Five years ago, my job at a major telecommunications company was eliminated. I was in my late 40s and unable to find suitable work in New Jersey. So my wife and I sold our home and moved to northern Virginia.
Rather than take another job where I’d have to worry about being laid off again, my wife and I decided to explore buying a franchise. After researching the market, we invested $30,000 of our life’s savings in a Molly Maid housecleaning franchise.
It was one of the best investments we ever made. Today, our business grosses nearly $500,000 a year, and we net about 20% of that. Here’s our advice to anyone considering buying a franchise—and how to make it a success:
Decide what type of business you want to own.
We knew that people who start their own businesses have a high failure rate, and that franchising represented a much better chance of success over the long term.
We also chose to franchise because neither of us had previous business experience. A good franchise company will teach you the business…and provide you with the proven systems of making it work.
Helpful Attend a franchise show. We went to one in Washington, DC. We walked the entire show floor with an open mind. We talked at least briefly to many of the 500 exhibitors. We took the phone numbers of those we liked. Then we called and talked with them at length.
We saw the housecleaning field as a high- growth industry with tremendous potential. After living here for a few months, we decided our suburban Washington location was an ideal market for such a service. There are lots of two-income households here, with both spouses having no time to clean the house, but earning enough income to pay for help. It also looked like a fairly easy business to get into and learn.
Be prepared to make a sizable investment.
Depending on the franchise, you must have from a few thousand to more than $100,000 to invest.
But there is no relationship between the cost of the franchise and your ultimate success and happiness. You have to do your own research, and read up on franchising.
Size up the management of the franchise company you’re interested in by talking to other people who already have franchises from that company.
Example: We didn’t make our final decision until after we had visited the Molly Maid headquarters in Ann Arbor, Michigan, and talked to all the managers and to several other franchises. Only then were we ready to commit our money— and our lives.
The amount we had to pay initially for the franchise and start-up materials from Molly Maid was $17,500. Molly Maid told us it would take six months before we would start taking out more money than we were putting in and that we would need enough capital to keep running for that long. Between the franchise fee, start-up costs and operating expenses, we put up $30,000 of our own money. It came from the sale of our home in New Jersey. We had put that money in the bank and rented a home in Virginia.
Our franchise turned profitable in just four-and-a-half months, although we didn’t take in any real money for a year. But we always had the rest of the money we banked from the sale of our house to fall back on.
Get the training you need.
You need help with everything when you start out in a franchise. If you don’t have any previous business experience—and most franchisees don’t—you will have to be led by the hand each step of the way. You will need training not only in the franchise business itself, but in the business basics— bookkeeping, marketing, managing people, etc.
Know it all.
Once the training is over, you’ll be open for business, so use your training time to ask every question you can think of, such as…
- How do I recruit and train people?
- How do I find my best customers?
- What are the worst mistakes most startups make, and how* can I avoid them?
Molly Maid flew us to its headquarters and put us up for a week of intense training.
We needed both a business plan and a marketing plan to help us get the business started and to set goals of where we wanted to be over time.
Molly Maid helped us create our plans and formulate our goals, and provided us with a program to track our progress toward achieving those goals. All the help we got during the training period gave us a sense of “Yes, we can do this. There are people out there who have done it before us, and we can do it, too.”
Hire people who work hard—and work hard to keep them.
Finding great employees is still our toughest challenge. All franchise owners go through a lot of people at first because it takes time to find people who are trainable, willing to listen and willing to do a good job. Start by advertising for help in newspapers. As you grow, employees will start bringing in friends and relatives. Offer a bonus to those who bring in a friend who stays three months.
Once you find good employees, reward them for their efforts. Pay a bonus each month to employees who score high in customer satisfaction. Pay an annual bonus to employees who perform well over the year. Those who do a good job should be praised in front of their peers.
Laura Bushnell is Editor in Chief for National Review Brand Foundation of Consumer Updates and based in Boston. Previously, she held senior VP level positions in corporate finance and consumer financial planning firms.