1851 caught up with the franchise development professionals of various brands to learn more about the state of the industry and their predictions for the year ahead.
1851: Who's buying franchises right now and what type of activity are you seeing?
Jo Gonzalez, Franchise Development Director at Martinizing Dry Cleaning: Our target audience tends to be senior-level executives who want to get back to a six-figure income. A lot of our franchisees are used to making that much money; to go into a startup that is going to take them 18 months to turn a profit is not something they’re interested in. Our model is an acquisition model. We look at independent dry cleaners and assess four things: cash flow, geography, lifestyle and budget. Based on those four things, we find a dry cleaning business that matches [a franchise candidate’s] desired range of income, evaluate it, inspect it, make an offer, buy it and rebrand it. That way, they walk in day one with a cash-flowing business.
1851: What's the number one thing franchisees are looking for in the conversations that you're having with prospects?
Gonzalez: They’re looking for cash flow. Like, now.
1851: Do you have an ideal franchisee in your system, and what are their qualities?
Gonzalez: Senior-level management skills. They know how to manage time and they’re really good at building teams. We have families, too, like father-son teams, husband-wife teams and mother-son teams, which actually work really well. We’re a mature business, so we have three generations of families in our system.
1851: What's the biggest challenge facing franchise development right now and how are you overcoming it?
Gonzalez: The biggest challenge we have is helping people to understand that nothing happens immediately. That’s just the way we are as a society. They have to understand the process that it takes to make this acquisition happen. There’s a system for everything, it takes time and we want to make good decisions. [Our process] takes 6-8 months, which is actually pretty good. In major markets, there are hundreds of dry cleaning businesses—that’s our inventory. It’s like buying a house: you don’t buy the first one you find. You have to shop around and compare.
One of the new things we have done is to integrate technology. What Uber did for taxis, we’ve done to the laundry industry. Everything today is technology-driven. We’ve realized that millennials prefer to do business on their phones, so we created an app that aids in most aspects of the business, including digital lockers.
1851: What's one thing prospective franchisees should know about your brand and franchising in general before buying?
Gonzalez: They should understand their own goals and what they’re trying to achieve. If they understand their goals, we can understand if we’re a good fit for them based on their income requirements, how far they're willing to go and their budget. If they don’t know those things, it makes it really hard to look for the right opportunity.
In terms of franchising in general, I would say to do your homework. We have over 4,000 franchise companies in the U.S. Every day, there are new companies coming on the horizon, and not every franchise is the same. The culture is critical. If I were looking for a franchise now, the franchisor’s culture has to share common values with me.
Overall, look for systems that are mature and refined. For those willing to take risks, looking at a younger franchise is an option. Know what your business style is. Consultants are really good at evaluating, so I would recommend working with them.
1851: Why should franchisees invest in your industry and in your brand specifically, and why should they invest now?
Gonzalez: We are leading the industry. We are disrupting the industry. We’re consolidating the industry. We’re doing it in a way that is so different from any other franchise brand, through the acquisition model, through technology, through other revenue streams that drive revenue to the stores.