In a previous article called, “Can You Franchise the Used Book Business?” I wrote the following: “I do not plan on ever franchising. I simply do not want to give the branded name of my store to someone else.” Well, almost exactly 3 years later, I’m now the CEO of Gottwals Franchising, Inc. which is doing business as Walls of Books. A few things have happened since June 29th, 2009, so let me explain the decision.
At the point when I was writing that article, we were in the process of opening our second Gottwals Books location. A few short months later, we would open our third store. After that, we were involved in opening three other used bookstores. Soon after the third store opened, we received some attention from an outside investor who wanted to franchise our used bookstore model. He flew down to have a look at all of our stores, spending the day with me. He asked questions over lunch, he asked questions in the stores, and he asked questions while I drove him back to the airport. He seemed very interested and said that he’d “get back with” me.
Another year passed, and we were at a standstill with him. Of course, my mouth was watering at the idea of franchising. With this outside investor, he wanted to purchase the rights to the bookstore system and then begin selling franchises himself. He would receive all the royalties, and we would receive a substantial up-front paycheck for the sales of the franchise rights. The more I thought about it, the more I realized that we had a significant system in place. Not only was our method of business important, it was reproducible. That’s the key when considering franchising. Once we knew that a business relationship wouldn’t happen with the outside investor, we began to explore the options for franchising the business ourselves.
We discovered that the fees were astronomical. Unless we wanted to lay up everything we possessed as collateral to a bank, we weren’t going to be able to afford the franchising fees. It’s an extensive legal process, to say the least. Months and months passed between 2010 and 2012, we opened more stores, and I still had franchising in mind. I began searching for venture capitalists, but I didn’t turn up any good leads. Then, I ran across a company that was an all-in-one stop. Basically, we would pay them a hefty fee to walk us, step-by-step, through the process of franchising.
Well, that was four months ago, and I’m proud to repeat that, “I’m now the CEO of Gottwals Franchising, Inc. which is doing business as Walls of Books”! We have a Franchise Disclosure Document that is hundreds of pages long and a Franchise Operations Manual that is even thicker. We provide training, trademarks, and full-on access to all the secrets of the trade that we have picked up while doing business as Gottwals Books for these past five years. Essentially, as with all successful business owners, you reach a lull with your success. The most successful people keep building on previous successes. So, we could have either decided after the first successful store that we should just retain the one store, make it perfect, and be satisfied until the day we died. Or, we could keep opening more stores.
We opened as many stores that we could reasonably manage within driving distance, and the question, “What next?” came up again. Either we open more stores and drive hours upon hours each week to maintain those stores out of town, or we invest in franchising. Franchising is often spoken about in derision. It’s perceived as a restrictive system that gives no room for creativity. However, I’ve learned that a franchise structure IS restrictive, yet it has a purpose. We’ve learned what WORKS in the used bookstore business, so we will require our franchisees to operate in ways that have proven successful to us. We don’t want them making the same mistakes we made early on. For instance, we once advertised piecemeal… we would put a little money here, a little money there. Now, we know it’s best to do a larger advertising campaign with one medium. Besides tidbits like this, our Operations Manual is full of bookstore-specific information that will promote the health of any Walls of Books franchisee’s business.
We also provide exclusive access to book distributors, bookstore software, and advertising slicks. Our ultimate goal is to push the expansion of the used bookstore model. Obviously, the new bookstore system has it’s woes, and I think the used bookstore model is a much stronger business concept, when it’s done properly. Trust me, Gottwals Books was NOT doing business properly at first. Now, we are operating like a well-oiled machine, and we want hundreds of people to own their own Walls of Books so that they can do the same. I’ve called around to Downtown Development Authorities across the United States, and every DDA director becomes very excited knowing about the Walls of Books option. They know that bookstores promote literacy, cultural diversity, and an overall sense of enlightenment in a community.
The bookstore should be the foundation of every town’s business district. Yet, the bookstore is something much more… it’s retail+education. It stimulates a community with tax dollars while stimulating the minds of old and young alike. Of course, if you’re at this blog, you know this truth good and well!