He Bought a Failing Franchise and Took it From $30K a Year to $750K. What's the Secret to a Successful 'Flip?' Franchise turnarounds aren't always easy, but if you spot the right signs and follow the right strategies, it can be lucrative.
By Liz Brody Edited by Frances Dodds
This story appears in the July 2024 issue of Entrepreneur. Subscribe »
Kenny Clark was looking for a failure.
In 2014, the lifelong Texan decided he wanted to buy a Minuteman Press franchise because he liked the business: It was closed on weekends, required skilled workers (versus high school kids that come and go), and offered a royalty cap. But locations were expensive. Opening a new one could cost him more than $200,000, and he realized the demographics near his home just didn't support it.
So Clark had a different idea: What if he bought a failing Minuteman Press location on the cheap, then turned it around?
This strategy is often overlooked in franchising, where the main focus is on new units. But there's plenty of supply. At any given time, according to the industry experts we talked to, an estimated 10% to 20% of a franchise's units are struggling.
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Clark asked Minuteman Press about existing units in his region, telling them, "I want to see the good, the bad, and the ugly," with an emphasis on the bad and the ugly. Soon he was heading to a store in McKinney, Texas. It was 10:30 a.m. when he arrived, and the place should have been bustling. Instead, it was closed.
That was great news to Clark.
"This store is failing because it's not even open when it's supposed to be open," he figured. "You couldn't even find them on Google. They weren't doing any online marketing." This was a fixer-upper he was sure he could rehab. He had to pay a transfer fee of around $21,000, but he negotiated the store's price down from $40,000 to $11,000. "I definitely stole it," he says.
Then the hard work began. Because here's the thing about franchise turnarounds: They're a great opportunity for savvy business operators, but they're not as easy as they might appear.
"I was worried," admits Pete Scaglione, the former Minuteman Press sales support vice president, who worked with Clark. "He had three kids. But Kenny is a go-getter."
Sure enough, Clark took the annual revenue from around $30,000 to over $750,000 — and this year he's shooting for $1 million.
There's nothing new about the franchise turnaround strategy. "It's always been something people do, and usually with single units," says Bill Luce, president of Transworld Business Advisors, whose brokers cover franchise resales.
But that can look different as times change. Certain categories might suddenly become more available as resales, for example — like food franchises after COVID. "Restaurants were in such dire straits there was kind of a shark mentality among people who thought they'd pick up deals," says Robin Gagnon, cofounder and CEO of a marketplace for people to buy and sell restaurants, aptly named We Sell Restaurants. "Even now, we absolutely have those customers."
If you want to enter the world of franchise turnarounds, you'll find many people willing to help. There are brokers, consultants, and online marketplaces that range from the category-specific We Sell Restaurants, to the broader service Franchise Flippers, which focuses solely on franchises and covers all kinds of industries. And because the brands themselves have a vested interest in getting their failing units into better hands, some even have dedicated resale programs. CarePatrol, a franchise that advises on senior care with 211 locations, even gives a special prize to owners who've turned around an existing unit. They call it the "Sexy Buffalo" award, after the legend that buffalo will charge into a storm instead of trying to avoid it, says brand president Becky Bongiovanni.
Often, fixing a franchise really is like plunging head-on into whiteout conditions — because it's not always clear from the outside why a particular unit is doing poorly. Sometimes it's the franchise concept itself, which might be anchored to an old and dying trend, like the many frozen yogurt brands that rose and fell a decade ago. Occasionally, location is the culprit; a neighborhood has changed since the unit opened, and now it's too far from its target customers. Othe times, the problem is operational: "The current owner hasn't been able to build the business properly," says Jeremy Pourbaix, CEO of Franchise Flippers, and from what he sees, that's most often the case.
To figure out what's really going on, Pourbaix says, you'll need to roll up your sleeves and get your hands dirty — and give it two or three years before you expect to see success.
None of that frightened Clark when he bought his Minuteman Press location. By then, he was well acquainted with adversity: There was his early childhood with a "drug addict, alcoholic mom," as he puts it, the bad neighborhoods, the nine or 10 different schools by third grade, the epilepsy that struck as a young man and destroyed his dream of being a game warden, his rebound into a new career in electronics that led him to the top of the circuit board industry, and then his wife announcing she was pregnant with their third child, which was great news but also signaled a need to make money without having to travel all the time — and therefore, the inspiration to pursue franchising.
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His franchise education began immediately upon buying that Minuteman Press business — and over the years, he learned that every good turnaround likely requires three big things:
1. Fixing your team
On his first official day as a Minuteman Press owner, Tuesday, September 2, 2014, Clark was driving to his store when he got a text. It was from the store's only employee from the previous owner — the one who could show him the ropes.
The guy quit. Clark's stomach sank.
