Over the past twenty-eight years as a franchise attorney, author, teacher and recognized expert in franchising, he helped companies enter and succeed in the field of franchising – the hope of every one to become the next “McDonalds” of their respective industries. Along the way, I have met and worked with an interesting group of founders of entrepreneurship. Clothing for water treatment, the franchise concept also incredibly diverse. Some of them interested me so that I considered buying a franchise myself. In two or three cases, began talks to discuss the possibility, but never progressed. I could not find the precise set of criteria to meet my requirements. After all, I had advised hundreds of franchise buyers, and developed sophisticated radar to detect the good, the bad and the ugly in franchise investments.

In May 2002, my life changed dramatically as I took the step and became a franchise holder for the first time. I just finished a draft of franchise development for the San Francisco Peninsula, a company ready to enter the franchise. It operated a highly successful home improvement business specializing in a unique niche. Orientation of houses built in the 1960s to the 1980s that have old, flat and ugly interior doors, the company replaced all the interior doors to a new house, newly painted raised panel design doors, hinges and locksets. Your advertising mantra was “Replacement of America’s 1.16 billion of interior doors.”

After interviewing a couple of franchises interested candidates who are not registered, the company became concerned about the sale of its first franchise. The sale of the former is usually the most difficult task facing any new franchise. No other franchise owners of a potential buyer can discuss the financial results, training, ongoing support and other issues regarding the franchise. In their absence, the sale of the former is difficult. After he was asked repeatedly when they could expect to sell the first franchise finally my hand and I jumped up to be offered for the mission. After discussing the project with my wife Linh Luu-Murphy, who agreed to take a break from her successful Napa Valley reflexology foot massage to help my business, our franchise agreement was signed May 22, 2002.

Let’s examine the main assumptions and the factors evaluated in making the purchase of a franchise in my investment decision, and see how things worked out.

INDUSTRY TRENDS
As stated in the previous section franchise, an important issue is the search for a franchise in a leading sector that is well now and is expected to do in the future despite any economic slowdown. From my experience in the evaluation of hundreds of franchisees, who observed the home improvement industry is a stable segment. People are always looking for ways to improve the appearance and value of their homes.

Unlike other home improvement companies that focus on a single ticket high improvement (remodeling a kitchen, for example, can cost $ 50,000 and more) for a couple of thousand dollars ($ 2000 to $ 5000), a homeowner can make all the rooms throughout your home a major face lift by replacing your old, flat doors with new raised panel door design. Following 9-11 attacks and the country’s high security anxiety, I felt most people would never be nesting at home. A home typically represents the most valuable asset in the portfolio of a family. If the owner can be educated and motivated to improve the appearance and value of this asset by making a reasonable investment, sales are easy.

Key chains for home improvements, such as Home Depot, realized this and are aggressively promoting the interior door replacement. However, it is not organized to meet the needs of the target market in a profitable way. The franchise company had discovered and perfected the “do-it-right” for this market and, indeed, welcomed the competitive bids from Home Depot and other large chains of home improvement. In my opinion, all this bodes well for home improvements in general and this particular franchise company.

TOTAL INITIAL FRANCHISE INVESTMENT
The franchise company franchise initial investment estimated between $ 127.00 and $ 180,000 in its Franchise Offering Circular. Result, we have come in below the lower end of the range. Including the $ 20,000 franchise fee and a $ 78,000 house that used against the credit line, our total investment was just under $ 100,000. Incredibly, this was enough to get the business operational and to reach the critical “point where the cash flow paid all the bills. As discussed in the article another franchise, reaching the point where many companies can take a year, two years or more.

As operational fairly quickly. Linh from the time my wife and I signed the franchise agreement in late May 2002, secured the property in mid-July 2002, after completion of the improvements in training in August 2002 and began operating as a rocket in the first week of September 2002, approximately four months elapsed. We have reached a point in mid-October 2002, barely six weeks after commencement of operations, and began to accumulate an increasing balance in the business savings account.

When we sold our franchise in September 2003, our internal work of replacement door swinging and rolling. Owners of residential housing negotiated on our position from six to eight weeks on the waiting list to get his old, ugly, flat interior doors replaced with new raised-panel, the interior designer and shinny door lock sets. The new owner paid $ 236,000 for our franchise, and received $ 235,000 from escrow after fees. Subtracting the $ 100,000 investment made a profit of $ 135,000 ordered. Not bad for the operation of the business just a year, and this does not include monthly operating income before the company was sold.

REAL BUSINESS
We operate a retail business with a shop, as opposed to “work home” operation.

FRANCHISE MANAGEMENT EXPERTISE
The management team of the franchise had no past achievements and experience in running a franchise business. Had started the franchise and the company were learning on the fly. That was definitely a major risk. However, I detailed seminars on how to operate a franchise business and franchise management relations based on my more than twenty years of experience in the franchising industry, and had reason to believe that she could follow my advice. And it was their first franchise, also believes that everything that would make us a success. My goal was to develop the first franchise from scratch, build, then good for them to develop other franchisees, or selling out – depending on what happened in the franchise. We have chosen to sell.

