Latest / It's Time for Success: The Business Insights Podcast / Franchise Ownership The Pros and Cons of Buying a Franchise with Jamie Soucy of Pet Planet
Transcript
- Sharon DeKoning: [00:00:16] Thank you for joining me today on the It's Time for Success: Business Insights podcast. Our podcast today is going to be on franchise ownership and a bit of the pros and cons about buying a franchise. Today we're with Jamie, who is the franchise owner of Pet Planet here in Lloydminster. Franchises are a popular option for entrepreneurs offering a ready made business model, but they also come with their own set of challenges. Jamie will share her experience as a franchise owner, the pros and cons of purchasing a franchise, and advice for anyone considering taking this path in business. I think this will be a great episode. Not only do you have lots of energy, I got to know you on a personal level and you humor me on a regular basis. One thing about being a business owner, I own It's Time Promotions and I get to work with amazing other entrepreneurs. That's how I got to know Jamie, is she came into work here at It's Time and we hit it off right off the get go. She's also with me at BNI here in Lloydminster, so we have a great relationship. Okay Jamie, introduce yourself to everybody. Jamie Soucy: [00:01:20] Hi, Sharon. Thanks for having me. I am the owner of the Pet Planet store in Lloydminster. Pet Planet is an established franchise, it's dedicated to providing pets with the best life possible. The store has been open for 12 years here in Lloydminster, and I've been the owner for three years. Sharon DeKoning: [00:01:42] Let's talk about franchises. You purchased a franchise, what possessed you to purchase a franchise instead of starting a franchise? I know that you worked there previously, is that how you fell into the franchise? Jamie Soucy: [00:01:59] No, my daughter actually worked there for five years. She started there when she was 16, and she worked right through her first couple of years of college. When the store was up for sale, then the discussion started. That's how I got into the Pet Planet franchise. Sharon DeKoning: [00:02:17] When you initially thought about this was it overwhelming, all the paperwork, jumping into the franchise? What were your thoughts on that? Jamie Soucy: [00:02:26] There was definitely a lot that went into it. We had to basically vet the franchise, but they also had to vet us. We had numerous discussions, we had to look at financials, we had to look at everything from how the product gets into the store to how to use the POS system that you sell it. There was a huge amount of research and information that we had to go through. Sharon DeKoning: [00:02:53] Did you go off site for training? Jamie Soucy: [00:02:56] I went to Calgary for two weeks and did training. I learned about the franchise itself, I learned about the products itself. Then I spent one week in a physical store and worked in the corporate store to learn product knowledge and the day to day operations. So that was really helpful. Sharon DeKoning: [00:03:22] Sometimes as a business owner, when we start fresh we learn on the go. We don't know. You're building your own systems, you're stumbling. The learning curve is huge. Not saying franchises don't have learning curves, of course they're going to have learning curves, but they're there as a support system as well. Jamie Soucy: [00:03:52] Yes, absolutely. Sharon DeKoning: [00:03:54] Your POS system, is it actually part of the Pet Planet franchise? Jamie Soucy: [00:03:59] Pet Planet has negotiated, and they are the ones that deal with the POS company that we use. If there's any issues or anything, we go through our head office, we go through the franchisor and they deal with those issues for us. Sharon DeKoning: [00:04:31] So those are a few of the advantages, what are the other advantages of having a franchise? Jamie Soucy: [00:04:39] It is definitely an established system. They tell you what has been successful in the past. I can refer back to them and say, I know that all the products we have in our store pass a certain level, a high quality level, of a certificate of trust. We don't carry anything that's below a certain quality. We don't carry things that we don't know where they're sourced from or how those sources are fed, slaughtered, processed after. When people come to our store, they can be rest assured that it's only great products that they're getting. It's also a sound peace of mind for myself, when I'm able to discuss that with customers and have that backing, knowing that we're not selling subpar or below standard products. Sharon DeKoning: [00:05:54] I went in there because I have a lot of animals. As you know, I take in a lot of animals. I went in and it was one of your team there and it was great. I said, I want good stuff but at a reasonable rate. What I was surprised by, you have on your shelves