He Bought a Failing Franchise and Took it From $30K a Year to $750K. What's the Secret to a Successful 'Flip?'

Kenny Clark was looking for a failure.

In 2014, nan lifelong Texan decided he wanted to bargain a Minuteman Press franchise because he liked nan business: It was closed connected weekends, required skilled workers (versus precocious schoolhouse kids that travel and go), and offered a royalty cap. But locations were expensive. Opening a caller 1 could costs him much than $200,000, and he realized nan demographics adjacent his location conscionable didn't support it.

So Clark had a different idea: What if he bought a failing Minuteman Press location connected nan cheap, past turned it around?

This strategy is often overlooked successful franchising, wherever nan main attraction is connected caller units. But there's plentifulness of supply. At immoderate fixed time, according to nan manufacture experts we talked to, an estimated 10% to 20% of a franchise's units are struggling.

Related: Exploring Expansion Strategies for Franchise Success, From Goals to Growth

Clark asked Minuteman Press astir existing units successful his region, telling them, "I want to spot nan good, nan bad, and nan ugly," pinch an accent connected nan bad and nan ugly. Soon he was heading to a shop successful McKinney, Texas. It was 10:30 a.m. erstwhile he arrived, and nan spot should person been bustling. Instead, it was closed.

That was awesome news to Clark.

"This shop is failing because it's not moreover unfastened erstwhile it's expected to beryllium open," he figured. "You couldn't moreover find them connected Google. They weren't doing immoderate online marketing." This was a fixer-upper he was judge he could rehab. He had to salary a transportation interest of astir $21,000, but he negotiated nan store's value down from $40,000 to $11,000. "I decidedly stole it," he says.

Then nan difficult activity began. Because here's nan point astir franchise turnarounds: They're a awesome opportunity for savvy business operators, but they're not arsenic easy arsenic they mightiness appear.

"I was worried," admits Pete Scaglione, nan erstwhile Minuteman Press income support vice president, who worked pinch Clark. "He had 3 kids. But Kenny is simply a go-getter."

Sure enough, Clark took nan yearly revenue from astir $30,000 to complete $750,000 — and this twelvemonth he's shooting for $1 million.

Image Credit: Pete Reynolds

There's thing caller astir nan franchise turnaround strategy. "It's ever been thing group do, and usually pinch azygous units," says Bill Luce, president of Transworld Business Advisors, whose brokers screen franchise resales.

But that tin look different arsenic times change. Certain categories mightiness abruptly go much disposable arsenic resales, for illustration — for illustration food franchises aft COVID. "Restaurants were successful specified dire straits location was benignant of a shark mentality among group who thought they'd prime up deals," says Robin Gagnon, cofounder and CEO of a marketplace for group to bargain and waste restaurants, aptly named We Sell Restaurants. "Even now, we perfectly person those customers."

If you want to participate nan world of franchise turnarounds, you'll find galore group consenting to help. There are brokers, consultants, and online marketplaces that scope from nan category-specific We Sell Restaurants, to nan broader work Franchise Flippers, which focuses solely connected franchises and covers each kinds of industries. And because nan brands themselves person a vested liking successful getting their failing units into amended hands, immoderate moreover person dedicated resale programs. CarePatrol, a franchise that advises connected elder attraction pinch 211 locations, moreover gives a typical prize to owners who've turned astir an existing unit. They telephone it nan "Sexy Buffalo" award, aft nan fable that buffalo will complaint into a large wind alternatively of trying to debar it, says marque president Becky Bongiovanni.

Often, fixing a franchise really is for illustration plunging head-on into whiteout conditions — because it's not ever clear from nan extracurricular why a peculiar portion is doing poorly. Sometimes it's nan franchise conception itself, which mightiness beryllium anchored to an aged and dying trend, for illustration nan galore stiff yogurt brands that roseate and fell a decade ago. Occasionally, location is nan culprit; a vicinity has changed since nan portion opened, and now it's excessively acold from its target customers. Othe times, nan problem is operational: "The existent proprietor hasn't been capable to build nan business properly," says Jeremy Pourbaix, CEO of Franchise Flippers, and from what he sees, that's astir often nan case.

To fig retired what's really going on, Pourbaix says, you'll request to rotation up your sleeves and get your hands soiled — and springiness it 2 aliases 3 years earlier you expect to spot success.

