Mobile storage is quickly changing the way people store and move belongings. Its gained tremendous recognition over the past few years by combining the benefits of self-storage with the conveniences demanded by todays consumers. What may have begun as a unique way for traditional storage facilities to differentiate themselves and gain market share has spawned an industry revolution.
The mobile-storage business is keeping pace with consumers needs and continually growing, but customers are becoming increasingly brand-driven. How can operators keep up with the increasing demand for brands?
Enter Franchising
According to the International Franchise Association (IFA), franchises play a significant role in the U.S. economy and are an important aspect of the service industry. Today, an estimated 760,000 U.S. franchised establishments generate more than $1.5 trillion in financial activity and produce one in seven jobs. Approximately 75 industries use franchising to distribute goods and services to consumers. Fast food, retail, automotive, computer services, hotels, motels, maid services and, of course, mobile storage are excellent examples of how franchising can be successfully applied to an established business.
The 411
Lets start with a brief explanation: As defined by the IFA, franchising is a method of distributing products or services. It can also be described as a relationship between a company (the franchisor) and an independent businessperson (the franchisee). Simply put, the independent business owner receives a limited license to certain rights, characteristics and elements of the company, usually including the identity, imagery and operating experiences. With franchising, consumers can expect the same quality products, convenience and customer service, regardless of a specific location.
The franchisee is not the only party involved with binding terms. A potential franchisor must be in business legally for one full year. It must also be able to show franchisees how to open a business and, consequently, make money at it.
Whats in Store
For many people, owning a business is an attractive option for achieving the American Dream. Franchising allows them to realistically obtain that goal, with little or no experience, through established methods and support services. The clear-cut advantage of buying into a franchise vs. starting a new business is a faster route to opening, building a customer base and realizing profitin short, quicker general success. It also carries less risk.
Franchisees ultimately benefit from the experience, expertise and support of the franchisor. Most franchisors provide the sales, marketing and operational tools for franchisees to succeed, with handson guidance to help them develop their own territory. Franchisors provide comprehensive training during the initial stages to educate franchisees about the company and ensure ease of operation. They also must set professional standards for training at every location.
In the mobile-storage industry, most franchised companies have pretested all their products, including the storage unit, trucks and facilities. Rental agreements for customers are already completed through corporate offices, so no legal fees are incurred. Another strong advantage for the franchisee is the franchisor pays for legal and accounting guidance, which would easily and quickly add up when trying to open a mobile-storage company solo.
Heres a summary of the benefits franchising provides:
- Continued support from the franchisor. Trial and error has already been established, and firm policies and procedures have been cemented. Overall, this can provide a sense of security for franchisees.
- Networking and bargaining power. Due to the large scale of the franchising system, better-quality items and services can be obtained at a lesser price.
- Brand-name recognition. Many franchisees are simply looking to buy an established name, which, through branding, could give them the extra boost needed to succeed and build their business quicker.
- Protected territory. Territories are normally protected by the franchisor, so no other franchisee from the same company can do business in that specific area.
- Advertising, marketing and PR support. Many mobile-storage franchising systems also provide a corporate website.
Tough Stuff
All these advantages aside, owning and operating a mobile-storage company is no easy task. Whether youre a franchise business or solo operator, challenges arise. Its important that a prospective mobile-storage operator be aware that the brand and system are designed to serve the customer, not the franchisee. The following are several drawbacks of franchising:
- The success of a franchisee is often based on the proven success of the franchisor to operate company units. The franchisor should be able to show that the business can be successful in various markets and conditions.
- If the franchisee strays from or does not follow the brand model, it might lead to failure. The biggest challenge for the franchisee is to keep up with the franchise system and goals.
- Unrealistic expectations on the part of the franchisor or franchisee can result in business malfunction. Attracting the right franchisees that fit the system can be a challenge for franchisors. Although a protected territory is a huge advantage, having a limited area for service could be a downfall.
- Although annual franchise fees can be considered a negative, they exist as a necessity. Franchisors can't support franchisees entirely. This fee goes toward efforts to continually fine tune their programs. Franchisors must satisfy their own goals as well as everybody elses.
The bottom line is mobile-storage owners should firmly understand any involved costs and the franchise system. Being financially prepared is essential, but franchisees must strive to hire professional employees who reflect the brand and be involved in all educational activities to solidify success.
Do Your Homework
The Federal Trade Commission (FTC) suggests conducting thorough research before deciding to franchise or invest in a franchise, as it can be a costly endeavor. Lawyers, accountants and state regulations are all good places to start for gathering information about franchise matters. Always ask a lot of questions.
FTC regulations provide security for potential franchise investors and franchisors. Franchisors are required to send potential franchisees a disclosure document called a Uniform Franchise Offering Circular (UFOC) before any money is paid or contracts signed. The IFA recommends careful consideration of the information provided in the UFOC, with the assistance of a lawyer and accountant. Many states also have disclosure regulations of their own and require franchise companies to file or register with a state agency. Other informative outlets include:
The Big Move
A recent article in the Denver Post acknowledged dynamic growth in the U.S. mobile-storage industry over more than 20 years. According to the IFA, over the past three years, almost 900 new franchise concepts went into business. Merging the rapidly growing, residential, mobile self-storage market with the benefits of the franchising system can result in a perfect fit.
Any success requires a commitment from the franchisor as well as franchisee. The challenge is not to sell a name and turn some cash but to constantly grow the business in the exclusive territory. Overall, franchising a mobile-storage company may be the perfect opportunity for some entrepreneurs. The franchise system is a proven model, with regulations and guidelines to help bring uniform standards to the industry. With franchise systems being monitored by the FTC as well as through state regulations, compliance helps meet the needs of customers and provides a safe and profitable business environment.
Those who can successfully identify a fitting company and grow as a franchisee may achieve their dreams of controlling their own financial futures in the mobile-storage industry.
Michael McAlhany, founder and president of Extra-Room-Self-Storage, conceived and developed sister company UNITS Mobile Storage in 2003. Adding to its two corporate-owned and eight franchised operations, the companys plans call for 50 franchises by 2011. For more information, visit www.unitsstorage.com.