How to Franchise Your Business » Succeed As Your Own Boss

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How to Franchise Your Business?

Keenan Fisher grew up in the back of his family’s salons, watching his dad, Ken Fisher, shape the beauty industry. Now, as a second-generation franchisor, Keenan has taken that legacy to new heights, transforming Tommy Gun’s Original Barbershop into a global brand with over 100 locations across Canada, the USA, Australia, and New Zealand. With a focus on blending world-class experiences and cutting-edge technology, Tommy Gun’s delivers the ultimate barbershop experience—without ever compromising on quality or convenience. For more information: https://us.tommyguns.com/

SmallBizLady: What traits make a business suitable for franchising, and how did you determine that your company was ready?

Keenan Fisher: When considering if your business is ready to franchise, there are a few key questions you need to ask.

Is the business concept profitable and cashflow positive? This has to be proven out prior to beginning franchising your business. At the end of the day, franchisees are investing to get a return on their capital and time investments.

Is your business scalable? Is your business tied to a specific person, place or unique skillset. You have to be able to create systems and a training program that will allow a new franchisee and their team to successfully “run the play” and learn the operations of the business in a reasonable amount of time. There needs to be a large enough market to allow you to achieve scale. Critical Mass is key in Franchising; in order to have the infrastructure in place to support and drive growth across your franchise network, you will need scale to create enough revenue to support the required operation.

What is your unique point of difference and separation in the market? How does your business fit within the competitive landscape, what makes it unique that it will be able to gain enough market share to be successful. What makes your business stand out from the competition is what will influence potential franchise owners to invest in your system.

In our case, we had franchise experience and Tommy Gun’s Original Barbershops was not our first franchise system we created. From the start we wanted to build out a business model that met the criteria to scale as a franchise system. We opened 4 more locations that were all in different market types and sizes, with unique real estate to determine how the concept would work outside of our home market. All of these initial shops were part of our overall proof of concept that demonstrated a success franchise system, and that set us on our course.

SmallBizLady: How did you approach the initial planning phase for franchising your business?

Keenan Fisher: The first step is ensuring you have a great franchise attorney to help you set up your corporate structure and the required franchise documentation. By getting this right from the start it will save both yourself and your franchisees a lot of issues in the future. This will be one of your most critical early investments.

Our approach to franchising is building a support system that can help ensure the success of each and every franchisee. When preparing to grow, you need to ensure you have the systems and team in place to support the growth and ongoing support of existing franchise locations. In the beginning these systems can be simple and closely managed, but as you scale, they will need to evolve, become more sophisticated and be able to be implemented by a larger team. When we started franchising our concept we had a small team, detailed operations manual, training guide, and unique guest facing technology to support our initial phase of growth.

SmallBizLady: What experts or resources did you rely on while developing your franchise model?

Keenan Fisher The great thing about franchising, is it is an absolutely massive business sector, so there are unlimited resources. We took a two layered approach, first, having personal relationships with individuals who were leading franchise systems we admired and wanted to replicate their success. I’ve always made it a point to have as many people as I can in my network that are ahead of where I am today that are willing to listen to me and share their advice and experience on what they feel is a good path, and what worked and didn’t work for them.

The second thing we did was lean into the industry organizations that offer support, resources and learning opportunities. This is included joining both the Canadian Franchise Association and International Franchise Association and tapping into their resources and events to expand our network and knowledge within the industry.

How to Grow Through Acquisition

Jack Wilson is a Franchise Development Director with HomeWell Care Services. He has been involved in franchising since 2012. Jack also owns Rezultz Team, a franchise consulting firm affiliated with the Franchise Brokers Association. His expertise spans the areas of franchise and independent start-ups, mergers, acquisitions, business growth strategies and business exit planning. Jack formerly owned and operated a franchise, Liquid Capital of Greater Philadelphia. Jack previously served as the Chief Development officer for a Philadelphia area franchise. He is an advocate for DE&I initiatives within the world of franchising as well as for business ownership opportunities for those seeking ownership via franchising. Prior to franchising, Jack enjoyed the opportunity to gain over 20 years of management experience with AT&T. For more information: www.rezultzteam.com/

SmallBizLady: What are some benefits of growth by acquisition?