None of that frightened Clark erstwhile he bought his Minuteman Press location. By then, he was good acquainted pinch adversity: There was his early puerility pinch a "drug addict, alcoholic mom," arsenic he puts it, nan bad neighborhoods, nan 9 aliases 10 different schools by 3rd grade, nan epilepsy that struck arsenic a young man and destroyed his dream of being a crippled warden, his rebound into a caller profession successful electronics that led him to nan apical of nan circuit committee industry, and past his woman announcing she was pregnant pinch their 3rd child, which was awesome news but besides signaled a request to make money without having to recreation each nan clip — and therefore, nan inspiration to prosecute franchising.

Related: "Growth Can beryllium Extremely Rapid" — Use These Tools for Your Long Term Franchise Success Plan

Image Credit: Pete Reynolds

His franchise acquisition began instantly upon buying that Minuteman Press business — and complete nan years, he learned that each bully turnaround apt requires 3 large things:

1. Fixing your team

On his first charismatic time arsenic a Minuteman Press owner, Tuesday, September 2, 2014, Clark was driving to his shop erstwhile he sewage a text. It was from nan store's only worker from nan erstwhile proprietor — nan 1 who could show him nan ropes.

The feline quit. Clark's tummy sank.

Turns out, he was astir apt lucky. When caller owners bargain a struggling franchise, they often presume that nan store's existing labor are an advantage. After all, they're inheriting a squad that knows what they're doing. No hiring, nary training! But that's not ever nan case.

Ann Marie and David Weaver learned this nan difficult measurement successful 2013, erstwhile they entered franchising. Having decided connected nan unit massage category, they didn't needfully intend to bargain a struggling unit. But they discovered that a mates of existing Elements Massage studios (a marque that now has astir 250 locations) were for waste adjacent their location successful Littleton, Colorado, while nan territory wasn't disposable for caller ones. And those 2 studios were for a bully price!

They went for it, and past instantly discovered problems — which they came to telephone nan "broken legs" of nan business. One of nan worst: the existing team.

"I americium abruptly eyeball to eyeball pinch 50 labor successful 2 locations, and I didn't prosecute immoderate of them," Ann Marie recalls. "I'm like, 'Hey, I'm excited to meet each of you. Let's get to work!' But to them, I'm Attila nan Hun coming successful to messiness up their world. I was not prepared successful nan slightest for each nan uncertainty and judgement they had for maine arsenic a caller owner."

Despite 13 years successful firm America, she'd ne'er fired anyone. Now she had to study fast. And she sewage bully astatine it ("I was raised by a Marine," she says). She'd spell connected to prosecute and occurrence adjacent to 300 group complete nan adjacent 4 years, assuming nan mindset of, This is really I'm going to tally nan business that I want to own.

Once she had a loyal squad successful spot and a civilization to support them there, business started to prime up. By 2017, she'd astir quadrupled nan yearly gross from beneath $300,000 to much than $800,000. And erstwhile she sold, she says, she doubled her investment. "It was for illustration an aged Honda pinch a instrumentality displacement and a mates 100 1000 miles connected it, and I had that point successful 5th cogwheel going astir 90 miles an hour," she recalls. "When you propulsion that off, you go a very different master successful each nan champion ways."

As for why she doubled her finance successful trading nan units, David says, "She'd gotten really bully astatine increasing income and taking attraction of nan customer. But what we sold nan institution connected was nan team." That's why, if nan Weavers ever do this again, Ann Marie knows nan first point she'd do: "I'd perfectly cleanable house."

Related: Why Franchising May Be nan Low-Risk, High-Reward Investment You're Looking For

2. Fixing your reputation

When Clark first walked into his store, he had a checklist of things to change. First, location was nan location itself: "I conscionable hated it," he says. The shop was acheronian and dumpy. So

when he spied a freshly renovated vacancy astatine nan different extremity of nan strip, he talked nan landlord into transferring his lease. He besides worked connected integer marketing, and hired a schematic designer.

What he didn't expect was each nan group who flooded nan phones asking for their original files. "I learned it was because they were truthful fed up pinch what was happening before, they were taking their printing location else," he says.

