Franchise Focus

Identity is more than slapping a moniker on uniforms and painting trucks in company colors. Consumers trust brand names, often associating logos with quality, consistency and professionalism. Comfort often dictates decisions customers make, which is why many will choose a service provider with an established reputation. Franchises wear this trademark.

With a franchise, entrepreneurs purchase a package deal – a business kit stocked with the tools necessary to assemble successful operations positioned to grow. Nuts and bolts like marketing plans, operational strategies, purchasing perks, technological systems and support networks, serve as a model for start-up companies.

The essential start-up ingredients are already measured and the recipe is tested by the parent company to please the palate of owners and customers, alike. That is, if potential owners are willing to follow the franchiser's systems cookbook.

A MIX FOR THE MATCH. Franchising allows aspiring business owners to run their own company and tackle entrepreneurial challenges with the helping hand of a parent corporation. The lawn and landscape industry is a lucrative market for franchisers, noted Don DeBolt, president, International Franchise Association, Washington, D.C. "Franchising really provides the market power for a franchisee to get the best prices on the products they need to buy and the guidance on how to run equipment," he added.

A new franchise opens every two minutes in the United States, and franchises represent 50 percent of all U.S. retail operations. Though a thriving economy generally doesn’t feed franchising efforts, which depend on out-of-work management-level employees to sprout new operations, multiplying green industry franchises validate the popularity of this business model, especially when you considering the popularity of the holiday-decorating franchises recently introduced to the industry.

"When I got into the industry there were about 3,000 different franchise organizations overall – now there are close to 6,000," added Randy Loeb, vice president of franchise development and international licensing, NaturaLawn of America, Frederick, Md. "There are individuals out there who have always wanted to run their own businesses, be their own bosses and control their own destinies, but they have an uneasiness in terms of doing this alone."

There are clear advantages to buying into a franchise system, however certain personalities simply will not mesh with the requirements franchisers set for their operations. Mainly, franchisees must be willing to conform to a pre-set business model. Some entrepreneurs find this stifling, Loeb noted.

Ideal franchisees are self-starters with a competitive streak. Industry background, however, doesn't necessarily result in success, Loeb said. Individuals from Fortune 500 companies along with former landscape owner/operators apply for franchises at NaturaLawn – neither candidate is a step ahead in the training process, he said.

"We try to prop up what appears to be the weakness in owners to make a strong franchise," he said, explaining that owners with technical lawn expertise need business management support, while former executives require field training. The key is attitude.

"When we find a person who takes guidance and directions well and has a willingness to follow the franchise system, it’s almost a guarantee that they will be successful," Loeb predicted.

"The consolidations and acquisitions have provided fertile [conversion] ground for us to work in and a tremendous amount of growth has occurred in the last two to three years," noted Ken Hutcheson, vice president, U.S. Lawns, Orlando, Fla., stressing the distinct difference between consolidation and franchising. "We allow an owner to remain an owner. Franchisees still get their operation, but they have access to our tools and resources."

A PERSONAL INVESTMENT. When an entrepreneur purchases a franchise, the transaction binds an owner both personally and legally. The business owner commits to a system – a roadmap to build their company. At the same time, franchisees pay a royalty to the parent corporation. Franchise contracts generally last between five to 15 years and royalty payments range from 4 to 7 percent of the franchisee’s annual revenue. An initial franchise fee, generally not exceeding $40,000, precedes the start-up, and covers training, equipment, materials and uniforms – the brand name.

In return, franchise owners receive a support system. "Franchising allows owners to achieve their goals faster, safer and with less uncertainty," Hutcheson added.

Jeff Dajani, president, U.S. Lawns of Ashburn, Va., said his contract has been worthwhile so far. After working 14 years for a lawn maintenance company that grew from five to 50 employees, he decided to start a company targeting the commercial market, he explained.

"I knew ‘A’ and ‘B,’ but I needed the big picture – how to grow a business," Dajani said. "I’m getting the expertise of more than 60 franchisees that have done it before me, so they know where the mistakes are."

Dajani figured the franchise fees compensate for mistakes he would make without U.S. Lawn’s assistance, and the 4 percent annual royalty fee is only a small piece of his profit, he said.

Starting up a company is risky business, Loeb recognized. Locating resources, financing equipment, paying employees – every component costs time and money. "We’ve accumulated a great deal of experience opening franchises, which allows us to take the experience and transfer that to new people and reduce timely and costly mistakes."

Before owners sign the dotted line, however, they must be confident that the match will produce a successful business relationship. A mutual selection process allows both parties to determine whether or not their goals coincide, DeBolt noted.

"Our basic message is investigate before you invest," he said. "Potential owners need to take a personal inventory to make sure the franchise system is a good place for them to be. If you’re overly entrepreneurial, it might not be too wise."

Loeb said most mismatches occur due to false expectations. In response, the company instituted an intricate application process.

