Michelle HammondFollow on twitter www.startupsmart.com.au
Playing the franchise waiting game
John Newton found this out the hard way when he founded Sydney-based Jumping J-Jays in 1997, which hires out jumping castles and other party-related equipment, primarily for children.
“I was looking for something to supplement my income, but also something I could do on a weekend and therefore keep my day job – the backyard party market [was ideal],” Newton says.
However, Newton made the mistake of thinking he could run the business remotely, setting up depots in different parts of Sydney for workers to collect the equipment from.
“We would have people who were trained up to go a depot unsupervised, collect the castle, set it up and dismantle it at the site, and return it to the depot,” he says.
“The job got done but it was not exceptionally run and we had a few complaints.”
“We were getting calls about people being late, taking the wrong equipment [to the sites] and not providing the equipment in the cleanest way.”
“We needed to be able to get good installers, drivers and operators on the weekend that would run around their ‘territory’ and put up jumping castles in backyards.”
“We thought, if we can get franchisees to be that person, they will do it better… For example, a franchisee will make sure their equipment is squeaky clean.”
It took three years for Newton to make this realisation, but this proved to be a blessing when he began recruiting franchisees, who liked the fact that the business was more established.
“It was three years of agony – making mistakes and getting bad feedback. But we went to [the franchise] market with a proven model, so they could see solid numbers on the board,” he says.
The experience also prevented Newton from making the same mistake with his second business Stufflers, which lets children make their own stuffed bears at parties.
“I implemented a franchise model straight away. I didn’t want to make the same mistake of letting employees or part-time employees harm the business in the start-up years,” he says.
Meanwhile, the Jumping J-Jays network now consists of 21 franchisees, scattered throughout the country. According to Newton, the network will remain small for the benefit of the franchisees.
“We’ve changed the model so franchisees are operating in a bigger territory [than before]. They carry a little bit more equipment and we’ve introduced local area marketing,” he says.
“It’s wonderful bringing on franchisees who aren’t afraid to get out there and meet their community, and provide locals with a standard of service that is not often found in this industry.”
Newton says while some people don’t like the idea of working on weekends, a Jumping J-Jays franchise can be an ideal way to supplement one’s income.
“It’s a great little second income… All our franchisees have a minimum guarantee of $100,000 in sales [per annum]. $100,000 is pretty easy to achieve – most did around $130,000 last year,” he says.
“However, you need to have someone in the household to still be working fulltime… We won’t sell a franchise to anyone unless there’s a fulltime income coming into the home.”