In 2002, Desmond Stanback of Bear, Delaware, was frustrated with the corporate environment. As an information technology executive at J.P. Morgan Chase, he had survived a merger that led to many of his colleagues being laid off or jobs were being increasingly outsourced to India.
“I was going through a second merger where they were outsourcing their entire IT department to IBM,” Stanback says. “One minute you’re at J.P. Morgan, the next day you wake up and you’re at IBM Global. Everyone was freaking out.”
Stanbeck decided to follow his dream to become an entrepreneur, so he opened Friendly Computer, a computer-repair franchise, because he didn’t want to continue on the path of corporate instability. He left his $80,000 per year career, invested a $15,000 bank loan, along with $10,000 from his severance and savings, and almost immediately started making up to $33,000 per month.
Things were great until Geek Squad, a computer-repair company affiliated with national retailer Best Buy, moved in on his Delaware and Pennsylvania region. Stanback started losing $12,000 to $13,000 a month once the competitor opened up. “No matter how much I put into advertising, I was just spending money to stay in business,” Stanback says. “I realized if I stay the course something could go wrong here.”
Later, his former employer offered him a job at $100,000 a year, but he didn’t want to go back to work for someone else. So in 2006, he and his wife took $70,000 from their 401(k) plans and used bank loans to invest $104,000 in FiltaFry, a food-service oil filtration and fryer-cleaning business. For the first year, Stanback traveled to restaurants, filtered their oil, cleaned their fryers, and replaced filtered oil.
Despite having FiltaFry clients at several baseball stadiums, community colleges, and Bank of America locations, Friendly Computer is still his cash cow. StanBack has become adept at balancing the two franchises and he says he doesn’t miss the corporate world one bit.
Matching your personality and lifestyle
Miriam Brewer, director of education and diversity at the IFA Educational Foundation, recommends that before determining whether you can afford a franchise, first perform a self-evaluation. Not every entrepreneur should be a franchisor, she says. “Ask yourself, ‘How well do I follow instructions? Am I willing to adhere to the franchisor’s operating plan?'” Brewer advises.
As a franchise owner you need to learn that franchising is all about the brand. If you think your grandmother’s chicken tastes better than KFC’s, you still can’t change KFC’s recipe, Brewer adds. “The beauty of franchising is it is a proven system. Rogue franchisees diminish the brand. If you like to experiment, then franchising isn’t right for you because you can’t change the system.”
While Friendly Computer may have been a perfect match for Stanback, his decision to buy into FiltaFry was not as obvious. “FiltaFry is completely opposite from what I am. I have been a white-collar worker all of my life. Nobody thought I would be able to pull this one off,” Stanback says. “You leave your office and all of a sudden you’re just one of the kitchen workers.”
But Stanback stands by the idea that his open personality could carry him through any job. “I can get along with and [work with] pretty much anybody no matter their walk of life,” he says, noting that with the FiltaFry franchise his job responsibilities can lean anywhere from marketing his services to chain restaurant executives to working in a kitchen with minimum wage workers.
Acknowledging the time commitment
Next, Brewer asks potential franchisees to determine what amount of time they want to commit to the franchise. “You should not bite off more than you can comfortably chew,” she says, noting that owning a franchise requires dedication that will make your 9-to-5 look like a hobby. In Stanback’s case, Brewer suggests that he may have jumped the gun by entering into his second franchise. “If you haven’t mastered all of the techniques and processes that you need to make one unit successful, opening up another one on the heels of that one can have a negative trickle down effect.”
In hindsight, Stanback, now 42, admits that instead of investing in another franchise, he should have pooled his resources into Friendly Computer and accepted J.P. Morgan’s job offer. Although he has hired four Friendly Computer technicians and two FiltaFry workers, balancing two franchises has prevented him from growing either one the way he would have liked. Fortunately, he has been able to hire staff to drive the vans while he acts as administrator.
Brewer warns that if you plan to add a partner to divide the workload or want to continue working a part-time or full-time job while running the franchise, then the type of franchises available to you could be limited. For example, McDonald’s requires that franchisees not work another job and it does not allow partnerships.
Determining profit and affordability
Finally, your franchise’s affordability will make a case for which business to invest in or whether you should invest at all. “Some franchises might
take a year or two to break even and make a profit,” Brewer says. You should ask yourself if you “can reasonably live off of a minimum amount while trying to get the business started.” Stanback’s wife continues to work a full-time job to help supplement the family’s income.When considering a franchise, take into account miscellaneous expenses, repairs, and fees for legal, accounting, promotion, and equipment that aren’t always built into the initial franchise fee. “You need to look for what type of training and support will be involved and the additional costs associated with that,” Brewer says, adding that franchisees should ask if the franchisor offers health insurance and have a contingency in one’s business plan and budget if not.
Stanbeck says Friendly Computer requires him to spend an additional $500 a month for a national promotion that has only netted him one client when he could have spent that money to advertise locally. He admits that he works harder now than when at his former employer, but he is content in knowing that now his time is his own. “I’ve been able to watch my kids grow up. [My franchises] have enabled that to happen. You can’t put a price on that.”