What to do??? Franchise or Business Consultant...

[yamirodz]

I have managed to save $35K in cash; I also have two credit cards with a credit limit of $12,000 on both. So now I am caught into deciding if I go with a franchise, or a consultant to develop the business. I am a full-time teacher and the business usually operates from 6 to 10 pm during the week, and Saturdays & Sundays from 12:00 to 7:00. The concept is a "paint and sip" studio...Currently franchising are several like: SipsNStrokes, Painting w/a Twist, Pinot's Palette, Wine & Design, Bottle n Bottega... Most of these ask for $25K for the franchise fee... Another option that I have is working with a consultant or a partnering studio. Wine and Paint in Houston offers lifetime consulting services for $6,000.00...and Canvas & Cocktails in Denver, Co. offers consulting/partnering studios their service for $15,000.00 which includes license to use their paintings, website, unlimited visit to their studios, and 6 month support. There are no royalty fees when doing business with either consultants I will not quit teaching job, until the business allows me to, so I would have to hire an employee to open the studio, and get things ready for the artist to teach. The artists are hired and paid by class...so they are on "contract" to teach. I was advised to have at least 2 artist in case one can't show up the other one will be available. I have more than 10 artists interested in teaching in the studio. My worries consist in deciding which way to go....do I go with a franchise, or do I go with a consultant. Don't know if I can post their websites but here they are so you can please give me some advice...

http://www.cocktailsandcanvas.com currently have two studios of their own in Denver, and have developed 5...and one opening soon in Florida.

Cork and Canvas Cork & Canvas (http://www.wineandpaint.com) studio in Houston, and developed two paint & sip studios...

The other ones mentioned are franchises and all can be found online: Pinot's Palette, Wine and Design, Bottle and Bottega, SipsNStrokes....

I have a full time job like I said...and my fiancee also works full time as an independent contractor for "Dish"...

Any feedback would be greatly appreciated. The only competition close to my area within 7 miles is "Painting with a Twist"....Thanks!....

[vangogh]

Welcome to the forum yamirodz. I think there are pros and cons to owning a franchise and you have to weigh those pros and cons to determine what's the right thing for you.

A franchise helps you in few ways. It gives you an instant brand and it helps with your marketing. I would think there's also some training materials and information about how to best operate the franchise. To me having the known brand is the greatest strength. For example imagine opening a new fast food drive through in town. You could have the best food, but people know McDonald's and they know Burger King and that's where they're going. Your new place can still succeed, but it's going to take time to get the word out.

With a franchise you pay in order to have a quicker path to profitability and a strong brand.

The downside of course is you do have to pay and continue to pay. You're also going to be somewhat constrained in some of the things you can do. Since it's the brand of the franchise you don't get to decide what that brand should be. Instead you have to follow the franchise rules and represent their brand.

I'm not sure how those consulting sites work, but it looks like they approach a franchise in some ways through training and I think a brand. Naturally they won't have the brand reach of the larger franchises, but they could certainly grow into them.

Which you should go with probably depends more on you. I'm guessing a little here, but I would think the franchise will lead to quicker results mainly due to being a known brand. On the other hand the consultants will probably give you more flexibility in how you run your business. They likely don't have quite the same resources as the franchise to help you at first. I'd probably choose the consultant since to me the flexibility is more important and I'd be willing to wait a little longer for the financial success to have that extra freedom later. That's me though. You'll have to decide which is the better path for you.

[ckcash]

I am currently investigating the same "Paint & Sip" business concept for start-up here in Illinois. I am curious which option you went with Franchise or Consult.? Did it work out for you? Any advise to me starting up?

[nealrm]

I agree with vangough about the brand name being helpful. However, in the case I don't think it will help. None of the names you mentioned rang a bell with me.

Check with the local small business office, the extension service and the local chamber of commercialism. They should have resources that will help you get started.

[billbenson]

I think its interesting that we have had very few posts regarding franchises here and I don't believe there are any active members who own franchises. You can draw your own conclusions from that???

[vangogh]

Good point Bill. The section was included mainly as a legacy thing since it was on the old forum, but it's never had many threads in all the time we've been here. I don't think that means franchises are automatically a bad thing, but it does say something.

[tmerrill]

In case it helps, I would recommend reading Sam Walton's book, Made in America. Walton started with several franchises before he started Walmart. The book might give you an insight in how to start with a franchise then move on to bigger and better things.