such a wide range of dollar value. Yes, I took the bottom bag because I have to feed ten cats with it, but I still want to give them good stuff. I'm rest assured that yes, it may be on the lower dollar value, but I'm still giving them quality stuff. So that was reassuring as an owner of animals. Knowing that you did the research, I don't have to research that. You guys already did that, I just went in there and it was already done. What about marketing? Let's talk about marketing. Marketing as a business owner is a nightmare. If you're a franchise, do they help with your marketing or how does that work? Jamie Soucy: [00:06:48] They do, they handle the larger scale campaigns. They get our brand out there so we have the brand awareness, that sort of thing. All of our social media marketing is all created for us. The pictures and that sort of thing, and we create the posts to share. They do national campaigns, they do provincial campaigns, and we handle more of the local campaigning. It is for focusing on our store with the support from head office, so they'll design things that we ask for them to do. Sharon DeKoning: [00:07:26] I know you're involved a lot with the SPCA and giving back to the local charities for the animals, so that kind of stuff you are in charge of marketing, but you have access to help if you need help. Jamie Soucy: [00:07:39] Yes, they will design pictures for me, that sort of thing, and then I do the advertising. Sharon DeKoning: [00:07:48] Do they charge you for that? I know because I looked, I researched, I wanted to do a franchise. As a business, I still want to do a franchise. I ain't going to lie, I don't know what it's going to be yet, but I kind of visioned a franchise. I'm just going to start it and I don't have to show up. But that's wrong, because whenever I go there, you're there. It's just like any other business. You have to baby it, you have to nurture it, you have to get it off the ground. Now I realize that, so I'm glad I didn't do the other one. When I was looking into that one, there are fees, of course, but they also have a marketing percentage. Is that how that works? Jamie Soucy: [00:08:29] We pay a monthly royalty and it's a percentage of our profits, of our sales. It's a percentage of our sales, and then on top of that is a smaller percentage that we also pay for marketing. There is a total amount and it's broken down into royalties and marketing, if that makes sense. Sharon DeKoning: [00:08:55] You don't have to give me a dollar value, but if I'm going to hire somebody out for marketing, because I don't have the time, I don't have the energy, and it's evolving on a daily basis, it's a struggle. It's probably no different than paying a marketing person. Jamie Soucy: [00:09:11] When it boils down to it, it is definitely not any different than paying a marketing person. This is not an accurate number, but pretend I'm paying 10% a month. 7% of that goes into royalties and 3% of that goes into marketing. Then 1.5% of that goes back into my local market. That is something new that the franchise has just established, is that I'm paying them now to be my marketing team. Sharon DeKoning: [00:09:44] Interesting, and they have to stay on top of things and evolve with them, right? Jamie Soucy: [00:09:49] They work with me. They don't do things without talking to me. I used to do a lot of ads on my own, Instagram, Facebook ads and that sort of thing. Now I can rely on them to do that for me. I do pay for it, it's just that they are taking that off my hands, basically. That's based on my sales from the previous two weeks. But they pull all of that information from through my POS system. Sharon DeKoning: [00:10:29] That's how they track it, okay. What happens if I'm like, I'm going to open up a Pet Planet. Can somebody open a Pet Planet down the road from you? Jamie Soucy: [00:10:56] No they can't, in a city like Lloydminster. Being that we're a small location, a small city, that would be directly impacting my business. Can they be an hour and a half down the road? Absolutely. Sharon DeKoning: [00:11:17] I was wondering about that. I'd be so nervous about opening a franchise and then somebody opens up beside me. Jamie Soucy: [00:11:28] My franchise in particular is different from other franchises because we are smaller. We are only 43 stores. I have a one on one relationship with the head office, the CEO of Pet Planet, the CFO of Pet Planet. If that were to ever be a situation, there would be a conversation to be had. It's not so big a conglomerate that I don't have a say in things. Sharon DeKoning: [00:12:03] The one I was looking at, that's one of the questions I had. They said, yes it could happen. Not down the road, but within our community. If I opened up in the West End, they could open up on the East End. I'm like, I don't know, there's not enough room. So I was too nervous to do that. Jamie Soucy: [00:12:36] Our franchise