Cell Phone Repair Franchise Opportunities
Learn about the experiences of Shane Miracle, owner of five Cell Phone Repair franchises, as he shares insights on the good and bad sides of franchising, including issues with franchisors, franchise agreements, and the importance of franchisee associations.
Table of Contents:
Introduction
Patrick Findaro, co-founder of Vetted Biz, had the opportunity to speak with Shane Miracle, the owner of five Cell Phone Repair franchises in Texas and founder of the Cell Phone Repair Independent Owners Association. They met at an event hosted by the American Association of Franchisees and Dealers, where they discussed Shane’s journey in franchising, the benefits and challenges of being a franchisee, and the importance of franchisee advocacy. Shane shares his insights on navigating the ups and downs of the franchise system, including both the rewarding and difficult aspects of working with a franchisor.
About Shane Miracle and Cell Phone Repair Franchise
Shane’s background is in software engineering in the insurance industry. After growing tired of extensive traveling, he decided to start a local business and eventually entered the franchise world. In 2013, he found an opportunity with a Cell Phone Repair franchise that at the time had about 50-60 locations. Initially, things went well, but challenges started when the original franchisor sold the business to a new company, MerryMeeting Group (MMI), which caused disruptions in how the franchise system was managed.
Key Challenges
- Market Encroachment A significant challenge arose when the new franchisor purchased a competing brand, Digital Doc, and allowed them to open a store just across the street from Shane’s second store. The two stores operated in direct competition, severely impacting revenue.
- Inconsistent Franchise Terms Over time, the franchisor brought in conversion stores from independent operations with different, often lower, royalty structures compared to legacy franchisees like Shane. This discrepancy created significant tension.
The Benefits of Franchising and the Role of Franchisor
While the challenges were significant, there were still key benefits of being part of the franchise:
- Network Access: The ability to discuss challenges and share insights with other franchisees in a confidential environment.
- Brand Credibility: The Cell Phone Repair brand helped build credibility in the local market.
- Partnerships: The partnership with Zagg provided access to a broader customer base and additional services, helping drive traffic to the stores.
However, Shane highlighted a lack of hands-on support from the franchisor, with no visits from corporate in nine years.
Expanding to Five Franchises
Despite these challenges, Shane expanded to five locations. Some were through buying struggling stores and turning them around. However, balancing profitability proved difficult as ongoing costs, royalties, and operational challenges eroded profits. Even with five stores, Shane estimates his net profit at around $38,000, emphasizing the struggles with scalability in the current franchise environment.
Advocacy as the Founder of the Independent Owners Association
Shane established the Independent Owners Association (IOA) to support franchisees like himself, focusing on:
- Negotiating Better Terms Successfully driving initiatives such as adopting Square for credit card processing, which helped increase employee tips and overall morale.
- Financial Literacy and Training Organizing training events that covered financial literacy, store management, and device sales techniques, which significantly boosted store sales for many members.
Importance of Franchisee Associations
Shane advocates for franchisee associations to help provide a balance of power against franchisors. Associations can:
- Negotiate: Collective purchasing power can be a significant advantage.
- Provide Training: By organizing events, franchisees can share knowledge and improve store performance.
- Support Legal Review: Association funds can be used to review franchise agreements, making it more affordable for prospective franchisees to understand contract implications.
Key Takeaways for Prospective Franchisees
- Legal Review Always have a franchise attorney review the franchise agreement. Negotiate terms where possible.
- Do More Research Speak to as many current and former franchisees as possible to understand the real challenges and successes.
- Franchisee Associations If there isn’t an association, consider starting one. Associations provide a platform for franchisees to support each other and hold franchisors accountable.
Advice for Franchisors
Shane suggests that franchisors should:
- Over-Communicate: Open up communication channels to ensure transparency and understanding between franchisor and franchisees.
- Engage with Franchisees: Understand and address the concerns of franchisees, especially when those concerns involve profitability and sustainability.
Conclusion
Franchising can be a rewarding business model, but it’s crucial to understand both the opportunities and the risks. Thorough research, legal counsel, and engagement with franchisee associations can help mitigate risks and align expectations between franchisors and franchisees. Shane’s experiences illustrate the importance of transparency, effective communication, and support in creating a successful and profitable franchise environment.
