Grow

Papa Murphy's Take 'N' Bake Pizza must be doing something right. In fact, the country's fifth-largest pizza chain is doing a lot of things right.
The Vancouver, Wash.-based pizza chain, with 1,350 units in 38 states, Canada, and Dubai, recently ranked first in two consumer surveys. Technomic's 2013 Consumer Restaurant Brand Metrics Report named Papa Murphy's the top chain overall among full-service and limited-service restaurants. Papa Murphy's also was ranked the #1 pizza chain in the 2013 Consumer Picks survey from Nation's Restaurant News and WD Partners. That follows previous awards, including Zagat's top-rated pizza chain in 2010, 2011, and 2012. The brand is doing something right with its franchisees as well, earning Franchise Business Review's Franchisee Satisfaction Award several years running...

"How does eliminating the 'silos' of separate departments help integratea brand's recruitment, development, sales, and marketing cultures and tasks?"

Jamie Davis
Executive Director of BusinessDevelopment & PizzAmbassador
Donatos Pizza
Silos are good for one thing, and one thing only: holding stuff back.
I grew up in the Midwest, so silos were a familiar site to me as a child. These huge concrete structures held enormous quantities of grain to be shipped off to other parts of the country, and they never moved. Ever. Of course, the silos were doing exactly what they were supposed to: hold stuff back and not move.

In the dynamic world of franchising, silos have no place. Franchises are complex organizations made up of independent franchisees supported by a corporate structure of marketing, operations, real estate and construction, and business development teams...

Does recent history give us a good basis for what to expect for franchise development in 2013? Certainly there is some guidance that can be taken from the past few years. After all, we're 3½ years past the technical end of the Great Recession, and we have data for the first 2½ years of the "recovery." (We're just starting to compile the 2012 results.) So let's see what the data might suggest for 2013.
Based on a sample representing more than 70 percent of all franchised units at the end of 2011, the number of franchised units increased at a compound annual growth rate (CAGR) of 2 percent between 2005 and 2011. As we know, and as the graph clearly shows, growth significantly slowed starting in 2008, the year the financial crisis hit...

Different types of international franchises are being granted today for U.S.-based education, food and beverage, retail, and service franchises. The level of franchisor investment and control for each type of franchise varies. How do you know which method to use when expanding internationally? Master franchises, area developers, company-owned stores, or joint ventures? We look at the five types in use today and the pluses and minuses of each.

Master franchise
Five to 10 years ago, the master franchise was the most common international type, used about 90 percent of the time. In this model, the franchisor grants exclusive rights for a country to one franchisee, often with the right to sub-franchise once the franchisee has shown they can operate the business correctly in their country...

Are you making the grade? Is a "C" okay for your company? Are your competitors scoring higher?
With 2013 already trending to be one of the best years in the recent past, we need to make sure we are prepared to take advantage of the new year to grow our franchise brands. We need to take a look at our systems and procedures and create a "scorecard" for success. Today's franchise buyer expects the best in marketing materials, in systems, and in professional sales consultants who can guide them to a franchise that can meet their financial goals.
The franchise systems that will be most successful in the upcoming year will have taken the time and invested the capital to implement the critical changes they need for success. They will also have tracked these five key components to franchise development success (and more):

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...

There's always more hype and more promises during a presidential election season. With all the rhetoric, expectations rise. The reality is likely to be quite different. I hope you liked 2012. In a nutshell, not much will change in 2013, as only two significant factors could alter this forecast.
One is unpredictable and largely out of the control of any of us: global conditions. The other is within our country's control: our own Congress. Unfortunately, even 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 they can have in the next 12 months is rather limited. I'll look at the most important reasons why.

