Regional Report Charlotte December 2013

After years of struggling, often working four jobs to make ends meet, the switch finally flipped for Gretchen Hollifield Ewers in 2005 when she opened The Dog Wizard Inc., an obedience school in Charlotte. The Mooresville native’s company has an excellent reputation — all 66 Google reviews give it the highest rating — and by 2011 was raking in annual revenue of more than $500,000. She expanded to Columbia, S.C., and that branch fetched almost $200,000 in 2012. With that — and the U.S. pet industry doubling to more than $50 billion during the last decade — Hollifield Ewers, 39, and Cranston Blanks, chief operating officer, saw franchising as a logical next step, so they launched The Dog Wizard Academy LLC last year to do that and train franchisees. Her goal: add 18 franchises a year.

Tradition, backed by an old U.S. Department of Commerce study, claims 95% of franchisees succeed, but that figure has been debunked. And fortune often frowns on franchisers, according to a 2005 study by Scott Shane of Case Western Reserve University. “Of the more than 200 new franchise systems established in the United States each year, 25% don’t even make it to their first anniversary, approximately three-quarters fail within a decade, and only 15% make it to 17 years.” Has The Dog Wizard concocted a potion that will beat the odds? Business North Carolina asked Marko Grunhagen — marketing professor at Eastern Illinois University and a member of the International Society of Franchising — to examine the company’s expansion plan. His opinion, edited for brevity and clarity:
 
They’re doing a number of things right in the short term, such as paying $30,000 for a franchise lawyer who has prepared them to do business in 50 states, and forming 25-square-mile exclusive territories. I’ve seen franchisers use territories of 600 feet. The entrance fee of $10,000 is a pittance, but it’s designed to get the name out there. Franchisees also go through four months of training. That’s a lot. McDonald’s has one month, but this is more than food service. It sounds like they’re doing what they think is right to protect the franchisee. But there’s a steep learning curve. If this takes off, they’ll have to alter the contracts, especially the $1,600 monthly franchise fee, to cover costs such as monitoring their franchisees. Most franchisers tie monthly fees to sales, not net income, so it’s on the franchisees to wring out a profit.