Multi-Unit Franchisee Magazine Issue II, 2016 | Page 78

OUT-SOURCERERS
looked outside for accounting, human resources, bill
paying, site selection, vendor
and lease negotiations, co-op
management, and advertising.
And with eight new stores
scheduled to open this year,
Johnson will consider any
outsourcing tool that leads
to quicker, better decisions,
cost savings, and back office
efficiencies.
“It all comes down to return on investment, and to
me, time is the most valuable thing,” he says. “If it’s
cheaper for someone else to
do it, takes less of your time
or your team’s time, and if the
end result is as good or better
than what you can do internally, then it’s worth looking
into outsourcing.”
“If I’m in the back office
writing checks, I’m not with
the customer and I’m not
seeing the competition, new
products, or what the market
has to offer,” says Mike Alia,
a 17-year multi-unit franchi- Mike Alia
see of Gloria Jean’s Coffees.
“All we have in this business is time. If we
waste time doing the little things, we can
never grow the business,” says Alia, who
outsources payroll, accounting, and real
estate functions.
Spend money to make money
Outsourced contractors provide multiunit franchisees with the most up-to-date
technology, as well as providing scalability,
saving on both staff hires and the need for
internal maintenance time and expense.
“I’ve run into plenty of folks along the
way who tried to keep payroll in-house
to save a dollar or so,” says Karg. “I knew
right out of the gate that it is not something you want to invest your time in. It
is such a commodity-type service that you
end up wrapping up too much time and
money, and the filing penalties and things
of that nature are just not worth the risk.”
Along with hard cost savings, increased
efficiencies, and the invaluable “soft” cost
benefits of time to focus on growth and
productivity, outsourcing can provide additional intangibles that may have previously
seemed out of reach for smaller or early
stage franchisees. For example, creating an
outsourcing team can give a small company

74

the feel of a larger one and provide access
to a higher level of talent—even more vital if the franchisee lacks the expertise of
more seasoned operators.
“What you are getting is a panel of
experts in their fields,” says Karg. “You
are using their knowledge, rather than
saying ‘I have to know it all.’ I don’t have
to know it all. I just need to have access
and business relationships with folks who
are good in those areas. Unless you are a
really large company, it is really hard to
cover all the disciplines you need to cover
on your own.”
And as franchis ees expand into multiple brands or markets that require new
or expanded procedures and processes,
outsourcing to gain needed expertise can
be increasingly critical to the success of
their new venture.
Alia, who operates four Gloria Jean’s
stores in three different markets in Indiana and Wisconsin, relies on outside lease
negotiators to make sure he gets the best
deal possible. “They know the financials
of the malls, the traffic, the competition,
and the market,” he says. “They are experts
and charge a small amount of money for
what they really do.”

In-house or outsource?
Many factors go into the decision of whether to keep a task
in-house or to use an outside
source. Where do you spend
your time? How critical to
your business is the job, function, or task? Are you able to
let it go? And especially for
smaller or startup franchisees, can you afford it at all
at this stage?
Tom Burtzlaff, president of
CMIT Solutions of Columbia,
a provider of IT outsourcing
services, looks to contractors
to help him run his own business. A franchisee of two territories near Columbia, Md.,
and an area developer for four
additional territories in Central Maryland and Northern
Virginia, he outsources legal
services, accounting, payroll,
human resources, bookkeeping, benefits administration,
and telemarketing.
“As a multi-unit franchisee,
it can be easy to be dragged
into the day-to-day administrative aspects of your business,” he says. “I always say that our team’s
most important value is to work on the
business, not in the business.”
Burtzlaff recommends creating a list
of tasks that must be accomplished each
week for the business to thrive. “Highlight the tasks that someone else could
do more efficiently. Then begin the outsourcing search to find who can provide
those services to help the business reach
new heights,” he says.
Baskin-Robbins franchisee Gary Yarbrough believes in a “must be present to
win” philosophy for his four San Diego
area stores. So he uses contractors for taxes
and legal help and established a creative
tie with a local college for marketing assistance.
Yarbrough says he has been able to keep
payroll in-house, but with two new stores
in the works, he expects that to change. “If
I don’t have time to get out in the neighborhood and help market my place, and
the accounting is keeping me from being
free, I have to hire a bookkeeper,” he says.
Taking a hard look at business operations also can help a franchisee know when
not to outsource a function. Outsourcing
might not be the right choice if a specific

MULTI-UNIT FRANCHISEE IS S UE II, 2016

muf2_outsourcing.indd 74

4/2/16 2:41 PM