By Bruce Freeman
Orange , California native Chad Hallock never aspired to be a business executive responsible for 800 franchises, but he knew he wanted to do something with his life. His first job was busing tables, a job he took as a teenager to help support his family. After high school, he called a friend who owned a small window blind installation company and asked for a job, but it took five tries and an offer to work for free for 30 days to get the opportunity. Within a month, Chad and his boss generated $30,000 in new business. While installing blinds one day, a homeowner and attorney mentioned franchising. Chad and his boss decided to try it.
In five years, the company sold 130 franchises and a buyer was negotiating to purchase the business for millions. Life was good, and Chad expected to profit handsomely when the sale finalized; but life has a way of throwing you curves when you least expect them. In March of 1992, Chad was already in his tuxedo preparing for his wedding, when a process server handed him a bomb. He was restrained from having anything further to do with the business because its ownership was embroiled in his friend’s divorce. He was 25 years old, about to be married, out of a job and devastated.
Fortunately, Chad Hallock had friends, family, and a new bride to help him through this difficult time. By the time he returned from his honeymoon, a plan had formed, and his resolve had hardened. Budget Blinds, Inc. was formed within a week by Chad and four partners who had worked for the old company too. Each invested $5,000, which they used to print four-color brochures. For eight hours a day, they cruised neighborhoods, dropping brochures on thousands of doorsteps. Within the first six months, Budget Blinds was grossing about $100,000 per month, so they took a deep breath and hired an attorney to start the franchise process.
By 1994, Budget Blinds sold its first franchise, but it was a long, hard road; if not for their continuing blinds sales, they could never have made the franchise side work. One mistake common to new franchisors is selling franchises within their own selling territory. This dilutes the market from which sales that are supporting the franchise effort are drawn. Fortunately, Chad realized this early on and branched exclusive territory franchise sales out to another state. By 1996, the franchising end of the business began to pull its own weight and a year later, Budget Blinds virtually stopped selling blinds direct. Today, Budget Blinds has 91 employees and supports over 800 franchises. Collectively the company spends approximately $15 million dollars a year in advertising.
Professor Bruce’s Words of Wisdom
Franchising is profitable, but not an easy business. In order to franchise, you have to have the personnel and expertise to run two different businesses at the same time. You must continue to run your primary business profitably while you also work out-of-town trade shows to sell franchises, advertise, train, and then support the new franchisees, while still soliciting additional franchisees. You eventually get royalties from your franchisees, but only after they are up, running, and making a success, with your support. Further, most inquiries come from the Internet where portals are set up at different buy-in price points. In order to get visibility with a high caliber franchisee, the buy-in amount has to be substantial, which means the support and services you provide must also be substantial. Territorial exclusivity is also a key ingredient as it affects franchise net worth, resale, and the ability to add new franchises.
Chad Hallock and his partners started Budget Blinds with a clear vision and an overall goal to dominate their market by building their share to 30%. For Chad, being cheated out of a share of a business he helped build turned out to be a catalyst to even greater success. As for the original company, the buyer backed out almost immediately amidst the ownership battle and most of the franchisees backed out as well. It went defunct within four months and provided Chad Hallock and his partners some “blind” justice after all.
Entrepreneur’s Strategy: Franchise a business.
Could This Work For Me? If your business can continue to be successful without your presence and you think you can train others to be successful in different markets, franchising might work for you.