\n<\/p>\n
Danielle Scott had spent years working in franchise development when she got an opportunity that appeared too good to be true and almost impossible to pass up: buying six tutoring centers in Central Florida.<\/p>\n
She was successful, ambitious and, by her own description, \u201cpretty arrogant.\u201d The chance to become a franchise operator felt like the next logical move. So Scott assembled funding, drawing from her own savings and money from her family and friends, and bought the portfolio for more than $3 million in the early 2000s.<\/p>\n
\u201cEverybody could get money back then,\u201d Scott says in a new interview with Entrepreneur<\/em>. \u201cMoney was very easy and very cheap, and that was the problem.\u201d<\/p>\n In hindsight, Scott saw warning signs she didn\u2019t fully investigate. She says she should have asked why the tutoring company was selling off corporate-owned locations. At the time, however, she interpreted it as an extraordinary opportunity rather than a possible indication of risk.<\/p>\n \u201cI got very excited,\u201d she says. \u201cI was very young, and I was very successful, and I pretty much had the world in the palm of my hand at that moment.\u201d<\/p>\n The 2008 Great Recession hit Scott\u2019s businesses hard.\u00a0When the economy worsened, many households began cutting discretionary spending. Tutoring, music lessons and extracurricular activities were often among the first expenses to go.<\/p>\n The business suffered an immediate exodus of customers. Scott says one child\u2019s program could cost nearly $5,000 per year, and as parents withdrew their children, the revenue loss piled up rapidly. <\/p>\n \u201cEverybody was pulling out their kids,\u201d Scott says. \u201cWe lost $180,000 in one week. We didn\u2019t have enough money to keep things afloat; we had to start closing the centers.\u201d\u00a0<\/p>\n The centers were in Central Florida, a market Scott says was hit especially hard by the downturn. Her recollection of the period is defined by incomplete housing developments, closed businesses, empty malls and a swift increase in crime.<\/p>\n \u201cThere were roads that were being built into neighborhoods that would just stop,\u201d she says. \u201cYou would see a road going up a hill with street lamps, no houses, just a road, and it just stopped.\u201d<\/p>\n The conditions were devastating not only because of the macroeconomic collapse, but also because Scott had built a business model that depended on customer spending that could be postponed or eliminated. In a downturn, many families didn\u2019t view tutoring as a necessity, even if Scott believed in the service and the company\u2019s mission.<\/p>\n As the centers\u2019 finances deteriorated, Scott began closing them. She ultimately lost all six businesses. <\/p>\n The loss was financial, professional and personal. Scott employed more than 100 people, some of whom had spent a decade or more with the tutoring centers. Some blamed Scott for their lost jobs. She received death threats. And for a time, she believed the collapse had ended her career in franchising.<\/p>\n Eventually, she realized that \u201cthis situation would have happened whether I was standing there or not,\u201d she says. \u201cThere was nothing that anybody could do.\u201d<\/p>\n Before the collapse, Scott believed that she had reached the top of her professional game. She had corporate experience, operational knowledge, a growing portfolio and the confidence that comes with early success. Losing the businesses forced her to reassess her identity as a leader.\u00a0<\/p>\n \u201cIt humbled me completely,\u201d Scott says. \u201cI mean, beyond humbled me.\u201d<\/p>\n Reflecting on that time, Scott now believes she should have paid closer attention to the broader business environment and demanded answers about why the franchisor was divesting corporate-owned units. She had been senior enough to recognize that the decision warranted scrutiny, but she did not pause long enough to conduct the level of due diligence she now considers necessary.<\/p>\n \u201cIf I had, I probably wouldn\u2019t have bought them at all,\u201d she says.\u00a0<\/p>\n The emotional toll was equally severe. Scott feared that the loss had permanently damaged her standing in franchising.<\/p>\n \u201cIt made me feel like I had ruined my career,\u201d she says. \u201cIt made me feel as though I would never work in franchising again because who does something like this at the top of their career and then fails so massively?\u201d<\/p>\n Her return was not immediate. Scott says it took about three years after the collapse for her to feel that she had truly come back to the franchise industry.\u00a0<\/p>\n \u201cIt took a lot of people telling me that it wasn\u2019t my fault and that they still wanted to work with me and that I was still amazing and that I still had a lot to offer to the industry,\u201d she says.<\/p>\n Scott dipped her toe back into the franchise industry by helping a franchise owner pursue growth and secure an equity partner. She was initially hesitant, but the relationship became a successful experience.<\/p>\n Today, as chief development officer of Alliance Franchise Brands, Scott helps guide franchise growth, legacy ownership transitions, business sales and acquisitions across brands including graphics and signage franchises Allegra and Image360.<\/p>\n Her advice to entrepreneurs is not to minimize hardship or pretend that failure is painless. Her story makes it clear that when a business collapses, it can carry economic consequences, damaged relationships, public embarrassment and grief. But she believes that leaders cannot afford to remain trapped.\u00a0<\/p>\n \u201cDon\u2019t sit in it too long,\u201d Scott says. \u201cLet it be what it is, because the failures and the hits, they\u2019re just going to keep coming \u2014 and all it does is make you better.\u201d<\/p>\n For Scott, that perspective was hard-won. The crisis had made her feel exposed and ashamed, especially when employees blamed her for the closures. But over time, she came to see the difference between a flawed decision and a permanent personal failure.<\/p>\n \u201cJust because you failed at something doesn\u2019t mean you fail at everything,\u201d she says. \u201cAnd just because this happened doesn\u2019t mean that it\u2019s a reflection upon you.\u201d<\/p>\n<\/p><\/div>\nThen the Great Recession happened<\/h2>\n
Closing the centers<\/h2>\n
Returning to the franchise industry<\/h2>\n