Turns out, he was probably lucky. When new owners buy a struggling franchise, they often assume that the store's existing employees are an advantage. After all, they're inheriting a team that knows what they're doing. No hiring, no training! But that's not always the case.
Ann Marie and David Weaver learned this the hard way in 2013, when they entered franchising. Having decided on the retail massage category, they didn't necessarily intend to buy a struggling unit. But they discovered that a couple of existing Elements Massage studios (a brand that now has nearly 250 locations) were for sale near their home in Littleton, Colorado, while the territory wasn't available for new ones. And those two studios were for a good price!
They went for it, and then immediately discovered problems — which they came to call the "broken legs" of the business. One of the worst: the existing team.
"I am suddenly eyeball to eyeball with 50 employees in two locations, and I didn't hire any of them," Ann Marie recalls. "I'm like, 'Hey, I'm excited to meet all of you. Let's get to work!' But to them, I'm Attila the Hun coming in to mess up their world. I was not prepared in the slightest for all the doubt and judgment they had for me as a new owner."
Despite 13 years in corporate America, she'd never fired anyone. Now she had to learn fast. And she got good at it ("I was raised by a Marine," she says). She'd go on to hire and fire close to 300 people over the next four years, assuming the mindset of, This is how I'm going to run the business that I want to own.
Once she had a loyal team in place and a culture to keep them there, business started to pick up. By 2017, she'd nearly quadrupled the annual revenue from below $300,000 to more than $800,000. And when she sold, she says, she doubled her investment. "It was like an old Honda with a stick shift and a couple hundred thousand miles on it, and I had that thing in fifth gear going about 90 miles an hour," she recalls. "When you pull that off, you become a very different professional in all the best ways."
As for why she doubled her investment in selling the units, David says, "She'd gotten really good at growing sales and taking care of the customer. But what we sold the company on was the team." That's why, if the Weavers ever do this again, Ann Marie knows the first thing she'd do: "I'd absolutely clean house."
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2. Fixing your reputation
When Clark first walked into his store, he had a checklist of things to change. First, there was the location itself: "I just hated it," he says. The store was dark and dumpy. So
when he spied a freshly renovated vacancy at the other end of the strip, he talked the landlord into transferring his lease. He also worked on digital marketing, and hired a graphic designer.
What he didn't expect was all the people who flooded the phones asking for their original files. "I learned it was because they were so fed up with what was happening before, they were taking their printing somewhere else," he says.
It took Clark a minute to figure out he'd need to be doing image repair. "Sometimes you've got a turnaround where there's bad will," says Transworld's Luce. "And you've got to overcome that, which can take a little longer. But my experience is that customers are pretty forgiving, and if you can bring value, it's not that difficult to win them back."
Clark started by joining the McKinney Chamber of Commerce and showing up at their weekly meetings. He told the assembled 100 or so business owners that he'd taken over, and offered to make amends for his predecessor: If an order was late or the quality wasn't up to their expectations, they would not pay for it. He also told every customer that walked in to reach out to him directly if they had any issues.
This kind of commitment, he knew, would be the marrow of his success. "I will jump through hoops," he says of getting every order done on time with exceptional quality. He also rides his employees hard on this kind of service and has added incentives to keep motivation high. If they hit a certain target for the month, they'll get a bonus of up to $1,000.
Almost immediately, revenue started to grow.
Ask around, and you'll hear plenty of stories among franchise rehabbers about getting whomped with the curveball of reputation management. Scott Greenberg has a few to tell. He bought an Edible Arrangements franchise in 2012, in a low-rent strip mall in Hollywood, California. (The brand is now just called Edible, with nearly 800 stores.) Greenberg already owned one Edible store nearby, which he'd started from scratch six years earlier, and he'd heard complaints about this second unit from customers who ended up at his store. Still, he wasn't prepared for what he found when he acquired it.
"I thought I was gonna walk into a store that was ready to operate, flip on the lights, and just provide a better experience," he says. "But the previous owner had gutted the place. They even took the $10,000 electrical sign outside."
Greenberg rebuilt that location — including its public perception — from the studs.
He put up an "Under New Management" banner and replaced the old team with experienced employees from his first store. Then he plastered the neighborhood with flyers and door-hangers inviting people in for a free treat and new experience. He also pounded the pavement.
In the mornings, he went to the preschool around the corner and offered chocolate-covered strawberries to the parents dropping kids off. He gave away fruit arrangements to the teachers inside. He sponsored events at the local Boys & Girls Club — everything he could think of. The store never performed as well as his first one, but because he could combine some of the operational components, like orders and deliveries, sales grew to profitability within a year. "It became the little business that could," he says.
