The Power of the Franchise

Everyone has dreamed of being the boss, but starting a business is fraught with challenges – there is money at risk, new skills to learn and long hours. The barriers to breaking into the security integration business are even higher than most, with an immediate need for employees, facilities, inventory, equipment, vehicles, licensing and insurance. Add in competition from well-known national and regional integrators, and these roadblocks tend to keep the idea of becoming your own boss a dream.

But a growing number of security entrepreneurs are turning dreams into reality – launching their own businesses thanks to a model most often associated with the retail, food or hospitality industries – the franchise model.

Since 2007, West Palm Beach, Fla.-based Security 101 has been selling integrator franchise territories. The concept – unique to the security industry – has worked. There are currently 37 Security 101 franchises that cover the United States from coast to coast, including the most recently opened Security 101 in Los Angeles.  

The Security 101 owners are a diverse group, but all acknowledge that the franchise model has provided them with the opportunity and support that enabled them to become “the boss.” SD&I sat down with five of the franchise owners, who share their motivations, concerns and advice for making the leap from a steady paycheck to business owner. Each owner comes from a different background; however, they all share the entrepreneurial spirit and tremendous self-confidence necessary for opening and running a successful business – that and help from their franchisor partner.

They are:

• Susan Hunter – Hampton Roads (Va.)
• Kevin Schaefer – San Diego
• Nathan Zautcke – Detroit
• Charlie Taylor – Jacksonville (Fla.)
• Rob Ryan – New York/New Jersey

Virginia: From Air Force to Security Force

Susan Hunter is a U.S. Air Force Academy graduate and served 14 years as an officer. She was working as a college math instructor as her Air Force husband neared his 20-year retirement. They frequently talked about buying a business before he accepted a job in coastal Virginia, near Norfolk. She continued looking at business opportunities such as tutoring and fitness franchises.

“They just didn’t appeal to me for a variety of reasons,” Hunter says. “Then I heard about Security 101 and found my territory was available.”

While in the military, Hunter had minor experience working with surveillance cameras, but little else that would prepare her for a security business. Fortunately, her son was a retail loss protection professional. Over Sunday dinners, Hunter and her son began exploring the possibility of buying the local Security 101 franchise, and in 2013, she became the owner with her son joining as a partner.

“We both said we wouldn’t mind working 60 hours a week if we were working for ourselves,” she says. “It was a good choice.”

Hunter now counts Canon Virginia and the city of Virginia Beach among her customers.

Southern California: Expanding Reach

Kevin Schaefer retired after 20 years as a Navy SEAL with no direct experience with the civilian security industry; however, the Navy provided him a familiarity with some best practices and equipment.

“There weren’t many comparable positions for me to pursue – at least in this country,” he says. “I considered – and rejected – a few opportunities to find one that fit my criteria. I had to make a change and the idea of becoming my own boss was very appealing.”

He met with Security 101 officials and carefully checked out the organization. He and a partner were impressed and bought a San Diego franchise in 2012. Shortly after his first partner left for another opportunity, Schaefer found a new partner, Jason Beardsley, and the business has grown with customers including Terradata and Univision.

The two most recently expanded by opening a franchise location in Los Angeles, and the two branches together cover most of Southern California, including Los Angeles, San Diego, Orange, San Bernardino, Riverside and Imperial counties.

“I spent extra time choosing my second partner,” Schaefer says. “You need to know your own strengths and weaknesses and find a partner who complements you. (Beardsley) is a great salesman, so I’m confident he has that important part of the business covered.”

Detroit: From Cable TV to CCTV

Nathan Zautcke was a 15-year veteran of the cable TV industry when a colleague met with Security 101 officials at a convention. While their backgrounds did not exactly transfer to the security industry, both of them knew quite a bit about low-voltage equipment and networked systems. The opportunity looked good, so they became partners and bought a Detroit franchise in 2012.

“At the time, I didn’t know the difference between an IP and an analog camera,” he says. “I hadn’t heard of Cat-5 or Cat-6 cable. I didn’t know the manufacturers and had never sold a thing in my life.”

The partners initially viewed the franchise as an investment. They kept their jobs and hired four employees to run the security business with Zautcke handling accounting on weekends. Two years later, the business was not meeting the partners’ expectations so Zautcke quit his job and took over day-to-day franchise operations.

