Franchises that meet perennial needs are best bets for entrepreneurs, consultant says
Mike Welch is the FranNet consultant for the state of Minnesota, based in Maple Grove. Welch, 36, has found considerable success as a franchising consultant and in the franchising field in general, where he’s held three of the industry’s main jobs: franchise owner, developer and now consultant.
What’s your professional background?
I’m a bit of a broken ladder. I didn’t go to college, so I spent several years in my early 20s doing odd jobs, tending bar, laying carpet and hanging drywall for a living. I had a young family then, a wife and a child, so I did what I needed to do to keep the lights on. I knew I needed to begin a career for my family’s sake, so when I saw an ad in the paper looking for salespeople to sell theater advertising across the country, I talked about it with Shari (his wife), and we agreed that I might be a good fit. As it turns out, we were right; I was really good at selling ads to small and medium-sized businesses. After a couple of years as a salesman and trainer, I became a national sales manager. In three years, I went from hanging drywall for $10 an hour to earning a very respectable income in sales and sales training.
How did you get into franchising?
Totally by accident. I was recruited by an indoor advertising firm that was also in franchising, and that’s when I fell in love with the idea of buying a business in a box. I knew most people wanted to own their own business, they just didn’t know how — and this company was selling the playbook! I loved the idea so much that I bought one of the franchises. I’m not a terrific strategist, but I’m an excellent tactician. If the strategy is sound, I am very comfortable with execution. I found that out through a lot of honest self-reflection.
After less than two years of owning this franchise, I sold it for an excellent return. After I sold the franchise, I was just going to take a sabbatical. But after a few days, I was going nuts. I had to do something, so I touched base with some people I knew, and within a month I ended up accepting a franchise development position with a very large franchisor. The position provided me access to resources that were previously unavailable to me, but yet I could work from home 95 percent of the time. It was a tremendous opportunity and a turning point in my career. It’s when I decided to go “all in” into the franchise industry.
FranNet was one of my lead sources; it was my best lead source. When the territory of Minnesota became available, I just jumped on it. I always wanted to be on this side of the fence. I’m an entrepreneur, and even though I was in a terrific spot with an excellent company, I was working for someone else, building someone else’s empire, so when the opportunity arose to get back into the driver’s seat, I just jumped at it.
What are some of the best franchise opportunities?
That’s the number one question I get, and it’s probably my least favorite question because it’s impossible to answer. I don’t know how to tell someone what’s the best franchise for them until I know them and really understand on a deep level what they are trying to accomplish.
Now, I will tell you that I’m bullish on anything that’s a necessity. Whether it’s a bull or bear market, people are going to get their hair cut. They’re going to get their transmissions repaired when they need to. Those are recession-resistant because you just can’t live without them. I also look carefully at anything related to demographics that have to be serviced — anything serving seniors, for example.
Have things in the franchise industry changed in recent years?
I think people are doing a bit more due diligence than they used to do, and they’re more cautious about what they spend their dollar on, which I think is excellent. It takes longer to get deals done because people are taking a closer look before they leap, which is fine with me. Buying a business is a marathon, not a sprint. Too many brokers worry about their paychecks, but to me getting paid is a side effect. The goal is to put people in front of the right concepts and help them through a fact-based due diligence process.
This business is totally karmic. You have to have the heart of a coach. I coach baseball and two football teams, and I’ve found that if you approach this business as a coach instead of a salesperson, you’ll win.
Are more people in your territory approaching you about franchising?
Absolutely. Our business is countercyclical. When corporate is displacing talent, that talent doesn’t just go away. Those people need to earn a living. I’m amazed at the talent pool that’s available in the Twin Cities right now. Our clients are some of the best and brightest that Minnesota has to offer. In most cases they come to us because they don’t want to go back to corporate. They are firing corporate America.
Do people still have preconceptions about franchising? How do you educate them about the diversity?
I ask for permission to challenge their paradigm. Most people still think franchising is only fast food and retail. So when people come to us, we have to break down that mental barrier. The first thing we do is have a bit of fun. We ask people, “What color is a yield sign?” Almost always, people say, “yellow and black,” but they’re not. They’re red and white. They haven’t been yellow and black since 1973. I said yellow the first time I was asked too, and I’ve never seen a yellow and black yield sign in my life. The point is that we have a tendency to disregard information that doesn’t pertain to a current need, so our perception of what is real may not always be accurate. On your drive home from work every day, you pass thousands of restaurant franchises, so you think that’s what franchising is.
When a candidate comes to me, I say, “I’m going to introduce you to franchise opportunities you never dreamed of, and I need your permission to challenge your paradigm.” And they usually respond by saying, “Knock my socks off” because they came to us to see things from a different perspective. The socks then get knocked off. The goal is to find the opportunity that minimizes their exposure to their weaknesses and maximizes the utilization of their strengths. That’s what our evaluation process is for.
What advice would you give someone thinking about buying a franchise business?
Make sure you understand what the owner is responsible for and make sure it’s something you would enjoy doing for a long time. Forget what the business does. Focus on what the owner has to do. Your passion for blueberry glazed doughnuts is irrelevant. The question is, would you be happy and successful doing the things that are required to run a successful doughnut shop?
What kind of person makes a successful franchisee?
They’re entrepreneurial but not serial entrepreneurs. Mark Zuckerberg would be a terrible franchise owner. He would question everything, reinvent everything. Guys like Zuckerberg and Gates and Jobs, they accelerate matter and have it collide and create new things. That’s how their brains work. That’s not what franchising is. We’re entrepreneurial, but the person who makes a good franchisee tends to have a need for structure and support and is willing to follow a well-laid plan.
What are the benefits of franchise ownership?
The benefits of franchising are support, systems, processes, training and camaraderie. It’s hard for me to get lost at FranNet because I’m walking in the footsteps of those who’ve gone before me. But it’s not always easy. While the path through the woods has been cleared, I still have to do the walking.