[vangogh]

I never read Sam Walton's book. I takes it you liked it since you're recommending it. I'd think Sam Walton would have some interesting things to say and be a good person to learn from, given his success. I'll add it to my wish list.

[smb-coach]

What about a third option that would include a little home work. Buying a franchise or hiring a consultant might make you feel better in the beginning because you have a path to go on, however there are many unknowns.

First of all a franchise sells you a system, for that you pay a fee, then they have lots of other ways to get money out of you (required equipment, paint, etc.) I am not against franching but you loose freedom. A consultant can be beneficial if they teach you the right thing.

I believe that first you should write out your vision, what would you love to do. Second, determine if there is a market for this (larger enough to make money), test all this in the real world and see if this will work.

If you do this, and can be done in less than a week, you can determine if your vision is correct and then decide if want to do franchise, consultant, go at it alone, or even not doing it at all.

Just because you have the money does not mean you need to risk it on something you not sure of yet.

As always I just give my 2 cents worth, start with more info.

[BIZDEV]

Good point Bill. The section was included mainly as a legacy thing since it was on the old forum, but it's never had many threads in all the time we've been here. I don't think that means franchises are automatically a bad thing, but it does say something.

I think what it says is that franchises are usually prohibitive for most entrepreneurs because they can be extremely expensive. I'm a former franchise owner (children's retail).

As to the OP's questions...I would be very wary of that particular type of business. It seems like a fad. Obviously wine is not a fad, but the concept can be a short lived "craze". How many times can a person do this before tiring of it? I would think it might be difficult to convince a lender (if you need a loan) of the viability of this business model.

Request the UFOC and look for how many franchisees have failed. Also if there are currently a large number of these types of businesses for sale by current franchisees, that is a red flag.

Keep researching. This is a life changing decision.

[Arrowhead21]

Here's a bit of information on prerequisites on moving franchise opportunities (http://greatdaymoving.com/franchise/). Granted, some of the questions are geared specific to moving companies, but the lists on assets and initial capital are explained.

[AccountantSalary]

Here's one thing to think about. Go with a franchise if you're a team player and like to work in a structured environment. Go consulting if you like to play by your own rules.

[kimoonyx]

Hi,

I consult prospects on this question all the time. Believe me... I know what I am talking about here.The answer is very easy. The two types of structures, franchise, and business op work well for two different types of people. Aggressive entrepreneurial minded trail blazers are a good fit for business opportunities offered by consultants... Typical Americans who have atypical money are a good fit for franchises.

That is the simple answer... Now let me hit you with the details. I have sold consult models to clients across the nation. A couple of my clients are members here at this forum. Through my marketing services I also deal with the franchise directors of many hard hitting, nationally recognized US Franchises and know their models and what they "truly" offer. I have been in this game for a long time. Most people see consults as a money saver, so they want strongly to be able to fit into that option. I don't say this lightly because like I said I sell consults myself but most business opportunities do not offer the level of support that true franchises do... and they certainly... CERTAINLY do not offer the same in terms of transparency. I disagree with the previous assertion and emphasis put on the fact that with a franchise you are buying a "brand name". That is not all... but this next piece of advise...this crucial piece of advise when implemented will cost you nothing. For the franchise you are considering. Call them up and request the federal franchise disclosure document. It is a regulated document that your are entitled to... get it.... get several competitiors as well, that will allow you the basis for comparison.

That document provides you the transparency you need to make an educated business decision regarding the franchise. I don't have time to break down everything I have published in the past on how to actually read that document so I will provide you a link to very in depth free information here that will help ( Understanding the Franchise Disclosure Document - How to open a franchise. Welcome to All You Can Franchise. Your destination for information on how to open a franchise, as well as a directory of franchises and business opportunities that are availab (http://www.allyoucanfranchise.com/understanding-the-franchise-disclosure-document.html) )

I am excited for you because you have made the decision to go into business for yourself. Its the only way left to shine in America. Corporations have flattened and taken away your ability to matriculate within their ranks... we all know it. But that does not mean that Owners of large franchises are in the same boat. Yes franchises cost more, but the structure they provide is truly needed by most new entrant entrepreneurship that have previously been nine to five-ing it. Think of your skills in negotiations for example.. do they match the prose of someone that has been at it for years? are you gonna have the edge that your competitors employ a a matter of routine? How about the boring stuff... developing your market, demographic analysis and response to your market from a strategic stand point. what are other markets doing that you can deploy within your own, buying power, operational structure and training for your employees. How about the character of the slickster selling you the consult? guess what... you get some awesome up front info about what you are jumping into on that disclosure document. The consult has no obligation to provide you with that.

