John Andikian's Entrepreneurial Story
"The stores that already exist have a certain amount of popularity and visibility in the local market," White said. "We can start and continue the business on that basis."
But it's not as easy as you might think, and buying a company and turning it into a franchise presents its challenges. In Andikian's case, when an independent operator turns into a franchised chain, it is assumed that the original owner will find it hard to bear the loss of independent control. But buying a store and handing it over to someone else, without the same problems, has its drawbacks: the new owner lacks the previous owner's experience and risks losing the relationships that have been built.
White argues that new franchisees need to learn both ways: "On the one hand, they need to learn about the industry; The other part is understanding how the franchisor operates. Just providing regular franchise support is not enough." Because of this, Allegra Group often provides professional and intimate service to franchisees in the first year.
Another difference from 7-Eleven's model is that Allegra Network and Signs Now operate in a business-to-business model, with changes based on transactions between two companies, rather than between individual store owners and franchisors. It also means that there are drawbacks to rebranding, rather than directly transferring an advantage from a chain.
"Incumbents tend to have a fixed customer base," says White. "That relationship is very important, but the transition also means destroying the old brand connection, which is a bit hard to bear."
Moreover, in the current climate, both franchise models face the same dilemma: a shortage of capital. But in Mr. White's experience, buying an existing retail store is more likely to be backed by a loan than borrowing money to open a new one. But this is not a generalization.
In 2008, George Riesenfeld wanted to join Project Matchmaker but was passed over for lack of money. But he is not giving up. "In today's economic climate, starting from scratch is riskier."
His persistence paid off. In January, he finally got what he wanted: a Fort Worth, Texas, print shop that turned over $3.2 million last year, the biggest deal ever made by Project Matchmaker. Is the franchise more profitable than the original single-store operation? It is too early to say. But Mr. Risenfeld is so convinced that he plans to buy more stores in the future.
Advantages and disadvantages analysis
Today, Andikian's 7-Eleven May is not what he and his father envisioned, but at least he doesn't have to make a living. Further, he may be more invested than before, because the benefits of switching from a family-run store to 7-Eleven go beyond just brand awareness. The advanced equipment offered by 7-Eleven -- a sophisticated but elaborate system, for example, that can even pinpoint which cigarette brands are banned -- must have been something he could not have afforded.
Although the store is rented by Andikian, 7-Eleven handles all day-to-day maintenance. That means Mr. Andikian has more time for work like visiting clients, rather than struggling to figure out how to break even in one corner of the room.
"When you're independent, you have more control, but you also have more responsibility. It's a lot of work to figure out costs and expenses and wait for a profit point," Andikian said, comparing the two. "Now I have more time to do more meaningful work."
An additional benefit of joining a chain is the ability to gain marketing experience, a national clientele, the attention of alliance partners, and ample financial resources from the franchisor. At the same time, there is no doubt that a solid home front can provide all kinds of services and support.
"There are a lot of tangible benefits to franchisors," said Mr. Seibert of the iFranchise Group. "So you can do the math and see if you're getting more bang for your buck." Of course, deciding to switch from an independent business to a franchise is not a simple matter. "Sometimes it takes an emotional decision. For example, some people had to give up the name of the store they had been running for years, and even some came from the owner's parents, but they also had to change."
Indian agrees. "I love the feeling of being an independent business, but it has its limitations. In the first year after I switched to 7-Eleven, my total sales increased by $850,000." In mid-2009, two and a half years after the transition, he fully earned his $120,000 conversion fee.
And, most importantly, in this way, he's more or less keeping part of his and his father's dream alive, albeit in a different form -- owning his own 7-Eleven.
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