Normal working hours and days, sufficient income LEVEL – FRANCHISE FRANCHISE PROFITS AND PROFITABILITY
The nature of this business was a normal five days, forty hours of work. Our opening hours are 9A to 5P, Monday through Friday initially. After talking with the owner of the second franchise in early 2003, I found and copy your idea of a forty-hour work spread over four weeks, instead of five days.

Although this means that our employees had to work four hours ten days, which were very receptive to the idea. When you start on Monday and get all the orders for the week door installed on Thursday, everyone had a weekend three days each week, not only on an occasional holiday. Of course we do not have to work ten hours a day. I arrived in 10 hours and usually end at 4 pm – Monday to Thursday. The supervision of four employees, working 24 hours a week and have 3-day weekend off every week – in which to try to find another franchise!

What about the financial situation? Take June 2003, our tenth month of operation, when we started interviewing a number of interested buyers. Sales were $ 47,000 less expenses of $ 35,500, income that has left $ 11,500 a month. Of course, other months varied, and the business was still in the implementation phase of development that operates with a team of four employees – but you get the idea. Using the results for the month of June and is multiplied by an annual twelve, who had entered the execution of the territory is only a select group of franchisees throughout the industry.

Minimum number of employees
Remember my question here: the company can operate with six or fewer employees? When we started commercial operations in September 2002 which had two employees. A month later he added another. When the company sold a year later, our team has a part-time and three full time employees, plus me and my wife a super energy-Linh Luu Murphy.

LEASING AND LOCATION
Our interior door replacement commercial rental business operated under the business area on the top square foot lease and triple net leases were never a concern. The 7200-square-foot warehouse exhibition and retail who settled in San Carlos, CA, with rent starting at $ 0.65 per foot for the first year, it seemed almost too big (and expensive) initially. Cutting a check to the landlord rent for about $ 5000 each month, by far our largest expense of initial operation, he made my heart race as I thought, “is all this going to work and how long it takes to reach the point “But as things turned out, our location is perfect, the sales were never a problem, and we have reached the threshold of just six weeks after commencement of operations.

Due to the size of our facilities and the nature of the inner door of the place of business, three crews were possible and in line with what a crew at a time, that ultimately, then double triple sales. Also, because we were the first to enter the franchise system, we have chosen the very lucrative, exclusive territory, which stretched from Palo Alto, CA all the way to San Francisco, CA. Although it was never expanded the business beyond a single team, the “next steps” in the evolution of the main company in this area are the strong points of sale. The new owner of our franchise ultimately took the following steps and enjoy the crews of three weekly sales of $ 30K to $ 35K – which is more than $ 1.5 million per year.

IMAGE AND LIFESTYLE
It is not necessary to flip burgers, ice cream ball, or clean bathrooms. As co-owner franchise, my main work was the creation and maintenance of client relationships. I put ads designed by the franchise company, responded to telephone calls from customers, create appointments, that the estimates and sent the contracts. Much of my working time was spent driving to the homes of clients, meet with them over coffee, taking all the measures of interior doors, going over the options and explain our production cycle for a week – collecting its doors on Monday and installation of new doors for Thursday.

Back at the office, I enter in the estimation of the information on our team and generate a contract proposal. Then I email or fax the contract to the client and wait for your deposit. Approximately 70% of the proposals that became the job. Customers called, gave me your credit card billing information, fax the signed contract and scheduled production week. By the time they sold the company in September 2003, turnover for residential housing in our position of six to eight weeks on the waiting list to get your interior doors replaced.

He also ordered the new doors, lock sets, hinges, paint and accessories. Finally, I paid the bills. It was a very efficient company, a large cash flow, no billing and no waiting for payment. Looking back, I saw some very nice homes and met some very interesting people. The collection, production, painting and installation process was handled directly by the employees under the supervision of the contractor and therefore not involved in this issue – although I did go out with our crew of about three months for collection and installation of doors. In this way, I understand the process first hand, and this helped a lot in knowing how the job and cover the contingencies in the contract.

TRUE VALUE OF FRANCHISING
My wife and I knew that investment in this franchise was not created with a “blue chip” franchise company. After all, he had bought his first franchise, becoming offenders in the field, the pioneers – to accept a greater risk than other franchise buyers. In return, we expect an appropriate level of support from the franchise company. Virtually every new franchise company offers not only adequate, but extra support to compensate for its first franchise of the franchisee to help pioneer the new franchise system and the additional risk they have assumed. There is also an interest in providing additional support – the future growth of the franchise network is based on the success of the first franchise.

The best proof of franchise value reached in November 2002. I was in route, will drive our table full of door-jamb, power tools, lock sets, hinges, etc, to our larger facility employment, however, with our contractor, Scotty, who oversaw the team and franchisor adopted was our manager. Everyone was back in the shop, frantically cutting, sanding and painting the rest of the doors more than 100 for other jobs during the week.