Jack Wilson: There are at least 10 benefits I can share.

Immediate Revenue and Cash Flow

Acquiring an existing business brings in a new revenue stream from day one. This is often faster and less risky than growing organically, as you’re buying a business with an established customer base and predictable cash flow.

Access to New Markets and Customers

Acquisitions can quickly expand a business’s geographic footprint or open access to a new customer base, often making it easier and faster to enter new markets than trying to build from scratch.

Economies of Scale

By combining operations, businesses can often reduce costs per unit. For example, shared resources like warehouses, suppliers, and administrative functions can reduce overall expenses and improve profitability.

Enhanced Competitive Position

Acquisitions can help a small business grow its market share and strengthen its position against competitors. Acquiring competitors, in particular, can allow a company to reduce market fragmentation and consolidate its hold on a specific industry or region.

Reduced Time to Scale

Organic growth often requires years of investment in marketing, brand-building, and customer acquisition. Acquisition shortcuts this process by immediately providing the infrastructure, brand recognition, and customer base of an existing business.

Increased Valuation and Equity

Growing by acquisition can quickly increase the overall value of a small business, making it more attractive to investors, lenders, or future buyers. Larger businesses often command higher valuation multiples, increasing the company’s overall equity.

Access to New Technologies and Intellectual Property

Acquisitions can provide access to proprietary technology, patents, trademarks, or specialized processes that would be costly to develop independently. This can offer competitive advantages and save on research and development costs.

Enhanced Financing Opportunities

Growing through acquisition can sometimes make a business more attractive to lenders and investors, as it increases scale, cash flow stability, and asset value. Additionally, some acquisitions can be financed through SBA loans or seller financing, making it easier to acquire without depleting cash reserves.

Reduced Risk Compared to Starting New Ventures

Acquiring an established business can be less risky than launching a new product or service, as the acquired company has a proven track record, existing processes, and a known customer base. This can be especially valuable in uncertain or competitive markets.

Synergies and Operational Efficiencies

Acquisitions create opportunities for synergies that enhance productivity and reduce costs. This can include shared marketing efforts, combined purchasing power for supplies, or optimized distribution networks, all of which contribute to greater efficiency.

SmallBizLady: What are ways to finance a small business acquisition?

Jack Wilson: Small Business Administration (SBA) Loans

SBA 7(a) Loan Program: The SBA offers 7(a) loans for business acquisitions, which are particularly popular due to favorable terms, lower down payment requirements (typically around 10-20%), and longer repayment periods (up to 10 years).
Benefits: SBA loans often have competitive interest rates, and the SBA guarantee reduces risk for lenders, making these loans more accessible even for small businesses with limited collateral.
Considerations: SBA loans require a detailed application, including financial statements and business plans. They also come with eligibility criteria and take time to process, so planning ahead is important.

Seller Financing

Structure: In seller financing, the seller agrees to finance a portion of the sale, allowing you to pay them back over time (typically 3-7 years) with interest. This reduces the immediate cash requirement and spreads out the cost.
Benefits: Seller financing aligns the seller’s interests with yours, as they have a vested interest in the business’s success. It’s also often quicker and more flexible than bank loans.
Considerations: Sellers may only agree to finance if they’re confident in the buyer’s ability to succeed. Terms can vary widely, so negotiations are key.

Earn-Out Agreements

Structure: In an earn-out, part of the acquisition price is paid over time based on the business’s future performance. For example, the seller may receive additional payments if the business meets revenue or profit targets.
Benefits: Earn-outs reduce the initial cash burden and provide some protection in case the business doesn’t perform as expected.
Considerations: Earn-outs can be complex to negotiate and require clearly defined performance metrics to avoid disputes. They’re best suited for situations where the seller will remain involved post-acquisition or has confidence in the business’s growth potential.

Traditional Bank Loans

Structure: Conventional bank loans may be used to finance acquisitions, often with shorter terms and higher interest rates than SBA loans. Some banks offer specific acquisition financing for qualified buyers and businesses.
Benefits: Traditional loans can close faster than SBA loans, and banks may offer larger loan amounts for well-qualified borrowers.
Considerations: Bank loans generally require strong financials and collateral, making them less accessible to newer or smaller businesses.

