Franchising: More Than French Fries Lloyd Shears The 90's have seen a number of changes on the face of franchising. There are changes in the profile of franchise buyers and the businesses that offer themselves for sale as franchises. And, this has all taken place in a relatively short time frame. While historically we reach back a long way to find the roots of franchising, few would argue that it was Ray Kroc who molded the shape of the industry in North America, and whose influence will be felt for years to come. Ray Kroc, for anyone who doesn't know, was the founder of McDonald's. He was a restaurant equipment salesman. Fascinated by the number of milkshake machines purchased by the McDonald brothers at their California drive-ins, he bought one of their two restaurants and founded the franchise empire we are familiar with. Is anyone as fascinated as I am at how a hamburger and french fries were turned into an empire? These are pretty common foods, and simple to make at home. However, in 1955 I'm certain few of us would have been able to envision what was to come … either with McDonald's or franchising. The 70's and 80's were a time of incredible growth in the fast food industry. So much so, that today it is an industry with formidable competition. Even McDonald's, faced with stiffening competition from Wendy's and Burger King, is watching their sales and market share in the United States fall. Fortunately, their international expansion into more than 100 countries has kept corporate profits healthy. With the food industry represented all over our communities, is it any surprise that many of us think of franchising and french fries as the same thought? And, with the industry so heavily penetrated, again is it any surprise that many aspiring franchisees are looking for alternatives? The profile of the person buying franchises has also changed. The "Corporate Restructuring" of the 90's and the "Golden Handshake" delivered by so many corporations have been a boom to the franchise industry. With so many of these outplaced corporate refugees seeking safe self-employment where they can replace and perhaps add to their sizeable corporate salaries, franchising has experienced an influx of a very sophisticated buyer. These buyers are seeking franchises which contain elements of corporate life … regular hours, offices, etc., and bring with them both money and experience. The franchise industry is also responding, and virtually every business category is now franchised. The second most obvious industry is perhaps the automotive. Many car dealerships are franchises. Also, many of the oil, brake, tune-up, muffler, lube and gas stations are franchises. The auto after-service market has benefited from the fact that we keep our cars longer but, like food, it will be a tough industry to find a market niche not already well penetrated. Retail is a concept we are all familiar with, and to many of us it provides a comfort level. We like the fact that customers come to see us. We are involved in a consultative sale as opposed to cold calling or door knocking. Retail franchisors have brought some very innovative and very successful concepts to the marketplace. For example, a computer store which prides itself in being a step behind in technology, instead of a step ahead. The student who needs only word processing, or the person who only uses the computer to play cards, does not need a pentium. Not everyone has the need or budget for all the latest computer bells and whistles. Just as a used car will get us to our destination, it's possible that a used computer is adequate for the needs of many. Daily, we are reminded of the "aging baby boomers" and the pressures we will bring to the pension and health system. Interestingly, 80% of us now have or will have something wrong with our back. A retail franchise dealing strictly with products for relief of back suffering is meeting with incredible market acceptance. Everything from the simplest handheld massager to a leather massage chair are available. Pillows, for comfort of the neck while sleeping, and an incredible variety of furniture and equipment for the office, offer the back sufferer the promise of a good night's sleep and comfortable hours of sitting at work. The service industry, newer to franchising than food, automotive and retail, may not be as obvious to the aspiring franchisee as they rarely require high profile street locations. Service businesses are generally less expensive and also generally provide a greater return on investment. Some of these businesses are home-based, fitting in with the growing trend of working from home. I encourage you to view the franchise you are buying as the vehicle to get you to your destination. Know what you want to achieve, and buy the least expensive business that meets your needs. I also encourage you to investigate the service industry. Of course, the service industry will break down into a number of categories as well. There is home-based, business-to-business, white collar and home services. Home-based simply means you operate from home. You will most likely go out during the day and provide services to your customers. If their customers are corporations, you are in a business-to-business franchise. Your business provides services to other businesses. If you provide service to people in their home, you are probably in the home service business. And white collar usually means you the franchisee dress as you did in corporate life. Suit and tie or dress. White collar franchises are in great demand from the outplaced corporate refugees we spoke of earlier. As it is the service industry which is the least familiar to most of us, let me provide you with a few examples. Everyone has carpet. Every hotel, motel, apartment building, office and home. And everyone who has carpet has problems with it. It fades, a tenant spills bleach in a hallway, pet stains, the colour is damaged, etc. Langenwalter Carpet Dying is a successful franchise system, in business since 1975, which can correct the colour problem. Whether this involves dying a whole room or a spot, the carpet colour can be restored to like-new condition. Langenwalter is an example of a business-to-business service business. While services will be provided to the residential market, the bulk of the business is from other businesses. Companies are outsourcing at every opportunity. Services once provided in-house are now provided on a contract or consulting basis. "Renting" expertise is viewed as desirable in many industries. Crestcom is an example of a white collar business-to-business franchise. Franchisees will dress as they did for corporate life and will be meeting and working mainly with Presidents and Vice-Presidents. It is also home-based, as franchisees will generally have their office at home. The company Crestcom provides training courses for corporate sales departments, as well as training and motivational seminars for various corporate levels. The franchisee may be involved in the training or may simply perform the sales and hire a facilitator for the service. Top corporations accepted long ago that dollars spent on sales training pays dividends. And for the third category of service, I will introduce the home-service business. Changing demographics, with few households having a spouse at home, opens up a whole new industry. Providing services to people at home. Add to this an environmentally friendly (no chemicals used) lawn aeration and fertilization service. We all want a green and healthy lawn, and the benefit of being chemical free, and few of us have the time or knowledge to achieve it. Enviromaster is also a seasonal business, where you will have the winter off. Providing services to homes is booming and becoming very sophisticated. In the final analysis however, it's important that you buy the business that is right for you. A business that is in the investment range you are comfortable with. One that you will enjoy, and one that can make the amount of money you want or need. Speak to the franchisor and franchisees. Generally, the larger franchisors offer the most stable investment. However, even with the added risk of a smaller company, you may enjoy the challenge. Research is the only sure way to know if a company is right for you or not.