Franchise Articles

In a time when many business executives are looking at what to cut because of rising payroll and healthcare costs, Michael Kulp, president and CEO of KBP Foods, a $250 million restaurant company with units in nine states, is taking an "inverse" approach.
"We're using our growth as a vehicle to handle costs rather than shrinking the business down," says the 38-year-old Colorado native. "We're making sure that our growth and cash flow outpace the costs of healthcare and payroll." This approach illustrates what Kulp finds most rewarding about his job, he says. "Our mission is to develop our people personally, professionally, and financially."
With that goal in mind, KBP Foods, which includes nearly 300 KFCs, Taco Bells, and Long John Silver's, took another major step...

Whether the mergers and acquisitions market is in a hot upswing or in a down cycle, one valuation measure remains the primary focus in nearly all transactions: the multiple of EBITDA (or cash flow).
This seems to be universally true, as it is used by buyers, sellers, finance sources, franchisors, franchisees, investment banks, and private equity groups. In more than 23 years of managing M&A activity in the franchise sector, we continue to scratch our heads at the overemphasis and focus on EBITDA multiples. This article explores what we describe as "The Myth of Multiples," and how deal-makers put too much emphasis on this inconsistent measure of value.
While the arithmetic to calculate a multiple is simple (transaction price divided by EBITDA), the variables in the calculation are not quite so simple...

Do your franchisees use location analytics? Do they know what it is, and how it can boost their average unit volume and help the system grow? Do you?

Wouldn't it be great to know where and when consumers bypass your brand's stores or restaurants to visit a competitor, or how often consumers bypass \ their competitors' locations to visit their stores? Think about how much it would help to also know the why behind that behavior. In 2014, you and your franchisees can gain this new knowledge about your brand's customers to gain a competitive edge.

Three converging trends enable you - and your franchisees - to better understand your current customers, and even to connect with non-customers you want to attract. First, a huge and ever-growing number of consumers carry smartphones with built-in global positioning systems (GPS)...

Every day there seems to be a new "security breach" making the news. We hear a lot more that don't make the news. Businesses from all over the world call us in a panic, trying to figure out what went wrong with their online security. Unfortunately, for many franchise systems, these miscues are common. My hope in sharing some details from three actual security failures is that you will discover actions you can take to enhance your own IT security practices.

1) Please pass the pepperoni - and the passwords. Several small pizza chains used the same restaurant management software and POS system. Sadly, hundreds of those restaurants were hacked.

Once each restaurant's POS system was configured, the local restaurant owners did not change the default password set by the payment application vendor...

We asked Mike Pearce, Chief Development Officer at ServiceMaster Clean, what role diversity plays in his brand's recruitment and development process. Here's what he had to say.

At ServiceMaster we highly value diversity. Diversity has been a key ingredient for our successful growth. Our corporate diversity statement reads as follows:

"Working with associates and franchisees from diverse backgrounds improves our thinking, makes us more creative, and allows us to better achieve our collective goals for our associates, our customers, and our communities.

Diversity is every way that we reflect and share our unique experiences. Guided by our corporate values, we believe diversity and inclusion allow us the best possible chance to succeed both individually and as a company...

Objective: Candidate gains insights and understanding of the opportunity from owners

1) Review the results of your candidate's conversations.

"Tell me about the owners you spoke with. What did you learn from them? Any surprises? Who did you identify with? Who did you feel most comfortable speaking with? Why? Were franchisees satisfied with our support services? What were some of the benefits they were enjoying as owners? Can you see yourself achieving your goals in our business?"

2) Know how to respond with assurance and conviction when a prospect dwells on a particular franchisee who is facing problems, unhappy, and falling short of financial expectations.

"As discussed, we have star performers as well as a few struggling...

If you're not filing employee tax credits, it could be

Do you know there is "free" money out there for your business, and that it is easier than ever to claim it? Last year alone, TaxBreak, a tax credit recovery and processing firm, discovered more than $200 million in available tax credits for clients. Many businesses don't take advantage of the tax credit opportunities available to them, for several different reasons.
Tax credits are designed to encourage businesses to provide job opportunities to groups such as veterans, those in a specified demographic, or those in a specific geographic area. To qualify, your business must have recently paid federal taxes and be for-profit. Businesses with hourly workers and high turnover tend to see the highest qualification rates...