It's old news to all of us that franchising has evolved since 2007 with the changes in the lending environment, home equity, high unemployment rates, and lack of consumer confidence. What's amazing to me is that franchising has been talking about the "New Norm" for five years. Let's face it: This is not a new environment for business ownership any longer. It is just the Norm!
I would like to introduce you to "Norm" in this article, and how we might consider working with him. Norm is a franchise seeker with the same needs he has always had. Norm wants to find an opportunity that feels comfortable for him to operate, that can give him a reasonable return on his investment, and that will provide security and a future for his family. Norm has not really changed over the years...

When Steve Olson stepped onto the stage at the Leadership & Development Conference in Atlanta in October, he once again had the unenviable job of reporting the good, the bad, and the ugly in franchise development as seen through the lens of Franchise Update Media Group's annual Mystery Shopper survey. There was a lot of bad.
"Only 19 percent of sales staff were available for our first telephone call. That's down 22 percent from last year," said Olson, president of Franchise Update. He went on to point out that 57 percent of the calls resulted in messages left on voicemail or with the receptionist. Incredibly, 24 percent of the sales staff never returned the call from our mystery shoppers, who posed as qualified prospects.
Website-driven leads didn't get any better service or attention...

You can't improve what you don't measure, the old saying goes... which is one reason so many in franchising eagerly anticipate the release of the Annual Franchise Development Report (AFDR) at Franchise Update Media Group's annual Leadership & Development Conference. Things change from one year to the next, in life and in franchising, and the AFDR provides franchise sales and development executives an annual benchmark of best practices, along with a slew of other development-related data and analysis.
This year's survey gathered data on sales and recruitment practices from 106 franchisors representing 43,497 units (34,566 franchised and 8,931 company-owned). Participants consisted of franchisors who registered for the annual conference in Atlanta and filled out a lengthy survey online in advance...

What make a franchise All-STAR? A passion for excellence. That's the premise behind the STAR Awards (Speaking To and Responding), presented annually at Franchise Update's Leadership & Development Conference, held October 3-5 in Atlanta. The awards recognize franchise companies for best practices in lead generation, follow-up, and recruitment practices.
STAR Award recipients are scored and rated based on results compiled by mystery shoppers who pose as qualified prospects and contact franchisors by phone and online. Franchise recruitment websites were also analyzed by online experts. (See page 42, where this year's mystery shoppers discuss their methodology and experience.)
This year, mystery shoppers called 116 franchisors and submitted applications on 81 franchisor websites to judge how well--and how quickly--the companies' sales and development teams responded to inquiries...

"How can you help prospects with questions to ask and what information they should be seeking from franchise development people and franchisees?"

Erin Crawford
Director of Franchise Development
United Franchise Group

The following are five areas I believe are important for prospects to inquire about:
1) Costs and what's included (franchisor). It is important to ask a franchisor about the various costs associated with the franchise. A franchise fee usually covers the training, implementation, and setup. The total investment includes the franchise fee, working capital, inventory, and equipment costs. The initial investment is the amount of liquid capital required up front after all financing options have been applied...

There's a game changer coming to franchising, and the lending community is to thank for it. While it's hard to thank banks for the financial mess they created a few years back, capitalism is built on creative destruction, and what was destroyed within the banking industry is how they evaluated credit. They got it wrong, some banks failed, many businesses and people suffered, and banks now are starting to enter a new period where the old rules are being seriously revised.
As surprising as it may seem, this is a good thing for franchising and will be for years to come (until banks get carried away again and the cycle repeats). Here's how franchising is beginning to win the competition for credit.
We're now in the second phase of a small business credit recovery following the financial meltdown of 2008...

Most franchise systems would like to attract quality multi-unit franchisees and enjoy the benefits of having fewer franchisees operating more units, and reap the efficiencies gained in support, marketing, and training. Here are some tips for deciding if a multi-unit program is right for your concept.
Most franchise systems organically grow a single-unit owner into their first multi-unit owner--without having proper systems or training in place for multi-unit operators. They are (or become) reactive, rather than starting out of the gate with a multi-unit strategy. This is an organic growth curve that occurs in most franchise systems, as long as its unit economics are strong and the concept can operate through qualified managers. Reactive growth needs to be managed early in the lifecycle of your franchise system...