Leveraged Buyout (LBO) with Collateral

Structure: In a leveraged buyout, you use the acquired business’s assets as collateral to secure financing, meaning the target company’s cash flow and assets help fund the acquisition.
Benefits: An LBO minimizes the buyer’s out-of-pocket costs and leverages the business’s own financial strength to secure financing.
Considerations: Lenders will examine the business’s cash flow closely to ensure it can support debt repayments. LBOs are more feasible for businesses with stable and predictable cash flow.

Combination Financing (Structured Financing)

Structure: Many acquisitions use a combination of these financing methods, such as combining SBA loans with seller financing, or using both personal funds and a bank loan.
Benefits: Combination financing allows you to leverage multiple sources and often reduces individual lender risk, which can make it easier to secure funding.
Considerations: Structured financing requires careful planning and may involve coordinating repayment schedules across multiple lenders, so understanding cash flow needs and lender terms is essential.

SmallBizLady: What resources are available to help acquire a small business?

Jack Wilson: There are quite a few resource that I can share.

Small Business Administration (SBA.gov): The SBA offers guidance on mergers and acquisitions, including how to conduct business valuations, prepare sales agreements, and transfer ownership. They also provide free business counseling.
Business Valuation Services: Hiring a qualified business appraiser can help you determine the value of the business you’re interested in acquiring. This is crucial for making informed decisions about the purchase.
Legal and Financial Advisors: Consulting with attorneys and financial advisors can help you navigate the legal and financial complexities of acquiring a business. They can assist with drafting agreements, conducting due diligence, and ensuring compliance with regulations.
Online Resources and Guides: Websites like DealRoom and Forbes Burton offer comprehensive guides on the acquisition process, including due diligence questions and steps to follow3.
Networking and Conferences: Attending industry conferences and networking events can provide valuable insights and connections. Events hosted by institutions like Harvard, Stanford, and MIT often feature sessions on mergers and acquisitions.
Podcasts and Thought Leaders: Listening to podcasts like “Think Like an Owner” and following thought leaders on platforms like Twitter can offer practical advice and real-world experiences from those who have successfully acquired businesses.
Search Funds and Private Market Labs: Organizations like Searchfunder and Private Market Labs provide resources and communities focused on entrepreneurship through acquisition.
SCORE:A resource partner of the U.S. Small Business Administration (SBA), SCORE has a nationwide network of more than 10,000 volunteers serving all 50 U.S. states and territories. They provide free business counseling, mentoring, business tools and referrals to outside industry experts as needed.

How to Get Started with Real Estate

Sonia Booker is the CEO of 16th Street Equity Group, a company dedicated to re-imagining affordable housing. With over 20 years of experience, she has developed and managed over $200 million in single-family, condominium, multi-family and commercial property. Sonia’s areas of expertise include all aspects of construction, development and building exit teams. She’s not afraid to get her hands dirty, working solo on some of her earlier single-family properties. Mentored and groomed by the late Herman J. Russell, Sr., Sonia embraces real estate project creativity. She has developed some of the most innovative strategies in the marketplace, including one of the most successful condo conversion projects in midtown Atlanta, selling 168 units in less than 18-months. For more information. www.soniabooker.com

SmallBizLady: How do a personal assessment of yourself prior to starting to invest?
Sonia Booker: Start by evaluating your finances to determine how much you can afford to invest and where you’ll access additional funds if needed. Define your goals to understand how much you need to reach them. Lastly, assess your credit, as it will influence your ability to secure funding.

SmallBizLady: How to determine what type of investor you should be?
Sonia Booker: Your investment strategy depends on your short-term and long-term goals. Define your priorities: Are you looking for quick returns or building wealth over time? Aligning your goals with your risk tolerance and investment timeline will help you determine the best type of investor to become.

SmallBizLady: How do you build your investment team?
Sonia Booker: Your investment team should include professionals like a mortgage broker or banker, a real estate agent, an appraiser, and a property management company, if needed. These experts provide valuable insights, streamline processes, and help you make informed decisions, ensuring your investments are positioned for long-term success.

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