Page 12 - aruba-today-20220808

A12 BUSINESS
Monday 8 august 2022

'Quasi-preneurs' see opportunity,

challenges in franchising

their business, and then
pay a monthly royalty per-
centage. In return, they get
use of the brand name and
marketing, and other sup-
port.
As a classically trained pas-
try chef, Helen Kim often
dreamed of owning her
own bakery. But when she
decided to strike out on
her own, Kim thought build-
ing a business from scratch
would be "too big of a
mountain for me to climb."
The husband and wife team of Kelly Jackson, left, and Davina
Arceneaux stand for a portrait at their Motto Mortgage office While working at the Aria
Thursday, July 28, 2022, in Oakbrook Terrace, Ill. Resort & Casino in Las Ve-
Associated Press gas, Kim was a frequent
customer at Paris Baguette.
By MAE ANDERSON train you," said Matt Haller, She was impressed, and
AP Business Writer president and CEO of the last year bought a Paris Ba-
NEW YORK (AP) — In 2020, International Franchise As- guette franchise in the city
Kelly Jackson and Da- sociation. with her sister.
vina Arceneaux wanted In the months after the While the financial require-
to leave their company pandemic hit, many peo- ments are strict -- accord-
jobs and become business ple with corporate jobs de- ing to the company web-
owners. They were looking cided to strike out on their site, franchisees need a net
for something both COVID- own, in what's referred to worth of $1.5 million and
proof and recession-resis- as the "Great Resignation." $500,000 in liquid assets
tant. They looked for alterna- – Kim said it was worth it.
Instead of completely tives, including opening up While the money invested
stepping out from under a a franchise with an estab- in a franchise is still at risk
corporate umbrella, they lished brand. if the business fails, brand
looked at franchising. The The "quasi-preneurs" open- name recognition and
two worried about the no- ing franchises say they like franchisor support offer
toriously tight margins for the ability to buy into a more of a safety net than
restaurants. They looked proven brand name and establishing an unknown
at a drug testing franchise, the access to tools and op- brand.
but the initial investment erations that you wouldn't However, getting used to a
was too steep. get if you started your own franchise structure can be
A franchising mentor told small business. But fran- an adjustment. When Chris
them about Motto Mort- chising has plenty of chal- Dordell and his husband
gage Home Services, and lenges, too. There are a lot Jason Fenske decided to
Jackson and Arceneaux of rules and regulations to leave their jobs at Wells
opened one in Oakbrook abide by. Contracts are Fargo and Salesforce and
Terrace, Illinois, in July of lengthy and can be diffi- open two Club Pilates in
2020 with an initial invest- cult to terminate. 2018 and a YogaSix studio
ment of $35,000. The number of U.S. fran- in 2020, in and around Palm
"People always need new chises grew an estimated Springs, they appreciated
places to live and are al- 3% in 2021 to 774,965 after the playbook provided by
ways buying and selling a dip in 2020, according the franchisor, Xponential.
houses," Jackson said. He to IFA. Those include big "It was appealing at this
takes rising interest rates in franchises like McDonald's stage after being in corpo-
stride. "Interest rates move or 7-Eleven, but all types rate jobs for 20-plus years
up and down, that's what of businesses can be fran- that we could plug into
they do, that's part of the chised, from pool cleaners an existing model," Dordell
industry." to barbershops. said. But Dordell said fol-
Jackson and Arceneaux, There are about 3,000 fran- lowing the corporate rule
who had been a senior IT chisor brands in the U.S. book took some adjusting
program and project man- The IFA predicts franchises to. There were some costs
ager and an assistant di- in the U.S. will grow 2% to incurred while building the
rector of catering, respec- 792,014 this year. That's still franchises that could have
tively, had no experience just a fraction of the 32.5 been cut, but "in keeping
with mortgages, but Motto million total small business- the consistency across the
Mortgage provided train- es in the U.S. company, we were re-
ing and support. Franchise owners buy in quired to follow the model."
"You don't necessarily need with an initial fee – any- If a franchisor changes cor-
experience in that indus- where from tens of thou- porate management or
try in order to go into that sands to hundreds of thou- gets sold, a franchisee can
category, the brand will sands of dollars -- to get be left in the lurch.q