“…a franchise is a business model that has a much greater chance of success as opposed to launching a startup.”

Interview by Mike Sullivan

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Mike:
Hello, I’m Mike Sullivan from M.O., where we feature small business owners and entrepreneurs and then bring you hints, tips, insights, and perspectives on what it takes to be successful.

Today joining us is Duane Anderson of Anderson Franchise Group. Duane is joining from between meetings right now, in his car. We’re lucky enough to catch him. Duane, can you tell us a little bit about what made you decide to get into this line of business, into franchising and what opportunities you see there?

Duane:
Well, Anderson Franchise Group is a franchise and sales consulting company. We help investors, entrepreneurs, and aspiring business owners get into a franchise system. I’ve always had an interest in business and business ownership, and I love the franchising model because it allows people to get into a system that is already working and is proving itself to be successful. The process and procedures have already been put in place, and most of the challenges of starting a business from scratch have already been worked out, including things like marketing, branding, supply chains, equipment, and leasing negotiation. Also, back office support, things of that nature.

Mike:
Being a franchise consulting company, I imagine you have some existing relationships with franchise companies?

Duane:
Yeah, we’re affiliated with about 300 franchises, and that number’s actually growing. In fact, we’ve got a couple of new franchises that we’re getting acclimated with right now.

We help the franchises with finding qualified candidates for their systems. We look for prospective master franchisees, and those are the franchisees that will buy the rights for the entire state, or if it’s a foreign country, they’ll buy the rights for the entire country. Area developers, which will buy the rights for an area, whether it be a city or a couple of towns depending on population, multi-units and then, of course, your single unit franchisees as well.

Mike:
What would be some of the advantages of selecting a franchise as a business opportunity?

Duane:
Well, a franchise is a business model that has a much greater chance of success as opposed to launching a startup. Statistics say that about four out of five businesses fail. But we found out in the franchise model that the reverse is actually true, and about four out of five of them succeed.

I’ll give you an example of a restaurant. If you’re opening up a single restaurant, you have a lot of things you have to deal with. You have to deal with the leasing or the buying of the property and the building or building a new building from scratch, buying your supplies, your food supply chain, where are you getting your food from, are you able to bargain for a good price? Your restaurant equipment, including your kitchen equipment. You’re hiring staff, establishing menus, and things of that nature. Then, also, dealing with the rules and regulations that comes with starting up a restaurant. Then, of course, that’s all before you even start marketing for your restaurant.

If you get into a franchise system, they will help you with all of those things that I just mentioned, including marketing. They’ll help you get group buying power on supplies. They’ll help with the hiring of the franchise employees that are going to be working in your restaurant franchise.

Financing, all of that, where to go for financing. Some of the franchisors will also help you with financing. They have in-house financing. What I’ve also discovered is that banks are more likely to lend money to a franchisee because they can go on the strength of the franchise itself as opposed to you just opening up a restaurant.

Mike:
What are some of the steps you’d work through with a typical client?

Duane:
Well, we’re affiliated with many different franchises. We’ll fill out a profile on a candidate and see which franchise best fits their needs and goals. Do they want a franchise that has a lot of build-out and overhead? One that they can scale into multiple locations? Or do they want a home-based business that is little overhead, but is a chance good for a [inaudible 4:22].

What type of money do they need to be comfortable? Are they looking more for a franchise in terms of an investment, or [inaudible 4:30]. Let’s find a franchise that fits their agenda. We provide them with the legal help, funding assistance, the best places for funding and getting money for your franchise, accounting help, business plan writing, which is very important if you’re going to apply for an SBA loan and so on. We do all those things through strategic partnerships we’ve developed. Then we connect them directly to the franchise, who at that point is able to help them get into the system and pretty much take the reins from there.

They love it because they’ve got a qualified candidate. The candidate loves it because they know that they are in a system that they’re comfortable with.

Mike:
You not only assist clients in finding franchises to invest in and to create as their business, but you also help current business owners move into a franchise model. Is that correct?

Duane:
Correct. If there is a business that has done well in their community for a while and they’re looking into expanding their business through the franchise model, we can definitely help them with turning their business so to speak into a franchise. There are a lot of regulations and things that they have to deal with to do that. So we’ll help them with that process, and also develop a program in place so that they can be successful in that type of model.

Mike:
As a business owner, what techniques are you using to market your company or otherwise get the word out about what you’re trying to offer?

Duane:
In the early stages of a business, you want to keep costs low. Unless you have the capital to do a lot of marketing, whether it be through TV, radio, or things of that nature, then you can do that. That has not been the case here. So I do a lot of networking. I also develop a lot of strategic partnerships. I’m not a big fan of buying leads or spending a lot of money on advertising, especially if you’re trying to keep your funds low in the beginning. You can actually get plenty of business by developing the right relationships.

If you go in with something to offer into these relationships, people will usually want to work with you. Recently, I partnered with a company that does security based lending. What they do is they allow people to take out a line of credit on their securities or stocks without any transfer of title to finance their franchise purchase or give them cash flow until the business turns a profit. This opens the door for a lot of people who are looking to get into a franchise opportunity or any other type of business opportunity but not being able to find financing in this current market.

Mike:
Did you have anyone that mentored you along the way to help develop your entrepreneurial skills?

Duane:
I’ve had several people that have helped me along the way. I also do a lot of reading. There have been people who have mentored me and they didn’t even know it. I’ve read a lot of books by Norman Vincent Peale, Steven Covey, Michael Gerber, Jack Canfield, Dale Carnegie, and Napoleon Hill to name a few. Just by reading those books alone, they’re mentoring me by the things, in the way that I run my business and the things that I do.

Mike:
What advice do you have for someone who’s looking to start a new business or a franchise or a startup?

Duane:
Of course, I’m going to plug the benefits of franchising. Make sure that you understand what’s involved before you get in. On the flip side, don’t be afraid to take that leap into business ownership either. There are a lot of people who will sit on the fence for years and years and miss out on a great opportunity.

Franchise ownership is great especially for those who have never owned a business before. It’s a great gateway to getting into the business world. Generally, everything is going to be easier for you if you go the franchising route. Now, that’s not to say there’s no risk involved, but the risk is definitely a lot less.

A company like mine can help you find the best possible franchise for your goals and needs along with helping you along the way. Just because a particular franchise or business works for someone else doesn’t mean it will work for you and vice versa. So decide what’s best for you according to your strengths. Just because a franchise is popular doesn’t mean you’ll do well in it. Just because one is not popular or you’ve never heard of it before doesn’t mean that you won’t be successful. Evaluate what’s best for you and don’t be afraid to take risks.

Mike:
Duane, thanks so much for taking the time to meet with us today. I appreciate it very much.

Duane:
I appreciate it very much, and thanks for giving me the opportunity to go ahead and talk a little bit about what I do.