Recession Creates More Cleaning Franchises

There are more businesses than ever franchising their concepts from doggie daycare to window cleaning.

Franchising Sizzles In Wake Of Downturn (By David Winzelberg) - Apart from layoffs, the downsizing of corporate America in the last few years has created another byproduct: entrepreneurs.

Thousands of out-of-work executives have chosen to become business owners themselves. Many have gone the franchise route, buying into pre-determined business models so they don’t have to reinvent the wheel. This year alone, new and existing franchise units will create or maintain 797,700 jobs and generate $106 billion of annual economic output to the American economy, according to the International Franchise Association.

Harold Kestenbaum, a noted franchising attorney at New York law firm Gordon & Rees, with more than 500 franchise deals to his credit, has seen a big increase in the number of people looking to own a franchise in the last few years. In fact, the recession helped franchise companies. “The proliferation of very qualified, downsized corporate executives has been terrific,” he said. “It increases the pool of prospective franchisees.”

While the corporate world has been shrinking, franchising has enjoyed steady growth, with brand-licensed businesses now topping 750,000 U.S. units, according to the International Franchise Association Educational Foundation. Expected annual U.S. sales this year: $472 billion, or almost 3.5 percent of the nation’s gross domestic product. While most people still think fast food when they hear the word “franchise,” there are now more businesses than ever franchising their concepts – everything from doggie daycare to window cleaning. There’s even a franchise that sells other franchises.

Business brokers Ken Stein and Stuart Levenberg, of New York’s Kensington Company, say would-be franchisees should try to think outside the bun. That’s because for most just starting out, a fast-food franchise is financially out of reach and requires previous restaurant experience. Cleaning franchises have been especially popular lately. In fact, three of the top five fastest-growing franchises in America in 2012 were commercial cleaning services, according to Entrepreneur.com.

In fact, three of the top five fastest-growing franchises in America in 2012 were commercial cleaning services.

The all-in costs to own a franchise vary as much as the concepts themselves. Franchises for some janitorial concepts start as low as $5,000 and climb to as much as $5 million for the rights to develop a Choice Hotel. And there’s everything from embroidery services to weight-loss clinics in between.

Franchises offer a structured environment that may not work for everyone, especially those who march to the beat of a different drummer. “You have to conform and do what they tell you to do,” Kestenbaum said. “Some people just can’t do that. Entrepreneurs who can’t follow the format shouldn’t buy a franchise.”

It’s not that creative people can’t still fit within the confines of a franchise and offer suggestions to improve the business within its boundaries. “But don’t go in thinking you’re going to do things differently,” Kestenbaum cautions. For that reason, Kestenbaum said ex-military personnel usually make excellent franchise owners since they’re used to following rigid rules and regulations. Franchisors usually charge from 5 to 8 percent of each franchise’s revenue for royalties and advertising. While non-franchised businesses don’t have those added fees, they also don’t get the support, training, or benefits of having a nationally recognized brand.

And when it comes to franchises with a proven track record of success, there’s also a fairly predictable roadmap for new franchisees to follow. Franchisors often assist their franchisees in finding real estate, securing financing, buying supplies and equipment, even hiring employees. “All these things that franchises do you might struggle with on your own,” Kestenbaum said. “It’s a business in a box.” Non-franchised business owners may have more flexibility, but unless they hire a business consultant, they’re basically blazing their own trail. Shopping for a franchise has gotten easier: You can even apply for one over the Internet or visit one of the major industry trade shows. One of the largest, the International Franchise Expo in New York, attracted more than 12,000 potential franchisees who explored some 300 business concepts last summer.

26 Books About Success That Every Entrepreneur Should Read: We go through dozens of books each year here at Business Insider's War Room. Many aren't worth a second glance, but there are some every business owner should read. So, we've put together a list of the best books for entrepreneurs — either from our own recommendations or touted by big-time VCs, CEOs and startup founders.

"The Four Steps To The Epiphany," by Steve Blank - Blank's book prompted the whole "Lean Startup" movement, which says that you need to get traction in the market as quickly as possible, instead of developing a final version of a product before releasing it.

"How to Change the World," by David Bornstein - Bornstein profiles a variety of "social" entrepreneurs in his book. The case studies serve to show that you can succeed if you have a hunger to actively change the world, and that idealism can be an infinitely strong motivator.

"From Resource Allocation To Strategy," by Joseph Bower - Bower offers a comprehensive guide to how organizations work. Drawing on decades of research from the top business schools, he explains how to develop an effective corporate strategy, and how to prevent breakdowns in the system. Clay Christensen recommended it to us as "a classic book about how the world works."

"Losing My Virginity: How I Survived, Had Fun, And Made A Fortune Doing Business My Way," by Richard Branson - One of the world's most iconic billionaires shares how he built his Virgin empire with the philosophy "Oh, screw it, let's do it." Branson's autobiography shows how having the confidence to fail is one of the surest ways to success.

"How To Win Friends And Influence People," by Dale Carnegie - This is a class self-help book, but don't let that scare you away. It's essential to understanding the fundamentals of how to get people to like you, make good conversation, and win people over to your way of thinking — in other words, what you need to succeed in business.

