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Retail and Restaurant Franchises: Finding the Fit

March 30th, 2011 Comments off
Joe Barbat and Family

Familiy is an important support structure to a franchise owner.

Knowing what categories of franchises that fit your desires, lifestyle, and budget is extremely important when exploring a career as a franchise owner.

For example, restaurants and retail locations such as Great Clips® usually require build-out of a fixed retail location, so they cost more to get started, and, are open longer hours in order to accommodate their market. Some franchisees find these brick and mortar operations produce more revenue than home or vehicle based franchises.

Regardless of the type of franchise that you select, it’s important to weigh the investment cost against the financial return in your franchise disclosure document.

Restaurant and Retail Franchises

Most restaurant franchises for sale fall into Café, Casual Dining or Fast Food subcategories. Retail, on the other hand, can be printing and framing, hair care, animal care, automotive, mailing and shipping, sporting goods, and much more. When you evaluate your franchise opportunity, consider how much contact you like to have with the public.  Again, restaurants and retail will have a lot of contact with the public, so extraordinary customer service is a must if you intend to be successful. However, customers come to your location, and you do not have to go out and actively “sell” to them as you would with other business models.  You will need to be comfortable hiring, training, managing and motivating a team to help sustain the success of your franchise so strongly consider the pros and cons of each type of business model.

About Joe Barbat

Joe Barbat founded Wireless Toyz in 1995 and grew the company from a one kiosk service center to a multi-location franchise throughout the United States. As an avid fan of all things Michigan, Joe enjoys snowmobiling, family, and recreational activities, as well as, testing the next hottest technology products to enter the wireless marketplace. Honored by both Crain’s Detroit and Ernst & Young for community involvement and entrepreneurship, Joe Barbat has a passion for developing successful franchise businesses in the wireless retail industry.

When Family Gets Involved Financially

March 30th, 2011 Comments off

Joe Barbat CEO of Wireless ToyzMany franchisees receive financial support from friends and family to get started. It is very, very important to document the terms of the equity or loan agreement with each party. Create a promissory note for each transaction. Also create either a buy-out option or payback agreement in advance to prevent inevitable future conflict that will occur if these documents do not exist.

If you are not able to meet the obligations of the loan, do not avoid the lender.  Rather, keep them on your side by keeping lines of communication open. Share your plans to resolve the current deviation. Give your family and friends the opportunity to be supportive. If they are or have been business owners, they may have some valuable advice and can suggest action steps.

Remember: There will be sacrifices. With proper planning, reasonable expectations, and open communication, conflicts can be avoided. Work to find a balance so that you don’t become a financially successful loser at life. Ultimately, it’s about the income and the outcome.

About Joe Barbat

Joe Barbat founded Wireless Toyz in 1995 and grew the company from a one kiosk service center to a multi-location franchise throughout the United States. As an avid fan of all things Michigan, Joe enjoys snowmobiling, family, and recreational activities, as well as, testing the next hottest technology products to enter the wireless marketplace. Honored by both Crain’s Detroit and Ernst & Young for community involvement and entrepreneurship, Joe Barbat has a passion for developing successful franchise businesses in the wireless retail industry.

Franchise, Family, and Financial Management Tips

March 23rd, 2011 Comments off

Joe Barbat CEO of Wireless ToyzTo avoid some of the family issues involved with starting and operating a franchise, it is wise to include all members of your family in the decision to find and purchase a franchise.  The difference between coming home and telling your family you purchased a franchise, vs. including them in the education and decision process will be enormous. Don’t underestimate the damage that can be caused to your family relationship if you make a huge business decision without full family support.

You can avoid some of that heartache by agreeing to the following financial expectations up front. Each family will fill in the blanks according to their own circumstances:

1. We will not invest more than $_____ of our cash/liquid capital.

2. We will not borrow more than $______ in additional funds to capitalize the business.

The new business owner needs to have enough money to cover household bills and run the business for 12 to 18 months. These questions will help determine how much you need:

3. To make sure we can still live comfortably while growing the business, we will cut our household budget to $ ____ per month for at least ____ months and be sure to never exceed that budget.

4. We will only buy a franchise that we have confidence can get big enough to feed itself, i.e., income (cash flow) will cover monthly business expenses (fixed and variable costs), no later than ___ months after signing the agreement.

Let your family know that you may not be able to draw a salary for one to two years.  Consider how household expenses will be covered during that time.

5. We will generate other income of $___ (amount needed to make up for loss of other income and savings budget) from ___ (spousal income, other household income or investments) independent of the new franchise business.

6. We will only seek a franchise for sale that we have confidence will be able to pay me a discretionary salary (enough to cover some or all of household expenses) without harming the business no later than ___ months after signing the agreement.

7. We will only pursue a franchise business opportunity that will allow us to have our initial investment back, i.e., pay off the start up loan from business income, in ____ months/years.

About Joe Barbat

Joe Barbat founded Wireless Toyz in 1995 and grew the company from a one kiosk service center to a multi-location franchise throughout the United States. As an avid fan of all things Michigan, Joe enjoys snowmobiling, family, and recreational activities, as well as, testing the next hottest technology products to enter the wireless marketplace. Honored by both Crain’s Detroit and Ernst & Young for community involvement and entrepreneurship, Joe Barbat has a passion for developing successful franchise businesses in the wireless retail industry.