Charles Smith found himself at a crossroads in 2011. For 15 years, he had worked in technology sales and sales management. He made a good living but felt he was bumping against the ceiling in his chosen career. Smith was in his 40s. He worried that in 10 years or so, he might be seen as obsolete.
"I wanted to have something I could control, where I dictated my viability in business," Smith said.
He decided to start his own business. It took him two years to decide to go with a franchise and two more years to find the right one.
Smith’s company, Slidell-based Jan-Pro of Southeast Louisiana, went from zero to $2.6 million in revenue in less than three years and serves markets from New Orleans to Baton Rouge to Lafayette. The company has twice been recognized as the janitorial service chain’s fastest-growing regional master franchise. In Jan-Pro’s 26-year history, the janitorial services chain has never had a regional franchise grow so quickly.
As a regional master franchise, Smith's firm has two sources of revenue: clients and franchise unit businesses, or smaller territories. Smith's firm has sold more than 100 of the unit businesses, which start at $950. More than 50 of the unit businesses have $50,000 in revenue.
New Orleans resident Misheko Stevenson-George opened her unit franchise in March. She saw a Jan-Pro ad on Facebook. Then she saw it again. And again. She had thought about that line of business before, but the ads made her consider the idea more seriously. After discussing the idea with her husband and a friend, she decided to pursue the business.
Stevenson-George worked as a preschool teacher, managed a law office and was a real estate agent before Jan-Pro. She works around the same number of hours, but now the work takes place at night.
"When it's your own business, it doesn't stop, as opposed to working for someone else, where once 4 o'clock hits, you clock out and go home," she said. "But anything can happen when it's your own business. You're responsible 24 hours a day, seven days a week."
Smith said franchises offer a more predictable path to success. The franchisor offers buyers a proven recipe that includes a business model, training and support, along with advice from a network of other franchise owners.
But Smith’s success story, although unusual, demonstrates one reason that franchise activity is growing, nationally and in Louisiana.
There were 11,000 franchises in Louisiana in 2016 with 12,535 locations, which generated $9.8 billion in goods and services, according to the International Franchise Association. Those numbers are projected to reach 11,500 franchises and $10.3 billion in 2017.
Nationally, 733,000 franchises generated $674.3 billion in goods and services in 2016. This year, the number of franchises will grow to 744,400, and the value of their goods and services will reach $710 billion.
In the past several months, south Louisiana has seen franchise openings, acquisitions or expansions that cover everything from pet care (Camp Bow Wow) and tire sales (Discount Tire) to hotels (The Watermark Baton Rouge) and helping seniors move and declutter their homes (Caring Transitions in Lafayette).
There also have been lots and lots of deals involving restaurants, with the biggest being GPS Hospitality buying 124 Louisiana Burger Kings — including 33 in metro New Orleans, 28 in the Baton Rouge area and 20 in the Lafayette area.
Ted Fireman, a franchise consultant with FranNet of Greater New Orleans, said there are a few reasons the amount of franchising activity has increased.
“I think one big issue for sure is the job losses in the oil and gas sector," Fireman said.
He's had a lot of calls from the Acadiana area, people who love Louisiana and don't want to leave. Many of them realize that the chances are low that the kind of job they had before will come back. Those people know they're going to have to look at other careers.
Franchising also has picked up in part because of the global economic meltdown 10 years ago, Fireman said. Many people in their 40s, 50s or 60s who lost jobs then may have gone through a second layoff. They find themselves competing with younger workers who can be hired for less. The older workers don't want to relocate or spend six to 12 months looking for a new job that might last only a year or two.
"They're done with corporate, and they look at franchising as something that makes sense and that they can afford," Fireman said.
In 2013, the average age of a business owner was 52, according to a report by the U.S. Small Business Administration. The median age for franchise owners was between 45 and 54, according to The Wall Street Journal.
Fireman said although there aren't as many franchises based in Louisiana as in Texas or Atlanta, the Louisiana companies have brought attention to the entire sector.
Smoothie King has close to 800 locations worldwide. The Smoothie King Center is home to the NBA's New Orleans Pelicans. Mandeville-based Painting with a Twist has about 300 locations, and co-founder Renee Maloney was recently featured on an episode of "Undercover Boss."
In Baton Rouge, Walk-On's isn't huge but has gotten a lot of attention as it marches into markets around Louisiana and Texas and across the Southeast. Raising Cane's has more than 300 locations, branching out from hometown Baton Rouge.
All of those companies are growing, and that's also drawn more attention to franchising, Fireman said.
Blake Mathias, an assistant professor at LSU's college of business, offered another possibility for the increase in franchise activity: Franchisors have less appetite for owning physical assets.
There's more risk than ever before in owning brick-and-mortar facilities, Mathias said. A number of businesses that depended on physical locations have failed or are struggling, including Blockbuster, Borders, Barnes & Noble and Circuit City.
In the hotel industry, peer-to-peer companies like Airbnb are competing against major firms like Hilton or Marriott, Mathias said. But Airbnb is doing so without investing any money in bricks and mortar.
Hotel chains look at that and ask themselves a couple of questions: Do they want to spend $50 million on a hotel and take on that risk? Or is it better to own a revenue stream than a building?
Instead of building, hotel chains franchise out new locations and collect 8 percent to 12 percent of the new hotel's revenue from the franchisee, Mathias said.