- 10 December, 2006 -

Harry Yee was downsized from his auto industry job in October, and now he's getting closer to being his own boss. Yee is among a growing number of Michiganders, from people taking auto industry buyouts to baby boomers in transition, who are interested in buying a franchise -- running their own businesses with the help of a proven formula. The number of companies selling franchises has grown 27% in Michigan since 2003, with 1,350 now operating, according to the Michigan Attorney General's Office. The franchising explosion coincides with thousands of autoworkers taking buyouts, some large enough to let them consider entering food, fitness, check-cashing or an array of other businesses. Mark Cory, who owns the Franchise Network in Detroit and helps match people to the 100 franchise companies he represents, said business has been steady since he opened in 2002. He said half of his clients are leaving the auto industry, from which more than 80,000 workers have agreed to buyouts in the past year. And despite having to invest long hours, franchisees say they value their freedom from the corporate world. "They want more control over their destiny," Cory said. "By having that control they are not going to be subjected to future downsizings or layoffs." Yee, 43, of West Bloomfield is among thousands of workers displaced by the ever shrinking domestic auto industry this year. Buyouts at General Motors, Ford and several suppliers including American Axle and Visteon have workers wondering what to do next. Yee spent the first two decades of his career as an engineer at GM, Chrysler and Johnson Controls. At the auto supplier, he was a well-paid project manager when his job was eliminated. Now he is researching Cash Plus Inc., a payday advance franchise based in Tustin, Calif. "There was something about being let go, it just gave me an opportunity to pop my head up," Yee said. "For the last 21 years, I've had my head down just working for the man." Start-up costs at least $20,000 Franchising is growing beyond Michigan's sour economy. In the past two years, companies offering franchises nationwide grew by 900 to 2,500, according to a recent study by the International Franchise Association. Franchises employ more than 18 million Americans and represent more than $1.5 trillion in annual revenue. Cory said people are often attracted to franchises as a way to own their own business without inventing it from scratch. They benefit from a proven system with support along the way. While franchises vary, most require a minimum of $20,000 in cash up front for the franchise fee and a net worth of at least $100,000. Once operating, franchisees must pay royalty fees that average about 6.7%, usually based on gross sales. Pati Heath, of Novi, owner of Entr?e Vous in Northville, gets Marc Mastropaolo of Northville his carryout order Wednesday. Lisa Mailley, had just stopped in to see the restaurant that Heath, a former car saleswoman, opened in February. (HEATHER ROUSSEAU/Special to the Free Press) International Franchise Association has information on a number of franchises and offers a free online course on franchising basics. ? Go to www.franchise.org and click on the IFAUniversity link. It will take you to the online courses where you can select the franchising basics course. To order the association's annual guide to franchises, call 800-543-1038. ? The Michigan state government Web site has a section on franchising. Go to www.michigan.gov/beyourownboss. Go to the quick links section, and click on general resources. Then click on starting a franchise. ? The Michigan Attorney General's office publishes the Michigan Franchise Guide, which includes information about evaluating Start-up costs vary widely, depending on the franchise. For example, fast-food concepts can begin at about $180,000 and go up to $2.9 million, according to IFA data. A Little Caesars franchise could cost $97,000 to $220,000 while a Curves fitness center franchise could cost $36,425 to $42,850. Some franchise companies offer special incentives to displaced autoworkers such as the Toledo-based Marco's Pizza, a 155-unit chain that plans to open 12 Michigan locations next year. It is offering discounted franchising fees, moving expenses and donations to United Auto Workers' training funds. The company has set up meetings in January for UAW members who have requested information from the pizza chain. But not everyone succeeds, even with franchise support and training. The top reasons people fail are because they don't follow the franchise system or they lack adequate capital, Cory said. It often takes six to 12 months for a business to take off, and people don't always budget enough for their expenses during the early days. "If you are not willing to follow someone else's system, you probably shouldn't open a franchise," Cory said. "Why pay for it if you aren't going to use it?" Joe Dyament, 45, of St. Clair Shores also got into franchising after working for DCI Marketing. The company did GM's showroom promotional materials. But Dyament felt a change was coming in 2004 and started investigating his own business. Soon after, he was offered a buyout package and took it. He opened Foot Solutions in St. Clair Shores in February 2005 after consulting with Cory. "I was taking a look at emerging markets and have always been interested in the medical profession and customer service," Dyament said. "Foot Solutions doesn't define itself. It is a hybrid of retail and medical. We are like a pharmacist of the foot." The store sells comfort shoes such as MBTs, which re-establish natural walking and standing conditions, that run $245, and also builds custom orthotics by analyzing computerized scans of feet and doctor's prescriptions. Dyament said the days were long for the first year. But this year, he and his wife, Diane, were able to take a week's vacation. Soon, he will cut back to working five days a week instead of six. Richard Gorman, 42, of Rochester Hills isn't quite ready for a vacation. After examining more than 30 franchise concepts -- including fast food, online auctions and resorts -- he decided on Schakolad Chocolate Factory. He opened his store in Rochester Hills in September after nearly 20 years in the banking and investment business. "There really was no limit, except at the end of the day, I did not want to stay in the same business I was in for 20 years," he said. "I wanted to do something different, and making chocolate is definitely that." The franchise isn't purely retail; it also generates business from weddings to corporate events. Also, the initial investment of nearly $200,000 was lower than many other food-related franchises, he said. Gorman makes all the chocolate fresh in the store. He makes 70 combinations of handmade chocolate and sells sugarfree chocolate, gelato, fudge, coffee and hot chocolate. Candies sell for about 90 cents each. Yee, who is researching Cash Plus Inc., feels fortunate that his severance package was enough to help him get started in a franchise. It required a $35,000 franchise fee, and it costs up to $120,000 to build out a store, he said. "A lot of these people are just like me. A lot of them got tired of the cutbacks, of the game, the tight budgets," Yee said. "One thing my previous career taught me is I am not opposed to doing what it takes." To obtain a copy, call 517-373-7117 or go to www.michigan.gov/ag. ? The Federal Trade Commission regulates franchisors & provides some information on franchising. Call 877- 382-4357 or go to www.ftc.gov. Contact GRETA GUEST at 313-223-4192 or gguest@freepress.com. Copyright ? 2006 Detroit Free Press Inc.

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