“I realized this is meant to be an owner-operated business,” he says. “It takes sweat equity. You have to go through the process – you can’t let someone else do it for you.”

His first hire was an inside salesperson – a 24-year-old former waitress with “the knack and personality for selling.” Her job was to make cold calls and set up appointments for him. Within two months, she was so successful he made her an outside salesperson.

Not surprisingly, Zautcke’s customers include “a lot of auto guys” – suppliers to the Detroit automotive industry.

Jacksonville: Taking Advantage of Economic Realities

Charlie Taylor held lead sales positons for two local integrators – both acquired by national companies. He did not enjoy the structured corporate environment, particularly when one employer regularly modified the sales team’s compensation terms. “I knew I could sell, but it is frustrating when the rules are always changing,” he says.

He also disliked the bureaucracy that prevented him from serving customers as he had been able to do working for the smaller integrators. He was about to give up on the industry when he discovered Security 101. A friend (now his partner), discussed the idea of buying a franchise, and the more they talked, the more they viewed franchise ownership as a “calculated risk” worth pursuing.

But the Jacksonville, Fla., franchise had a harrowing beginning. The ink had barely dried on their Security 101 business cards in Sept. 2008 when the economy crashed, plunging the nation into a deep and prolonged recession. Some people may have begun looking for Plan B, but Taylor saw the opportunity.

“The economy may have helped us,” he says. “In tough times, the bigger integrators cut employees, reducing their ability to provide customer service. That was our chance to be the alternative – we had no choice but to grow.”

Taylor’s business has grown significantly with franchises added in Savannah, Ga., and Charleston and Columbia, S.C. Current customers include the University of Florida and Daytona International Speedway.

New York: Security Sales Expertise Pays Off

Rob Ryan had a background similar to Taylor’s in Jacksonville, having worked in sales for two national security integrators. Like Taylor, he did not enjoy working for large corporations, so he moved to a small independent integrator. There, he clashed with an autocratic boss.

Ryan and a good friend on the operations side of the firm started talking about how they could do a better job of running a business. “It was really a joke at first,” he says, but the talks continued for two years, becoming more serious with each discussion.

From experience, Ryan knew top manufacturers do not sell to integrators who lack a proven track record, and he knew he would need access to those products to succeed on his own. That is when he heard about Security 101, which had those relationships he required. That cinched the decision for him.

Looking back on 10 years as an owner, he says his strong sales background prepared him for becoming the boss. “Owning a business seems a natural progression for a salesperson,” he says. “When I worked for others, my base salary was only 30 to 40 percent of what I took home. The rest of what I made was up to me. The more I worked, the more successful I could be. That’s true of owning this franchise.”

Ryan and his partner opened their New York Metro franchise in 2007. Big name customers include the New York Daily News and American Sugar.

How the Security Franchise Model Works

Steve Crespo, Security 101’s chief executive officer, and his partner, started their own integration business in 2003. As it grew, they looked to expand their national footprint. They did not want to take on massive debt to grow through acquisition and likewise were not interested in going public.

Although franchising had never been tried in the security industry, the idea attracted them. They hired consultants and created a business plan. “We wanted a different type of franchise (model) – not like a fast food restaurant where owners are told what to offer and how to sell it,” Crespo says. “It was important to us that the owners be deeply involved in the decision-making process.”

Research showed him the first 12 to 18 months are pivotal in the success of any business. He also realized most franchisees would have no business ownership experience – requiring them to learn the back office, sales, operations and marketing. Without support, failure was a real possibility; so Crespo created what he calls a “business in a box” model.

Within the first 60 days of ownership, franchisees spend two to four weeks at corporate headquarters for intensive training; but the training does not stop there. Making the transition from a $1 million a year business to a $5 million annual operation can be even more challenging, Crespo says. “The training just matures as the business changes,” he says.

Proprietary software, dubbed 101WARE, helps franchise owners prepare estimates, order products and handle other operational activities. It also enables Crespo and his team to check on each franchise, gaining accurate insight into the progress each is making. By being proactive, the corporate office can help franchise owners head off potential problems before they become major.

“We know the story of how each franchise is doing,” Crespo says. “Instead of waiting for a phone call for help, we pick up the phone and let the owner know we need to work together to fix a challenge.”

