“It was really an idea that came to me in an odd place; it was at a McDonalds drive-thru,” says Brian Scudamore when asked how he got the inspiration for, what is now, 1-800-GOT-JUNK? back in 1989. The junk-hauling founder says he noticed a pickup truck lined up in front of him with ‘Mark’s Hauling’ inked on the truck’s plywood side-panels. “A week later, I bought myself a pickup truck and formed a company called The Rubbish Boys.” However, Scudamore’s transition from The Rubbish Boys to 1-800-GOT-JUNK? wasn’t anything near an overnight success; it was a 10-year process from local business to North American franchise.
Oftentimes, entrepreneurs pitch their great ideas hoping to open up shops all over the country before establishing a business that’s proven to succeed. According to President and CEO of the Canadian Franchise Association Lorraine McLachlan, she finds this troubling. “One of the hallmarks of franchising is that you are dealing with a proven concept,” she says.
Prove it
So you have your concept with the dream of turning it into a franchise one day. That day won’t be tomorrow, but with the right idea, team, and resources, it increases the chances of that dream becoming a reality.
“Franchising is a very powerful and very viable way of expanding a proven business, and that really is the key,” says McLachlan. “What a university student would have to do is have a great idea for a business, open up that business, and run it for a while themselves—possibly have a couple corporate locations or more—before they start contemplating franchising.”
Ultimately, becoming a franchisor is the step above owning a stand-alone business. It requires years of experience and proven success in the market before an entrepreneur can consider expansion. One important characteristic the business must have, according to McLachlan, is knowing whether the work can be replicated by others or not. To flourish in different cities, provinces, and even countries, the business must be able to survive under the ownership of other franchisees. If that’s a missing piece, “don’t try to get a franchisee to pay for the testing of your business concept,” McLachlan warns.
Money, money, money
It’s not cheap to own a business, so it won’t be any easier if you have your sights on becoming a franchisor. Start-up costs and legal fees are just two of the expenses you’ll have to face when looking to expand your business.
“Becoming a franchisor, it was a lot of money,” says Scudamore. “It was a lot of money for a small business that I had, which was doing by the million in revenue at the time, and I had to spend a couple-hundred-thousand dollars on legal fees to register to sell my franchise in the United States.” 1-800-GOT-JUNK? is most famous for its purple-and-green hauling trucks and junk pick-up services. The franchise, which started in BC in the late 90s, has since expanded to notable metropolitan cities like Toronto and Seattle, and even as far as Australia.
Bill Redfern, founder, president, and chief executive officer for A Buyer’s Choice Home Inspections, says franchisor hopefuls should be aware of the initial expenses they will face. “In setting up a franchise company, there’s an awful lot of upfront costs. You have to have an idea and whether it’s viable or not is of course the million-dollar question.” A Buyer’s Choice Home Inspections, which provides residential and commercial inspections to those looking to invest in a new home or area, originated in Nova Scotia and has expanded to six countries worldwide in just seven years. Included in expansion costs are the production of manuals, disclosure documents for prospective purchasers, branding and marketing materials, and websites—just some other expenses that must be accounted for your franchise.
Why franchise?
If you could own your own business and be successful at your job, why turn it into a franchise? Redfern says if your dream is to expand your business, it’s difficult to do it on your own.
“When you could tie a business model to using individual entrepreneurs with their own invested funds in the business [and] an invested interest to succeed and to earn their livelihood and build a future for themselves, then that creates a really neat opportunity for everybody,” he says. Sharing your proven concept with people who have an equal interest and skill set in your concept can turn your local business into a worldwide brand name.
On the flip side, as an aspiring franchisee, operating a franchise comes with much less baggage than owning a stand-alone business. While you do technically own your own business, “you don’t own the exclusive rights to the name of the business and the proprietary operating system,” says McLachlan. With that said, you’ll be running the store, business, or service on your own with a set of people you’ve employed, but essentially you’ll be replicating the operating system set by the franchisor.