owners are everybody, they're always looking to grow and expand. I think there would be a discussion with me if there was one within an hour's distance. Sharon DeKoning: [00:12:47] Would you ever consider opening another one, say, in North Battleford? Jamie Soucy: [00:12:51] I've definitely thought about it, but I like to be involved in my own business. I like to meet my customers, get to know my customers, and be a face there every day. Being in a different location, having two locations, I think would wear me too thin. Then I don't get to build either store to where I would love it to be. Sharon DeKoning: [00:13:18] There are some people that are franchise junkies. I don't know if that's the right word. Jamie Soucy: [00:13:23] That's where Pet Planet is different because our customer service is our number one focus. Well, second focus after having high quality products. Sharon DeKoning: [00:13:38] How important is an established brand? If our listeners out there think, I'm going to join a franchise, what kind of research should they do into the brand? Pet Planet is an established brand, we all know that name. Jamie Soucy: [00:14:14] Basically, is it a brand that you've heard of before? Are there people in your circle that have said this is something that they've always thought should be around? Go to other places, go to other franchises, other stores, other locations. Talk to the owners of those places. Do they feel supported? Do they not feel supported? Do they feel their royalties are crazy versus the support that they get? It is super important to look into the franchise. How much do they advertise their brand? Is it a household name versus something brand new? Have they had successful businesses and stores run successfully or are they closing left, right and center? And what is the reason behind that? That happens in every franchise, and sometimes people don't like to follow the set out models. That plays into it, but then the other flip side is maybe it's not a successful model. Sharon DeKoning: [00:15:25] So behind the scenes. That brings up another question for me. When you're an entrepreneur, you hope, you pray that eventually you establish a business that's sellable. That's our goal. So when you have a franchise, how does that differ to somebody like myself, being an entrepreneur? Does it differ or how does that work? Jamie Soucy: [00:15:46] For resell ability? Basically, whoever was going to buy my business would also have to be approved by the franchise. Yes, it's valued based on your financials and your future potential. Sharon DeKoning: [00:16:12] Then do they help you sell it? Jamie Soucy: [00:16:14] They help with the paperwork. When I bought into the store, the head office definitely helped. They helped get all the franchise agreements, they got all that kind of stuff put together. Pet Planet, as a whole, sold to a new owner in the time that I've owned the store. The old ownership was more hands off, and this new ownership is more hands on. It just depends on the company, how supportive they'll be and how much they'll actually do. Sharon DeKoning: [00:16:57] The one franchise I was looking at, I still get emails. 'Store available in Canmore' or whatever, it's up for sale. They might even do stuff like that to whoever is our current franchise owner. Jamie Soucy: [00:17:13] There's definitely some stores that have closed and gone back to corporate, that have become for sale. People come in and buy them because they turned them around, and that sort of thing. But the established businesses that are doing well, it's because the ownership is usually a face in their stores. Sharon DeKoning: [00:17:43] Let's talk about some cons. We talked about lots of good. I have a list here, and I don't know if it's even a thing. Lack of independence. For myself, here we do promotional products, but we added on to it. We do vinyl, we're not limited. Are you limited to selling stuff in that store? Jamie Soucy: [00:18:09] Yes, I am limited. Anything that is ingested or topical. If it's put in the pet's tummy or put on their skin and is topical and has to pass the certificate of trust, it has to be approved. I do have a certain percentage that I'm allowed to sell as miscellaneous. When it comes to toys, jackets, dishes, that sort of thing, I can venture out from what's laid out. But when it's anything that the dog or cat will eat or put on their skin is when it needs to be approved. Sharon DeKoning: [00:19:07] What about your groomer, how does that work? Is that outside the wheelhouse, or does that fall into that percentage that you're allowed? Jamie Soucy: [00:19:24] There are stores that have groomers, and it's basically dependent on the owner and the availability of space and whether it's something that's needed in the community or not. Sharon DeKoning: [00:19:45] When you added the groomer, because that's relatively new, did you have to put a request