Frances Allen is no stranger to big brands. Over the past 25 years, she's logged successful stints as a senior marketing executive at Dunkin' Donuts, Sony Ericsson, PepsiCo, and Frito-Lay. During that time she has spearheaded brand repositioning initiatives, led new product introduction strategies, and launched expansion into international markets.
Now, as executive vice president and chief brand officer for Denny's since July 2010, Allen is responsible for the overall direction of the brand's marketing strategies and initiatives, positioning, advertising campaigns, menu development, and restaurant image.?One of her core tasks has been to lead the implementation of the company's "America's Diner" campaign, an effort to reposition the brand to reflect its roots and connect with guests...

Franchisees looking to grow, expand, or simply up their game would do well to check out Franchise Update Media's upcoming 2014 Multi-Unit Franchising Conference (MUFC) next month, April 23-25 at Caesars Palace in Las Vegas. The conference is dedicated to meeting the needs of multi-unit operators - especially those interested in discovering new concepts and making new deals. It's become one of the premiere meeting places for franchisees, franchisors, and allied industry (see the current list of franchisor sponsors and exhibitors here.)
This year's event will feature two major keynote speakers. First is John C. Maxwell, an internationally renowned leadership expert, coach, and author with more than 22 million books sold. Dr. Maxwell founded The John Maxwell Company and EQUIP, organizations that have trained more than 5 million leaders in 185 countries...

Corporate prepaid credit and debit cards offer a new approach to managing day-to-day employee spending that, until now, was available only to the largest corporations. Unlike standard business credit cards, a prepaid expense card ensures employees never have direct access to the company’s business credit line. Employers no longer need to worry about exceeding credit limits or getting hit with late fees or interest charges.
Franchisees across a wide variety of industries across the globe are implementing prepaid expense cards to streamline their business expenses. Here are four more reasons to consider a corporate prepaid expense card program for franchise businesses.

1. Prepaid expense cards are less limiting than credit cards...

In earlier articles, I have discussed your two key yardsticks of financial performance: the balance sheet and the income statement. Taken together, they represent as complete a financial picture of your company as it's possible to get.
Now, it's a common practice (and a sensible one) for businesses to have at least two sets of financial statements (or maybe three): one for the IRS (with the tax rules and regulations making net profit look as small as possible); one for your banker (adjusted to present the most glowing picture of the business); and one for yourself. But remember you can't fool all of the people all of the time. And the worst possible person to fool is yourself. You need clear, concise, decision-relevant information.
Incidentally, two or three sets of statements does not imply more two or more sets of books (the general journal and the general ledger, which report all financial events that occur in the business)...

What's the downside to getting information from your sales force into your CRM system? If you're like most managers, you'll answer, "Actually getting the information from the sales force."

There are many reasons this seemingly simple task is like pulling teeth. Which ones do you recognize?

Imagine you're a new snowboarder or skier having a rough day on the slopes. Suddenly, a Vail Resorts employee glides alongside of you. You wonder if she's going to ask you to get off the mountain so you don't endanger yourself or anyone else. But instead, she asks if you'd like to attend a group skiing lesson that normally costs $160 - free.

Wouldn't that make your day?

Wouldn't you want to tell everyone you know about the experience?

Wouldn't you want to come back to that same resort year after year?

This isn't a fantasy. It happens every day at Vail Resorts, a company that knows how to manage every aspect of the customer experience. And that's not all Vail Resorts does to earn their customer's trust, loyalty, and dollars...

If a 1% or 2% percent return on a direct mail campaign is about okay, then using the same odds you're sure to find at least one or two useful, inspiring, or challenging nuggets among these "101 Awesome Marketing Quotes" collected by HubSpot, the inbound marketing software platform provider. The company also has an extensive online library of downloadable marketing-related studies, surveys, reports, and ebooks. The only cost is your contact info.

The "flipbook" of collected marketing quotes - some timeless and others focused on specific aspects of social media marketing - couples the quotes with an entertaining set of background visuals. Many of the quotes were collected from Inbound 2013, Hubspot's annual fall conference.

