Franchise Articles

As of 2012, there were about 1,300 franchised food brands operating in the U.S.; roughly two thirds started offering franchises in 2000 or later.



In 2011, these food brands operated an estimated 176,700 franchised locations. The largest industry by number of franchised units is QSR, which accounted for 72% of franchised units in 2011, followed by baked goods (9%) and retail food (8%).



To estimate the growth rates in franchised food units, FRANdata created a sample of 488 brands for which consecutive data for 2004 through 2011 was available. In 2011, the sample operated 163,054 franchised locations, about 92% of the estimated total. From 2004 through 2011, the number of franchised food locations in this sample increased at a compound annual growth rate (CAGR) of 5%...

Note: This is part 2 on how to qualify franchise prospects more effectively. To read part 1, click here.

Separate dreamers from doers

"Dreamers" love the idea of owning their own business. They envision themselves as happy proprietors of a fun ice cream store, socializing with smiling families raving about their scrumptious hot fudge sundaes in their Ben & Jerry's franchise. Gracefully disqualify these passionate individuals before they soak up your selling hours. Since they often are raving customers of yours, let them down gently. They just don't realize the difference between eating at and owning an ice cream store. Share the hard realities of working 80 hours a week, fixing broken machines with 10 people impatiently waiting to be served, and two employees on the busiest shift not showing up for work...

There is a revived interest these days in assessment testing during the franchise recruitment process.

Why is it that franchisors and even brokers are looking for ways to assess the individuals they are engaged with during the due diligence conversations? Some believe assessment testing of candidates is nothing more than a deal killer, a way to slow down the process and even scare off a potential franchisee. Savvy franchisors see it quite differently.

Back in 2000, when we brought assessment technology to the franchise channel, franchisors were leery of anything that would affect the sales process. There were only a few very high-caliber organizations that understood the immense value that assessment could deliver...

It's 2017, and you're a franchise consultant. What does your typical day look like? Where is your office - corporate headquarters, at home, in the cloud? How do you connect with your franchisees - in person, by webcam, smartphone, or a drop-in visit on your jet pack?

As part of the Franchise Operations Performance Summit (OPS) held recently in Atlanta, senior franchise operations executives were asked to project their vision of what the role of the franchise consultant will look like in 2017. While the topic of jet packs did not come up, most agreed that greater use of technology and a more personal touch will be required for the successful franchise consultant of 2017.

What prompted the deepest discussion was how to transition today's franchise consultants into tomorrow's...

PostNet International Franchise Corp., which turns 20 this year, entered franchising with a development culture firmly in place. "We started as an independent consulting firm back in the '80s," says CEO and founder Steve Greenbaum, so a strong development culture was critical to its growth and success.

"When the business is dependent on growth, you learn very quickly," he says. "Ten years later, when we began franchising, we already had a very effective method of growth and knew how important it was to the culture of the business."

For Greenbaum, having a "development culture" means an organization supports, encourages, and embraces the idea that growth fuels the company and creates positive momentum. "Fundamentally, the idea is aligned with how important development is to the organization...

Does your system screen out the best and hire the rest?

When it comes to recruiting and selecting new hires, it's amazing how many astute business owners and managers repeatedly shoot themselves in the foot.
I've made hundreds of best practice hiring system presentations, and whenever I ask if anyone in attendance has hired "the employee from hell," without fail, at least 20 percent of the audience will raise their hands. (And those are just the ones brave enough to admit it in public.)
Most of these hiring mistakes are the result of two behavioral tendencies that seem to be part of our all-too-human nature: 1) resistance to change, and 2) an inclination to take the easy way out.
When it comes to change, no one in their right mind would deny it's an entirely different world today than it was even a short 10 years ago...

In some companies, under the premise that they will be perceived more meaningful, rewards and recognitions are given so infrequently as to in fact be meaningless. In order to be effective in generating long-term, concrete results, such rewards, recognitions, and motivation must be given liberally, frequently, and publicly. They should be fun, uplifting, and encourage all members of the workplace.
A critical aspect of leadership is the manager's role as cheerleader. Leaders need to keep their employees motivated and emotionally prepared to do business in a marketplace fraught with intense competition, rejection, and failure.
There are both tangible and intangible aspects of motivation. The intangible aspects of encouraging words and pats on the back, although not insignificant, can be quickly forgotten, while the tangible aspects are visible and durable...