“The advantage is that you are going into a concept that has already been proven,” says McLachlan. “So somebody else developed it, hopefully worked out all the kinks, and they have determined that their business can be replicated by somebody else.” And the more popular the brand is, the more franchisees will be drawn to it. “The larger the brand, the stronger the brand, the more that is true.”
Secrets to success
The taste of success couldn’t be sweeter for franchisor Brian Scudamore. Scudamore, who turned his 1989 junk-hauling inspiration into 1-800-GOT-JUNK? has hit about $120 million in revenue today with business in Canada, the United States, and Australia.
“We went from a point where we had five trucks, we hit $1 million in revenue and it really became an opportunity where I saw that this could grow into many markets beyond just Vancouver where we started,” says Scudamore. Knowing there were cities larger than Vancouver, he decided to expand to other metropolitan areas where he thought his purple and green junk-hauling trucks would find most success.
Scudamore when asked how he got the inspiration for, what is now, 1-800-GOT-JUNK? back in 1989. The junk-hauling founder says he noticed a pickup truck lined up in front of him with 'Mark's Hauling' inked on the truck's plywood side-panels. A week later, I bought myself a pickup truck and formed a company called The Rubbish Boys. However, Scudamore's transition from The Rubbish Boys to 1-800-GOT-JUNK? wasn't anything near an overnight success; it was a 10-year process from local business to North American franchise.
Oftentimes, entrepreneurs pitch their great ideas hoping to open up shops all over the country before establishing a business that's proven to succeed. According to President and CEO of the Canadian Franchise Association Lorraine McLachlan, she finds this troubling. One of the hallmarks of franchising is that you are dealing with a proven concept, she says.
What’s his secret to success? Scudamore says it’s creating a vision, or what he likes to call a painted picture. “It’s one page, double-sided, of what the company looks, feels, and will act like in a point in the future,” he explains. “I paint this picture that I then share with every employee, every franchise partner, everyone that’s involved, and they read and identify with this picture.” This one ingredient has proven the success of 1-800-GOT-JUNK? when he explained the original painted picture for his franchise. “In 1997, I created my first painted picture and said we will be in the top 30 metros in North America by the end of 2003, and we did hit exactly 30 metros, and we did it 15 days before the December 31 deadline.” Scudamore’s success didn’t stop there. He and a partner have since launched WOW 1 DAY! Painting—yes, they paint your whole house in one day—and he’s hoping to franchise a moving business called You Move Me.
For Bill Redfern, his success as founder and CEO with A Buyer’s Choice Home Inspections has landed the franchise in six countries in just a short seven years. He says his inspiration to franchise came from his decade-long background in real estate sales. “I had a thought after using many inspectors over the years that left a lot to be desired. After using the service through the real estate service, we saw an opportunity that we could do better and on a broader scale.”
Redfern observes that the franchisees who keep pushing for sales and inspections are the ones who succeed at the end of the day. “In building any business, there’s going to be lots of ups and downs. You have to take the positives and expect the negatives and carry on.”
The CFA is here to help
Once your business is past its infancy and has gained some proven success, the Canadian Franchise Association is the next big step to franchising your concept. The CFA website has a wealth of information through free bi-monthly e-newsletters, and franchise support—from advisors like lawyers, consultants, and bankers to help businesses understand everything they will need to leap into franchising.
The CFA also hosts The Franchise Show which is held twice a year in Toronto, once in Montreal, and once in Vancouver. The trade show’s purpose is to exhibit about 100 franchises across the country—all members of the CFA—and connect them to potential franchisees. The franchises hail from different industries from food, education, retail, and automotive, just to name a few.
“There are two days of free seminars being educated by experts,” says CFA President and CEO McLachlan, “which is the best education you can possibly get for $10 [entrance fee].”
Discussion
Have you had a job at a franchised location? What did you think of their work environment?
For more information on building a franchise, visit the Canadian Franchise Association. Also take a look at College Pro, a franchise for students, and don't be afraid to take risks.