Finance

Franchise candidates need easy access to capital. Many candidates who were "slam dunks" to get financing in the past are now receiving rejection letters and are faced with the prospect of trying to finance franchise opportunities through internal funds or with help from friends and family.

During a Franchise Update Leadership & Development Conference, Darrell Johnson, CEO of FRANdata and former "blue suit and power tie wearing" member of the banking community, predicted lenders are going to be as concerned with the potential match between the candidate's skills, background, and experience to successfully run the franchise venture as they are with the candidate's ability to repay the loan.

Franchisors with higher loan defaults than their competitors may wake up one morning and find their franchise candidates and existing franchisees completely cut off from raising start-up or expansion capital...

Franchising is bursting (not busting!) out all over this spring, with a flurry of activity in financing, M&A activity, and franchisee incentives. Combine that with ongoing signs of a thaw in the capital markets and private equity firms unloading cash by loading up on franchise brands (especially restaurants. This new column presents an ongoing focus on the deal-making, consolidation, and reorganization taking place in franchising. To be considered for next month’s newsletter, please send your news to eddyg@franchiseupdatemedia.com.

Finance

Denny’s Establishes New Five-Year, $250 Million Bank Credit Facility
Denny’s has entered into a new five-year, $250 million senior secured bank credit facility, composed of a $190 million term loan and a $60 million revolving line of credit...

As savvy franchise companies continue to flourish in a volatile economy, FUSR continues to bring you good news each month, highlighting brands that are adding units, increasing comp store sales, striking deals with investors, innovating, and continuing to grow, whether domestically or overseas. To be considered for next month's Winner's Column, please send your good news to eddyg@franchiseupdatemedia.com.


New Units & Deals

Yogurtini Self-Serve Frozen Yogurt Opens in Phoenix
Yogurtini Self-Serve, a pay-by-the-ounce, self-serve fro-yo franchise, has opened its newest location in North Phoenix, its sixth unit in Arizona, where the brand is based. The "serve-yo-self" concept allows customers to make their own frozen yogurt creations, creating blends and concoctions (like a martini, thus the name)...

Zig Ziglar once said, "People don't buy drills, they buy holes."

Carrying his logic into franchising, franchisees don't really invest in franchise opportunities; they invest in the future they are designing for themselves and their families. They buy the next chapter of their lives. Whether you are selling multi-million-dollar hotel investments or home-based businesses with low entry costs, franchise candidates are investing in a perceived solution to a personal problem.

Most franchise candidates invest in franchises for reasons that have nothing to do with business. They only appear business-oriented to the mediocre or underperforming franchise recruiter who is not skilled enough or doesn't care enough to ask the necessary probing questions to uncover what is really driving the candidate...

As savvy franchise companies continue to flourish in a volatile economy, FUSR continues to bring you good news each month, highlighting brands that are adding units, increasing comp store sales, striking deals with investors, innovating, and continuing to grow, whether domestically or overseas. To be considered for next month's Winner's Column, please send your good news to eddyg@franchiseupdatemedia.com.


New Units & Deals

Sears Retail Franchises Signs Two 14-Store Deals
Sears Retail Franchises, which franchises two concepts (Sears Home Appliance Showrooms and Sears Appliance and Hardware), recently signed two multi-unit deals, each for 14 stores. The first 14-store deal is with Sacramento-based Marlu Investment Group, a 73-unit operator of Arby's, Church's Chicken, Jack in the Box, and Little Caesars...

As savvy franchise companies continue to flourish in a volatile economy, FUSR continues to bring you good news each month, highlighting brands that are adding units, increasing comp store sales, striking deals with investors, innovating, and continuing to grow, whether domestically or overseas. To be considered for next month's Winner's Column, please send your good news to eddyg@franchiseupdatemedia.com.


New Units & Deals

Pollo Campero Debuts New Design in Houston
Pollo Campero will open three Houston locations by year-end featuring its new design and menu. A fresh salsa bar will remain at the center of the restaurant's layout, said Roberto Denegri, president of Pollo Campero USA. The revamped design will also feature a patio for outdoor seating...