letter into the franchise? Jamie Soucy: [00:20:04] I had to put a request letter in for the renovations that I did, for the expansion that I did. They did have to approve all that. Because other people, other franchisees, have groomers, I knew that wasn't going to be an issue. The issue is the quality of the groomer, the quality of the work that she does, the system that we have in place for grooming. We're not a mill where we have ten dogs going at once, or even two. We have one dog at a time. That is the stuff that our franchise will have a say on, our day to day operations of it. Sharon DeKoning: [00:20:48] Besides that, do you have a list of any other challenges, cons or limitations? Jamie Soucy: [00:20:57] Obviously, royalties impact your bottom line. That is just what it is, it's part of the package. The flip side of that is you're paying for the support, the systems, the brand recognition, all that stuff. That is definitely a challenge. I think about what I pay and that could be in my pocket. That being said, I really like having the backing of the certificate of trust for my customers. To be like, don't worry about what you buy from here because it is a quality product. We are not allowed to carry low quality products. We have no choice but to follow their guidelines. I can't venture out on my own and decide I'm carrying a whole new line of dog food that isn't approved. There may come a time where I have an idea for my store, for my particular store, that doesn't jive with the franchise model, and I can't venture out into those. Sharon DeKoning: [00:21:53] I want to touch a little bit on the royalties. I'm an entrepreneur, and the bottom line is a big thing, but the amount of money on learning curves that you spend over the years growing a business that you put into creating systems, that you put into evolving, that you put into training staff, training yourself. I don't know, I think there's a flip there. I think it's a double sided coin, with the right franchise. Jamie Soucy: [00:22:27] I absolutely agree. That being said, I have to look back over the last three years and say, what did the franchise give to me? Because there are so many things that I know. Even my POS system, which sometimes is a P-O-S. I would have to do that totally separately. I would have to run the inventory, completely separate the purchases, that sort of thing, so how much more is that going to cost me per month to do that independently? I have a distributor that comes right from my head office, I would not have access to that anymore. Sharon DeKoning: [00:23:22] What about a sounding board? If you have issues or questions, are they there? Jamie Soucy: [00:23:27] Absolutely. With the new ownership, it's been so wonderful to be able to call them and be like, we're struggling with this and getting down to the nitty gritty. Okay, let's work together, let's figure this out. What's the best thing? They're actually wanting to get to know us franchisees and what works well for us and what doesn't work well for us, and how they can help us move forward. Everybody wants to make money, that's the bottom line. Sharon DeKoning: [00:24:04] I pay for business coaching, so that's an expense in lieu of, you have those people on your doorstep, basically. Jamie Soucy: [00:24:12] Our franchise owners actually own another franchise in Canada already, and they are a family operated business. That being successful and showing where that's grown just proves that they know what they're doing, and it provides that level of trust. That I can phone them and then be like, have you thought of this? It's a whole new idea system that provides another brain to help with, which is what the other franchise owners are as well. We have a communication platform and we all bounce ideas off of each other, and it is so helpful. Even when it comes down to having employees, what would you guys do? What would you guys do in this situation? This has happened to me in the past and this is what I did. It's so helpful. Sharon DeKoning: [00:25:06] We have listeners that want to buy a franchise, they've talked to the franchise people, they got the paperwork, what are your suggestions? What was the legwork? They're committed, they want to do this, what do you suggest to them from here on? Jamie Soucy: [00:25:20] Consult a lawyer. Have a lawyer go over the franchise agreement. Franchise agreements are definitely one sided agreements. They support the franchise. That is with every franchise. That being said, you just have to make sure that when you sign on that dotted line that you know exactly what you are signing or the advice from a lawyer to make sure that you know what you're getting into. Sharon DeKoning: [00:25:44] That you understand what you're signing. How many pages is that agreement? Jamie Soucy: [00:25:51] I believe my franchise agreement is 89 pages. I don't think there was a page that my lawyer did not have