It took Clark a infinitesimal to fig retired he'd request to beryllium doing image repair. "Sometimes you've sewage a turnaround wherever there's bad will," says Transworld's Luce. "And you've sewage to flooded that, which tin return a small longer. But my acquisition is that customers are beautiful forgiving, and if you tin bring value, it's not that difficult to triumph them back."

Clark started by joining nan McKinney Chamber of Commerce and showing up astatine their play meetings. He told nan assembled 100 aliases truthful business owners that he'd taken over, and offered to make amends for his predecessor: If an bid was precocious aliases nan value wasn't up to their expectations, they would not salary for it. He besides told each customer that walked successful to scope retired to him straight if they had immoderate issues.

This benignant of commitment, he knew, would beryllium nan marrow of his success. "I will jump done hoops," he says of getting each bid done connected clip pinch exceptional quality. He besides rides his labor difficult connected this benignant of work and has added incentives to support information high. If they deed a definite target for nan month, they'll get a prize of up to $1,000.

Almost immediately, gross started to grow.

Ask around, and you'll perceive plentifulness of stories among franchise rehabbers astir getting whomped pinch nan curveball of estimation management. Scott Greenberg has a fewer to tell. He bought an Edible Arrangements franchise successful 2012, successful a low-rent portion promenade successful Hollywood, California. (The marque is now conscionable called Edible, pinch astir 800 stores.) Greenberg already owned 1 Edible shop nearby, which he'd started from scratch six years earlier, and he'd heard complaints astir this 2nd portion from customers who ended up astatine his store. Still, he wasn't prepared for what he recovered erstwhile he acquired it.

"I thought I was gonna locomotion into a shop that was fresh to operate, flip connected nan lights, and conscionable supply a amended experience," he says. "But nan erstwhile proprietor had gutted nan place. They moreover took nan $10,000 electrical motion outside."

Greenberg rebuilt that location — including its nationalist cognition — from nan studs.

He put up an "Under New Management" banner and replaced nan aged squad pinch knowledgeable labor from his first store. Then he plastered nan vicinity pinch flyers and door-hangers inviting group successful for a free dainty and caller experience. He besides pounded nan pavement.

In nan mornings, he went to nan preschool astir nan area and offered chocolate-covered strawberries to nan parents dropping kids off. He gave distant consequence arrangements to nan teachers inside. He sponsored events astatine nan section Boys & Girls Club — everything he could deliberation of. The shop ne'er performed arsenic good arsenic his first one, but because he could harvester immoderate of nan operational components, for illustration orders and deliveries, income grew to profitability wrong a year. "It became nan small business that could," he says.

Greenberg sold some stores by 2015; now he's a business keynote speaker, regular Entrepreneur contributor, and writer of nan book The Wealthy Franchisee. He says nan turnaround acquisition taught him a batch astir really to build estimation quickly — which is important nary matter what business you're in. You request to beryllium each complete nan reappraisal platforms, for example. That intends responding to some awesome reviews ("Thank you, we're grateful, we emotion what we do") and complaints ("I'm truthful sorry that was your experience. We'd emotion an opportunity to hole it.") Don't get protect aliases statement nan facts, he advises. You're ne'er conscionable addressing 1 customer; you're ever talking to nan remainder of nan world.

"With my store," Greenberg says, "we very easy turned our angry customers into customers for life, because we swooped successful and we made it correct — and past some."

Related: Franchise Ownership Made Easy: Best Practices for Managing and Growing Your Business

3. Fixing your organization narration

Over nan years, Clark came to understand that you tin prosecute a bully team, repair a ruined reputation, and amended your operations—but to really catapult a turnaround, you must go basal to your community. And that takes semipermanent dedication.

For Clark, this instruction really clicked aft 3 years of turning astir his Minuteman Press location—when he decided to return complete a second failing unit, astir 30 minutes away. To his surprise, he soon realized he was dispersed excessively thin.

"I saw that if I wanted to turn that 2nd business, I had to beryllium going to its section sporting and downtown events, and building relationships pinch folks location connected a regular basis," he says. Things sewage moreover worse erstwhile COVID hit, and his customers needed him much than ever to enactment unfastened and do what he could to service them.

He had to look facts: He couldn't beryllium personally invested successful 2 communities astatine nan aforesaid time. So he closed nan caller portion and absorbed nan customers into his original McKinney store. Then he doubled down there, and business kept growing.

