Why Running A Franchise Is Easier Than Ever

Monday, June 25, 2007

You don't have to quit your day job. You can even work from home (or the beach). But don't be fooled: Making money is just as hard.

Bob McQuillan runs a tight ship at his Hollywood Tans franchise in Arlington, Va. He knows precisely when workers clock in and out, who each of his daily customers are and which employees are selling what products, at regular price, or discount. But there's a twist: He's doing all this micromanaging from home -- 133 miles away in Mullica Hill, N.J.

"We monitor the business remotely via the Internet," says Mr. McQuillan, who co-owns the store with his wife and another business partner.

While a manager handles the tanning salon's day-to-day affairs, he pulls up data from afar by computer. A fingerprint scanner monitors workers' arrivals and departures, while intricate software tallies sales data and pricing, almost in real time. "I'm down there once every three months," he says.

The franchising world is letting loose. Gone are the days of one owner being chained behind the counter of a single store day in, day out. Today, there are absentee owners who oversee their operations from laptops and Treos, and owners who maintain dual careers or run multiple franchises. At Hollywood Tanning Systems Inc., more than half of the 330 franchise owners have another job. The chief executive of Sport Clips Inc. hair salons estimates that 10 hours a week is a "generous allowance" for owners to physically be in stores. And franchisees for the Decor&You Inc. interior-design business can receive decorating and product training at home whenever they like via online video seminars.

Even costs are more flexible, with investments ranging from as low as $10,000 to more than $1 million, according to the International Franchise Association. That frees up owners to spread their talents around by opening multiple franchises, either of the same brand or even in different industries -- a departure from the days when the rule of thumb for franchising was "one person, one store," says Ann Dugan, author of "Franchising 101" and assistant dean at the University of Pittsburgh business school.

In large part, technology has helped fuel the shift, making it easier for franchisers to replicate and spread their systems, as well as for franchise owners to keep track of their businesses wherever they are.

An unstable economy has also made the franchise model look more appealing with its entrenched systems and sales history; between 2003 and 2005, about 900 new franchising concepts were launched in such diverse fields as real estate, art education, construction and health care. Today there are an estimated 760,000 U.S. franchised establishments generating more than $1.5 trillion in economic activity and producing one out of every seven jobs, according to the franchise association.

The result is that franchises must now compete more rigorously with one another for the best owners, in part by offering more-flexible business models. "The concept now is to be in the business but not in the store all the time," says Steve Greenbaum, incoming chairman of the franchise association and CEO of PostNet International Franchise Corp., based in Denver.

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Hollywood Tans
CSC Plaza, #400, 1123 Rt. 73 South
Mount Laurel, NJ

Phone: (856)914-9090
Fax: (856)914-9099

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