We're all in search of the "golden leads" year after year. We all say we are willing to pay whatever it takes to speak with qualified candidates who have an interest in our business. And we know that franchisee referrals and the customers who use our products or services rank as the top leads in any franchise organization. Getting the word out in the community is a great way to get more customers for your franchisees, make your franchisees feel good about being known, and to create a system with great validation and attitude.
PR is a great opportunity to promote your franchisees and build franchise sales. Public relations efforts have always been thought of as an expense, rather than an investment in your franchise system's branding and expansion...

Expanded website will help connect lenders with borrowers

The 2008 financial meltdown has had a lot of bad implications for franchising, mostly by making access to capital much harder. However, it did have one good implication for the franchise business model. It strengthened it. Capitalism is all about survival of the fittest. Most would agree that many franchise brands in the first half of the past decade were focusing more on growth than quality, assuming (correctly for a while) that the economy would continue to rise and in doing so cover up weaker franchisees and even weaker brands.
All that changed after 2008. Although painful, the down economy demanded better performance, forcing weaker brands and units out. That wasn't good for underperformers, but it is very good for the business model of franchising...

Good or bad, customer feedback is a gift. So much so that almost every franchise system asks customers to comment on their experiences, and even to rate them.
There are predictable reasons customers want to give you feedback. Some will have bad experiences. You can bet on it. And they'll want to tell you--and then expect you to do something about it. But only a few franchise systems are really good at anticipating and responding to this challenge.
What I mean is that a lot of franchise companies will respond to complaints, but only in a very tactical way. They install systems to alert them when customers complain. Managers are then held accountable to call the unhappy customers and "solve the problem."
Of course, this kind of one-off, after-the-fact approach to problem-solving is not nearly as effective as identifying the root causes of recurring problems...

Whether you have one franchise or a thousand, Discovery Day catapults your recruiting process to its crescendo. It's "Confirmation Time," and engaged candidates serious about your franchise are now at your doorstep. Are you really prepared to invite them in? How scripted, rehearsed, and polished is your "meet and greet" event?
According to a study conducted by Dunhill Personnel years ago, 85 percent of what your prospects absorb at Discovery Day is visual, not informational. Seemingly minor details can make lasting impressions, and steer a candidate's decision to join or pass on your franchise. Check out these 12 tips that have enhanced the Discovery Day experience resulting in more franchise closings:
Tip 1: Assign a tour guide...

In this tech-obsessed world, franchisors seeking to recruit the next generation of top-tier franchisees are engaging prospects through a constant flow of communication. The goal is to give those prospects the information they want, in the form they prefer and as quickly as possible, because in 2012 they have to.
"The one who responds the quickest gets the business, especially on leads that come in through your portals and websites," says Kevin Drudge, who manages franchise development for Maaco Collision Repair and Driven Brands. "Our goal is to get back to them within 24 hours, preferably sooner. The prospects who are serious will stick with the first couple of systems that demonstrate interest in them, and we want them to be ready to make a decision within 30 to 45 days...

What are you doing to improve the speed and effectiveness of your responses to prospects evaluating your system?

Steve Cox
Vice President, Franchise Development
i9 Sports
To better position us to reach our 2012 goal of doubling franchise awards, we recently revamped our lead follow-up processes to increase the speed and effectiveness of our prospect follow-up.
Step one was the implementation of Captivate from FranConnect. Prospects want a lot of information before they are willing to fully engage. With the implementation of Captivate, we are providing prospects with more information than ever. Our Captivate virtual brochure provides them with the emotional hook needed to engage them, while also providing them with the nuts and bolts of our opportunity, which allows them to determine (1) if investing time in the discovery process makes sense for them, and (2) if they qualify to engage...