Should You Be the First Franchisee of a New Franchise System?

Deciding to start your own business is a scary prospect for anyone. That's why so many people turn to franchising. Starting with a proven model where the concept, business plan, and operating system are already put together can give you a leg up, according to Susan Manwaring, owner of seven Batteries Plus franchises in Indiana. But what if you're the first franchisee in the system?

Susan found out what that was like more than 20 years ago as the first franchisee of Batteries Plus. Today, Batteries Plus is the nation's largest battery retail franchise, but in 1991 it was still a small chain of company-owned stores looking to expand by franchising.

Susan's husband, Dan Manwaring, discovered the store when they were living in Wisconsin and kept it in the back of his mind even when they returned to their home state of Indiana after he lost his job to corporate downsizing. "We were kicking around thinking what we wanted to do. My husband was intrigued by Batteries Plus. He made the phone call and got the information," explains Susan. Dan discovered the company was looking to expand through franchising and was in the process of getting licensed to do so in several states.

While the Manwarings were waiting for the company to get licensed in Indiana, they did their research on franchising in general and on Batteries Plus in particular. "The Internet wasn't big then," says Susan. "That meant going to the library, visiting stores, talking to the [franchisees] ('Really, you can make money selling batteries?') and watching customer interaction." By the time Batteries Plus was licensed in Indiana it was 1992 and the Manwarings were ready to take the plunge.

Being one of the first franchisees in a system has its advantage and its disadvantages like anything else. One advantage is the availability of open territories. "The market was completely open," says Susan. "Today certain markets are closed. Plus, getting in on the ground floor, the fees were lower."

And the downside? "The biggest thing you want to look for is a concept that's expandable," advises Susan. "The battery industry was in its infancy in the early '90s. We never dreamed how battery dependent [society] would become, but we could see the potential for long-term growth."

You also need to look at who's running the show. "Obviously we took a big leap of faith, but we felt like the partners who started the company were really dedicated and had a good, solid background," Susan says. Also crucial is to look for a franchisor that is financially sound, committed to growing the franchise, and committed to the franchisees. "You're starting a business and relying on them for support," Susan says. "If [that support is] not there, it could be detrimental."

The key to success, Susan says, is to follow the system. "Obviously, you have to have an entrepreneurial spirit and be dedicated to growth. But I have met people over the years who want to take the [franchise] model and tweak it and do it their own way. We've always felt strongly that, even though there are always areas for improvement, if you follow the system and use the marketing materials and selling techniques, that's [your secret] to success."

As far as making it work as a first franchisee today, Susan warns that in today's economy it's going to be a lot harder. "I know what it was like in 1992 going to a bank for a loan with a new concept. I can imagine it being really tough today." Your best bet today is really researching the franchise opportunity for uniqueness. Does the concept have a niche, or is it a blatant copy of another concept? Says Susan, "You've got to be really careful that you can set yourself apart from the place down the street."