something to say. Sharon DeKoning: [00:26:01] That's impressive. Jamie Soucy: [00:26:02] It's not necessarily that we changed anything, it was just that I was aware of what I was signing. That was the biggest. Sharon DeKoning: [00:26:10] Let's talk about traits or skills. What would make someone well suited for a franchise owner? Jamie Soucy: [00:26:20] You have to be somebody who's willing to compromise. I don't mean put your standards to the side, your high standards. What I mean is you have to be willing to take the advice and take the business model that's laid out for you and run with it. It looks a little bit different in every single store that you go into, but the basis is all the same. The base is the same. You have to take what they have used over their history and be successful, so you have to be able to compromise. Sharon DeKoning: [00:27:17] It's a proven outline, they've proven it. So you want to follow that to the tee. Jamie Soucy: [00:27:22] Yes, that's exactly what it is, you want to follow it. Sharon DeKoning: [00:27:27] I'm kind of jealous that you even have an outline to follow. Jamie Soucy: [00:27:32] It's not a step one, step two, step three kind of a situation. It said, this is how your store is set up, this is how you approach customers when they walk into the store, this is the education that all of your staff need to have. We have a Pet Planet University where every single one of my staff members have completed it, and that is on the products that we carry in our store and our customer service model. That's the basis of how you greet people or how you communicate with people. They're not telling you how to do that, you have to do that in your own business. Sharon DeKoning: [00:28:31] Communicate with each other within the business, morale, all that. Jamie Soucy: [00:28:35] It's not step one, this is what you say to the person, step two. Because every situation is so different. This is what has worked in the past, take this information and build your business. If I'm making money, they're making money, we're all happy. Sharon DeKoning: [00:28:58] Sometimes when we travel, we make a pact, my husband and I, that we only will go to places that are not a franchise. But that's not really fair, just because it's a franchise doesn't mean they're not privately owned. When I'm traveling, how do I know? When I'm traveling, or I'm doing stuff and I want to give back, how does a person know if it's owned privately? We don't know, do we? Jamie Soucy: [00:29:31] We don't know because there are certain franchises that are 100% corporate owned, and then there's some that's probably 20% corporate and 80% locally owned. You don't know. I do a lot of advertising that I am locally owned, that I support my local community. I try really hard to say, yes, I am a franchise, but this is what the franchise means to you as a customer. It means a high quality product, the certificate of trust, that sort of thing. But I am still a local person. Sharon DeKoning: [00:30:22] That's interesting, that's something I have to be more aware of, I think. That's awesome. Looking back, is there anything you wish you knew before you became a franchise owner? Jamie Soucy: [00:30:38] I think it's just that you have to put in the hard work. If you put in the hard work, it's very time consuming, it's not something that you take over and put in 40 hours a week. It's all day, every day, but it is so worth it in the end. The other thing I wish that I knew going in, is that I didn't realize how important the other franchisee owners would be, how valuable they would be. My first year, I didn't really know anybody else who owned franchises. I had stopped in stores and had conversations and that sort of thing, but then I got to know people better. Sharon DeKoning: [00:31:36] Are you talking about the Pet Planet owners? Jamie Soucy: [00:31:40] Yes, reaching out to them and getting to know them on more of a personal level has helped me build my business that much more. Sharon DeKoning: [00:31:50] They're like a support system. They're talking the same language, that's interesting. Very clever. I'm your person, too, even though I don't own a franchise. Jamie Soucy: [00:32:14] Absolutely. Sharon DeKoning: [00:32:15] Now we're going to say, what's been the most rewarding part of being a Pet Planet franchisee? Jamie Soucy: [00:32:33] Seeing the impact that we make with our customers, nothing makes me happier than a customer coming back after having an issue with an allergy or a skin sensitivity or a health issue that we've been able to help, and them coming back and being like, I can't believe what a difference that made. I had no idea that their food or this supplement or this oil could make such a difference in their life. The relationships that I've built with my team and my customers is probably the top of my list. That is my favorite part of the job is the relationships with my