Region Unusually Packed With New Entrepreneurs

(Monday, August 14, 2006) - After 20 years of tinkering with a system to improve cognitive learning skills — brain training — Dr. Ken Gibson is your basic overnight success.

Gibson's LearningRx system is one of the 50 fastestgrowing franchises in the country, according to Franchise Times magazine, opening new markets just about as quickly as it opens minds.

Since taking the plunge in August 2003, Gibson, along with his daughter Tanya Mitchell and son-in-law Dean Tenpas, has opened 42 franchises with as many as eight more ready to join the system in September.

"Our target is 300 over the next three years," Gibson said.

That's ambitious even in suddenly franchise-mad Colorado, where quality of life and an entrepreneurial spirit have prompted a sudden growth spurt.

FRANdata, the world's largest database on franchises, has identified 72 such companies with headquarters in Colorado, 39 percent of which have started within the past five years.

That compares with 23 percent growth for the nation during the same period. In 2004, the last year with complete data, nationwide franchiser growth was 3 percent, and franchises in Colorado grew at a rate of 14 percent.

With 100 outlets, Miracle Method is not only the largest franchiser in Colorado Springs, but it's the nation's leading bathtub, tile and countertop refinishing franchiser by a factor of two. Learning- Rx is next biggest here, followed by ambitious newcomer Wild Wings 'n Things, which has 13 franchises and is aiming for 100 statewide within five years.

Chuck Pistor, Miracle Method's owner, thinks all this growth is the reflection of larger issues at play in the American economy.

"This overall transition to franchising may be in part the result of outsourcing jobs to India and China," Pistor said. "People here are looking for opportunities, and the trend is toward the service side of the business. Anybody selling a commodity is struggling against China."

"Another factor may be that people here are a little more independent, a little more entrepreneurial than some other places — even a bit more willing to share information," Gibson said.

Still, franchising is as likely to fail as any other startup business.

Gibson cites a figure from the International Franchise Association that puts the failure rate as high as 85 percent for franchisers.

So with success stories such as Miracle Method and LearningRx, the important thing to look at is not what they've done, but how they have done it.

And that starts with the service. Gibson said he started working on the LearningRx system while he was still running a pediatric optometrist practice in Wisconsin in the late 1980s, and he has tested the system in more than 360 doctors' clinics.

In 17 years of issuing licensing agreements and fine-tuning the system, Gibson developed a rigorous one-on-one program that he is confident can provide "lifelong improvements" in comprehension, processing speed, memory, attention, auditory process, visualization and reasoning skills.

"We had never franchised anything before," Gibson said, "just developed product, worked on making it a fantastic system."

Given that he was new to the franchising game, he and Tenpas enrolled in the Certified Franchise Executives program administered by the IFA to learn everything they could about franchising, and then they brought in consultants to help with goals and marketing strategies.

And have they haven't stopped doing that. Each year, Gibson brings in a consultant to a franchisee meeting to discuss aspects of the industry. Last year it was Michael Seid, author of "Franchising for Dummies," who talked about what factors franchisees must emphasize to succeed.

"The people who have started a franchise with us in the past 1½ years are growing three times faster than those who came before," Gibson said, "because we have a better system and our marketing is better."

One of the first lessons he learned was to determine the right focus. The LearningRx system is designed to get results in any age group from preschool to seniors, he said, but the biggest market is schoolage children, and that has been its point of emphasis.

About 90 percent of its clients are school-age.

"If you are chasing seven rabbits at once," Gibson said, "you're not going to catch any."

Gibson developed a different pricing structure for his franchises, requiring startup costs of $100,000 to $190,000, about double what many franchisers set as their minimum level of financing.

The theory here is that franchisers sometimes set a dollar figure assuming a three-month break-even period — that being smaller and therefore more attractive to a potential franchisee.

"But nobody ever breaks even at three months," Gibson said. "We try to figure the dollars required to cover a franchise for 9 to 12 months. I'd rather have people not accept us than fail."

And that's the other big factor with Gibson. Finding the right people to run a Learning- Rx franchise. What he finds works best is referrals from current LearningRx franchise holders.

"They always say that you have to have submissive people running franchise operations, rule followers," Gibson said, "but I like it when the franchisees are entrepreneurial. They challenge you, but they make the business grow. The main thing we are looking for is someone with high ethics and character, who fall in love with the product."

This emphasis is especially important to Gibson, given the company policy on program pricing. One-on-one training fees range from $1,200 to $8,000, based on the student's level of need, how much training the parents are willing to undertake at home and whether the training session is 12 or 24 weeks.

LearningRx said it also has a policy against "upselling," starting students in a lowerpriced course and then pushing them into something more expensive. The idea is to identify need and address it upfront.

Said Gibson: "There was a book, ‘The Ultimate Question,' published by the Harvard Business School that deals with the one question that companies must ask of their customers: ‘Would you recommend us to a friend?' That is the standard we are trying to maintain, to be worthy of being recommended to a friend."

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