Franchises can mean opportunity for the unemployed - East Valley Tribune: Business

Franchises can mean opportunity for the unemployed

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Posted: Monday, January 3, 2011 10:00 am

After 20 years working in corporate finance, Brian Achenbach was laid off in February for the third time in his career. Instead of looking for another job, he decided to open his own business.

"I found myself in a situation where I was looking for another job," said Achenbach, 46. "... I didn't want to spend the next 20 years working for someone else if there was an opportunity to venture out on my own."

Worried that his experience -- most recently at a large pharmaceutical company -- would command too high a salary in the weak area job market, or that he would have to move his family to find a comparable job, Achenbach made the leap to entrepreneurship.

Rather than starting from scratch, he decided to buy a franchise. And after considering all the choices, he settled on opening a full-service, home care and staffing agency called BrightStar.

Based in Gurnee, Ill., the company launched its franchise operations in August 2005 and has opened 160 locations in various markets across the country.

Achenbach's office opened in October in McMurray, a community just south of Pittsburgh. "Owning my own business is way out of my comfort zone," he said. "I had to get over that hurdle."

In today's tough job market, a growing number of laid-off corporate executives and managers are seizing franchise opportunities as an alternative to finding another job when it may take a while to find one.

Many franchise companies are actively marketing and recruiting people who have lost their jobs due to the recession.

As part of the outplacement services offered by the last company he worked for, Achenbach was introduced to a franchise broker.

"I wasn't even considering buying a franchise," he said. "I had already updated my resume and was preparing for the job search. But I promised myself I would at least talk to the franchise broker and keep an open mind."

The franchise world has changed, said Fred Rock, an investment banker at Focus Investment Banking in Pittsburgh. "It used to be very expensive to get into the franchise business. Franchise owners were wealthy people who tended to buy whole areas and they opened nine, 10 or 20 stores in that area."

In recent years, smaller franchises have proliferated, with many owners essentially buying jobs.

"It doesn't cost a lot to get into, and they are buying an opportunity to make a decent living of $25,000 to $75,000 a year, which is about equal to what they had been earning, and now they're their own boss," Rock said.

The No. 1 advantage of buying a franchise is the ability to build a business using someone else's proven formula, which can be less daunting than starting from scratch.

Although exact figures on the number of new franchises started in 2010 are not available, Rock said the number has fallen since 2008 because it is harder to get financing.

Franchises do not always come cheap. For more well-known businesses, such as McDonald's, new franchisees will need as much as $500,000 in nonborrowed cash. On top of a franchise fee, franchise owners also have to pay royalties to the parent company on all revenues earned.

Franchisors often also place restrictions on their franchisees and require them to follow their operations manual closely. This could include what products can be sold, pricing requirements, employee performance and policies, territory and marketing.

The BrightStar business model supplies private duty health care, which is mostly paid for privately. The company charges its franchise owners a $45,000 base fee to purchase a standard franchise and requires franchise owners to have at least $500,000 net worth.

Many franchises can be purchased for significantly less, some for as little as $2,000 to $3,000.

While senior citizens make up the majority of BrightStar's private duty clientele, BrightStar also works with pediatric and workers' compensation cases, long-term care and veteran clients.

Since opening, Achenbach's company has signed about a half-dozen clients and has between 10 and 15 caregivers on standby to provide care in people's homes when needed. They have hired a registered nurse to work as director of nursing. The director supervises all the company's caregivers and does all the client assessments.

Achenbach has one outside marketing representative on staff who happens to be his wife, Kim, 45. After teaching for 20 years, she also made a life change and joined him in the franchise. The Achenbachs have three children ages 17, 14 and 10.

"Any health-care facility that discharges or treats patients who may need in-home care are primary targets for us as far as sales and marketing efforts," Achenbach said.

"Some examples are rehabilitation facilities, nursing facilities, hospitals and physicians. We call on them and let them know we are out here in hopes that they will recommend our services."

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