite Senior Member
    Messages: 387

    It really depends on your long term goals and your current financial situation. The majority of owners in this industry start out on a shoestring budget and over time build a business that meets their needs. What their needs are however will vary from person to person. When I decided to go into business for myself, I already had a good job, a good income, and some money in the bank. My goal was to have a million dollar business in 10 years or less that provided me with a 25-30% net profit level. I had over 10 years of experience in lawn care, but I realized that to have a business of this magnitude would require expertise and experience that I didn't have. In a nutshell, I went the franchise route and am 75% of the way to my goal in 7 years.
    The larger I get, the more benefit I feel I derive from being in a strong franchise system. I do pay more royalties as sales grow, but my bottom line continues to soar. If you want to be a small operation and have the time to spend researching equipment, products, software, marketing, and creating your forms, brochures, web site, logos, etc, etc, then you may do just as well on your own. But if you want something more and have the ability to generate the initial investment of a franchise, take a closer look.
  7. Enviro Green

    Enviro Green LawnSite Senior Member
    Messages: 324

    I agree with Cemars, and it all depends on what you want and how much time you have. A franchise is great if you don't have a ton of background, and you can come out of the gate with advertising, promotional materials, technical knowldged, equipment and someone to ask questions to. Don't get me wrong, this is an ok place to ask technical questions, but a lot of the answers here are so so becuase they are only antecdotal evidence.

    If you have the time to build it slowly and can answer questions and dedicate the time to growth, you can do it yourself. I did, but it has taken three and four seasons to get just a little of the level of name recognition that "Scotts" or "Lawn Doctor" or "Tru Green" have.

    Besdies, sure you pay a % to someone of your gross, but you will be paying that same % or more probably learing the hard way like I am.

    Just my thoughts, if I had it to do over, I might think harder about it.

  8. pema

    pema LawnSite Member
    Messages: 54

    I purchased a franchise a few years ago. Let me share my experience. As Cemars points out, the benefits of going with an extablished "system" has its merits. It is exactly why I choose to go the franchise route to begin with.

    During 1 year of training before I opened my doors it was "Drilled" into my head to "DO EXACTLY WHAT" I was told to do by the franchisor. These training meetings were held by the owners and managers and they used exisiting franchise locations as examples citing instances when their instructions were not followed and the consequences that followed. I didn't want to be used as an example for future franchisees.

    Franchisors have to list the "Expected" opening costs to you prior to making your comitment. My actual opening costs were 10x this amount after doing all the things I was instructed to do. Items were ordered by the franchise headquarters. This was to save me time as I did't have to worry about inventory, supplies, marketing materials...etc.

    Example: Everyday a box of literature would show up. I had to use there marketing materials but instead of buying as I needed I had to purchase in 10,000 pc increments. Instead of $2000.00 in marketing materials as stated in the francise offering circular I spent nearly $17,000.00 my first year.

    My initial inventory of fertlizer was to cost me $5000.00. Since no other franchise locations were nearby I had to purchase an entire tractor trailer load. I found this out the day the truck showed up with 20 Tons of fertilizer.

    Instead of growing the business at a rate I felt comfortable with, I was told (after I paid my non refundable franchise fee) that I had to have a "respectable" office/warehouse with a minimum of 1000 sq.ft. and I had to have $100,000.00 in gross revenue by the end of my first year. This required I hired more employees than I had planned. The franchisor sent a representative to help with the hireing process. The Technitian they recommended I hire (keep in mind I had been drilled to follow their lead) ended up taking my company truck home everyday and making up quotes when he was supposed to be measuring lawns and doing analyisis.

    At the end of my first year I had met the $100,000.00 sales goal, was recognized as the "Leading" New location and was in the top 10 nationwide in sales, and I was deeply in debt.

    I sent a very "non hostile" letter to the owner explaining my disappointment in my 1st year revenue and debt situration and expressed concern that my marketing costs for the next year would exceed my financial abilities. I closed the letter by asking for advice/assistance. A few weeks passed and I got a certified letter from the SOB saying that I needed to acquire another $100,000.00 line of credit and if I didn't, I should consider closing my doors.

    Now, not all franchises are alike and many people succeed like Cemars. You just have to keep in mind that these people are not "IN Business" with you. Their #1 concern is to make their money off of your success.

    Good Luck
  9. MacLawnCo

    MacLawnCo LawnSite Bronze Member
    Messages: 1,847

    Pema, what franchisor was this? PM me if you dont want to share publicly.
  10. jd boy

    jd boy LawnSite Member
    from nw ohio
    Messages: 173

    it seems like that story is contrary to what I thought the basic premise of a franchise was. It seemed to me that the franchise succeeds when you as the franchiser succeed. That is, afterall, why they charge a royalty to collect that long term money from your success.
    That story sounds like they were after the quick buck.

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