Kahala baker overcomes risks
By Deborah Adamson
Advertiser Staff Writer
Jeff Widener • The Honolulu Advertiser
It was somewhere between the azure waters of Bermuda and the Azores that Adam Wong, crossing the Atlantic Ocean in a friend's 44-foot sailboat, knew with certainty that he was coming back home to Hawai'i.
Adam Wong, who holds the Great Harvest Bread franchise for O'ahu, loads a rack of cinnamon rolls in Kahala.
He had recently graduated from UCLA with a degree in international business and had gone through job interviews with Wall Street investment bankers.
But as the prospect of being straitjacketed by a desk and a suit drew near, he dropped everything and took a friend's offer to sail for 2 1/2 months. That was in 1999. Today, the 27-year-old franchisee of Montana-based Great Harvest Bread has a store in Kahala and rights to the rest of O'ahu.
The bakery is doing so well that Wong plans to open a second bakery in 2005, somewhere between downtown and the University area.
Considering buying a franchise business? Here are some tips to help you choose wisely: • Know all the fees — not only the initial franchise fee and other expenses, but continuing royalty payments and advertising costs. • Read the rules carefully. Franchisors usually exert extensive control over sites, design, goods and services for sale, among others. • Be realistic about money. Do you have enough to invest? Can you get financing? Do you have enough to live on while the business gets going? • Talk to other franchisees about their experience and relationship with the franchisor. • Find out whether you need certain skills to operate the franchise. • Be realistic about the demands. You'll likely be working more than eight hours a day. • Assess market demand and competition. • Evaluate the franchisor. Is it well-known enough to attract customers immediately? What's the franchisor's reputation? How good is the training and support? • Look for market saturation and control. Does the franchisor control growth so another location doesn't open nearby? • Verify sales and profit claims. Ask for written substantiation. • Ask for a copy of the franchisor's disclosure document, also called a Uniform Franchise Offering Circular. Source: Federal Trade Commission
As Wong did, many people dream of buying a franchise as a way to escape a desk job and become their own boss. While the Kahala bakery is doing well, buying a franchise is not a guarantee of success and it can be fraught with pitfalls.
A checklist before starting
Some lesser-known franchises have been known to have high rates of failure, said Kevin Murphy, director of operations at Franchise Foundations, a research and publishing firm in Calistoga, Calif.
It's important to do your homework, he said, and the first place to start is with yourself: Are you cut out to be a franchisee?
"If you're too entrepreneurial, you're not going to do well as a franchisee," Murphy said. "In a franchise, you'll be following a great deal of rules and policy, not only initially but on an ongoing basis."
Choosing an industry to enter is critical as well. It should be one that's growing, such as education or home improvement, he said.
Food is tough because the market is oversaturated, he said, unless you're in Wong's situation where it's a new concept to the area.
"You have in a sense a mini-monopoly, so it's going to do well," Murphy said.
The bottom line is to pick a good franchise out of the 3,000 available nationally.
It should fit your interests and cater to the demand in your community.
In a town full of bakeries, Great Harvest found a niche in gourmet breads like cheddar garlic, honey whole wheat and Dakota bread with sunflower and pumpkin seeds. The breads — 400 loaves are baked daily — retail from $4.50 to $8.75 for a rounded loaf.
Since its opening last November, Wong's bakery has expanded from eight employees to 14. He declined to disclose his sales, but said his business is profitable — no small feat, because it can take small businesses years to break even.
"This is a long-term business. I'd like to think of this one as something that will be around," Wong said.
Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.
