If you think investing in a franchise opportunity is a "slam dunk" to success, you're partially right. Even though franchising has a better success rate than start up businesses, determination and hard work are still key factors to a successful outcome.
Most of the stories I've written about over the years were individuals that used franchising as a vehicle to a new career, where they would be rewarded for their efforts. But there are also individuals and partnerships that utilize franchising as an investment opportunity. Many professional athletes have invested in franchising during and after their professional career ended.
Our story this month is about a former NBA All-Star that transitioned his professional career into a conglomerate of franchise opportunities making him an All-Star in the business world. His story was featured in Entrepreneur Magazine and I wanted to share it with you. It puts a whole new perspective on franchise ownership.
Congratulations Jamal, and welcome to the world of entrepreneurship!
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Jamal Mashburn
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Growing up in Harlem Jamal Mashburn had to ride buses, trains and cabs to get to school downtown. As he observed the other commuters, he was always curious about what was in the briefcases people were carrying. These people seemed important and had direction and purpose and he grew up idolizing the briefcase. To him, it symbolized information and knowledge. He realized at a young age that he wanted to be part of that.
Jamal developed into a talented athlete. Although his father was a professional boxer, Jamal excelled in basketball. He was drafted by the Dallas Mavericks and during his 12 years in the NBA in the 1990s and early 2000s, "Monster Mash" was instrumental in turning around the Dallas Mavericks. He also set several scoring records and was even selected for the All-Star Game while playing for the New Orleans Hornets. But despite all that success, he couldn't stop thinking about briefcases.
Mashburn had few illusions about the life of an elite athlete when he was drafted by the NBA. Unlike many of his teammates, he recognized that his career was always just one injury or one bad season away from ending forever. So, instead of blowing money on cars and houses, he began buying franchises with a group of investors, including his old college basketball coach at the University of Kentucky, Rick Pitino.
Now, six years after his last lay-up, Mashburn has a briefcase full of contracts for 37 Papa John's, 34 Outback Steakhouses, three Dunkin' Donuts and the largest Toyota dealership in Kentucky. "I think I was a little bit of an anomaly, because I was thinking about my exit even when I entered the league. Most guys don't start thinking about that stuff 'til their seventh or even 10th year," he says. "They've been in the basketball industry since they were a young kid. It's all they know. And now they have to find something else, another passion."
Jamal's desire to be part of the "briefcase people" and insight to have an exit strategy as he entered the NBA, has made him a winner in the business world. Roughly 60 percent of NBA players find themselves bankrupt five years after retiring, while 78 percent of NFL players are in financial trouble two years after taking off the pads.
Michael Stone, an NFL safety for seven years, is among those who believe the franchise world can provide former athletes a safe way to ease into their post-sports life. That's why he formed the Professional Athletes Franchise Initiative (PAFI), which in October 2011 signed a memorandum of understanding with the International Franchise Association. The goal is to educate pro athletes on franchising and to network them with franchisors. Athletes get a stable post-sports career; the companies get franchisees with deep pockets and built-in publicity.
Stone believes franchising is uniquely suited to the skill sets of professional athletes. "It's a good fit, because franchising parallels sports," he says. "Athletes are executors. You follow prescribed movements put together by a coach and organization to win a ballgame. In franchising, you have the game plan and business model put together by the franchisor. Like an athlete, the operator has to come in and execute the plan."
There are no official statistics on how many sports stars have gotten in on the action, but there is growing evidence that athletes and franchising do mix. Jamba Juice recently signed a deal with tennis ace Venus Williams to open five stores in Washington, D.C. An investment group led by Super Bowl champ Keyshawn Johnson, along with NFL star Reggie Bush and other elite athletes, has opened Panera Bread franchises along California's central coast. And Junior Bridgeman, a Milwaukee Bucks stalwart, has parlayed his 12-year basketball career into a franchise empire that includes 162 Wendy's and 121 Chili's restaurants, bringing in $507 million in revenue per year. NFL athletes like Troy Aikman, Angelo Crowell, Raheem Brock, Willie McGinest and Ron Stone are also franchise owners.
Mashburn applauds other pro players moving into the franchise world, but warns that it's not some sort of plug-and-play cash machine.
Owning a franchise takes just as much work as it took to reach the pros. "I ask guys who are interested in franchising, "did you wake up one day and put your name in the draft?' No, it was a process. You played in grade school, high school, college and, if you were lucky enough to be healthy after all that, you put your name in the draft," he says. "Guys miss how long my journey was to get to this point. They think they can just buy a franchise and make money. They might as well go buy a boat. You have to understand what you're getting into and to humble yourself to find people to mentor and educate you. I think guys who were pro athletes have trouble with the humility part."
There are a lot of great lessons we can learn from the Jamal Mashburn story. First of all, he had his eyes open for opportunities at a young age and was always thinking about his future. While he was successful in one career, he was thinking about an exit strategy and the possibilities for a new career. Many corporate executive refugees can take a lesson from that. Careers can change instantly with an injury or corporate reorganization. Jamal also had the insight and humility to seek out coaches or mentors to help him learn what he needed to know to be successful and minimize mistakes.
He also realized that he was going to work on his business and not in it. I guarantee you that Jamal isn't making pizzas or getting up at 5 a.m to put the donuts in the fryer. He's hiring the right people, doing business development and looking for his next opportunity. He's a "briefcase guy" with a winning attitude. Just like on the basketball court.
If you've been thinking about a pro-active investment where you'd have a say in the outcome, then franchising is a vehicle worth considering. It's not an automatic "slam dunk" to success; just ask Jamal. But the systems, training and support, plus your own hard work and perseverance will help make you a "winner"; just like Jamal.
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