Where do locally owned franchises fit in Asheville’s economy?

Brandy Mills and her husband, Robert, say that one of their fondest memories of growing up in Asheville is of meeting friends and family at the Tastee-Freez on Patton Avenue to enjoy their favorite ice cream on hot summer days.

“Both of our families could only afford to take us there once or twice a summer, and we just got to thinking, ‘Wow, that was the best time,’” she explains. “There was nowhere to sit; you sat outside in the hot sun eating ice cream, but that was family time.”

That’s when Mills, who’s worked as a registered nurse for 18 years, decided she wanted to open a dessert shop of her own. But as first-time business owners, Mills says she and her husband weren’t sure where to start.

“We kind of tossed around different ideas and never really would come up on the same page with things. But we had some friends in Georgia that actually opened up a Smallcakes location,” says Mills. “So we thought, if we did this, we could bring family and friends together over cupcakes and ice cream and kind of reminisce on how it used to be when you got away from everything else.”

In October 2016, Mills opened the Smallcakes Cupcakery and Creamery in South Asheville. Unlike traditional franchises, she notes, her business operates under a licensing agreement that gives her recipes, branding and limited marketing assistance but not full-blown, corporate-run marketing campaigns.

The business took off immediately, as many community members came in to try the extensive, rotating selection of fresh-baked cupcakes and ice-cream flavors. Opening the dessert shop, says Mills, also enabled her to connect with her hometown by donating to churches, sponsoring school activities and hosting special events.

The Asheville native says she was thrilled when the Asheville Grown Business Alliance reached out to her to be part of its Go Local campaign, until she she pointed out that her business was under a licensing agreement.

“I just wanted to be honest about the fact that I didn’t come up with the concept, and their response was, ‘Oh, thanks for noticing that — and no, you can’t participate in this,’” Mills recalls.

And for the first time, she says, it struck her that even though she was born and raised in Asheville, some folks might not see her business as local.

“There’s just not a shared mental model for what is considered to be locally owned and operated,” Mills points out. “Is it that all of the products they’re using are from the community? Did the business model start in this community, even if it has spread out somewhere else? That’s where it gets frustrating. I really don’t know what the turnoff point is.”

Leaving a thumbprint

According to Asheville Grown’s guidelines, a business is considered local if it’s privately held by owners who live in Buncombe County or the surrounding area and does not have a corporate headquarters outside of North Carolina. In addition, qualifying businesses can’t be publicly traded or registered as franchises and must be “free to make their own business decisions without the need for approval by owners or affiliates outside of the area.”

Franzi Charen, the organization’s founder and director, acknowledges that while locally owned franchises do exist here, both Asheville Grown and the Go Local campaign specifically aim to boost independent businesses that may not have access to some of the advantages that franchises provide.

“We feel there are thousands of locally owned, independent businesses that get overlooked and do not have the branding and marketing capacity of franchises and chains,” Charen explains. “It is these very businesses that help drive the unique, vibrant character and culture of Asheville that we’re most at risk of losing as rents increase and more people buy from chain stores or flock to Amazon.”

Mills, however, says that despite her business’s licensing agreement, she considers Smallcakes to be locally owned and operated, though she’s aware that not everyone would agree.

“It’s not that it’s been a negative experience: It’s more that people don’t really understand,” she says. Beyond that, however, “I do want the community to know that we’re grateful for all the support we’ve received. It has really allowed us to leave a thumbprint in the community.”

Plug and play

People who want to make the leap from working for others to owning a small business have limited options, says Sam Holt of Franchise Expert Consulting in Asheville. “You can buy an existing business, you can start up a new business and do it completely on your own, or you can buy a franchise.”

Among the challenges that owners of independent startups face is learning marketing and operating techniques specific to both the business type and the local area. And some aspiring business owners, notes Holt, have less financial leeway “to make mistakes and go through the learning curve.” Franchising allows new business owners to work with established systems that have been market-tested — which, in theory, boosts the chances for success.

“You don’t have to have any experience in the franchise business, because they are going to teach you how to operate that business; they’re going to support you,” says Holt. “That’s what those systems are there for: They just plug you in.”

Bob Long, who co-owns The Spice & Tea Exchange in downtown Asheville with his wife, Jill, says opening their franchise in 2009 was a “far cry” from his previous career as a nuclear medicine engineer, but the support he received from the corporate office enabled the first-time business owner to succeed.

“By and large, a franchise is good for the novice, because they know what works, and they want you to succeed because they get a piece of that action,” says Long. “If I succeed, that’s more money in their pocket as well.”