"We look at potential franchisees as closely as they look at us," Loeb noted. "We want them to believe in what we are doing, the methodology, where they can head with the franchise opportunity and what we can do for them."

A SUPPORT SYSTEM. Owners need various modes of support to bolster their businesses. The advantage of being a member of a franchise family is the support program that buttresses weaknesses, polishes strengths and provides upgrades to ensure a cutting-edge operation.

"Franchising is like hiring a personal trainer at a health club," compared Roger Albrecht, franchise sales, NitroGreen, Atlanta, Ga. "Franchisers will tell you they want one more set of this or that, and then the franchisee shows growth and improvement."

A regional facilitator serves as personal trainer and mentor, having previous field experience, Hutcheson explained of U.S. Lawn's model. Score cards categorize companies based on their phase in the business model, from start-ups to mature operations, and facilitators assess owners on standards from field quality to financial management.

Caldararo recounted an instance when a marketing boost reaped rewards for a franchisee who was frustrated with his stagnating business. The franchisee’s sales doubled the last three years after implementing a prescribed plan to remedy an ineffective advertising approach, he boasted.

"The company was not having fun doing what it was doing, and it was able to turn that around based on some very specific marketing and business planning," he said.

The business plan – facts and figures that lead to a company’s bottom line – is another ingredient franchisees receive from the parent company. Through consultations, franchisees establish a sense of direction and outline realistic goals.

Loeb said NaturaLawn customizes business plans for each franchise – a first step toward growing a successful operation. "Without a business plan, a franchise owner has no idea when they’ll make money or how they’ll make money," he stressed.

This tactic is especially helpful for Jerry Stadstad and Steven Vierzba, two NaturaLawn franchise owners from St. Cloud, Minn., who are now in the planning and training phase. Formerly account business managers for a large corporation, both have administrative skills, but neither has experience handling small business-centered issues.

"We’re used to following corporate direction and getting that paycheck guaranteed," Stadstad added. "Now, all of a sudden, we’re business owners and we have to make that paycheck."

Both men realized that along with a brand name, they purchased peace of mind in knowing a parent company sets up systems and checks on progress, they said. The doting "parent" also passes on purchasing clout. Franchisers arrange national accounts for items including uniforms, vans, equipment, marketing materials and fertilizer. Also, a central purchasing department eliminates the need for franchises to deal with delivery and price negotiations, Loeb added.

"If you talk to a business owner, he probably spends an enormous amount of time tracking down prices and delivery," he reported. "If we can remove that element of time so that they can concentrate on marketing their business, we position them to maximize their return."

Walter Wright, owner, U.S. Lawns of East Broward, Fla., estimated he saved 15 to 25 percent on equipment due to factory-direct prices he pays. Franchisees then can allot these savings to higher employee pay or improved marketing efforts.

Bulk rates go beyond supplies. Generally, corporate franchisers are affiliated with a financial institution that manages their banking, so franchises can obtain term loans, leases and credit lines, Loeb noted.

Franchise owners also boast the technological benefits including electronic research and training tools that upgrade company efficiency, Albrecht stressed.

Besides the economies franchisers offer, wearing a logo linked to success and consulting a network of non-competing industry members for advice and feedback garnishes a franchise purchase, noted Russell Frith, president, Lawn Doctor, Holmdel, N.J.

"The recognition and identification of a powerful national brand – our logo has been used in McGraw Hill’s publication of examples of excellent trademarks," he noted. "Also, franchises provide a forum for people in the same business to talk candidly because they’re assured the people they are talking with are not competitors."

WHAT’S IN A NAME. The lawn and landscape industry’s stiffening competition induces an entrepreneurial headache for some business owners who struggle with regulatory legislation, advertising competition and labor issues.

However, the "mom and pop" operations still thrive, DeBolt said. Trademarks and designer labels do not sway some clients, Wright added.

"People buy from those that they feel comfortable dealing with," Wright observed.

Franchises, however, enter the game with an established market position.

"The most valid comparison between a franchise and an independently owned business would be Don’s Hamburger stand vs. McDonald’s, in terms of attracting people to your business," DeBolt related. "There are some terrific brand names out there that people see on the side of a truck and in advertising all over the country that establish a position in the marketplace."

Being a part of the brand name is a sort of security blanket for franchises, and some entrepreneurs today would not want to be in the industry without one, DeBolt added. Perhaps this is why he indicated that franchise purchases are on the rise.

Frith also predicted a growing future for franchises, especially for services like lawn care that allow customers to eliminate time-consuming tasks from their busy schedules.

"I would think that we’re looking at the business to grow significantly because you have a desire for single-family dwellings and the demand for both husband and wife to work, which creates a tremendous premium on leisure time," he said.

Entrepreneurs capitalizing on these trends can do so in a network-supportive environment with franchises, DeBolt concluded.

"For businesspeople who have an existing lawn care business and see a future of challenges associated with running an independent small business but want to continue to run their own business, they don’t have to be by themselves if they invest in a franchise," he noted.