Wondering what the benefit of buying a franchise is? This is a story of one of the youngest franchisors in history.
It all started with a dog walking business started by two high schoolers in the late 1990s. Brothers Steven and Jason Parker, lifelong animal lovers, built their passion for pets into one of the country’s leading franchises: K9 Resorts Daycare & Luxury Hotels.
At that time, they had not planned to pursue pet care for their careers. Rather, they wanted to earn a few dollars as teenagers. In 2002, Steven attended an international conference for professional pet sitters and saw how successful other pet care professionals had become. The brothers spent years researching and travelling all over the U.S. and opened a luxury pet care facility in Fanwood, NJ, in 2005.
Due to the unparalleled level of service it offered, K9 Resorts was an instant hit. By 2010, they decided to franchise the business and became the youngest franchisors in U.S. business history with the help of SMB Franchise Advisors, one of the top franchise consulting firms in the country. In 2011, K9 sold its first franchise. Today, the company is licensed in six states (NJ, PA, NY, CO, NC, and SC) and has expanded to 16 locations with four more due to open by the end of the year.
Benefits of Buying a Franchise
“The benefit of buying a franchise is that you are getting a whole business in a box,” said Jason Parker in a phone interview. “Buying a franchise allows you to be in business for yourself, but not by yourself.”
A franchise company helps the franchisee find a location that can support the business; in the case of K9 Resorts, a location with a high concentration of people with an income level that can afford to pay an average of $65 a night to board their dogs.
“We tell our franchise owners they have to live within a 40-mile radius of their location. There are things that must be done locally to ramp up business. Even an owner/investor has to be on site to oversee the operation,” Parker says.
Parker finds that two types of individuals look to start franchises. First is the person who wants to leave their current position. It is usually an executive in their late 40s or early 50s who has become tired of the corporate grind. Other franchisees are investors who purchase multi-units, some of whom own multiple franchise brands (Subways, Ruth Chris, etc.) The investor finds new business opportunities and purchases the franchises.
Eighty percent of K9 franchisees utilize some type of franchise financing. The ones who are most successful in securing funding are those with $750K net worth who are home owners and have credit scores over 700. Once they pay the pay the franchise fee, they receive a territory and start the location search.
Why Franchising Works
Parker says his company is growing dramatically this year. Among the reasons he cites are:
- You buy into a proven system that works.
“If you have grandma’s recipe for meatballs, don’t change it. We’ve been rated #1 in New Jersey and #3 in the country. Our system works.”
- You buy into a brand, systems, and procedures — the secret sauce that makes it work.
“You’re paying us a royalty of 6 percent. If you don’t think we can raise your sales 6 percent, don’t go with us.”
- You can sell your asset when you want to leave.
“It’s a proven fact that you will get a higher value than you put in, if you decide to sell the franchise. The incoming person will benefit from the name, procedures, and existing client base.”
Lastly, Parker advises that prospective franchisees have to understand what they are getting into.
“You are involved in hiring, firing, and managing P&L. Marketing is under our direction. We mandate the look, the uniforms, the minimum employee count during operation, and control the advertising,” Parker explains. “Franchising is different from a licensing agreement, where you can just use the name and do what you want. We have a successful model; it’s the reason why someone buys into a franchise.”