Can Entrepreneurs Succeed as Franchisees?

For many people, franchise ownership is the most direct path to business ownership. You buy into an established brand, follow a specific business model, respect set policies and procedures, and have your franchise up and running in no time. But what about people who were previously entrepreneurs and are now looking to purchase a franchise? In such cases, does the franchise model spell success, or is it a recipe for disaster?

For Craig Schumacher and Steve Currier, owners of a Hand & Stone franchise in Ahwatukee, Arizona, franchise ownership offered them an opportunity that they couldn’t quite grasp as entrepreneurs. So, after more than a decade of building up 50,000-square-foot fitness clubs in various parts of the United States and establishing a place in the fitness industry for their independent venture Q The Sports Club -- which, at its peak, employed 4,000 people -- the pair decided to change gears and invest in a massage and facial spa franchise.

“The economic situation greatly dictated how we would move forward as entrepreneurs,” explains Currier. “It is very expensive and time-consuming to take a startup company from the concept all the way through to [being] fully operational. We made the transition from entrepreneurs to franchisees because the franchise concept had already been developed and the infrastructure was in place; all we had to do was plug in our own skill sets. The startup costs are highly mitigated, the software and employment parameters are in place, and most of the ‘heavy lifting’ of the startup cost and development time was taken by the franchisor.”

Currier admits that, as former entrepreneurs, he and Schumacher do have opinions as to how a business should be operated; however, they are fully aware of their position as franchisees, and the transition has gone smoothly since they opened their location in March. “Although we might run [the business] differently if it were solely ours, we have an opportunity to bring ideas to the franchisor,” says Currier. “However, the best way to bring ideas to the franchisor and be really heard is through consistency in performance.”

Learning how to let go is one of the main challenges that entrepreneurs-turned-franchisees need to expect, says Joel Libava, a franchise consultant and founder of FranchiseOnlineUniversity.com, an online resource where prospective franchisees can learn about franchise ownership before jumping in. “Entrepreneurs tend to have new ideas all the time, and they may spend too much time making suggestions on how things to could be done better,” he says. This kind of nonstop brainstorming is crucial for entrepreneurs, but, for franchisees, it can actually “take them out of the game” and negatively affect their businesses.

Because entrepreneurs are used to being in the driver’s seat and answering only to their own personal needs and opinions, ego often stands in the way. Therefore, it is essential for those who are making the transition to franchisee to keep their egos in check. “If someone approaches their franchise search like they already know it all, it’s going to be ugly,” says Libava. “It will be an uphill battle for them in their dealings with headquarters staff and even existing franchisees who they’ll be contacting during their research. I have turned away many people in the past 10 years who were way too entrepreneurial for the pretty rigid, system-oriented business model of franchising.”

However, if you can put your ego aside, the wisdom gained from previous entrepreneurial endeavors can be hugely beneficial in franchise ownership. “It’s the been-there-done-that-attitude, that, if used correctly, can help them get to market a lot faster,” says Libava. “There are things that former independent small-business owners don’t need to spend time learning, like bookkeeping, payroll, and local community involvement.”

According to Marvin Storm, an entrepreneurial and franchising expert with over 25 years of experience in startups, entrepreneurship, and franchising, there are four different types of entrepreneurs. The type of entrepreneur you are greatly affects your chances of success as a franchisee. Take a look at the following types and Storm’s definition of each to identify which one fits you.

1. Extreme Entrepreneur: sees the world as a series of high-adventure experiences. Extreme Entrepreneurs have entrepreneurial ADD and never think inside the box. (example: Richard Branson)

2. Innovator Entrepreneur: sees the word as a puzzle to be solved. (example: Steve Jobs)

3. Founder Entrepreneur: starts a traditional business in their garage and over several decades builds multimillion-dollar businesses. Founder Entrepreneurs color inside the lines and prove that hard work and a good idea, even in traditional business segments, wins the day.

4. Team Builder Entrepreneur: can be any one of the entrepreneurs above. Team Builders view entrepreneurship as a team sport. They use their extraordinary charisma and collaborative nature to build a team and lead that team in conquering the world, or at least their market segment.

According to Storm, Founder Entrepreneurs and Team Builder Entrepreneurs have the best chance of finding success as franchisees. “A Team Builder Entrepreneur embraces the concept of franchising because they become a part of a team with a central goal of building the brand,” says Storm. “This generally excites a Team Builder Entrepreneur. Founder Entrepreneurs who have failed or been modestly successful make good franchisees because they see the value of a system. A highly successful Founder Entrepreneur will rarely see value in a franchisee because they have been there and done that successfully, so why would they need a franchise to do it again?”