If you have been in a job for a while there are many things that you take for granted that you have to provide or handle as an owner... I feel that a franchise does a better job at helping you with those then business ops for the most part. There are good and bad in both examples, but the franchise is regulated and that in itself... is a big plus over the consult for a new market entrant.

I hope this information finds you well, and I wish you luck... Art is a very cool way to make money. I hope you can pull it off.

[billbenson]

Why is it, do you think, that the franchise section (at least there used to be a franchise section) on this board gets little to no activity?

[kimoonyx]

Because franchisees are getting support from the franchise, and do not need to turn to online forums?

[vangogh]

It never had much activity on the old forum either. I suspect it's a combination of things. Michael is probably right that the support from the franchise plays a part. I'd imagine the cost of buying in keeps some away. As a community I don't think many of us own franchises so perhaps we wouldn't have the best answers to questions. I think because we don't talk much about franchises here. we don't have the kind of content that would attract more people looking to discuss franchises.

[billbenson]

Then again, take someone who own's a franchise that is having problems. Blockbuster would be an extreme example (I believe they are a franchise). While franchise owners have a lot of contractual stuff they need to abide by, I would think that they would reach out to business owners if their franchise is having problems?

[vangogh]

Agreed, but we may not be the community they ask. Most traffic to forums comes via search. If we aren't talking much about franchise related topics we don't show up in search results to franchise related queries. Even if we do, someone might explore the forum, notice we don't talk much about franchises, and head back to the search results.

This is true of any site. The more your site is about something, the more traffic it will get for people looking for that something. If we want to see more people here talking about franchises, we probably need to have more conversations about franchises.

[billbenson]

I got an idea. Why don't you put the word franchise over and over again in white text on a white background. That should get Googles attention :)

[vangogh]

Sounds like a great idea. I'll get right on that. :)

[pinotspalette]

I realize the conversation here is a little old. I am the CEO and co-founder of Pinot's Palette, fastest growing paint and sip chain in the nation. I wanted to comment for anyone out there reading and making some of these same decisions. As a pioneer in the industry in 2009 and having "gone it alone" and also helping over 80 locations get open, I have some unique experience on this topic. Of course I am pro-franchise b/c Pinot's Palette is a franchise system, but I think it would help understand what else you get with franchise systems (I can only really vouch for Pinot's Palette) that you will not if you were to start your own. I agree with the many posts on this chain that brand names are not the biggest piece of value (at least in 2009) and there is not a huge value in that capacity. However I would argue that a large system has valuable resources that will allow you to build that brand locally much much faster. If you have never built out a retail business, believe me there is a tremendous amount to know in site selection, floor plan layout, lease negotiations, financing, general contractors, permitting, insurance, taxes, build out, supplies and inventory, hiring... the list goes on and on. I'm sure you can imagine that the knowledge that comes with doing this 50+ times in 29 states can help you save a tremendous amount of time and money.

On the marketing and branding topic. We are able to partner with many large name brands with exposes the nation to our brand. For example, in January 2014 we did a national social media partnership with TBS Cougar Town. We have an on-going partnership with Match.com as well as Whole Foods to name a few. How did we get these? We have locations in 80% of the top 20 markets. Size is not the only factor here, big brands as these want to know where your locations are. Pinot's Palette is in New York, LA, Chicago, Houston, Phoenix, Atlanta, Tampa, San Diego, New Jersey, Dallas, Memphis, etc.... This helps marketing partners reach all major markets and creates a win-win for both of our brands. Not something you will achieve as one location. Does this drive revenue to our franchise partners? Of course it does.

Another one of the biggest things to plague us as we opened our own second and third location in the Houston area was the operational time to manage the business. With my background in software development, we created our own proprietary software system that makes the day-to-day a breeze. The tedious tasks of refunds, reschedule, adding classes, gift certificates, private party deposits, customer emails, payroll, etc... added up to 20 to 30 hours of work per week. Over the past 5 years we have built software to automate these tasks and allow our franchise partners to focus on the important things, customers and marketing.