FRANCHISING: CAMP BOW WOW AND BEYOND

Going into business for yourself is part of the American dream. Choosing a business - and a business model - should be a well thought out and deliberate decision.

So should you franchise or start a business on your own? Well, ask yourself, are you able to follow a prescribed system, or do you need the freedom to innovate and create on your own? Do you need total independence, or can you follow a ready-made system?

Of course, there are costs associated with buying into a franchise system, but there is also a price to pay in starting your own business. The pros and cons should be weighed against the benefits, in terms of both investment and personal values and goals.


Camp Bow Wow believes the franchise model has successfully helped millions of entrepreneurs get into business for themselves, those who otherwise might not have had opportunities to own their own business.

At Camp Bow Wow, we always encourage our potential franchisees to do due diligence and make sure franchising, and our Camp Bow Wow business model, are the right fit for them.  We are extremely proud to be a key player in the overwhelming growth of the franchise industry and a promoter of the successful relationships between franchisors and franchisees that have allowed these businesses to flourish.

THE FRANCHISE SYSTEM

The economic performance of the franchise industry indicates that the model is a popular form of business and important to the success of the nation’s economy.  Findings in the International Franchise Association’s (www.franchise.org) Educational Foundation Economic Impact Study, Vol. 2, prepared by PricewaterhouseCoopers, illustrate that, from 2001 to 2005, the franchising sector expanded at a much faster pace than many other sectors of the U.S. economy.  Economic output grew by over 41 percent compared to only 26 percent for all other businesses. Jobs generated by franchises grew by 12.5 percent, compared to only 3.5 percent for other businesses – 3.5 times greater than franchise businesses.

Furthermore, the number of establishments grew by 18.5 percent compared to 15.9 percent for all businesses. This demonstrates that, as an economic development model, franchise business expansion is much more efficient at generating economic output and jobs on the whole than other types of business development.

In addition to the strong economic performance of the franchise industry, data indicates that franchisee satisfaction is high. In a July 2007 IFA survey of franchisees, 85 percent of respondents had a favorable view towards franchising.

The survey also showed that 82 percent of franchisees described their business relationship with their franchisor as favorable. When asked if they had to make the decision to buy a franchise business over again, more than four out of five respondents said yes, citing the support, business plan and brand name as the top reasons. The majority of Camp Bow Wow franchisees have expressed this feeling as well.

While the majority of franchisees surveyed expressed positive feelings about their business, sometimes the relationships may end. There are many reasons why businesses are not successful, but it is not uncommon for businesses to fail.

In 2008, the Small Business Administration reported that 30 percent of small businesses fail within the first two years and 50 percent fail within the first five years.  The IFA indicates the franchise termination rates over the last 20 years have averaged around 7 to 9 percent. In periods of economic recession, the turnover rates are slightly higher and in periods of economic expansion the rates are slightly lower.  This indicates that, over time and on the whole, franchise businesses have a much higher business continuation rate than non-franchise businesses. Otherwise, the termination rates on an annual basis would be much higher. Even in a difficult economic climate, Camp Bow Wow termination rates average 4.17 percent – nearly half the average IFA expected failure rate, with an overwhelming majority of that 4 percent precipitated by franchisees’ own banks rescinding promised loans.

Both the low termination rates and the high productivity rates indicate that franchising is a very healthy business model—one that is very adaptable to economic conditions, both in good times and bad. Given a stable economic and regulatory environment, the franchising industry excels at generating new businesses (with high productivity) and creating jobs.

REGULATION

Did you know the franchise industry discloses more information than any other business? In both scope and quality, the nature of the disclosure required under the Federal Trade Commission’s (FTC) Franchise Rule far exceeds the information available in any other comparable business transaction.

The franchise business model has been regulated by a specific rule at the FTC since the 1970s. The agency concluded that the franchise marketplace was sufficiently diverse in terms of contract terms and offerings that any individual seeking a franchise purchase could reasonably protect themselves from harm by reading the current disclosure document and comparison shopping.

GETTING STARTED

So how can you learn more about franchising? IFA provides basic how-to information to prospective franchisees at seminars in major cities and at franchise expos across the country as well as making available a host of information on its web site, www.franchise.org <http://www.franchise.org/> . This information includes extensive legal information that prospects need to consider and ways to determine if franchising is right for them.