Hunter says the support she was promised – and received – from the corporate office was a major reason she invested in a franchise. Still, she says, each owner has tremendous autonomy. “The corporate team realizes each region has its own products that sell well, and that is a decision for us to make,” she says.

Schaefer says corporate support has been invaluable, but he also appreciates the counsel of fellow Security 101 franchise owners. “It is great to have someone in an ownership position you can lean on for advice,” he says. “They will gladly share experiences they wouldn’t pass along to a competitor – because we’re all on the same team.”

Crespo says Security 101 does its own due diligence, carefully screening all franchise applicants. The cost of a franchise varies by location and market size, but generally requires cash on hand and available credit in the range of $250,000 to $350,000. As he explains, that funding is what it takes to get a business to be self-sustaining in an industry with long sales cycles.

“We look at the financials, skill sets that align with the security industry, and a supportive spouse or significant other,” Crespo says. “That last item is – and has been – a deal breaker. Throughout the process, the prospective owners are evaluating us as much as we are evaluating them.”

He says about half of the people entering into “meaningful” discussions end up as franchise owners. Once revenue begins to flow, Security 101 takes a percentage of sales – generally 6 to 8 percent – as a royalty.

Currently, Security 101 franchises are located mostly along the east coast and in southern states, leaving large parts of the midwest and western states with available territories. Crespo says he hopes to add seven or eight owners in the next year, with a long-term goal of 101 franchises.

The First Step is the Toughest

All five owners agree that leaving a steady job for a start-up business is not easy. Each had their own fears. Taylor, for example, says he and his wife worried about losing their investment; however, in the end, they agreed the only irreplaceable things in their lives were each other and their four children. “We were young enough to recover if things didn’t go well,” Taylor says. “And if success was based on my ability to sell, we decided failure was a moot point.”

What frightened Schaefer was finding well-trained employees – something he had never worried about in the Navy, where “there’s an unlimited supply for almost every job.”

Hunter worried about having the necessary business relationships in a community new to her. She and her son attended as many networking group meetings as possible, always asking to give security presentations. The strategy paid off well.

Zautcke had concerns about the long hours required by a new business and how that might affect his family. “Once you start the business, you’ll be working late every day and every weekend,” he says. “Fortunately, for me, it backed off fairly quickly.”

Team 101: A Partnership with Possibilities

As Schaefer notes, Security 101 franchise owners support one another; but there is more than advice being shared. The corporate office also encourages and helps owners share customers doing business in multiple territories.

Ryan says that practice was big for his franchise. The franchise owner in Atlanta had a customer needing a New York-based integrator – that business became Ryan’s, bringing him nearly $250,000 in revenue in his first year of operation.

There is also a Security 101 Global Division – itself a franchise – that works with multi-national companies doing business in 14 countries outside the United States. “As these global customers – many of them household names – have a need for a security integrator in the U.S., the installation and service of the business is handed off to the closest franchise,” explains Tom Echols, president of the global division.

“It is not only a good source of revenue, but the name is added to their customer list – helping them gain attention from prospective businesses in their local territories,” Echols adds. “Global or shared domestic customers are all viewed as ‘our’ customers.”

Adjusting to Being the Boss

The five franchise owners say they had enough of organizations lacking a strong customer focus, and they wanted a larger stake in their futures. In other words, they were ready to become the boss.

Hunter shrugged off being a woman in a heavily male-dominated industry. Being one of only four women at the Air Force Academy helped prepare her for her current role. “I know I have to prove myself, but so does everyone else,” she says. “A customer sees an older salesman and wonders if he has kept up with technology. They wonder about the experience of a young person. Everyone has their challenges, but if you deliver superior products and services, you will win business.”

Taylor advises carefully “crunching the numbers” before making a major investment in a new business. “Owning a business isn’t for everyone,” he says. “But I didn’t want to look back years later and wish I had made the leap. I didn’t want someone else to take the opportunity and find myself working for him. But if you do get into it, you have to go 100 percent, not halfway.”

Zaucke says the switch from being an employee to becoming the boss requires a different mindset. “You have to be mentally ready to be the boss,” he says. “You have to be willing to take a challenge. Tell yourself each day when you wake up, ‘I’m going to sell something today.’ You have to maintain a positive attitude and not let the little things get you down. Don’t have regrets and don’t look back.”