Just a couple of years ago Tom McDonald was a Burger King franchisee worried about the brand's need to keep up with the times. But he felt like no one was listening to his concerns. Then in 2010, global investment firm 3G Capital acquired the brand and the new management was interested in what he and others had to say.
McDonald had been a franchisee since 1986 and was among a select group of executives, franchisees, and suppliers assembled to evaluate every facet of Burger King's fare, which ultimately led to the rollout of a slew of new products in 2012 as part of a multi-faceted strategy to reimage the chain.
"I have always been an advocate of giving good value," says McDonald, who operates 35 restaurants, and recently completed a six-year stint on the national Burger King Marketing Advisory Council...

A strong leader needs to define their vision for success, effectively document it, and communicate it over and over again.
We have two jobs: 1) providing the tools, systems, and products for our current stores to succeed; and 2) spreading the Cartridge World message so more entrepreneurs join our franchise. Motivated entrepreneurs who seek a path to fulfill their financial goals and are able to communicate the value of a product and service will succeed.
We are reinvigorating both our current business support systems and franchise development efforts with the help of focused internal and external people power. We have partnered with a very strong franchise development organization to jump-start this process.

8 workplace values that drive success
Defining, communicating, and living specific values create the culture of an organization...

Employee theft is a common crime that is not even regarded as such by most people who commit it. Taking an odd pen or few sheets of paper home is regarded by many as being a right rather than a crime and something that even the most senior managers can be found guilty of.
It's estimated that 95 percent of all companies suffer from employee theft, but it's probably closer to 100 percent. Serious theft, however, is a different thing entirely. There is a world of difference between the theft of a few pens and the steady depletion of stock through organized crime within a large organization. This sort of employee theft is estimated to cause more than 30 percent of all company bankruptcies, and many companies are in desperate need of a means of controlling it...

Richard Martinez and his brother George served together during the first Gulf War. Now the two are serving together in a different kind of endeavor - franchising. The two brothers are busy putting the finishing touches on their new Russo's Coal Fired Italian Kitchen location in Tulsa, Oklahoma.
Richard Martinez served in the US Air force from 1983 to 1989 where he was stationed in the US as well as overseas in Korea. George served in the US Marines from 1988 through 1994. He was in the first Gulf War with the 2nd Marines.
The two vets have undergone a smooth process in preparing to open their business. They received a Small Business Administration bank loan and jointly invested their own money in order to open their franchise.
"If this Russo's Coal Fired Italian Kitchen does well, then we will open up several more franchises in Oklahoma," says Richard...

A quick "101" in generational understanding

By Jennifer Kushell

If you are one of the countless franchisors struggling to make the most of your relationships with Millennial employees, here is a quick guide to turning those born after 1980 into some of your biggest fans--and assets.

Welcome franchise colleagues. We're heating things up at the Franchise Consumer Marketing Conference in Atlanta this June 25-26, fanning the flame for all the million-dollar ideas generated at this high-powered event. We've broadened our Advisory Board, expanded our content and focus, and engaged a diversity of experts to share their knowledge and experience.
We are on track to continue doubling participation to 200+ brands, driven by word-of-mouth marketing from attendees who are sharing news about their powerful experiences at this exclusive conference.
My goal as Conference Chair is to ensure that CEOs, presidents, and marketing executives take home actionable initiatives, as well as new, meaningful relationships with other marketing professionals and suppliers...

In a digital world, it's no longer possible to have a gap between what you say and do. Everything, from the distribution network to the call center to R&D, must support a company's positioning. It's not just about consistency of message; it's a matter of survival.

Said another way, positioning is no longer a marketing problem, it's a company problem. The CEO needs to clearly articulate the urgency of this new reality and unite the organization.

