In true entrepreneurial fashion, Reed has violated -- or at least bent -- one of those rules to his benefit. He's the founder of Bruster's Ice Cream, a 100-unit chain of quick-service ice cream stores he launched in 1989 and began franchising in 1993.
Not everyone would have pegged Reed for success. A self-described class clown, he failed third grade and got booted out of high school. His mentors were an auctioneer who taught him deal-making and a used car salesman with a passion for real estate speculation.
Reed says his company plans to sign agreements for between 60 and 65 new franchises this year. In the long term, although there's no firm plan in place yet, Reed says Bruster's could have 1,000 stores in nine years. Currently, there are Bruster's in 10 states along the East Coast, with new stores scheduled to open in three more states this year.
There's no shortage of interest in developing new franchises. Reed says Bruster's gets about 40 inquiries a week for franchising information -- the number hit 90 in one recent week -- all by word of mouth or from interested parties filling out information request cards at its stores.
Reed, an entrepreneurial type who likes to scout potential franchisees and sites for development, decided this year that it was time to bring on a CEO with the experience, skill and interest to do the strategic planning and develop the systems and procedural guides needed to more than double the number of Bruster's units by the end of 2003.
Such systems are imperative when it comes to franchising, says Jerry Wilkerson, founder and president of Franchise Recruiters Ltd., of Crete, Ill., a consulting firm that helps franchisers find and recruit executive talent.
"It's extremely critical because it's going to be used by every franchisee in the system," says Wilkerson.
Moreover, says Wilkerson, the franchiser-franchisee relationship is one that works well only if it sticks for the long term. Franchisers earn their real money over time by collecting royalty payments from franchisees, and if franchisees don't accrue value from what the franchiser has to offer in the form of systems that enhance profitability, the relationship can come unglued.
To make the situation more complex, Reed is about to do what entrepreneurs and franchisers often find difficult -- let go.
"Sometimes, the entrepreneur doesn't know how to give it up," says William Repack, a professor at Robert Morris University and owner of Franchise Specialists Inc., a consultancy that assists business owners in franchising their business concepts.
Repack has seen many an entrepreneur struggle with the notion of surrendering control to an operations-oriented manager. The entrepreneurial spirit -- innovative and often single-mindedly dedicated to a peculiar vision -- is in many ways inconsistent with the franchise model, which demands the franchiser develop a system that can be replicated and implemented by a novice in the business.
Entrepreneurs, on the other hand, are wont to fiddle with an idea, constantly adjusting and shifting the concept.
A successful franchisee, says Reed, is someone who knows how to follow a plan and take direction -- oddly enough, someone unlike himself in many ways. He acknowledges he would find it difficult to follow a franchiser's model.
"I'd drive them crazy," says Reed.
To create the systems and impose the discipline needed to grow a franchise, Bruster's has hired Jim Sahene, a native-born Pittsburgher and an 18-year veteran of working within the structure of a large franchiser. Sahene is former president and chief operating officer of TCBY Systems Inc., operators of the Little Rock, Ark.-based TCBY frozen yogurt stores.
When Sahene joined TCBY, the chain had 200 stores. By the time he left in 2000 -- the same year an investment group affiliated with Mrs. Fields Holdings acquired TCBY -- the company had 2,700 units.
Reed is a veteran of the food service industry. His parents owned Jerry's Curb Service, a Bridgewater restaurant that Reed still owns, and spent virtually all of their time running the business.
"I was raised by babysitters," Reed says.
Reed was 16 and in ninth grade when he decided he wanted a new Chevrolet Corvette. An uncle who was a used car salesman drove him to a house that was for sale, pointed to it and said, "There's your Corvette." Reed didn't understand at first, but his uncle explained that if he bought the house and converted it into three apartments, he could rent the units out and have enough cash flow to buy the car of his dreams.
Reed persuaded his parents to co-sign for a loan, bought the house for $10,000 and did exactly what his uncle told him he could do. The $200 in positive cash flow covered the car payments, and Reed got to spin the wheels of his dream car around town.
The wheels in his head began to turn as well. The real estate deal had been a valuable business lesson.
"If I had 10 of these, I could make $2,000 a month and retire," is how Reed describes his reasoning at the time.
Reed took a job at a Texaco service station, working for a taskmaster of an owner. He also sold Bestline soap products, a line of cleaning agents, directly to consumers. By the time he left school halfway through his senior year, Reed says, he was making $7,500 a year, about what his teachers were earning.
He ran the family restaurant for a while, earning $125 a week. Before he was old enough to buy an alcoholic beverage in Pennsylvania, he had acquired two bars. A vending business followed, then a used furniture company. He bought a Rolls Royce.
"Everything I touched turned to gold," says Reed.
In the 1970s, Reed poured a pile of cash into gold futures just before the market bottomed out. At 24, he says, he was near bankruptcy, but by 1978 he had turned a couple of real estate deals and got back on his feet. He bought a ranch and raised Clydesdale horses.
Then stumbled on the Bruster's concept.
Reed's sister was going through a divorce, and he says he wanted to help her out by setting up a small, simple business that she could run. He looked into opening a TCBY franchise, then decided to open an ice cream shop.
He figured the store would attract about $200,000 in sales its first year, but when it did $600,000, he sensed he might have a winner on his hands. He built several more, but when he went through three managers in the first year at the fourth location, he decided he didn't want to own a big chain of Bruster's.
Instead, he tracked down a consultant to show him the ropes of franchising and opted to sell franchises to individual operators who would be willing to put their own money on the line and work hard to make their investment pay off.
The right fit
Reed thinks Bruster's has found the right fit for the CEO job in Sahene. He looked around for a good candidate for about a year, heard Sahene might be available and approached him about moving to Pittsburgh for the job.
Sahene, who had to pass muster in interviews with a dozen Bruster's employees before he was hired, says he jumped at the chance. Unlike the more seat-of-the-pants approach that Reed finds to his liking, Sahene, who bought a couple of TCBY franchises in the Little Rock area after leaving TCBY and got a taste of the franchisee side of the business, says he is comfortable with developing strategy and organizing systems.
"I like creating structure, I like focusing on the plan, I like to create the business plan and the financial budgets; I enjoy that part of the business," says Sahene.
For Sahene, joining Bruster's at this stage in the company's development means an opportunity to put to work the skills and experience he gained at TCBY. He says his efforts will be maximized because of the inherent strengths that reside in the Bruster's concept.
"We have a superior product and a commitment to customer satisfaction, and that's a winning combination," says Sahene.
For Reed, it means having the freedom to do the things he enjoys most about the business and, perhaps, more time to tend to his interests, like his 700-acre farm, where he prefers to raise hay, corn, cattle and mules instead of Clydesdales these days.
"What's nice is, as you grow a company, you start hiring people to do what you don't like to do." How to reach: Bruster's Ice Cream, www.brustersicecream.com; Franchise Recruiters Ltd., www.franchiserecruitersltd.com; Franchise Specialists Inc., (412) 262-5055