Bette Fetter’s business began with eight small children and a passel of colored pencils scattered across the table in her Elgin, IL kitchen. It was 1988, and Bette, an artist and stay-at-home mom of four, began offering children’s art classes as a way to make extra money. At first, she charged five dollars a head and earned just thirty-five dollars a week, but when the classes grew popular, she brought them to local preschools. By 1992, her venture, Young Rembrandts, was a success, grossing about $250,000 a year. Bette wanted to expand nationally, but there was a minor problem: “We didn’t have enough money.”
Inspired by the example of other once-small businesses (such as Wendy’s and Papa John’s), Bette took the leap and decided to franchise. Happily, the gamble paid off: In 2006, there were fifty-seven Young Rembrandts franchises earning $4.3 million. Bette’s Elgin-area branches pulled in nearly $700,000. More than 760,000 franchised enterprises operate in the United States, generating more than $1.53 trillion annually.
Many small-business owners, including mom entrepreneurs like Bette, find franchising a good way to grow their brand. Franchisors profit by charging an initial franchise fee, typically $20,000 to $35,000, and royalties, which can either be a fixed fee or a percentage (typically five to six percent) of gross revenues. But franchising is not a sure thing. “There’s a financial reward, but you also have to provide training, marketing, support, and administrative direction to the franchisees,” says Betty Otte of SCORE, a not-for-profit organization of small business counselors. “The best businesses to franchise are those that are easily duplicated without a great deal of specialty training.”
Consider waiting two or three years first, suggests Kay Ainsley, managing director of MSA Worldwide, a franchise consultancy in Kennesaw, GA. “You need to prove that your business model works through all seasons, through both highs and lows.” Set aside $80,000 to $150,000 for costs, and think about hiring extra people to maintain your original unit or business. Just like parenting, franchising requires you to pay attention to your own needs while tending to those of your offspring.
We asked several small-business moms about the best and worst moves they made while building their lucrative franchises. Here are their seven steps to success.
1. Start with franchising in mind. Marni Poe and Melissa Slack of Let’s Eat Dinner, a Tampa, FL meal-assembly business, developed precise specifications for everything their franchisees would need—down to the toilet-paper holders. “From the beginning, we set up a model that could be easily replicated,” Melissa says. “You can sell hundreds of units, but without the proper infrastructure, the wheels fall off.”
In 2005, a year after opening their first location, Marni and Melissa licensed a franchise in St. Petersburg, FL. The next one was in Ellicott City, MD. “That was the true test,” says Melissa. “We knew that if they needed us to come to Maryland, we hadn’t done our jobs properly.” Today, eleven stores are up and running, with eight in the works—a testament to the duo’s preparation.
2. Do it yourself. Consider opening a second location before you franchise. Michelle Violetto and Tanya Ehrlich started Little Scoops Inc., a 1950s ice-cream-parlor–style party business, in Blauvelt, NY, in 2002. In one year, they grossed $350,000 in sales and were approached by a lawyer about franchising. “We were excited but nervous,” says Tanya. “We didn’t want to jump into it and end up being a flash in the pan.”
The pair decided to open a second shop in Pleasantville, NY, instead. They worked on refining their business and hired franchising mentors for advice. In 2006, they sold one of their first franchises to a former employee, who opened her location with seventy parties pre-booked. They now have six shops in two states and two more opening soon. Little Scoops was named one of the industry’s “Hot New Franchises for 2005.”