Reading through the 101 quotes also can point you toward some of today's leading experts on the topic of marketing...

Where Are the Kids?
YouTube soft pedals it for fear of alienating advertisers seeking other age groups, but the 14- to 18-year-old set is their single largest demographic. A survey from The Intelligence Group shows that 74% of users in that age group report using YouTube frequently, while only 60% say the same about Facebook. The usage numbers are more evenly balanced between the two services for the rest of the age brackets from 19 to 34. In any case, both YouTube and Facebook are nearly twice as likely to be frequent stops for the younger set as iTunes, Instagram, or Twitter.

Making Adwords Effective for Small Businesses
The New York Times reported in February that many small businesses find that Google's dominant pay-per-click Adwords platform is not a practical marketing channel for them, based on the media cost of their campaigns...

Grant Simon is a textbook example of a multi-unit franchisee who can't sit still.
When we profiled Simon in 2008 (Q3), he was operating 18 Great Clips salons in the Atlanta area. He was doing well but had an itch for more, and had just teamed up with fellow area Great Clips franchisee Greg Thomas (profiled in 2011, Q3) to purchase a car wash business.
"It looked like a good opportunity, so we did it," says Simon. "We turned it around and quickly sold it for a healthy profit." It was an omen of good things to come. The two entrepreneurs invested their proceeds in Great Clips salons outside their Atlanta market and the growing began. Since the end of 2008, Simon has opened 21 more Great Clips salons in Georgia, Florida, and Alabama through new builds and acquisitions, bringing his total to 39...

Ted Kergan's path to success as Louisiana's largest Sonic Drive-In franchisee has been marked by hard knocks.
While his buddies were planning for careers on the auto assembly lines in Detroit, Kergan, who always had an entrepreneurial bent, hired on with a motivational company after high school, hoping for a different kind of life. He says his three years there helped him conquer his shyness.
Toady he laughs when he talks about one get-rich-quick scheme he and his older brother, Gary, cooked up as young guys. "My brother and I had this idea that if we could sell a million of anything for a dollar, we'd make a million dollars," he says. They found a New York company willing to make a million beer coasters on credit. They hired someone to put the (then) highly popular smiley faces on the coasters and dip them in cherry-flavored liquid--and tried to sell them as air fresheners at auto parks and car washes...

Kat Cole,CEO, Cinnabon

Stats/Facts:
System revenue: Do not disclose
No. of units: 1,100
Public or private: Private
Growth plans: Continue multi-channel expansion--we just hit $1 billion in global product sales from 60,000 points of distribution and would like to hit $2 billion from 100,000 points in 5 years; grow to 2,000 units in 5 years
Founded: 1985
Began franchising: 1988
Years with company: 3-plus
Years in franchising: 15
International locations: 500-plus
Questions
How has your life experience made you the leader you are today? Having a strong single mother as a parent taught me confidence, grace, trust, and resilience. Traveling all over the world for business shaped my skills in flexibility, influence, and compassion...

If you ask retired NFL defensive tackle Don Davey to list the qualities needed to succeed in the NFL or in franchising, his list is the same: competitiveness, tenacity, discipline, coachability, and focus.
Those same qualities worked well for him in the NFL, where he played defensive tackle for 10 years, starting with the Green Bay Packers and then moving to the Jacksonville Jaguars, where he led the young team to a berth in the AFC Championship Game in just its second year of existence.
The same qualities he displayed in the NFL have contributed to his success today as the operator of Firehouse Subs restaurants in Florida and as the brand’s area developer for Wisconsin. And that success has not gone unnoticed: the IFA named Davey its 2013 Franchisee of the Year...

As a franchise owner, your employees are likely making purchases on behalf of you and your business, which can conflict with the strong need you have to control expenses and limit risk. The dilemma here is that many franchise owners are uncomfortable handing over a business credit card to their employees.
Your comfort level when it comes to providing spend authority can be managed based on the type of tool selections you select. However, most options on the market for expense management are credit-based. These require a personal credit guarantee by the business owner to accept the responsibility of the debt if your company cannot pay. It's a big decision.
Companies with workers on the road now have a game-changing option: corporate prepaid expense cards...