As savvy franchise companies continue to flourish in a changing economy, FUSR continues to bring you good news each month, highlighting brands that are adding units, increasing comp store sales, striking deals with investors, innovating, and continuing to grow, whether domestically or overseas. To be considered for next month's Winner's Column, please send your good news to eddyg@franchiseupdatemedia.com.

New Units & Deals

Yum! Brands Sells Long John Silver's and A&W to Franchisee Groups
Yum! Brands, Inc. has signed definitive agreements to sell Long John Silver's, Inc. and A&W Restaurants, Inc. to two separate buyers led by key franchisee leaders. Long John Silver's will be acquired by LJS Partners LLC, led by a consortium of franchisees and other investors...

As savvy franchise companies continue to flourish in a changing economy, FUSR continues to bring you good news each month, highlighting brands that are adding units, increasing comp store sales, striking deals with investors, innovating, and continuing to grow, whether domestically or overseas. To be considered for next month's Winner's Column, please send your good news to eddyg@franchiseupdatemedia.com.

New Units

Zoup! Adds Second Denver Location
Following on the heels of its first Denver opening, Zoup! Fresh Soup Company opened a second restaurant in the city last month. After spending more than 15 years in the construction industry, new franchisee Tim McKennie switched career directions and signed on with Zoup!, a fast-casual soup concept founded in 1998...

Franchise Payments Network processes payments for more than 120 franchise chains across the retail, restaurant, service, and lodging sectors. This makes us uniquely positioned to provide a snapshot of the economy in franchising. Over the next few issues we are going to drill down and decipher what we are seeing in payment trends in the franchise space, with the goal helping you make better operational and marketing decisions. Let's begin with a 30,000-foot look at how consumers pay for transactions in franchise businesses.

Payments Accepted

As savvy franchise companies continue to flourish in a changing economy, FUSR continues to bring you good news each month, highlighting brands that are adding units, increasing comp store sales, striking deals with investors, innovating, and continuing to grow, whether domestically or overseas. To be considered for next month's Winner's Column, please send your good news to eddyg@franchiseupdatemedia.com.


New Growth

Welcomemat Services Sells First Franchise
Welcomemat Services has signed a franchise agreement with Thomas Gardo of Hilton Head, S.C. The company's first franchise will serve Hilton Head and Bluffton, as well as greater Savannah. Founded in 2003, Welcomemat began franchising last December after building 12 successful corporate-owned locations...

As savvy franchise companies continue to flourish in a challenging economy, FUSR continues to bring you good news each month, highlighting brands that are adding units, increasing comp store sales, striking deals with investors, innovating, and continuing to grow, whether domestically or overseas. To be considered for next month's Winner's Column, please send your positive news to eddyg@franchiseupdatemedia.com.


Growth
Jersey Mike's Continues Nationwide Expansion
Jersey Mike's Subs has announced expansion plans in markets including Texas, Colorado, Los Angeles, Chicago, Minnesota, Wisconsin, and Delaware/Maryland, and existing operators are growing in 14 additional territories.

A look at today's franchise candidates will reveal they are more sophisticated, better educated, and more technologically advanced than ever before. In addition, and even more so because of the economic downturn over the past few years and subsequent slow recovery, they are extremely cautious.
Today's candidates are spending more time researching opportunities, and doing so at a much slower pace. In order to be diligent in the process, more time is spent online pouring through page after page of information, constantly bookmarking, and moving back and forth from new information to saved information. They're comparing notes with other franchise candidates on social networking sites. As well, they're gaining invaluable insight monitoring online discussion groups and forums...

As savvy franchise companies continue to flourish in a challenging economy, FUSR continues to bring you good news each month, highlighting brands that are adding units, increasing comp store sales, striking deals with investors, and continuing to grow. And, as the U.S. struggles through its "jobless recovery," growth-oriented franchisors continue to look overseas for expansion opportunities. To be considered for next month's Winner's Column, please send your good news to eddyg@franchiseupdatemedia.com.


Dickey's Barbecue Pit Pulls Sales In-House, Boosts Franchise Sales 90%
Dickey's Barbecue Pit has signed 28 franchise agreements since January 1st, an increase of 90 percent over last year, which the company attributes to the decision to pull all sales efforts in-house this year...

