In The News
An Interview with FranNet Consultant Mike Welch
Dec 21, 2011
Mike Welch, owner of FranNet Minnesota
Mike Welch doesn’t mind talking about his “failure” as a traditional small business owner because it eventually led him to seek the structure and success of franchising. Welch, 35, was a highly successful advertising sales executive before the age of 30. Then, he started his own company, a journey that proved difficult. Luckily, Welch is a fast learner. He quickly leveraged the hard lessons he was learning as an independent small business owner and found a home in franchising.
Q. What is your professional background?
A: I started out in my early 20’s selling advertising on movie theater screens. I was the national sales manager by the time I was 27. I decided to start my own technology company. It didn’t go very well, but I like to say I had the good fortune of experiencing failure as a small business owner. I was such an entrepreneurial dreamer. We were completely unorganized and needed someone meticulous, grounded and disciplined. Ultimately, the business didn’t survive. After that experience I had more of an appreciation for the structure and power of the franchise business model. I then purchased an All Over Media (advertising) franchise and fell in love with franchising. It was a way I could own my own business without having to be as grounded and structured as you need to be when you are going it alone. All I had to do was execute the playbook. Within two years I sold that franchise for a 300 percent profit.
Q. How long have you been a FranNet consultant?
A: Less than two years. I looked into FranNet after I sold my All Over Media franchise. Franchise consulting is a great match for me, especially because of my experience in running a business by myself. A friend who’s very prominent in the franchising world recommended FranNet. I could have opened any franchise brokerage in the country. Choosing FranNet was a no-brainer. It’s top notch and has the best systems, processes and support available. It’s the country’s marquee franchise brokerage.
Q: Can you give a couple of examples of your success stories? Who comes to you looking for help?
A: I see many people from many different walks of life, but there’s high percentage of displaced corporate executives — middle managers all the way up to CEO. Most are in their 40’s and 50’s and I’d say almost all of them are nervous. Their security is important to them. They are looking for more control and independence and financial security. They don’t want to face layoffs and the unpredictability of corporate life. Their usual mindset tells them to go find a traditional job. But here are the jobs, and is that what they really want?
Starting your own businesses seems like the antithesis of security to many of the people I see. I introduce them to franchising and help them see how they can use their attributes in this unfamiliar model. There’s a lot of education – meetings with franchisors, seminars, telephone consultations. We are looking for as close to an ideal fit as possible.
Q. Can you talk about franchising in this economy?
A: Franchising is counter cyclical. When Corporate America is downsizing and displacing talent, franchising is there to give that person a place to land. So when the economy is down and corporate talent is being thrown aside, there are more people interested in starting their own business.
When looking for a franchise, I recommend looking for industries that are relatively recession resistant. Examples? Well, you are going to get your hair cut whether it’s a bull market or a bear market. I don’t care how hard your life is, when your transmission goes out you are going to take it somewhere to be fixed. Children’s services are great because people will always spend money to make sure their kids are getting what they need. No one wants to go into a nursing home. You can’t completely insulate yourself from the world and the economy around you, but you can protect yourself by going into good industries.
Q. Do people still have preconceptions about franchising? How do you educate them about the diversity?
A: Most people have an awareness of the major franchise chains that they see every day. They tend to assume that is what franchising is — food-based retail. We immediately let them know that franchising exists in 80-plus other industries. What they are aware of is like the tip of an iceberg. We put our scuba gear on and see the rest of the iceberg.
Franchising is a fiscal juggernaut. It can’t be ignored as a viable channel through which to start a business. Many benefit from the coaching process to understand and become comfortable with the trade-offs. They might be giving up some of what they think of as creative independence in exchange for the opportunity to reach their goals. Because I’ve been down the road of owning my own business without support systems in place, I’m able to talk from experience. I failed as an independent business owner. I don’t want to write the playbook. What’s another example of a trade-off? Well, let’s say you pay a 7 percent royalty fee and in exchange you increase your chances of success four-fold. Franchised businesses are four times as likely to survive as similar independent companies.
Q: Who makes a successful franchisee?
A: I believe the world has always and will always break down into a 20-60-20 model. Twenty percent will be at the top even if you are playing a game of pick up sticks. Winning is mandatory. Another 20 percent is at the bottom. They aren’t willing to do those things everyone else is willing to do to be successful. The rest, the 60 percent, are in what I call the comfortable middle. Of course, there’s a range of skills and motivation within that 60 percent, but many of the people in this range make successful franchisees. They need to find the right franchise because they to be excited about what they do on a consistent basis. Of course, they also need to be tenacious and hard working.
Q: What are the benefits of franchise ownership?
A: A Gallup poll found that 90 percent of people want to own their own business. And yet many people go it alone and fail. It’s like trying to jump over the Grand Canyon. If you choose a franchise with good systems and processes it’s more like jumping over a little creek.
Q: What are a couple of success stories?
A: I worked with a former vice president of strategy and business development at a large corporation – a Baby Boomer and a corporate refugee. I showed him a light manufacturing/sign franchise and his first reaction was that it was a waste of time to even look at it. I asked him to suspend his perception of reality and take the time to really consider it. This is an important part of the process with many clients because they don’t realize yet how their skills can be leveraged. His transferable skills were very much in line with the top owners in that particular franchise and he’s now happy as an owner.
I also recently worked with a corporate refugee from a major electronics and appliance chain. He was used to a six-figure income. I introduced him to a painting franchise. He didn’t initially perceive himself in this kind of industry because he’d been in this white collar career. But the transferable skills were there in spades – especially the management skills. He’s doing great now. He’s ramping up quicker than any franchisee I’ve ever seen.
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