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Buying in to a franchise is like joining a winning team

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Classes at Painting with a Twist are led by one of 11 part-time artists who teach participants how to paint everything from Monet’s Water Lilies to their own original works//Photos by Fred Bourdon.

By Christi Milligan

There’s good news for the corporate cog, the tradesperson or even the dreamer hungry for a chance to be his or her own boss: Franchise small business growth is on track to outpace non-franchise small business growth this year, according to a study by the International Franchise Association.

That’s a projected infusion of 278,000 direct jobs into the U.S. economy in 2016, led by individuals willing to plunk down an initial investment for a nuts-and- bolts business plan and a brand with traction.

“One of the advantages of a franchise is if you have no experience, the franchisor is going to do their due diligence to see if you’re going to fit into their business,” said Bill Pfaff, director of the Small Business Development Center in Sussex County. “At the end of the day, they’re looking for success too.”

Across the country, they’re finding it. FRANData, which tracks and measures the franchise performance of about 3,000 active brands, reveals that about 300 new brands franchise every year.

Christen Maroulis opened the first Brightway Insurance agency in Delaware after lots of research and some direct questions of the founders. Their willingness to meet with her in person helped seal the deal.

Christen Maroulis

Christen Maroulis opened Brightway Insurance a year go. She said she looked at a number of franchise options but found the company’s founders to be accessible and engaged.

“I read article after article about them,” said Maroulis, who already had some franchise experience and knew she wanted to run her own business.  She sat down with founder David Miller, who countered every one of her misgivings about teaming up with the insurance industry.

Brightway, started by brothers David and Michael Miller, is a national property/casualty insurance retailer selling through a network of franchised independent insurance agencies throughout the country. Franchised in 2008, it’s the seventh-largest privately owned property-casualty insurance agencies in the country.

It’s also one of the fastest-growing franchises. Today, the company has about 117 offices in nine states.  An initial investment is around $100,000.

“Our missions matched,” said Maroulis, who said she knew the direct access to Miller was crucial.  “A lot of times you enter into an organization and you’re talking to an assistant of the VP of the department,” she said. “This wasn’t like that.”

Maroulis opened her Brightway Insurance office on Lancaster Pike in February 2015.  For her money, she said the franchise provides full support, including technology, systems, marketing appointments and customer services.  Maroulis focuses on selling new properties.

“I have access to about 23 insurance companies, while the average independent agent represents about seven companies,” said Maroulis, who earns a commission from the companies she represents.

“They don’t want to see you fail so they work hard to make sure you’re successful,” said Maroulis. “It takes a lot of work but there’s a big benefit to being in a franchise.”

The business service sector is one of 2016’s projected growth leaders, according to the IFA’s 2016 Economic Outlook report.  It trails just behind the lodging sector and retail products and services and quick service and table service restaurant business lines.

An average investment of between $350,000 and $400,000, excluding real estate costs, can buy marketing and tech support, a robust business plan, round-the-clock advice from corporate and fellow franchisees, even hiring help.

In Delaware, there are nearly 900 franchisees who operate 1,235 franchise businesses, a modest 2 percent growth from 2014 to 2015, according FRANData Senior Research Analyst Kate Zhang.

In the First State, Dunkin’ Donuts leads with 64 stores, followed by 40 Subways and 31 McDonald’s franchises.

But while longtime fast food favorites may never lose the appeal of the generational bookends, millennials are opting for “fast casual” restaurants, one of the hottest sectors in franchising, according to Zhang.

Zhang describes it as a wedge between finer dining table service restaurants and fast foods, led by names like Noodles and Company, Chipotle and Jimmy John’s.

Russell Lehmann has purchased five Jimmy John’s franchises in just the last two years, three of them in New Castle County. He said he hopes to continue his franchise march through the mid-Atlantic region, adding additional restaurants to his locations in Newark, Wilmington, and West Chester, Pa.

“We grew fast by design,” said Lehmann, who lives in Philadelphia and divides his time between the stores. He said he drove through Delaware to scope locations, and has been rewarded by the state’s sense of community and the crop of great employees.

Buy-in is about $80,000 with an overall investment of more than $300,000. Lehmann said the Jimmy John’s franchise offers ample marketing and business support, his presence at the stores is still critical.

“Franchising is not as easy as relying on the power of the brand you get involved with,” said Lehmann, who employs about 150 people at his five stores. “You’re still the one that’s going to make things happen.

The Jimmy John’s restaurants have been around for more than 30 years, according to Lehmann. But others, like Painting with a Twist, are new to the franchise market, borne out of paint and sip trend where artists teach participants to paint.

Stephanie Rhodes

Stephanie Rhodes opened Painting with a Twist last fall at Suburban Plaza Shopping Center. She said the franchise was affordable, and fit her dream of a business she could see herself working every day.

It’s a trend that franchise owners like Rhodes hope will have some longevity, especially as she prepares to open a second and third location in Delaware.

“I’ve never been a business owner,” said Rhodes, who opened the franchise at its Newark Suburban Plaza location last fall.

An accountant with an MBA, Rhodes worked for years in the manufacturing industry, overseeing production operations, shipping and receiving.  But she said she always had an entrepreneurial spirit, and began to research franchise options about six years ago.

She stumbled on “Painting with a Twist,” a concept that allows participants to take an art class, and enjoy a beverage, usually with number of friends.

Rhodes flew to New Orleans for a discovery day, where she learned more about the business to see if she was indeed a match. Buy-in was $25,000.

Now, Rhodes said she plans parties full time. The store offers 16 public and private events each week, where participants find their inner artist and produce copies of works that range from Monet’s “Water Lilies” to original works by one of the 11 part-time artists employed by Rhodes.

“It’s met and exceeded my expectations,” said Rhodes, who added that she’s reached some of her goals and no longer feels it’s necessary to attend every single class. She said she’s already seen thousands of customers, and she’s preparing to open a second location this spring in Middletown, and has put in a request for a third location in Wilmington.

According to franchisees like Rhodes, the key is finding the right fit.

“I was looking at different types of business and franchises for five or six years,” said Rhodes. “But I could never find anything that was right balance of, “˜Could you make money, how much was it to get into it, and could I see myself doing it every day?”‘

Indeed, Pfaff said he recommends ample research if you’re considering a franchise. Not all are created equal, and some come in like a flash and exit quickly.

“I always ask if it’s a fad or if it’s here to stay,” said Pfaff.

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