"The Zigzag Principle," by Rich Christiansen - Christiansen's book tells you to ignore all the voices that tell you to charge full steam ahead toward your goals. Instead, his perspective is that you have to zigzag around obstacles, but still maintain your course so that you reach your destination.

"The Innovator's Dilemma," by Clayton Christensen - Steve Jobs was "deeply influenced" by Clay Christensen's classic, according to his biographer. The HBS professor introduced Corporate America to the concept of disruptive innovation—or the idea of how new, low-end products can eventually completely take over a market. It proved to be extremely prescient—just look at companies like Netflix.

"Good to Great," by Jim Collins - Collins followed up his acclaimed "Built to Last" with this book. It identifies top-performing companies and the traits of the CEOs that lead them. For instance, Level 5 leaders have personal humility and an unwavering resolve to accomplish the tasks at hand. They also create a culture of honesty.

"The Startup Game," by William H. Draper - Draper dives deep into the history of venture capital and the culture in Silicon Valley. The book addresses how VCs evaluate both ideas and the entrepreneurs who thought of them.

"Innovation and Entrepreneurship," by Peter Drucker - Drucker was one of the top management thinkers of his generation, and his insights about innovation in this book are invaluable. He breaks down the key elements involved in innovation and uses real world examples to show how they were executed. Though first published back in the 1980s, Drucker's ideas are still quite relevant today.

"The Ascent Of Money: A Financial History Of The World," by Niall Ferguson - This is Coke CEO Muhtar Kent's favorite book, which chronicles the evolution of the financial system. It's essential for entrepreneurs to understand the macro economic elements that will ultimately determine if their business succeeds or fails.

"Never Eat Alone," by Keith Ferrazzi - If you don't believe it already, this book will convince you that networking is the key to success. Ferrazzi shares how some of the most powerful people in the world—like Bill Clinton—mastered the art of networking, and made it to the top.

"The World Is Flat," by Thomas Friedman - Another essential macro-economic guide to understanding globalization. The New York Times columnist illustrates how companies and individuals need to react to the increasingly flat world and new ways of doing business. It's also one of JPMorgan CEO Jamie Dimon's favorite books.

"The E-Myth Revisited," by Michael E. Gerber - Gerber provides an approach for small businesses to survive where so many others fail. It's about turning a business into a well-tuned system that doesn't require you to work yourself into the ground every week.

"Outliers," by Malcolm Gladwell - Gladwell's third bestseller explains how hard work and luck equally play into success. The titans of Silicon Valley, for example, were all born within a few years of one another, in very specific circumstances, which allowed them to create disruptive technologies. But luck isn't anything without hard work: Gladwell also popularized the idea that it takes 10,000 hours of practice to create a genius.

"All Marketers Are Liars," by Seth Godin - Godin believes that the key to marketing is telling a story, and this book has become his manifesto on the subject. When marketers tell a good story, consumers will repeat the story, and they eventually they will accept that story as a reality. But without being authentic, you'll never get to that point.

"The 48 Laws of Power," by Robert Greene - Greene wrote the book while navigating the highly political Hollywood film industry. He told us in a recent interview that he was disturbed by the psychological gamesmanship he encountered, so he read up on the history of power—especially Machiavelli—and created this comprehensive guide to understanding the dark side to human nature.

"Delivering Happiness," by Tony Hsieh - Hsieh, CEO of Zappos, created a rabid consumer base for his brand by molding his company's corporate culture. His book is all about Zappos, but there are plenty of applicable ideas that can help any business looking to breed loyal customers.

"Steal Like an Artist," by Austin Kleon - Kleon isn't a prototypical business guru—he's an artist who has some fantastic insights about creativity. The book is a short, easy, very personal read that's packed with practical tips to help kickstart creativity.

"Founders at Work," by Jessica Livingston - Livingston provides a look into the early days of software startups. It's down-to-earth and goes into the grainy details of what it was like to be in the trenches of the early '80s tech boom to the Web 2.0 days. Plus, the book picks the brains of some very experienced entrepreneurs for advice.

"How Successful People Think," by John Maxwell - Successful people are not necessarily smarter than the rest—they just know how to think differently. Leadership guru Maxwell outlines the keys to innovative and disciplined thinking, for example, by offering tips on how to use the 80/20 rule to allocate your energy.

"The Smartest Guys In The Room: The Amazing Rise And Scandalous Fall Of Enron," by Bethany McLean and Peter Elkind  - Warren Buffett names the book as one of his favorites. It's a reminder to all entrepreneurs of the power and importance of ethics, since spectacular downfalls are years—and countless small decisions—in the making.

"Zen and the Art of Motorcycle Maintenance," by Robert Pirsig - The classic is filled with complex philosophical discussions, but at its heart it's about problem-solving and the metaphysics of quality. It's a guide to self-reliance and reasoning that every entrepreneur should take the time to read.

"The Lean Startup," by Eric Ries - Ries' book provides an approach to dealing with uncertainty, which is integral to the success of a new company. It's often touted by VCs and entrepreneurs as a must-read roadmap for innovation.

"Start With Why," by Simon Sinek - Sinek's book revolves around one simple idea: figuring out what your company's long-term vision is. Why does your organization exist, and why should customers care about it? By doing this, all your other organizational decisions will become much easier.

Now check out CEOs' favorite books.