team and my customers, that is number one. Sharon DeKoning: [00:33:16] How has having a franchise impacted your life personally and professionally? Jamie Soucy: [00:33:21] It's definitely been life changing for me. Professionally, I've definitely gained skills with leadership, business management, time management. Personally, I've found a sense of purpose and fulfillment that I didn't know that I was looking for. There is a very big difference in working for somebody else versus working for yourself and building your own future. Sharon DeKoning: [00:33:51] I find being an entrepreneur, when you say it's a different feeling working for yourself, but you're also accountable for other people's lives. I'll never forget when the oil went down and I just bought the second location and I thought I was losing everything. This is top of my mind all the time. One of my workers just bought a house, she just got her first mortgage, she was just a little girl and she just bought her first house. I remember being sick to my stomach thinking, I can't lose this. She's relying on us. When you talk about your relationship with your team and how important it is, as an entrepreneur, as a business owner, that's what it boils down to. Jamie Soucy: [00:34:35] There is definitely a different level of pressure when it comes to that side of it. But it's rewarding when it works out well. I don't know the flip side, thank goodness. Sharon DeKoning: [00:34:51] Over life there's some stressful situations, and they're always foremost in your mind. Jamie Soucy: [00:34:58] Everything that I do is to build my business, but also to impact my team in the most positive way. I never look at things like, how am I going to negatively impact anything? I don't look at things in a negative way. Sharon DeKoning: [00:35:13] That's the proper way of being an entrepreneur. You can't grow without that open mindset and the want to help others. Is there anything else you want to add before I go over some pros and cons here? The pros, what I really picked up on, is you have a business manual? That was cool. You have a department to reach out to, you have a marketing team, you almost have an HR, you have a support system by talking to your other franchisees owners and Pet Planet. That is remarkable. Cons, if you're talking about the franchise fee, there's fees involved with it, and the fact of not being able to step outside your so-called wheelhouse. Is there anything else that I missed on those? Jamie Soucy: [00:36:02] No, I think you pretty much nailed that. Sharon DeKoning: [00:36:05] I have a question for you before we sign off. We talked about getting your financials in order, do you literally have to have a wad of cash in your bank account? This is why I'm asking this question. When I looked at that franchise, you have to have X amount of dollars, but you have to have Y amount in cash. I'm thinking, who has $250,000 as a first time business owner? Jamie Soucy: [00:36:39] Yes, you do need that. But you can go, and I'm sure there are people who go, and refinance a house that they've paid for. Take that and buy a business, invest it into it. There's ways around it, but yes you do need to have a certain amount of money in your bank account. You do have to have a down payment, you do have to have leasehold improvements, which includes the inventory, all the shelving. That kind of stuff, a typical bank does not give financing for. Sharon DeKoning: [00:37:16] Would you finance through a typical bank? Is it normal financing like anything else? Jamie Soucy: [00:37:20] No, I went through a business development lender, which is how most of us have gotten started. Sharon DeKoning: [00:37:26] Because traditional banking is hard. Jamie Soucy: [00:37:28] Traditional banking is hard, yes. Sharon DeKoning: [00:37:31] As a first time employee, it's almost impossible. Jamie Soucy: [00:37:34] I went through a business development lender, and now being a few years in, I've refinanced with a local bank. Sharon DeKoning: [00:37:43] Now that you got established, you're able to. Which is good because I'm sure interest rates and everything else goes down. Jamie Soucy: [00:37:50] But you have to be able to pay for it. That is how most of us franchise owners have gotten into it, is through the business loans. Sharon DeKoning: [00:38:01] Well, thank you very much, Jamie, for joining us today. I think that with a franchise, as we discovered today, there are pros, there are cons. It's dependent on your lifestyle and what you're wanting to do, or opportunity. That opportunity was presented to you, per se so that was a great opportunity. I think just be aware of what's out there, and if you want to become an entrepreneur, that is definitely a great way to go. Till next time, thank you for joining us today and listening to our conversation with Jamie from Pet Planet. It's Time For Success, until then, take care everybody, bye for now.