In addition, IFA has recently updated its popular Introduction to Franchising publication to help prospective franchisees and opportunity-seekers to more fully understand the franchise model. The publication provides prospective franchisees with questions they need to ask prior to making their investment.  Finally, the FTC’s Consumer Guide to Buying a franchise is reprinted within the IFA Franchise Opportunities Guides, published twice a year, and is posted on IFA’s web site.

REASONS TO CONSIDER FRANCHISING

Brand awareness
If you walk into any of the 100+ Camp Bow Wow franchises, you're guaranteed an experience that will be the same no matter where you are. That's the franchise proposition of uniformity and replicability. Customers know this and seek out the reliability and familiarity of their favorite brands, which have been established over years or decades.

The system
If you're the innovative, independent type, starting your own business is the way to go. A franchised business provides a complete, ready-to-implement business model. You are required to follow the franchisor’s operating manual. If that’s not your style, do it on your own.

Economies of scale
If you're a single entrepreneur, you have the buying power of one. If you're a franchisee, your franchisor can negotiate bulk rates and pass along the savings to you.

Financing
Most new businesses require start up capital, regardless of whether you franchise or not. While most franchisors do not supply financing, many have relationships with lenders who will view that brand's referrals more favorably than an independent business owner just starting out.

Marketing
If you're Sally’s Sub Shop, you're on your own when it comes to marketing and advertising. If you're a Camp Bow Wow franchisee, you have the power of the brand's multi-million-dollar national and regional marketing and advertising behind you.

Speed to market
You can build the most beautiful dog boarding facility or buy the perfect van for your mobile business and fill both with the most expensive equipment. That takes time, as well as money. Or you can sign up with a franchisor who has done this hundreds of times and be handed a shopping list of exactly what you need to set up shop, allowing you to open for business more quickly than if you had to research it all on your own.

Faster ROI
No matter how extensive your opening, when you start your own business it takes time to build a client base and local reputation. When you advertise a known brand name in your new market, customers come ready-made, and the cash starts flowing faster.

Training
You may believe that you’ll be the best at what you do, but do you know how to manage a pet care business, hire and train employees, market your service, keep the books, and handle the technology, accounting, etc.? When you start your own business, you learn all these things on your own, with beginner mistakes as part of the learning curve. Franchisors provide new franchisees with extensive training in every aspect of their new business.

Franchisor support
Most entrepreneurs, franchised or not, love what they do. Some franchisees, however, can fall victim to a basic operational mistake that is actually easy to make, but one which can have devastating consequences. They may inadvertently “work IN the business, rather than ON it” which can result in lack of focus on overall sales generation and managing profitability.  They may get caught up in the day-to-day "mundane details" such as taxes and supplies, and fail to innovate and develop as leaders and executives. Many franchisors provide support specialists to help keep their franchisees on track, training them to become managers and leaders.

Peer support
As a franchisee, you receive operating support not only from your franchisor, but also from your fellow franchisees. This can be locally, regionally, at annual national conventions, through an online support network, or just by picking up the phone. Local business groups are invaluable for the networking connections they can provide, but who better to ask for help with your business than someone who's already solved the problem you're facing for the first time?

Finding a Site
You can hire a site selection expert, but what do they know about your specific business? A franchisor can provide teams of real estate experts, zoning specialists, and years of experience finding the best sites for their brand. They also can provide expert assistance negotiating leases with landlords – which at Camp Bow Wow has saved our franchisees over 45K on average per transaction.

Culture
In your own business, the only person you have to get along with is yourself. Many franchise experts describe the franchisor/franchisee relationship as a marriage. Unlike a marriage, you don't sign on for life (at CBW it’s 10 years), but you do need each other to succeed. That's why it's so important to ask if your values and goals align with those of the franchisor. Make sure it's an ongoing, win-win proposition!

So is franchising for everyone? No. But for those who don’t want to reinvent the wheel, and do understand the value of having a national brand to help promote their business, it is a fantastic business model.  

If you are ready to franchise, be sure to study the Franchise Disclosure Document, talk to existing franchisees – including those that have left the system -- and work through the costs of the opportunity so you understand the financials.  Then, get ready to have a dog gone great time running your own business and living the American dream!