|May 10th, 2006
Small Business 101: Buying Into a Franchise
< United States >
Interviewer : Interviewers
Interviewees : Tom Fihe (Vice President of Franchising)
If you are thinking about starting your own business, you probably have tons of questions about where to start. Get advice from Small Business 101 to learn more about the basics of entrepreneurship. Tom Fihe is the lead franchise planner and developer for Ratner Companies. Responsible for launching an area development approach to franchise agreements for Hair Cuttery, he has worked to develop a strategy for executing Hair Cuttery development throughout most of the United States. His primary duty is promoting the appeal of Hair Cuttery to potential investors. In addition to marketing the concept, Scott is responsible for developing an organizational design and culture that supports franchise potential. This includes providing project management of internal support services including real estate availability, store design and brand consistency.
Tom, how did you get into the franchising business?
I've been in the franchising business for 12 years now, working with four different brands. In fact, I've opened hundreds of franchise locations in almost every state except Louisiana, Iowa and Hawaii.
I graduated from Ball State with a degree in business administration and received my MBA from Case Western Reserve. A friend of mine was a franchisee and his franchisor was looking for a field consultant. Sounded like a great opportunity and I jumped on it. Twelve years later, I'm in on the ground floor at Hair Cuttery, a company that's been in business for 30 years. Together, we launched the company's franchise operations in September 2005 and already we have commitments for 45 locations.
I've been around a lot of different operations and really enjoy the field, especially the entrepreneurs who have the courage and smarts to go out and make it happen.
Could you discuss the pros and cons of buying into an established chain with a well-known brand, versus a newer, fast-growing concept? I'm interested in food services specifically, but would consider other opportunities.
You need to look at a company's best practices and business model to fully evaluate the opportunity. Having said that, I can provide you with some guidance on established chains vs. newer concepts.
Newer concepts, like the one I'm managing now for Hair Cuttery, allow you to get in on the ground floor with a wide range of markets available. When you're one of the first, you're going to get a lot of attention from that franchisor because you're one of the first to participate. Unfortunately, you don't have a history -- how the business reacts to different economic conditions, etc.
With an established chain, you have existing franchisees that you can research and speak to about the business. But you may not have as many available territories, as the best markets may be occupied by other territories. You don't have "first-mover" advantage.
Always remember how important the relationship with you and the franchisor is -- do you feel they support you? Do you have a rapport?
Wondering if you all owned the Hair Cuttery or are they all independently owned?
Until September of last year, nearly 1,000 Hair Cuttery locations were company-owned. Now, I'm proud to announce that we have agreements for 45 franchised locations in Long Island and Phoenix with more coming soon.