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You can be the boss — for a price By Ina Paiva Cordle / MiamiHerald Lisa Pein took the plunge three years ago, when she turned her corporate job at 7-Eleven into owning her first franchise in Wilton Manors. Today, she and her husband have three 7-Eleven franchises — and she calls it the smartest move she ever made. Her only regret is that she didn’t jump in sooner. “I was scared at first, so I waited a year and a half when they opened the franchising,” said Pein, 40, whose three teenage children also now work at the stores. “And the longer you wait, the smaller the selection.” Pein eventually dived in, yet for many in South Florida, owning your own business remains an elusive dream. Especially now, for all those who have lost jobs, had difficulty finding work after graduating, returned from military service, or become disillusioned with corporate America, being your own boss may seem appealing. A franchise could be just the solution, say industry insiders, because it allows a new business owner to build on the strength of a proven brand. Opportunities abound for every concept, from restaurants to home health services, and from auto repair to child care. “Most people, given the choice, would love to own their own business. But there is a large population that isn’t entrepreneurial enough to do that,” said Tom Portesy, president of MFV Expositions. The company produces Franchise Expo South, which was held recently in Miami Beach. “Franchising falls within that sweet spot. They don’t have to take such big risks.” Amid a dismal economic climate and lingering unemployment, demand for owning a franchise has never been higher, he said. “I don’t know of a better time or a more appropriate time for franchise groups. All the factors are there to make for an incredible time to open a business,” Portesy said, citing low interest rates, good real estate opportunities and low-cost equipment. “Franchising is probably the single biggest item that is going to drive small businesses in the next 10 years. We’ll see explosive growth and it will play a huge role in the economy.” Overall, the International Franchise Association is projecting 14,000 new franchises this year, representing 2.1 percent growth and 168,000 new jobs, said Steve Caldeira, president and chief executive of the International Franchise Association, based in Washington, D.C. The association is especially targeting military veterans, who Caldeira said are particularly adaptable to “following a structured model.” Costs of starting a franchise vary wildly, from $5,000 into the millions of dollars, in addition to ongoing royalty fees. The fees, based on a percentage of gross sales, range from 4.6 percent to 12.5 percent, depending on the industry, and average 6.7 percent, said Matthew Haller, spokesman for the International Franchise Association. At the lower end of franchise purchase costs are commercial cleaning operations, like Jani-King; at the mid-range are frozen yogurt or ice cream shops like TCBY; and at the high end are luxury hotel franchises, such as a Marriott. The key to choosing a franchise is finding the right fit for an individual, said Edwin Peña, a Boca Raton-based senior business transfer specialist and franchise owner of Murphy Business & Financial Corp. “They have to be introspective of who they are, take a look at their résumé and background and personality and see what might not be just a successful business but what is the best fit for their lifestyle and personality,” said Peña, who sells businesses, including franchises, all over South Florida. “Folks underestimate themselves — with the great training they get in the corporate world, they are in a position to run their own business,” he said. “They don’t know it, but they come with a skill set. As long as they bring the same focus and attention into something that is of great interest to them, it gives them the tools to be successful in their own small company.” To be sure, prospective franchisees should also do their due diligence and examine the company, including its track record, business model, competition, training and support, and reasons for choosing South Florida, Peña said. South Florida entrepreneur Emilio Braun spent two years looking for a franchising opportunity in South Florida, before settling on frozen yogurt. After researching various brands, he signed a master franchise development contract with Tempe, Ariz.-based Yogurtini, for Miami-Dade and Broward counties. He and his brother, Javier, opened their first shop in Coral Springs about five months ago, another in Davie last month, and plan a third in Kendall, which will open in March. In all, they hope to open at least 10 within five years. The brothers, who have businesses in industries such as television and real estate, sold their 80 mobile phone stores in Mexico and funded the yogurt shops with their own capital. They decided that franchising was their next best bet. “When I started doing research, I saw that competition is very high in the States, so if you don’t do it the right way you are going to go out of business very quickly,” Emilio Braun said. Franchise rules that govern everything from the size of the space to the type of sound system installed end up being advantageous in the long run, he said, allowing him to “compete in a saturated market.” “I have support from the franchiser in marketing, in publicity, in operations. We do a conference call every two weeks to see how things are going, and they come and visit every month or two,” said Braun, 37. “So that is the price you are paying. I believe it is worth it.” Nevertheless, franchising is not for everyone. Starting your own business without the constraints and costs of buying a franchise is far more appealing for some entrepreneurs. “You don’t have to pay for a mentor if you find the right one,” said Todd Fener, who lives in Key Biscayne and owns four coin laundries. He found his own mentor in John O’Brien, a Fort Lauderdale entrepreneur who owns 17 coin laundries. For many, the biggest hurdle to opening a franchise remains access to credit, Caldeira said. Loans guaranteed by the Small Business Administration, once considered the last resort, have become the first option, he said. In fact, the