Multi-Unit Franchisee Magazine Issue IV, 2016 | Page 54

BY HELEN BOND S Succession uccession SUCCEEDING AT IT’S NEVER TOO EARLY TO PLAN FOR A TRANSITION F or Wanda Sieber, what began as an ordinary phone call became a wake-up call. The person who answered the phone told Sieber that the owner of the business she’d called had died unexpectedly, adding “We don’t even know if we’re going to have jobs tomorrow.” “It was like a lightning bolt through my heart,” recalls Sieber who, with her husband Bill, is a Unishippers multi-unit franchisee with stores in Green Bay, Seattle, and Mobile, Ala. “This was a small business, where people depended upon each other. I immediately thought, ‘What would happen if something happened to us?’ That was when it was time to get serious.” Putting off succession planning is not unusual for multi-unit franchisees, who are preoccupied with running their everyday business—not with when they will hand over the reins, whether through careful planning or an unexpected event. And as more Baby Boomers inch into retirement, the need to plan for succession has never been more acute. “We need to be looking not just at where we are or need to be, but also ahead,” says Sieber. Soon after that phone call, she says, “We took care of all the things everyone tries to avoid.” As the saying goes, denial is not a strategy. “What holds people back and has them leaving so much on the table is the perception of what succession is,” says Kendall Rawls a second-generation member of 52 the Atlanta-based succession planning firm The Rawls Company. “Most people believe succession planning is about retirement and exit planning. What we believe is that succession is about value. It is not about the things no one really wants to talk about. It is about franchise growth, sustainability, and creating options.” If Rawls had her way, the word “succession” would be tossed from the conversation in favor of “building value.” Beyond ROI and cash flow, potential buyers and successors will consider future earnings, key leadership, management expertise, and family dynamics when valuing the business. Add in the varied (and often arbitrary) requirements of franchisors in approving transfers, and a well-structured succession plan is critical to preserving a franchisee’s hard-won equity. “If there is not a strong plan in place from the franchisee, the franchisor holds all the cards,” says Rawls. Why and when a business owner decides to exit differs for everyone. Problems occur when plans aren’t communicated effectively, particularly within familyowned franchisee firms, says Dean Zuccarello, founder and CEO of The Cypress Group, an investment bank and advisory services firm specializing in restaurant and franchise companies. “In some cases it is like the elephant in the room,” says Zuccarello. “The family hasn’t done enough internal communication, planning, or soul-searching to discuss the right plan for themselves.” Whether a franchisee seeks security or wealth from a sale, or is forced to step back because of age or health, the goal is to make decision-making as strategic as possible. “We encourage people to go through a disciplined process of evaluating those things,” he says. “So when the time is right they are committed to the process, they know why the time is right for them, and there is no second-guessing or missing an opportunity to act.” Building for the future For Weed Man subfranchisor and multiunit franchisee Terry Kurth, a secure business future means building a strong bench. A lawn care veteran and Weed Man franchisee since 2001, he is counting on the leadership of his son Andy to build the business into a $15 million to $20 million company in the next decade. Like many children growing up in a family-owned business, Andy had worked for the company when he was younger. He joined Weed Man in 2004, armed with a degree in soil science and turf management from the University of Wisconsin-Madison. When a general manager quit without notice the following year, he stepped into the job and has never looked back. From their home base in Madison, the father-and-son team have built a nearly $7 million business, with satellite offices in three additional Wisconsin cities, along with Northwest Chicago, Austin, and Denver. In 2015, they were named the brand’s Franchisee of the Year. MULTI-UNIT FRANCHISEE IS S UE IV, 2016 muf4_succession(50,52,54).indd 52 10/6/16 5:13 PM