Is A Franchise Right For You?

By Cathie Anderson
The Sacramento Bee.

From Sylvan Learning Centers to Tilted Kilt to Jimmy John’s, franchisors of all types regularly announce expansions in the Sacramento region. The prospect of launching such a business can be tempting to individuals forced into early retirement by corporate downsizing.

Many franchisors actively recruit retirees because they value their past experience in the business world. Google the words “franchise retirees,” and you’ll come up with dozens of news articles documenting the trend.

Although potentially rewarding, franchising also can be dangerous territory for novices. Serial franchisee Tony Lutfi and other experts recommend that people identify trusted consultants and do at least three to six months of homework to determine the right concept for them.

“In most cases, a potential franchisee has some money set aside, or they have some financing arranged, and they go to the broker and the broker finds them a business to buy,” Lutfi said. “Or, they meet a franchisor and the franchisor will tell them, ‘We will give you a territory to open a business.’ Both of these scenarios are very risky because … they don’t understand why the business is being sold or they really have no experience in selecting a site or attracting customers or even establishing the advertising.”

Lutfi’s Sacramento-based MarLu Investment Group started out with only two restaurants — a Church’s Chicken and a Long John Silver’s — but it now operates a stable of brands that include Sears Hometown & Outlet Stores, TGI Fridays and Jack in the Box.

“I started out as a graveyard employee, and from there, I learned the business,” Lutfi said. “It took me from 1976 to the early ’90s — 15 years in business — before I even had my first chance at franchising. I worked every position. I became an assistant manager, a manager and eventually a district manager, a director of marketing and a director of training. It allowed me to learn and make mistakes.”

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