Having lived in Asheville since the early ’80s, Long says he understands the push to buy local. But as a business owner, he believes the corporate support that franchises offer can also be invaluable logistically, when it comes to things like sourcing hard-to-find items.

“I know some people are like, ‘No chains,’ but it makes a lot of sense, because they’ve got the time to get a good paprika, and then they’re not buying just a pound: They’re buying 100 pounds,” Long points out. “I’m not saying that it’s not possible to do it without a franchise, but boy, I carry over 100 basic spices, 40 teas, sugars and salts, and to source all of those would be a monumental job.”

Leveling the field

Still, the biggest hurdle new business owners face may be startup costs. On average, notes Holt, people buying an existing business can expect to pay 3 to 4 times its annual revenues, which could amount to hundreds of thousands of dollars for a successful enterprise. And while franchise owners have to pay a franchising or licensing fee, he says, the upfront investment is generally less than what’s required for either an independent startup or purchasing an established operation.

Kimberly Hunter, who manages the entrepreneurship program at Mountain BizWorks, says the lower costs and instantly recognizable branding that franchising provides can help marginalized groups such as immigrant populations enter the marketplace.

“For years, certain models of franchises have been an entry point for entrepreneurs to obtain steady footing and use their skill sets and knowledge in a way that allows them to be economically equivalent to other people,” she says.

A 2017 Entrepreneur article points out that although immigrants constitute just over 13 percent of the U.S. population, they account for more than a quarter of all new business owners in the country, and many of them do so through franchising.

The bottom line, says Hunter, is that whether there’s a lack of experience, investment capital or mastery of the language, “It’s hard being a small business. There’s so many factors that are often threats and barriers for people. When you can find an avenue that actually kind of makes any threat or barrier more manageable and easier to get over and get through, that’s your lane; that’s the thing you do.”

Giving back

Large-scale franchise owners, says Hunter, can also leverage their networks and power to benefit the community by providing generous contributions that small, independent businesses can’t match. “They have the resources to do that,” she says. “You can look at it as a marketing ploy or not, but the truth of the matter is that when they can do it, they can volunteer lunch for 75 people that an independent place can’t, and it actually helps everybody.”

Joe Brumit, chairman and CEO of the Brumit Restaurant Group, operates 53 Arby’s franchises across North and South Carolina. He and his wife, Janice, who have called Asheville home for more than three decades, support many local and regional charitable organizations and schools, including Habitat for Humanity, Eliada and A-B Tech.

In December, Brumit’s company teamed up with the Eblen Charities to create JoyFULL Holidays at Home, which provides food for kids who might otherwise miss meals during school breaks and holidays. For Brumit, having a nationally recognized brand hasn’t stopped him from focusing on local needs.

“I think most people in this community know how involved we are,” he says. “One thing to always keep in mind is that locally owned is not always independent.”

Small-scale franchise owners, however, can also play a valuable part in their community.

Andrea Bryson and her husband, David Huebner, bought the Clothes Mentor resale store in South Asheville in April 2017. Bryson had taken a part-time job as a sales associate at the women’s boutique, which is part of a Minnesota-based franchise operation, and when the store came up for sale they decided to go for it. “I never in a million years thought I’d be doing this, but you never know what life will bring you,” she observes.

Bryson, a member of the Asheville Area Chamber of Commerce, says she’s donated both money and clothing to local schools and charities, including T.C. Roberson High School, the Miss Asheville/Miss Blue Ridge Valley Scholarship Pageant and Black Mountain Home, a social service organization that cares for orphaned children.

“They come in and they get their clothes for free,” she explains. “My heart breaks for them, but it feels good to give them coats and stylish clothing.”

A question of balance

Bob Long, meanwhile, believes the key to a healthy local economy is knowing when to support both independent businesses and franchises. “I get ‘Buy local,’” he says. “You shouldn’t forget the local guy. If you have a chance to get a locally grown tomato versus going to Walmart, I’d say get that.” But The Spice & Tea Exchange owner also warns against indiscriminately lumping businesses together, urging concerned community members to “Just be mindful of it, keep it in balance, and don’t swing that pendulum too far. There’s some good franchises out there.”

Hunter of Mountain BizWorks agrees.

“When you’re really involved as a community member, you can see very quickly that a business that might have a franchise name on it is actually owned by your neighbor, or that your kids go to the same school,” she points out. “ I love where we live, I love my neighbors, I’m invested in our community on such a local level, but I think there’s room to understand that small-business development comes in several forms. If we’re thinking about each other’s families, then we’re going to be OK with our neighbors doing what’s good for their families and what’s good for the community.”