When Tony McGee retired from the National Football League in 2003, he invested in a sports complex and restaurant. He lost money on them, which taught him that it’s important to start smaller. Since then, he started a logistics company that is thriving, and he recently bought a Dunkin’ Donuts.
“A sports complex is a tough one,” he said, adding that many new businesses fail, so it’s important to “grow the right way.”
About half of all new small businesses survive five years or more and only about one-third of them survive 10 years or more, according to the Small Business Association.
McGee was a tight end in the NFL for 11 years, mostly with the Cincinnati Bengals. Now 45, he started the company HNM Global Logistics six years ago, and In 2016, he bought a Dunkin’ Donuts franchise. Because of his success as a business owner, he spoke on an “Entrepreneur Panel” at the NFL’s Player Engagement Business Academy, held at the University of Michigan’s Ross School of Business from Feb. 27 through March 2. The event was designed to help current and former players with such things as building a business plan and buying a franchise. McGee talked with players about the latter.
He spoke with MarketWatch about what it’s like to own a franchise:
MarketWatch: Why do you think owning a franchise like Dunkin’ Donuts is a good idea for former players?
Tony McGee: Dunkin’ is an iconic brand which ranks second in coffee and breakfast sandwich sales across the U.S. Personally, I wanted to associate with a strong brand with a robust marketing plan. Our Dunkin’ stores are in my hometown. It feels good to provide jobs at home and see the smiles on people’s face when they’re enjoying our Dunkin’ products. Our Dunkin’ store has been well received and is a part of the community fabric. If managed correctly they’re profitable. It’s nice to have a playbook on how to run a business.
The global sports industry is worth roughly $150 billion in revenue, but the competition for consumers’ time and money is fierce. So sports organizations are offering new exclusive experiences that can add up to thousands of dollars per ticket.
MarketWatch: Do NFL players and franchises typically work out?
McGee: I know several athletes that have been extremely successful at owning franchises, including Jamal Mashburn, Drew Brees, Keyshawn Johnson and Peyton Manning. Dunkin’ connected my team with Kris Brown, a former NFL player that owns several stores, as part of my due diligence to discuss how his team developed their franchises. It was essential for me to speak with another former athlete and get an unfiltered prospective on the Dunkin’ Donuts franchise opportunity.
MarketWatch: When did you buy your Dunkin’ Donuts franchise, and why?
McGee: We signed our three unit Dunkin SDA (Store Development Agreement ) in January 2016 and opened our store in November 2016. The experience has been an eye opener, with the amount of time, effort and commitment it takes to run a successful store. However, it’s rewarding to go to your store and sit in a booth and have the Dunkin’ experience with coffee, donuts and breakfast sandwiches.
MarketWatch: How much did it cost?
McGee: Costs typically come in between $450,000 and $650,000 depending on the region of a location. Our first store cost was in the $600,000 range.
MarketWatch: Are you primarily responsible for the franchise operations and management, or do you have others help, given your other business holdings?
McGee: We have an ownership group which includes our operating partner, and he runs the day to day operations. However, I encourage athletes that own franchises to be present and accessible.
MarketWatch: Should players look at franchising as a sole source of income or as just one of many?
McGee: I think it depends on the individual. However, I would encourage any players to use the first store as a beta test and really be involved and go through the training. It will help them learn the business and manage multiple locations if they decide to grow. Most franchises usually take multiple locations to produce enough income to sustain an upper middle class lifestyle. Personally, I view our Dunkin’ stores as passive income and not a primary source.
MarketWatch: Are some franchises better than others to own, and is it better to start with just one?
McGee: The best franchises to own are the ones that provide strong support to franchisees. I’d suggest players master one with a plan to develop multiple units. The value of a franchise grows when they are scaled up three to five units.
MarketWatch: Can you tell us how you started your primary business?
McGee: I own 100% of HNM Global Logistics, a full service freight forwarder. Our core services include but are not limited to importing, exporting, custom brokerage warehousing and distribution. We have over 30 employees and eight-figure annual revenue. I got my start as a certified small and minority-owned business. These certifications and my NFL background help me with introductory meetings and good business practices helped me grow the business.