Franchisees head for home

It’s easy to be lulled by lower franchise fees and royalties – as is usually the case with home-based franchises. But in the absence of direct customer contact, buyers must nail down what the franchisor will do, especially in training and marketing.

The Globe and Mail
August 19, 1996

Franchisees head for home
SMALL BUSINESS / High-tech communications allows for workplace and product flexibility
John Southerst

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Peter Shurman, the founder of Response Team, has two home-based franchisees answering telephones for companys that want to distribute work electronically. Edward Regan/The Globe and Mail

When you talk about franchises, highway hamburger outlets and strip-plaza sandwich shops usually spring to mind. You don’t think of franchisees running call centres or publishing houses out of their homes.

Yet high-tech communications is expanding the boundaries. Today’s franchisees can be just about whatever and wherever they want to be, thanks to digital phone lines and networks such as the Internet. They can answer phone calls for businesses across the continent or download text and graphics from a central server to publish regional magazines – all from the comfort of their homes.

One entry in the teleworking franchise game is Response Team, launched this summer in Toronto. Its home-based franchisees – there are only two so far – answer telephones for companies that want to distribute work electronically that was previously don in-house.

“We’ve created a culture,” says Peter Shurman, Response Team’s founder and owner of Universal TeleResponse Corp., the parent company that operates call centres for other businesses.

The company’s proprietary software, Run Away, hooks up customers’ computer data bases – banks, insurance companies or fast food restaurants, for instance – with the home offices of its franchisees, usually using integrated services digital network (ISDN) telephone lines.

The franchisees handle calls that are appropriate to their skills. Someone with a banking background might process loan applications, or a nurse would take help-line calls fro a pharmaceutical company. Other operators could take fast food orders or answer 1-800 calls in response to direct mail offerings. Franchisees get paid for every minute they spend with a customer on-line.

“The trick is that they no longer have the insecurity of working for one company,” says Mr. Shurman, a former broadcast executive. “Instead, they supplement their work with calls for other companies that are complimentary to their skill sets.”

A V-node – Mr. Shurman’s lingo for this virtual franchise – costs $25,000 or $10,000 up front and $500 a month over three years. There’s also a monthly network charge. The franchisees get computer equipment, technical support, two weeks of initial training and a week-long refresher course every quarter.

While owners might work eight hours a day, they’re free to hire a daughter, for instance, to work nights, Mr. Shurman says. He estimates that a node could earn $150,000 a year divided among several people.

But for all the apparent flexibility, working from a home-based franchise has its hazards. Franchise consultant Douglas Fisher of Toronto’s FHG International Inc., points out that one of franchising’s advantages is the right to hang up a trademarked sign – McDonald’s or KFC – on your door.

But home business franchises have no street signs. “You’re depending entirely on your franchisor to do a tremendous amount of marketing,” Mr. Fisher says.

That means would-be franchisees have to examine carefully what they get for their money. It’s easy to be lulled by lower franchise fees and royalties – as is usually the case with home-based franchises. But in the absence of direct customer contact, buyers must nail down what the franchisor will do, especially in training and marketing.

With these caveats in mind, home-based franchisees do seem to meet the demands of a changing workplace. Some trend watchers predict that over 50 per cent of Canadian employees will work from home by 2000.

A few of these people may be operating as publishers. For example, 19 franchisees of Interactive Franchise Systems Inc. of Calgary use home computers to publish regional news, classifieds and directories – and even run a virtual travel agency called Cruise Experts. They all download what they need over the Internet from IFS’s central database.

For between $2,500 and $10,000, franchisees can take on one or all of the publications. So far, all franchisees are in Western Canada, but IFS president Stewart Sparks says the concept could be applied across the country and in different publishing areas.

Even traditional retail franchises are gaining flexibility from computer networks. Many owners of M&M Meat Shops Ltd., for example, do some work at home. They can look into their point-of-sale systems and check sales and inventory levels.

When they want to place an order for more stock, they use a modem to dial up M&M’s central warehouse in Kitchener, Ont. and the electronic order is placed in less than a minute.

“They can get the order in at 9 p.m. after the kids have gone to bed and they get the delivery the next morning,” says David Knight, M&M’s director of management information systems.


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