SBA has guaranteed more than 500 loans during the past six years, totaling $242.3 million, for franchisees south of Orlando, said Althea Harris, assistant district director of marketing and outreach at the SBA office in Miami. “In many cases, it is easier to get a franchise financed than other businesses,” Peña said, citing franchiser financing and the possibility of using your own retirement funds. Pein, for example, was able to finance her first 7-Eleven franchise by taking out a $200,000 loan with Citibank, which, at the time, had an arrangement with the company. Dozens of U.S. and international companies — from as far away as Dubai — say they are focusing on South Florida, hoping to find just the right person to become a franchisee. Many of them made their first appearances last month at Franchise Expo South. MoneySaver Coupons, a Sunrise-based, family-owned operation, is among those making a push into franchising as a way to expand. MoneySaver, founded in 1990, recently opened its first franchise in New Jersey and is now looking to expand in Florida — into Miami-Dade County and north of West Palm Beach — and further in New Jersey, said Adam Squires, vice president of MoneySaver Coupons, which publishes a direct mail booklet and has an online coupon site. The initial franchise fee for the home-based business is $15,000 to $22,000, and the total investment ranges from $29,000 to $74,000, including operating costs for the first few months. Someone with a background in advertising sales or marketing would be ideal, he said. “The franchise industry as a whole is growing,” Squires said. “People are looking for new ways to transition out of that corporate world and be more self-sufficient, and that is where franchising comes in. You are able to buy a business, yet it’s established — it’s a business with a track record and proven concept that can work.” Burger 21, a Tampa-based fast casual burger restaurant, is also focusing on South Florida, after launching its franchise program in September, said Dan Stone, vice president of franchise development at Burger 21. So far, the new-concept restaurant has two locations in the Tampa Bay area, with two more in development there. Stone said he is hoping to have a Burger 21 open in South Florida in early 2013. “We are focused primarily at this stage in finding the right prospects, the right candidates,” he said. “It’s a 10-year franchise agreement. It’s often harder to get out of a franchise agreement than a marriage.” Burger 21’s franchise fee is $40,000, which can be reduced for multiple locations. As an incentive, the company is offering 20 percent off for franchises sold by June 21, Stone said. He estimates the total investment to get a restaurant up and running at $513,000 to $733,000, including initial inventory and three months of working capital. “The ideal franchisee is someone who is a multiunit franchise owner in the food or restaurant industry — somebody who has 10 Pizza Huts,” he said. “We prefer to do multiunit development agreements, because the more savvy, seasoned and sophisticated the candidate, the larger deal you can sell. And we prefer that if we will have 30 restaurants, to have three or four franchisees in the market, rather than 30.” Lucille Roberts, a New York-based women’s fitness center with 47 locations, is also planning to enter South Florida this year, having signed a development agent agreement with franchise developers for 40 franchises from Georgia to Miami, said Collin Gaffney, director of franchising development. “They are a very experienced team of franchise developers,” Gaffney said. “They have the option to either open [the fitness centers] themselves or franchise them as sub-franchisees.” Though Lucille Roberts has been in business for 42 years, it has just started franchising. The cost to open a franchise is about $300,000, with a $25,000 franchise fee, he said. The frozen yogurt and smoothie shop Red Mango is also looking to open more locations in South Florida, said Dan Kim, founder and chief concept officer of the Dallas-based chain, which already has a franchise in South Beach and one at Fort Lauderdale-Hollywood International Airport, and is opening others in Fort Lauderdale and Davie. “South Florida is a growing opportunity for us — the climate, the demographics, the cultural ethnicity,” Kim said. The franchise fee for a Red Mango is $35,000, and the total start-up costs range from $250,000 to $350,000. International companies also are focused on expanding in South Florida. 7camicie, an Italian chain of men’s and women’s shirts and other apparel, has 350 stores, mostly in Europe. “We decided now to try to enter the American market,” said Sofia Fabian, development manager for the Rome-based company, which had a large display at Franchise Expo South for the first time. Palm Beach Gardens marks its first franchise here, as it pursues others, she said. Even a Dubai-based restaurant chain, the Noodle House, with 20 locations in 14 countries, is eyeing South Florida for the first time, as it expands beyond the Middle East and Europe. “South Florida is in the top five growth markets,” along with New York, Boston, Chicago and Atlanta, said Phil Broad, managing director of Jumeirah Restaurants, which owns the Noodle House. “People accept new concepts coming in and are willing to try it.” In fact, visiting Miami for the expo show, he said he likens the area to Dubai, where the Noodle House has six locations. He sees both as growing tourist markets that attract foreign visitors from all over. Broad estimates the cost to open a restaurant at $750,000, which includes a store-opening fee of $35,000 to $50,000. No question, Florida is a magnet for franchises, Peña said. “If they have had a successful history somewhere else, they are targeting Florida,” he said. “If they are not yet here, they want to get in.” As a result, there are seemingly endless opportunities for would-be franchisees who are ready to take the plunge. “It’s a myth that the American dream is to own your own house,” Peña said. “The American dream, in my opinion, is to own your business, because that generates a freedom, a love, a success if you work it. The freedom it provides — I would never trade it.”
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