CADILLAC — A Virginia-based business wants to come to Cadillac. But first they'll need an investor.
That's the nature of franchise-based organizations like Mosquito Joe: local money brings bigger brands to new locations. Sometimes, it's your friend or neighbor who is bringing to town a new business with a recognizable name.
Mosquito Joe, a seasonal pest treatment company, has franchises in the Detroit area but is looking to come north.
“I know there’s big old mosquitoes and ticks in Michigan,‘ said Lou Schager, president of Mosquito Joe.
The company breaks up states into territories. Cadillac's territory goes north to Bellaire and west to Lake Michigan, Schager said.
For a $95k-$140k investment, that territory could be yours.
“We’d love to make that connection,‘ Schager said.
$7.2 BILLION IN PAYROLL
The impact of franchises on Michigan's economy is no small thing.
In payroll alone, franchises spend $7.2 billion in Michigan, according to the International Franchise Association. In Michigan's 4th Congressional District, which includes Missaukee, Osceola and Wexford counties among others, franchises account for $409.6 million in payroll.
There are about 2,000 franchise locations and 17,100 jobs in the district. Franchises account for almost a quarter of a million jobs statewide.
In Cadillac, about there are about 60 franchise locations, according to an analyst from the Michigan Economic Development Corporation who cited Dun and Bradstreet Business Listings as their source. The five most common franchises in Michigan are restaurants; grocery stores; gasoline stations and fuel dealers; and hotels and accommodations.
Franchisors have different perspectives on whether a given territory will be viable for their businesses, according to Brigitte Betser, a franchise placement specialist at the franchise consulting firm FranNet.
FranNet is itself a franchise operation, according to a disclaimer on its website that reads "FranNet’s franchise consultants own and independently operate each office throughout the FranNet system." Consultants get paid by the franchisors when a franchisee decides to invest.
Franchisors often group Traverse City and Cadillac together, Betser said.
When asked whether would-be franchisees prefer Traverse City's larger and wealthier population to Cadillac's, Betser said Traverse City might be taking more of the retail opportunities.
But there's potential for other kinds of businesses to succeed in Cadillac, according to Betser.
Cadillac could be prime for light retail, such as hair and beauty, which usually have smaller territories, Betser said.
And service-based businesses like Mosquito Joe (a FranNet partner) might do well, she said. Businesses that provide services tend to require lower up-front investments than, say, buying into a fast-food restaurant chain. In service-based franchises, the owner often wears multiple hats and works from their home in the beginning.
CREATING THE DREAM
One man with a long career in franchises has a word—several words, in fact—of caution for potential franchisees: it's not going to be a magic ticket. You'll have to research and learn the business.
Sean Kelly's UnhappyFranchisee.com blog tracks horror stories of franchise investments gone wrong. Kelly himself had a long career in franchises.
“I was making a lot more money when I was creating the dream,‘ Kelly said. And he still makes some money consulting on franchises and selling ads on his site for franchise lawyers.
"I’m very positive about franchising," Kelly, who lives in Pennsylvania, told the Cadillac News by phone. "I'm not negative.‘
Franchising can be a great way to build or expand a business, when it’s done correctly, he said.
"Unfortunately a lot of people are exploiting that and selling mediocre or high-risk businesses," Kelly said.
When franchise investments go wrong, people can lose their homes, their assets and their 401ks, Kelly said.
But Kelly didn't reject Betser's assessment that a service-based business may work well in a rural area like Cadillac.
“It might be okay,‘ Kelly said. Businesses that operate out of a truck or house can make sense. You can lease the truck, do a lot of business over the phone—and you don’t need expensive retail space.
Start by asking yourself if there's demand for the business. Then ask yourself if you need a franchise or could you do it on your own? Kelly advised.
“Look for a franchise that has a lot of locations in rural areas,‘ Kelly advised.
Rural investors should also consider whether they need the name recognition of the franchise, Kelly said. In smaller markets it’s not that expensive to build your own brand name, Kelly said.
One brand name most Michiganders recognize is Biggby.
The coffee franchise had 196 outlets in Michigan at the end of 2017, according to a franchise disclosure document Kelly obtained.
MaryAnn Macintosh owns four. She opened one in Alma several years ago, then opened the Cadillac location two years ago and celebrated the store's birthday this week. Recently, she bought two stores in Traverse City.
“I love, love, love Biggby,‘ MacIntosh exclaimed.
For her, it's about cultural values.
“(I want) to help people, love life, drink super great coffee,‘ she said. And Biggby's enthusiasm for fundraisers helps.
“I want to make sure people understand we are local," MacIntosh said. "Even though we are a franchise, we are local.‘
With Biggby, “We keep our money in the community,‘ MacIntosh stressed, citing sponsorships, fundraisers, food banks, Project Christmas and the hiring of local residents to staff the store (workers get minimum wage and managers get a few dollars more an hour).
“It’s the staff that makes it the best place on earth,‘ MacIntosh said.
She doesn't worry about getting trapped in an unprofitable business.
The home office is supportive and helps her troubleshoot, she said.
Though Kelly, the publisher of the unhappy franchisee blog, indicated franchises are a better investment for people who are already wealthy, MacIntosh said that didn't describe her.
Now that she's running her Biggby stores, MacIntosh said she'd like to keep going. Another store may be in her future, though she doesn't know where.
“The places actually talked to me,‘ she said. That's how she ended up with a store in Cadillac.
“Cadillac has always been a place I wanted to go and be a part of,‘ she said. And she has no plans to quit.
“I don’t think I’m going to retire until I pass away,‘ she said.