Marketing is strategically important to the follow-through, both in terms of supporting the CEO in determining the right positioning and in becoming the glue that holds the different parts of the company together behind the promise. Why? Because armed with the voice of the market and an outside-in perspective, marketing is best equipped to help different areas of the company support the positioning...

In all likelihood, 2013 will feel a lot like 2012. Only two significant factors could change the economic environment in 2013 from the past two years of choppy, but painfully gradual improvement.
One factor--global conditions--is unpredictable and largely out of the control of any of us. Global weaknesses are outside our control, but weigh heavily on the recovery. And it's unlikely many positive shocks are looming in the next year or two internationally. We can't expect much from Europe any time soon. BRIC countries are unpredictable, led by China's apparent slowdown.
The other factor--our own Congress--is within our country's control. Unfortunately, I don't have very high confidence in a positive outcome. If the politicians in Washington somehow are overwhelmed by a strong dose of common sense (I hold out very little hope for this), the influence a compromise will have initially is big, in that it removes uncertainty...

Welcome to the era of the chief executive customer.

On a smarter planet, we've seen how predictive analytics can help transform everything from how we fight crime to how we improve things like healthcare, food safety, and utility grids. For companies, this has raised interesting questions about how to take advantage of the unprecedented streams of information generated by today's customers. These questions are increasingly falling on the shoulders of the chief marketing officer.

Our study of 1,700 CMOs worldwide confirmed that marketers believe their profession is being transformed by "big data," the proliferation of new mobile devices, and the emergence of social media. And only 48 percent of those we spoke with said they felt prepared for today's complexity...

Facebook no longer cool? Teens desert it for newer platforms
Instagram, Snapchat, and Tumblr are all experiencing a lot of success with the teen demographic, which often serves as a sensitive barometer of trends. Teens report finding Facebook addictive, lacking in privacy, and not as much fun as Instagram or Tumblr. And that's according to Facebook, whose annual 10-K report, filed in February, noted the trend and admitted that it could harm the brand in the long run. That said, Facebook owns Instagram, and is working hard and successfully to capture mobile social media traffic.

Retailers pin their hopes on Pinterest
With 25 million young, mostly female users who are well-educated and have plenty of disposable income, Pinterest attracts a lot of attention from retailers...

David Grimaud grew up in the car repair business. His father, Joe, operated a Midas shop in Alexandria, La., where David spent many days working as a teenager. "It really taught me a lot about budgeting and business management," says the 52-year old today. Grimaud, however, had a passion for electronics that led him to earn a degree in electrical engineering from LSU and begin a career in Dallas in the mid-1980s.
Grimaud soon realized that he liked "being the boss" and that he wanted to operate a business of his own. In 1987, his father, who was overseeing 37 Precision Tune Auto Care franchises in South Carolina, welcomed his son into the family business with open arms and a few new responsibilities--like expanding the territory and growing the number of units...

Personal credibility is based upon a leader's character and integrity and the actions and behaviors that stem from them. Far from perfect, many of the influential American leaders I surveyed possessed character flaws and displayed at times, questionable ethical behaviors. Yet their personal credibility remained intact.
So it is safe to ascertain that perfection is not humanly expected and attainable as a leader, but self-awareness of one's strengths and weaknesses is essential. It reflects both maturity and authenticity, which only then serves to enhance a leader's personal credibility.
An observance of the absence of self-awareness resulted in a strong emergence of arrogance and hubris that diminished and ultimately destroyed credibility on all levels...

"What are your goals?" is the common question I present to clients and prospects.
"We want to grow," is the common response I get from business owners who have found a way to make decent money in indecent times. And as though we were talking about buying filters for an air conditioner, they continue with, "and we would like to pick up a couple, three maybe four more locations. We know the management formula; all we need are the deals."
This has been happening so frequently that I rarely pursue dialogue on the subject as if I did, it would take up all my time. I just generally state, "That's impressive. Good luck, as I understand from first hand experience that growth can be fun, and growth can also be a challenge." In light of more pressing subjects on the agenda, I rarely press my opinion regarding succession and growth...