Population growth, home equity fuel franchising

Franchises are blossoming in northern Nevada as companies look to expand into the growing retail market and local homeowners gain the wherewithal to open their own businesses.

From Foot Solutions, a specialty footwear company, to Taco Del Mar, a quick-serve Mexican food restaurant, a new crop of franchises are opening this year.

Nevada, in fact, is the top market for franchises in the country, according to a 2003 economic impact report by the International Franchise Association.

Franchises in Nevada account for a greater proportion of jobs, payroll and economic output than in any other state.

Retail broker Kelly Bland, senior vice president of retail properties for Alliance Commercial Real Estate Service, says franchises are attracted to the newer growing areas, such as south Reno, Spanish Springs and northwest Reno.

Landlords welcome franchises because they offer a reassuring comfort level, Bland says.Unlike new mom-and-pops, franchises have established brand recognition and consistent standards for operation.

New franchises are moving into the city's center, too.

Figaro's Pizza, Cold Stone Creamery and Taco Del Mar will open by the end of the year in River's Edge Retail Center, a project Bland developed next to the Century Riverside Theater downtown.

Bland says he sought those restaurants because they're unique to this area and offer high-quality products.

Another factor driving franchise growth is the increasing number of people wanting to own franchise businesses and their ability to finance the ventures.

Rod Jorgensen, director of counseling for the Small Business Development Center at the University of Nevada, Reno, estimates he's worked with 30 percent to 40 percent more clients this year than last who want to own franchise businesses.

Part of the reason stems from rising home prices.

"People by and large have a lot of equity in their homes, and they've got some financial wherewithal," he says.

Before, they may have stuck with a lessthan- satisfying job, but now with an equity nest egg, they decide to strike out on their own.Many choose the franchise route because of the training, structure and brand recognition the companies offer.

Cathy Blair and Carmen Robert wanted to own a wine shop.

Both knew a lot about wine, but neither had owned a business.

Instead of climbing a long, trial-and-error learning curve, they decided to buy a franchise.

The partners will open the region's first Vino 100 at South Meadows and Double R Boulevard Nov.

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Blair says the franchise will offer the best of both worlds.

The shop will be able to cater to local tastes, a critical factor, says Blair, a fourthgeneration Nevadan.Yet it will also be able to get recommendations from the franchisor.

"We'll have access to amazing wine experts who fly all over the world," she says.

As part of the franchise network, the business will also get better deals on products such as Riedel stemware, than it would if it were independent.

Greg Roquet, president of FranNet in Northern California and Nevada, says the influx of Californians has also fueled the growth in franchises here.

The new residents need jobs, and many are deciding to open businesses.

FranNet matches people with franchise opportunities and provides free education and coaching.

Roger and Iris Iles moved here from the San Francisco Bay Area in 2000.After commuting three years to a technology job in Palo Alto, Roger, 60, decided it was time for a career change.He and Iris, a former nurse, researched business opportunities and received assistance from Jorgensen through the Small Business Development Center.

The couple selected Island Ink-Jet Systems, an ink-jet products and services company, and opened the first store in August at The Village at Double Diamond.

They plan to open several more stores in northern Nevada.

Joe Franc is another newcomer and new business owner.He moved here from New Jersey when his wife got a job with IGT.

Franc researched the market for several months and then bought a Foot Solutions franchise, which will open in south Reno by the end of the year.

The store sells specialty footwear geared toward an aging population.

Although franchises offer support and a recognized brand, potential franchisees still must research and prepare a solid business plan

before investing, Jorgensen cautions.

The most common misconception is that the world will beat a path to the door because the business is a franchise.

One downside of ready access to capital through home equity is some people may not apply the due diligence they would if they had to seek financing from a bank.

"Owning a franchise is a long-term marriage - a minimum 10-year agreement," he says.

Many still associate franchises with french fries, but the industry includes an ever widening spectrum of businesses.

Franchises in the fast-growing service sector include everything from educational tutoring to auction houses that help people sell items on EBay.Demand comes from aging baby boomers who are willing to pay for services, such as lawn care and house cleaning, and two-income families that don't have time to do the chores themselves.

Hair care is another business in which franchises are growing strong.

Sergio Nevel recently opened Fantastic Sam's hair salon at The Commons shopping center on South Virginia.

Despite little advertising, the store reached half its long-term goal for weekly guest count within two weeks.

Through his company Sierra Salons,Nevel plans to open other Fantastic Sam's locations in northern Nevada.He is also president of Gold Country Salons LLC, which owns the regional rights for the chain and sells the licenses here and in north-central California.

Nevada isn't alone in seeing franchise growth.

In its survey of more than 100 franchise business executives, Franchise Recruiters Ltd.

in Chicago projected a 5 percent to 6 percent growth in franchise units nationally for this year, following a projected 7 percent growth rate in 2004 - the fastest rates since the mid-90s.

Nationwide the number of Small Business Administration loans for franchises,meanwhile, jumped 29 percent from 2002 to 2004 and the total dollar amount increased 12.5 percent.