Since its U.S. genesis in the 1850s, when the Singer Corp. implemented a franchising plan to distribute its sewing machines — an operation that failed — the American franchising industry has flourished.
Output by franchise businesses is expected to grow to $710 billion in 2017, up from $674 billion last year, according to the International Franchise Association. Franchises in Nevada last year topped $3.1 billion in payroll with an economic output of $7.4 billion. About 6,000 Nevada franchises provided 73,900 jobs — while Southern Nevada franchises had more than $2.9 billion in payroll and provided 43,000 local jobs.
“Franchising is an American success story,” said IFA President and CEO Robert Cresanti in January when the organization’s annual Franchise Business Economic Outlook was released. “Establishments are growing faster and creating more jobs at a faster pace than the overall economy. They’re getting more sales and growth than other businesses.”
The restaurant industry has historically fueled much of the business model’s growth, thanks to high-profile chains such as Subway and McDonald’s Corp. Atlanta-based Chick-fil-A opened a trio of Southern Nevada locations this year to significant fanfare. Hopefuls camped out for more than 24 hours in advance for the chance to win free Chick-fil-A meals for a year
“We typically open 75 restaurants per year,” said Jackie Jags, senior consultant, public relations for Chick-fil-A Inc. The company operates more than 2,100 restaurants in 46 states and Washington, D.C. “We have three restaurants open in the Las Vegas market now and are very optimistic about future growth in Nevada, with eight to 10 restaurants planned for the state in the next five years. Each of these independently owned and operated restaurants provides more than 100 jobs and an active commitment to supporting local schools and charities in their community.”
While big-name businesses comprise a significant chunk of the franchising pie, smaller, lesser-known companies also contribute to the Southern Nevada economy.
This includes Fort Lauderdale, Fla.-based property-restoration company PuroClean, which was founded in 2001 and has one local location with room to grow.
“We expect to open two or three more locations in Southern Nevada in 2017, and also are looking at Reno,” said PuroClean CEO Mark Davis, adding that the company has 238 franchises in the U.S. and Canada.
“The all-in investment to open your doors is $160,000, which includes the $50,000 franchising fee as well as an initial equipment package and a vehicle,” Davis said. “Our franchisees also benefit from extensive training and support, as well as account development of a national brand in a recession-proof industry. Our bills are paid by insurance companies with approved pricing, so customer service is the differentiator.”
Las Vegas PuroClean franchisee Hyrum Pereira spent 13 years in the property-restoration business before taking the plunge in April 2016. Like many franchisees, Pereira was drawn in part by the autonomy afforded him as a business owner.
“I felt I had gained enough knowledge and experience in the field, and had a reputation for honesty and customer service that I have instilled in my company,” said Pereira, who has one full-time employee and one part-timer. “I love being an owner versus a project manager or estimator. PuroClean was an easy choice because they provide the best customer service and honest work, and the personnel at the corporate office are the cherry on top.”
While Pereira is a relative newcomer to the franchising industry, Michelle Shriver is a franchising veteran who made her initial foray into the arena seven years ago with Florida-based Tropical Smoothie, having co-owned six locations locally and in Colorado between 2010 and 2016.
“We employed upward of 100 employees at any given time, and the average investment ranges from about $225,000 to $525,000 all-in,” said Shriver, who also worked as executive vice president at Ameristar Casinos Inc. from 1996 until 2014.
“I took a calculated risk to focus full-time on my own businesses after a fulfilling 18 years with Ameristar,” she said. “The tradeoff of the biweekly paycheck for an income based on my own efforts could be seen as risky, but I also traded traveling 75 percent of my time for the ability to spend more time with my husband, our grown kids, my grandbabies and getting more involved in my local community.”
Many quality franchise brands are SBA-approved, which means lenders better understand the concept and projections, and recognize the system of support available to business owners, she said.
“That is why franchising as an industry continues to grow year after year, and it also has higher percentages of women- and minority-owned businesses than stand-alone startups,” Shriver said. “The popular adage of franchising, that you are in business for yourself but not by yourself, is absolutely true. Franchisees are small-business owners who have the benefit of brand recognition but the independent ability to employ people, support the local economy and live the American dream.”
Shriver has been a local franchisee and regional developer for hospitality-recruiting firm Patrice & Associates since 2014, working with recruiters to help hospitality companies find top talent for their leadership positions.
Founded in 1989 and based in Maryland, Patrice & Associates now has 100 franchisees and 18 regional developers in the U.S. With an initial investment estimated at $84,950 to $93,900, Patrice & Associates is not only affordable, said Shriver — who focuses on developing the brand in Nevada, Colorado, Utah and Maryland — but also fills a crucial need for services, particularly in the local market.
“In Las Vegas today, we are recruiting for assistant managers, general managers, kitchen managers, a district manager and a sales manager, among others,” she said.
The IFA predicts that Nevada will be the No. 3 state in terms of franchise employment growth in 2017, with an estimated increase of 4.4 percent.
While existing local franchises continue to expand, other major brands preparing to test the waters, including Dental Fix Rx, a mobile dental-equipment service and repair company that was founded in 2009 and now has more than 250 franchise territories in the U.S. and Canada.
“The average dentist spends about $6,000 a year servicing and repairing existing equipment, traditionally calling on larger companies whose business model is based on selling them new equipment,” said Scott Mortier, executive vice president of business development for Dental Fix Rx, which is based in the Fort Lauderdale area. “As an owner-operator-driven model working on a business-to-business basis, our hourly rate is about 20 percent cheaper than the competition.”
With all-in investment of $92,500 and financing in place for about two-thirds of the initial investment, the company has experienced steady growth, adding about 40 franchises annually. The company has one Nevada franchise in the Reno, with a Las Vegas franchise slated to launch this year.
“In Southern Nevada we still have three additional territories, and another five in Nevada, and are making a strong push to identify candidates in the Las Vegas market, which we expect to be sold out within the next 18 months,” Mortier said.