Moving where opportunity knocks
The Triangle draws many people from across the country to open franchises here
Sue Stock - Staff Writer
Published: Sun, Mar. 26, 2006 12:00AM
Modified Sun, Mar. 26, 2006 06:29AM
The News & Observer (Read original)
Wanda and Bob Vaziri moved from California to the Triangle to open a Dunkin' Donuts-Baskin-Robbins store because it was cheaper to start one here.
Thor Wendland came from Minneapolis to open his Pet Pantry franchise partly because his wife has local ties.
And Jeff Buck and Dave Gall chose this area for their Cold Stone Creamery -- there were too many where they lived in Arizona.
For a growing number of entrepreneurs across the country, the Triangle seems an obvious destination. With a booming population and high-income households, it's a virtual utopia for many franchise businesses.
New franchisees with freshly minted agreements for stores are flocking to the Triangle to open ice cream parlors, hair salons, candy stores, delis and pet supply shops.
But they're taking a double risk. Opening a brand-new business is tough enough. They're also uprooting their families to start over in a growing but competitive market.
Many say the gamble is worth it.
"It's crazy, maybe stupid. I don't know," said Gary Chvatal, who opened a Flicko's franchise in Cary in January after living in Ohio for 30 years. His business specializes in transferring video or slides to newer formats such as DVDs. "This place had everything going for it."
Nationwide, the number of franchise stores jumped 11 percent in 2005 to more than 391,000, reports research firm Entrepreneur.com.
But the Triangle seems particularly good at attracting these types of new businesses, both because of the area's quality of life and its demographics, such as household income and education level.
Entrepreneur.com ranks this region third nationwide for starting and expanding a company.
Some franchisees move here because they have a tie to the area. Wendland's wife, Mary, attended UNC-Chapel Hill.
A lifelong pet lover, Wendland found his niche with Pet Pantry, but the Houston-based pet-food delivery service already had a franchisee in Minneapolis where the couple lived.
"I could have bought the guy out, I guess," Wendland said. "But we wanted to start fresh. We really wanted to go someplace where we could spend the rest of our lives."
The couple considered Virginia Beach; Wilmington; Charleston, S.C.; and the Triangle.
"We settled on this because of the growth," Wendland said.
The booming population alone is enough to draw folks who have no ties to the Triangle as well.
Dan Richardson and his wife, Katherine, are moving here from Arizona to open a Melting Pot restaurant in Durham this year.
"When we decided we were going to look for something else, I started going online and looking at sites," Dan Richardson said. "I went to the bookstore, and on the lists of 50 best places to raise a family, Raleigh-Durham just kept appearing."
Taking a big risk
But that's not to say that simply moving to the Triangle will ensure a successful business.
Many stores are new to the area, and introducing a chain to an untested market is hard, whether you're a franchise or not.
Add the stress of moving and learning a new town, and the experience can overwhelm the most hardened business veterans.
Panera Bread franchisee Joe Bastian worked for three decades managing the finances of major corporations including DaimlerChrysler and Honeywell. He described his move to the Triangle, building a house and simultaneously starting the area's first Panera as "pretty ugly."
"It wasn't until we opened the fifth store that we said maybe we can hire an accountant," he said.
It took nine months for Cold Stone Creamery franchisees Jeff Buck and Dave Gall to find the right location, get it approved by Cold Stone and open their first ice cream store. During that time, they worked at On the Border.
"We had to get to know the market," Buck said. "We didn't know what the hot areas were or what regional preferences were."
Even getting money to start the business was harder than they thought it would be. Between the two of them, they had about a quarter of what they needed.
"It was very difficult to get the banks to buy into it," Buck said. "We had no data. ... We couldn't even give them a good estimate on how much our sales were going to be."
They opened their first store in August 2001 in Cary's Crossroads Plaza. Though it was a successful store run along the strict corporate guidelines, they found that it was important to cater to regional tastes, Buck said.
"Here in North Carolina, we have to have wet walnuts because it's such a big deal here, but it took corporate a while to get it," he said.
Making the right move
Some industry experts advise against moving to a new area simply because you've fallen in love with a particular company.
"What happens is people gravitate toward things because they like what that business does," said Doug Schadle, partner with Apex-based Rhino 7 Consulting, which works with national companies to find franchisees and growth opportunities.
Instead, Schadle advised, people should focus on what they can afford and what they want from their new business, and then find a franchise that fits those criteria.
"There is no perfect area," he said. "Phoenix is just as good as Raleigh is just as good as Minnesota. And if I already know my way around there, then that's my advantage. If you move, it should be for quality of life."
Improving the odds
Still, Schadle said, the nature of franchised businesses does help stack the odds in a franchisee's favor. Because parent companies do almost all of the market research, franchisees have less risk than independent business owners.
"Franchising as a whole has a 92 percent success rate," he said.
Being part of a larger chain eliminates questions about which equipment to use and how to set up the computer system, said Buck, the franchisee with Cold Stone Creamery. The size of the chain also makes for economies of scale.
"I don't have to test something to see if it will work and waste my money," he said. "When they roll something out, it's almost a guarantee that it will be a hit. They can't afford for it to be wrong."
But if potential franchisees don't want to be locked into a regimented way of doing everything, it's probably best to open an independent store.
That's what Michael and Susan Post did when they opened That Pizza Thing, a take-and-bake pizza store that now has two locations in downtown Apex and Raleigh's Creedmoor Crossings. Before opening, the Posts investigated several franchised take-and-bake pizza chains but decided against that route.
"To be an entrepreneur, we feel you should have all the freedoms of being your own business," Michael Post said. "I didn't like that you're paying them all the time and they're always looking over your shoulder."
But fans of franchises, especially many former corporate workers, say the benefits of having a larger partner backing you outweigh the negatives. And, in the end, they're still their own bosses.
"It's been a long time since I've been excited to get up for work," said Pet Pantry franchisee Wendland. "It's going to take a while to get back to the salary we were used to, but we kind of took that into account."
After all, there's got to be a trade-off for a job where your first customer is a Doberman named Boris.
Franchise: An agreement in which a company (the franchisor) sells another party (the franchisee) the right to use the company's name and to sell or rent its products.
The United States has more than 1,500 franchise businesses, including restaurants, auto shops and hair salons. Starting a franchise business can cost a few thousand dollars or turn into a multimillion-dollar investment.
