Franchising More about Selling Business than Product

By Stephanie Tavares

Around the turn of the century a seed was planted in the mind of restaurateur Yinorogia Aretos. Everywhere he traveled he found bland, preservative-laced fast food. Nothing like the quick fare he says he offers at his own restaurant, Sonio's Café, here in Las Vegas.

He figured the world could use more of a good thing, so why not bring his California-style cuisine to the rest of the country?

But Aretos didn't have deep pockets or a multimillion-dollar trust fund. Expanding the business nationwide all by himself wasn't an option. Like hundred of other business owners, Aretos is franchising his business.

"The benefit of franchising is that it's a quick way to expand around the country," Aretos said.

For some businesses franchising is the only way to turn a solid hometown business into a thriving superpower. But it's not as easy as it sounds.

"The most important thing is to really know your business," Aretos said. "Is it something that can be copied? When I first asked myself that question years ago, the answer was no. You have to look at your role as owner/operator. If nobody else can do your job, you've got to come up with another model for those tasks. It took years to change things so we could replicate this business."

Aretos spent months checking out similar franchises, seeing how his business would fit into the mix and if it could compete.

"I investigated about 30 different franchises similar to mine and incorporated things that I liked and left out things that I didn't like," Aretos said. "And I made sure my business offered something unique."

One thing that was important to Aretos was creating a franchise that offered a good lifestyle along with the business. His franchises are only required to be open six days a week, instead of the usual seven, guaranteeing the owner a little down time.

"Really, if you're making $2 million net but you don't have time to enjoy it, what's the point?" he said.

Franchising might be one of the easier options for mass expansion, but it's not cheap. Aretos and other franchisors spend tens of thousands of dollars on consultants and attorneys. Aretos said he saved hundreds of thousands of dollars by developing the operating and training manuals himself. He invested those savings in a top-notch franchise attorney who knew the business well enough to save Aretos money in the long run.

Finding a qualified franchise attorney who knows your business can be one of the most daunting -- but necessary -- tasks.

Take my experience, for example. Searches of several online directories turned up a whopping three local franchise law listings: two individual attorneys and one law firm.

I figured that couldn't possibly be accurate so I called the Nevada Bar Association. They have an attorney referral service, so surely if anyone would know where all the franchise lawyers are hiding, it would be the bar. I was told there were "too many to just send a list."

Don't even ask about the yellow pages. There are more than 200 pages of attorney listings. In alphabetical order.

But no sane person would try franchising without an attorney, according to Amy Bannon, a spokeswoman for the International Franchise Association. Franchise law is terribly convoluted stuff. There are piles of federal laws and regulations and paperwork. Then, when you have that figured out, you've got to worry about laws in individual states. And all of that before you even think about selling.

"Either a lawyer can let you know what those things are in the beginning or someone else can tell you when it's too late," Bannon said.

Still sound good? Before you get all worked up with the idea of starting the next In-N-Out, do you really want to be a franchisor?

To start a franchise, you need to know every tiny detail of the day-to-day operation of your business, spend months or years fine-tuning the product and business model and then be willing to cede control of the actual business to the individual franchise owners.

You've also got to become a full-time researcher and market expert. You're not selling hamburgers anymore, you're selling businesses. The franchise has to be as attractive as the products it will offer. And you're selling yourself as a competent business manager.

"What many people fail to realize is that they're no longer a sandwich business, they're a consulting business," said Janis Stevenson, business development advisor at the Nevada Small Business Development Center, which offers free consulting to small businesses.

Don't want to be a consultant? Then maybe franchising isn't for you. But that doesn't mean you can't grow -- you can expand your business on a smaller scale while keeping operational control.

Stephanie Tavares covers small business and law for In Business Las Vegas and its sister publication, the Las Vegas Sun. She can be reached at (702) 259-4059 or by email at Stephanie.tavares@lasvegassun.com

Article Source: In Business Las Vegas. To access their website, go to www.inbusinesslasvegas.com.