As savvy franchise companies continue to flourish in this challenging economy, FUSR will continue to bring you good news each month, highlighting brands that are adding units, increasing comp store sales, striking deals with investors, and continuing to grow despite the economy - maybe even because of it. And, as the U.S. struggles through its "jobless recovery," growth-oriented franchisors continue to look overseas for expansion opportunities. To be considered for next month's Winner's Column, please send your good news to eddyg@franchiseupdatemedia.com


Monkey Joe's Adds Five New Locations
Monkey Joe's Party and Play Center is expanding - into New Jersey, Tennessee, and South Florida. The inflatables-filled indoor party and play center reports "significant growth in franchise locations" over the past year, and now has 50 locations in 17 states...

Creative financing strategies to open (and re-open) franchise locations

All franchisors are considering how to maintain or increase market share in the new normal. Nobody can deny that the Great Recession has created more and better real estate opportunities for those who can afford to exploit them, as well as a surplus of qualified operators, composed increasingly of women and minorities, without assets to operate. The number of opportunities appears to grossly overshadow any one franchisor's resources in terms of cash, personnel, and credit.

These circumstances often are precisely the motivation to pursue franchising as a method of expansion in the first place. The difference now is that prospects generally need a lot more assets and cash to qualify and fund the initial investment...

I am a big fan of sales processes. However, I am a bigger fan of buying processes. And when a company's sales process is inconsistent with their customer's buying process, breakdowns occur. Many of the tactics and techniques franchisors counted on in the past appear to be producing diminishing returns in the present. I believe we are in the middle of a franchise buying behavior transformation driven by two game-changing events:

Shortly after the economic downturn descended upon us in 2008, we started seeing a few franchise brands begin to offer incentives to get units open. At the time, they were generally viewed as outliers. After all, the economy was at single-digit unemployment levels, and most business people were in denial of a long or deep recession.

Economic journalist Stuart Varney, the keynote speaker at Franchise Update's September 2008 Franchise Leadership & Development Conference, stated that he expected a fairly short recession. I followed his presentation with a rather different view of the road ahead.

In addition to my economic forecasts, I noted that some brands were starting to offer incentives for new unit openings...

Two years of tight credit and reduced consumer spending not only have left many franchisees reeling, they've also put a serious crimp in their franchisors' royalty streams. We asked workout professionals and bankruptcy attorneys experienced in franchising what franchisors can do to help turn around their distressed franchisees--without spending precious funds or getting themselves into legal hot water.

On the development side, the difficulty franchisees have had in finding capital since September 2008 has reduced the number of new units that would be coming on line now--and the effects are rippling through franchise systems, says Barry Blum, a partner with the Miami-based law firm Genovese, Joblove, and Battista. "People are not hitting their numbers...

As savvy franchise companies continue to flourish in this challenging economy, FUSR will continue to bring you good news each month, highlighting brands that are adding units, increasing comp store sales, striking deals with investors, and continuing to grow despite the economy - maybe even because of it. And, as the U.S. struggles through its "jobless recovery," growth-oriented franchisors continue to look overseas for expansion opportunities. To be considered for next month's Winner's Column, please send your Good News to eddyg@franchiseupdatemedia.com

Franchise Resale/Refinance Program Debuts
Franchise America Finance (FAF) announced the second in a series of initiatives to restart franchise lending. The new program provides capital for franchisees in about 30 selected brands who are entering the system through a resale, or for existing franchisees looking to refinance debt or who are facing a capital call...

Help your franchisees take advantage of tax savings in tight times

There are three essential areas of focus in a successful business: operations, sales, and financials. For the purpose of this discussion, let's assume you have a well-run operation and are doing as good a job as possible to maintain or increase sales. For most businesses, the easiest and most fun parts of the business are running it and having lots of happy and repeat customers.

Financial optimization or improvement isn't quite as much fun or as sexy, but you cannot survive very long with an unprofitable business. The formula for any successful and healthy business is to continue to grow profits and improve balance sheet strength. The normal way to sustain success is by increasing sales and controlling costs (or even better yet, reducing them)...