As franchising experts often say, nan champion trading doesn't moreover look for illustration marketing. It looks for illustration engagement — done supporting your section schools, parks, events, and wherever other you mightiness meet imaginable customers. But this is time-intensive work. It tin ne'er beryllium outsourced aliases optimized. And getting it correct tin beryllium nan existent lynchpin of a turnaround project.

Frank and Cathy Snodgrass took that to bosom erstwhile they became franchisees successful Spring Hill, Tennessee.

The mates had agelong dreamed of retiring and drinking vino connected nan beach, watching nan Florida sunsets. But arsenic nan infinitesimal neared, they started chatting pinch representatives of a franchise called Just Love Coffee Cafe. There was a floundering cafe nearby, they were told. Maybe they'd for illustration to bargain it?

The Snodgrasses moseyed successful arsenic customers to cheque it out. "It was almost for illustration stepping into nan adventures of nan Lost Boys successful Peter Pan," says Frank, past a elder vice president astatine Voya Financial, a Fortune 500 company. "You had a manager, possibly 22 [years old] astatine best, who had had nary training — not only for being a manager, but for decently making drinks and food. And past she was training each these group who were moreover younger than her."

The Snodgrasses believed they could bring nan squad up to speed. "And nan spot felt truthful right," says Cathy. "It conscionable needed immoderate love." They bought it connected August 22, 2022. Out of nan brand's 26 locations astatine nan clip (there are now 48), this 1 was 2nd to past successful sales. And conscionable for illustration that, their plans for those Florida sunsets changed.

At first, nan Snodgrasses made nan expected changes — replacing astir of nan staff, improving training and operations. Then they dove into organization relations, a passion of theirs, and started by putting connected each kinds of events to turn their customer base. During shop hours, they invited group to clasp meetings astatine nary charge, arsenic agelong arsenic they could service nutrient and beverages. In nan evenings, they promoted assemblage draws for illustration free plaything dancing, and 60 aliases 70 group would show up for unrecorded euphony and lessons. "We recovered that astir half nan group astatine nan nighttime events haven't been to a Just Love Cafe before, and a batch of them travel backmost during normal hours," Frank says.

Then they went moreover deeper into nan community. When personification comes in, nan server is trained to constitute nan customer's sanction connected nan saucer aliases to-go container — and arsenic they go acquainted pinch their regulars, they adhd personalized notes to admit a birthday, aliases connection lukewarm wishes to a sick spouse. The Snodgrasses besides built 2 "event trailers" and 2 mobile java bars, truthful they could rotation into farmers markets, wedding receptions, firm affairs, and festivals. All told, efforts for illustration this person tripled business. "When we bought nan café, it was averaging $4,000 to $4,500 per week. We now mean $12,000 to $14,000 per week — and I'll beryllium existent amazed if we're not doing $25,000 to $30,000 a week by nan extremity of 2024," says Frank.

"This is what nan caller status looks like."

Related: I've Seen How Reckless Franchisors Can Ruin People's Lives. Here's How nan Best Franchises Grow, Find nan Right Franchisees, and Thrive Together

So what does it return to move astir a franchise? In short, it's astir nan tangibles and intangibles of business — and being fired up astir both.

Clark still finds plentifulness of things to excite him astatine his Minuteman Press. For example, he's ne'er had nan instrumentality to people ample banners, posters, and signs — truthful he built partnerships pinch a section supplier and wholesale vendors to grip those orders. "Last year, for nan first time, 50% of my gross was outsourced," he says.

Beyond that, he's built thing you can't put a value on: After 10 years of being astatine his shop daily, and making it a fixture of his community, he tin now return a break without worrying.

"All of past week, I was successful Mexico catching bass," he says 1 time successful May. "Didn't get immoderate telephone calls, conscionable a fewer matter messages pinch questions. To person labor you tin spot to tally your business, that's invaluable. On apical of that, they had a slayer week and each sewage their bonuses."

This year, arsenic he intends for $1 cardinal successful revenue, he's reasoning astir a larger location, different instrumentality to bring much jobs in-house, and, travel adjacent bass play down successful nan Sierra Madres, nan chance to spell disconnected pinch his buddies without a attraction successful nan world. He knows that his customers — a organization that now counts connected him — will await his return.