What Every New Franchisee Must Know

Holly Valenti’s life has gone to the dogs – and she couldn’t be happier. As a Central Bark Doggy Day Care franchisee, her full-time occupation is caring for, training, playing with, and providing companionship to dogs in the Metairie, Louisiana, area. But it hasn’t all been fun and games, and the dogs aren’t the only ones learning new tricks. As the former director of revenue management for W Hotels of New Orleans, Valenti brought a lot to the table when she became a franchisee, but she also had a lot to learn. Here she shares four of the key lessons she has learned along the way.

1. Even if you invest in a franchise system, you may still need to go the extra mile to educate potential customers about your products or services.

One of the main reasons Valenti decided to buy a franchise was for the brand recognition, as she knew that it would help her grow her business faster. But one of the biggest mistakes that Valenti made was assuming that local residents would know what a doggy day care is and understand how it differs from a regular boarding facility. A year after officially opening her facility for business, Valenti is still working to educate potential customers, but at least she now has a solid foundation of clients who understand perfectly what Central Bark offers.

The fact of the matter is that not all franchises have become household brands like Subway or McDonald’s. Not only does Central Bark not yet have the brand recognition that Subway does, but it also specializes in a niche service that requires some extra explanation. The best way to deal with such a challenge is by using aggressive marketing tactics, says Jeff Elgin, CEO of FranChoice Inc., a network of franchise referral consultants. For situations where the amount of education required might be too extensive to be conveyed using simple marketing materials, Elgin advises directing potential customers to a Web site that spells out the concept and provides additional explanation.

2. When it comes to financing your franchise, be prepared to get creative.

Valenti left a six-figure job to start her franchise. However, her decision to give up her income worked against her when she tried to get financing for her franchise. She finally got a verbal agreement from a bank, but was left scrambling when they pulled the plug on her the day before the loan was supposed to go through. Her brother and sister-in-law ended up coming to her rescue by putting some of their real estate as collateral for the loan.

Valenti’s challenge in rounding up financing is far from unique. In fact, getting access to capital is a challenge for all franchisees these days. And while it still helps to be part of a franchise system, simply signing on with a franchise is no longer the golden key to financing that it once was. Says Elgin, “People will have to be creative and find other avenues that allow for securing a loan outside of the assets or projected performance of the new business.”

3. Look into zoning laws and other specifics of the location where you’re thinking of setting up shop.

The area in which Valenti opened her franchise did not have a classification for dog day care, and she had to work with officials for months before getting this established as an official classification. That affected where she could open her business, and she had to locate in an industrial area away from residences and food establishments. As a result, her store is tucked away, far from the main flow of traffic. “It has been a slow process to overcome this obstacle,” says Valenti, “but, slowly, people are starting to find their way to me and business is starting to grow.”

Due to zoning restrictions, Valenti’s business is what Elgin calls an “end destination business.” With such businesses, the key is effective marketing. For businesses that typically have high repeat business, the key is getting people through the door at least one time, he says: “The problem will solve itself after the first visit.”

4. You don’t have to break the bank to spread the word about your business.

Central Bark provided Valenti access to a large library full of brochures, flyers, mailers, and other marketing materials, but it was up to her to figure out what marketing strategies would work best in Metairie, Louisiana. The first year in business, she went through a lot of trial and error as she tried to figure out how to spread the word about her business. In the end, she found that word-of-mouth, referrals from existing clients, simple yard signs, social networking, and e-mail campaigns worked better than magazine ads, radio spots, billboards, or direct mail pieces.

“One of the most important factors to verify when researching any franchise opportunity,” says Elgin, “is whether or not the franchisor has worked out the details of an effective marketing program so that they can tell a new franchisee exactly what they should spend and do in order to attract the initial customer base.”

Although starting her Central Bark franchise has involved a learning curve, Valenti couldn’t be happier with the experience. “I learned from the hotel business that being part of a system was a good thing, but, personally, I don’t care for someone looking over my shoulder 24/7,” she says. “Central Bark has solid operational procedures that, when followed properly, do not require constant supervision. I know when to ask for help if I need it and am truly comfortable with the support that Central Bark offers when requested.”

Sara Wilson is a freelance writer who specializes in issues related to small businesses. Contact her at wilson.sara@gmail.com.