Knowing that it had taken the week of our fledgling business, Scotty contractor complained all week about his salary, saying he was not being paid enough. I explained many times, our cash flow would not support any increases at this time, had only been working for us a little over two months, and payment is exactly what we asked when we hired them. Scotty does not listen to their complaints and continued during the trip along El Camino Real to the customer’s home. We stopped at a red light, waiting to make a turn when he announced abruptly Scotty “I’m out of here, stop smoking.” Open the door, jumped out and walked quickly through the side of El Camino Real, leaving me stranded in a van a little larger than a UPS delivery truck. Scotty thinks that it is essential and plays were nothing but a hard power play for money.

Looking back on all freshly painted on the doors of the van, I knew there was no way one person can install them. I completed my turn, pulled over and called the store with my cell phone. Our main gate cutting and better employee, Brian confirmed what we already knew. That could leave me and for the installation, but throw out all of our calendar week.

Then I remembered something important. “That’s why I bought a franchise,” I thought, “we’re in business for ourselves, but not by ourselves.” Undoubtedly, the franchise company knows exactly what to do, and help us, its first franchise, as opposed to a problem that could paralyze or kill our new business. It was a short twenty minute drive, he had multiple crews, and so I called the founder, Mr. Interior door itself.

The first thing I told Mike, after I related my situation was: “Do you think Scott will start a competing company? I assured him that it was not even remotely possible. From a business door usually cost more than $ 350,000, a large warehouse-showroom, power tools, truck and other things. Scotty, in addition to their tools, has no assets. There was even moved into our warehouse from the first day so he did not have to pay rent and lived check to paycheck.

Mike quickly redirected me to the purpose of my call and asked his advice and help. Maybe a couple of installers on the door for the rest of the week, at my expense? Answer – No. What about a person for the rest of the day? Answer – No. What about a person by just a couple of hours? Same answer – no. Incredibly, Mr. Puerta said that Interior could not spare even a single person (including himself) for a couple of hours to help us.

Therefore, no help – but what about counseling? Mike the only advice: call all our customers, including the one I was on the way to say we could not do this week and re-schedule all future jobs a week. Since I already had booked other jobs during the next two weeks, this would have been a disaster, not just our cash flow (payroll, rent and bills from suppliers that were due weeks), but for our customers who had already scheduled time off from work to stay at home as scheduled.

That’s when I realized we were in business for ourselves. . . and by ourselves. After thinking about things going into the silence, I called the store and told Brian to me at the address of the customer for installation. I figured at least we charge $ 4000 and this work just to do the rest of the week. At the time Brian and I finished the day was over. We came back to the shop at 4 pm – quitting time for our construction workers. Our door job for the next day is not even close to being finished. The crisis was finally with us – I follow the advice of Mike, call all our customers and try to reschedule for next week?

Linh and I decided on a different approach. We had a small reunion, explained the situation and asked the employees if it had been willing to work overtime, so our company is not going out of business. Also fully the concerns of our employees. Who had been working hard this week to help us achieve our ambitious goal. Our team leader, Scotty, was history, and they all had families and responsibilities at home. Under normal circumstances, we shall the proverbial creek without a paddle.

Lưu Linh STYLE OF MANAGEMENT FOR THE FIRE
Fortunately, my management style of the wife was about to settle. Born and raised in Vietnam, and used to working in a series of family-owned businesses in Asia, Linh me from the start to treat our employees in the Asian tradition, such as members of our family. It was a much expanded version of the theory “and” management style that he had studied in my graduate school of business. Every day, we buy food for all employees and ate together, discussed what was new in their lives and sharing stories door. We also soft drinks, coffee and snacks throughout the day at the store. On birthdays, we bring the person to a movie of your choice and after dinner.

Fortunately, we did not have that many employees, but each month there was an increased total of these benefits in our income statement. Me Linh questioned on the subject, reminding her door Mr. Interior employee meals provided only once every two months for a special occasion. Linh always had the same answer – “do not worry, it’s the right thing and if you ever need them, they will be there for us.” As part of his management style, Linh also see our crew day of installation of gates and doors hung next to the right. It was amazing to see this little Asian-American women carry solid core doors weighing as much as it did in the house of the customer and our right to install equipment – a clear morale booster. Linh said our crew “This boss likes to get involved.”

Linh’s management style of our business remain in business and on the road in November. All employees immediately agreed to work overtime. I ordered pizza for dinner for all and worked from 5 pm until 1 am the next morning. This commitment was repeated over the next two days, which is nothing short of amazing because everyone had to report back to work at 7 am every morning. We have completed all the tasks scheduled for that week, our money and collected all the customers were very satisfied. In the next week, the company was on track, humming along, and strengthened by overcoming adversity.

ABSTRACT
Looking back, happened to be in the right place at the right time, and were willing to take a calculated risk. Do not rush in, took a long time evaluating many factors, and keep emotions out of the franchise investment decisions – thus avoiding the three mistakes most buyers franchise.

It was definitely an effort to get the business established, finding the place, the right of workers, and navigating a new company on our own. But the challenges are a learning experience, and overcoming them was very rewarding. Although I have advised hundreds of people and businesses on the in and out of the franchise, expertise and experience in running my own franchise and interaction with the company restructured franchise my knowledge of the franchise relationship.