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ARTICLE | May 21, 2012

Family Business: 10 Tips for Managing a Parent-Adult Child Business

A mother and her daughter, who will graduate in May from college, share ownership of a new Home Instead Senior Care franchise business, a partnership that seems tailor-made for these economic times. More college graduates are having a difficult time finding jobs, according to the U.S. Bureau of Labor Statistics. Teaming with a family member has proven successful. According to the U.S. Small Business Administration, family-owned businesses account for 90 percent of all businesses in the U.S. (large and small) and continue to be a powerful force. And senior care franchising is one way to help new graduates get their careers off the ground. 
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NEWS | May 18, 2012

Is Starting a Franchise From Home For You?

Fox Small Business Center offers tips and expertise on running a home-based franchise business.
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SECTOR REPORT | April 26, 2012

Senior Care Franchise Report 2012

Franchise Business Review's special report Senior Care Franchises offers a high-level look at the senior care/home care franchising sector. We explore what services the sector provides, what’s involved from an investment standpoint, what the “typical” franchisee looks like, and how franchisee satisfaction in the sector has fared in the past year. We also identify the top senior care franchises based on our franchisee satisfaction research.
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ASK FBR | March 19, 2012

How long have you been researching a franchise opportunity?

Franchise Business Review wants to know what you're doing in order to find that right "fit", and encourages all those interested in starting their own franchise to answer this simple question - how long have you been researching a franchise opportunity? (Click here to share) 
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Home > Resources

Information Broker

by Michael McCord

PORTSMOUTH - In the franchise selling business, it’s called "The Great Abyss," and it’s a major gulf of information that Eric Stites, the founder and president of the market research company Franchise Business Review, would like to minimize as much as possible.

The franchise industry is big business because it encompasses almost every sector of the economy, from restaurants, such as McDonald’s or Applebee’s, to pet-grooming services to gas stations. There are as many as 3,000 franchise opportunities; tens of thousands of franchise operators generated $1.5 trillion worth of business and an estimated 10 percent of jobs created in the country, according to figures from the International Franchise Association.

Yet, this regulated industry suffers from a great deal of misinformation, Stites told The Interview. A potential franchisee is buying a brand name and a way to do business. The Great Abyss refers to the stage in the sales cycle for potential franchise buyers when they need detailed information about franchise operations from actual owners but find it hard to get. The result is a 1 percent rate of sales closings for franchisers as potential buyers opt out of the process due to the inability to make an informed decision.

Stites, a University of New Hampshire graduate, worked for five years for a company that generated sales leads for franchisers. He started Franchise Business Review to offer a service the industry didn’t have - comprehensive information from current franchise owners through targeted surveys that can be used by both franchisers and those thinking about buying a franchise, with as much information as possible being put on the Web.

Stites, who majored in plant biology and was also a commercial photographer, has two other employees and a growing client list that he believes will grow even more the launch of Franchise 50, an industrywide survey the firm will conduct in 2006 to determine the best franchises in terms of operator satisfaction.

The Interview caught up with Stites to find out more about his research firm.

The Interview: What did you know about the franchise business when you started?

Eric Stites: Nothing really ... just McDonald’s and Wendy’s, what most know. I had no idea how extensive it was.

TI: What’s one of the more exotic franchise ideas you’ve heard about?

ES: One of the amazing aspects of this industry is that there are so many different types - the Aussie Pet Mobile. It’s a mobile dog-washing service. The service comes in an RV and washes the dog inside of it. There also is a mobile dog-training franchise. If it’s a good business concept, it’s out there.

TI: What is the allure of running a franchise?

ES: It’s the American dream of running your own business, to be self-employed. When someone buys a franchise, they don’t have to create a business from scratch.

TI: What’s the anxiety of buying one?

ES: It’s a major purchase, and outside of buying a house, it’s probably the most important investment one can make. And if you can’t get the right information to make a smart decision, it can be frustrating. That’s why the closure rate is so poor.

TI: How much does a franchise license cost?

ES: The prices range widely from smaller, less well-known franchises that can cost $20,000 to $30,000 to more established ones at $75,000 to $100,000. And then there are annual royalties.

TI: Who buys your services?

ES: The franchisers. They can use it to help prospective buyers learn more about what franchise owners are doing, who they are and what their expenses and revenues are. Some use the survey to learn more about what the people running their franchises are thinking. If some of the information they receive from the surveys is extremely negative, they won’t make it public. But it’s extremely helpful to correct problems.

TI: In your surveys, what have you found out about owner satisfaction?

ES: I liken it to be a bell curve. Every franchise system has some negative issues and every one has extremely happy owners. A majority of people are in the middle.

TI: What’s the top question from prospective buyers?

ES: How much money will I make? By law, franchisers can’t make any guarantees or speak much at all about finances. That is why prospective buyers want to talk to current owners. I believe that being able to judge the current satisfaction of current franchise owners is the most critical factor for buyers. (Current owners) are the experts, but they are hard to make contact with because they are often so busy running their businesses.

TI: What’s your standard survey consist of?

ES: We have 40 questions - 20 which have to do with satisfaction ratings on a 1 to 5 scale. The other questions cover important information about who these owners are and what markets do they work in. If you look on our Web site, you can see the questions and responses from three of our clients who post them publicly.

TI: How many clients do you have?

ES: We have around 15, from very small start-up franchises to larger established ones. One of our challenges is that three of those clients make their findings public while about a dozen choose to keep them private. So it looks as though we only have three.

TI: Would you buy a franchise?

ES: I have the entrepreneurial desire, but no, I don’t think so. I may end up creating a franchise myself and selling them. The reason why many franchise owners fail is that they have to conform to the policies of the franchiser. I couldn’t do that because of my own creative tendencies and I would want to change too many policies.

TI: What’s the best book you’ve read lately?

ES: "Lead or Get Off The Pot" by Pat Croce, the former owner of the Philadelphia 76ers basketball team. It was a great book and an inspiring read.

Originally printed in the Portsmouth Herald.

 

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