Greenberg sold both stores by 2015; now he's a business keynote speaker, regular Entrepreneur contributor, and author of the book The Wealthy Franchisee. He says the turnaround experience taught him a lot about how to build reputation quickly — which is important no matter what business you're in. You need to be all over the review platforms, for example. That means responding to both great reviews ("Thank you, we're grateful, we love what we do") and complaints ("I'm so sorry that was your experience. We'd love an opportunity to fix it.") Don't get defensive or debate the facts, he advises. You're never just addressing one customer; you're always talking to the rest of the world.
"With my store," Greenberg says, "we very easily turned our angry customers into customers for life, because we swooped in and we made it right — and then some."
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3. Fixing your community relationship
Over the years, Clark came to understand that you can hire a good team, repair a ruined reputation, and improve your operations—but to really catapult a turnaround, you must become essential to your community. And that takes long-term dedication.
For Clark, this lesson really clicked after three years of turning around his Minuteman Press location—when he decided to take over a second failing unit, about 30 minutes away. To his surprise, he soon realized he was spread too thin.
"I saw that if I wanted to grow that second business, I had to be going to its local sporting and downtown events, and building relationships with folks there on a regular basis," he says. Things got even worse when COVID hit, and his customers needed him more than ever to stay open and do what he could to serve them.
He had to face facts: He couldn't be personally invested in two communities at the same time. So he closed the new unit and absorbed the customers into his original McKinney store. Then he doubled down there, and business kept growing.
As franchising experts often say, the best marketing doesn't even look like marketing. It looks like engagement — through supporting your local schools, parks, events, and wherever else you might meet potential customers. But this is time-intensive work. It can never be outsourced or optimized. And getting it right can be the real lynchpin of a turnaround project.
Frank and Cathy Snodgrass took that to heart when they became franchisees in Spring Hill, Tennessee.
The couple had long dreamed of retiring and drinking wine on the beach, watching the Florida sunsets. But as the moment neared, they started chatting with representatives of a franchise called Just Love Coffee Cafe. There was a floundering cafe nearby, they were told. Maybe they'd like to buy it?
The Snodgrasses moseyed in as customers to check it out. "It was almost like walking into the adventures of the Lost Boys in Peter Pan," says Frank, then a senior vice president at Voya Financial, a Fortune 500 company. "You had a manager, maybe 22 [years old] at best, who had had no training — not only for being a manager, but for properly making drinks and food. And then she was training all these people who were even younger than her."
The Snodgrasses believed they could bring the team up to speed. "And the place felt so right," says Cathy. "It just needed some love." They bought it on August 22, 2022. Out of the brand's 26 locations at the time (there are now 48), this one was second to last in sales. And just like that, their plans for those Florida sunsets changed.
At first, the Snodgrasses made the expected changes — replacing most of the staff, improving training and operations. Then they dove into community relations, a passion of theirs, and started by putting on all kinds of events to grow their customer base. During store hours, they invited people to hold meetings at no charge, as long as they could serve food and beverages. In the evenings, they promoted audience draws like free swing dancing, and 60 or 70 people would show up for live music and lessons. "We found that about half the people at the nighttime events haven't been to a Just Love Cafe before, and a lot of them come back during normal hours," Frank says.
Then they went even deeper into the community. When someone comes in, the server is trained to write the customer's name on the saucer or to-go box — and as they become familiar with their regulars, they add personalized notes to acknowledge a birthday, or offer warm wishes to a sick spouse. The Snodgrasses also built two "event trailers" and two mobile coffee bars, so they could roll into farmers markets, wedding receptions, corporate affairs, and festivals. All told, efforts like this have tripled business. "When we bought the café, it was averaging $4,000 to $4,500 per week. We now average $12,000 to $14,000 per week — and I'll be real surprised if we're not doing $25,000 to $30,000 a week by the end of 2024," says Frank.
"This is what the new retirement looks like."
So what does it take to turn around a franchise? In short, it's about the tangibles and intangibles of business — and being fired up about both.
Clark still finds plenty of things to excite him at his Minuteman Press. For example, he's never had the equipment to print large banners, posters, and signs — so he built partnerships with a local supplier and wholesale vendors to handle those orders. "Last year, for the first time, 50% of my revenue was outsourced," he says.
Beyond that, he's built something you can't put a price on: After 10 years of being at his store daily, and making it a fixture of his community, he can now take a break without worrying.
"All of last week, I was in Mexico catching bass," he says one day in May. "Didn't get any phone calls, just a few text messages with questions. To have employees you can trust to run your business, that's invaluable. On top of that, they had a killer week and all got their bonuses."
This year, as he aims for $1 million in revenue, he's thinking about a larger location, another machine to bring more jobs in-house, and, come next bass season down in the Sierra Madres, the chance to go off with his buddies without a care in the world. He knows that his customers — a community that now counts on him — will await his return.
