Franchise Articles

Sean Falk's "secret weapon" for achieving success in business may lie in his Ironman triathlon creds. This three-time triathlon winner (a race that combines a 2.4-mile swim, a 112-mile bike ride, and a 26.2-mile run) harnesses his drive and energy to ride herd on 10 retail units (four brands) and one restaurant in three states. Or maybe it's experience in the U.S. Marine Corps., where he attained the rank of captain.

To be the best at what you do. To be the best in your market, your industry, your niche. To take your passion and build a business that excels in every way. To build teams, train managers, and win the loyalty of customers. To gain recognition and win awards from your franchisors. And to provide for your family and build a life--and a business you can pass on to your children. All these goals and more are what drive multi-unit franchisees to dominate. In our annual "Dominators" issue, we feature six operators what drives them. Here's a "sneak preview."

The economy hasn't been the only problem wreaking havoc across the nation. Most cities are also reporting a disturbing trend of crime increases that experts tie to rising unemployment and a pattern of thefts called organized retail crime (a.k.a. organized retail theft). Beyond the convenience store "beer runs" and juvenile candy grabs, prosecutors and retailers alike are feeling the impact of retail theft groups targeting specific merchandise--not for personal use, but for resale through household sales, community swap meets, flea markets, or most commonly, over the Internet through one of the large online auction sites or community resale forums.

The big multi-unit rollers who convened in Vegas this April represented more than $1.6 billion in annual revenues, and they were playing to win. It was all part of the 2009 Multi-Unit Franchising conference, sponsored by Franchise Update Media Group this past April 15-17 at the Bellagio hotel. The annual event, which attracted a record 500-plus multi-unit franchisees, franchisors, and vendors from across the country, was a sure bet for attendees.

Social media has exploded onto the franchising - and business - scene with a fury not seen since the early days of the World Wide Web back in the mid-90s. As more and more franchisors and franchisees begin experimenting and utilizing tools like Facebook, Twitter, and Youtube, we've decided to report on some unique, progressive, and innovative ways in which they've embraced this technology.

Gaining access to and securing capital is more important for franchisees today than ever. Every week we talk with multi-unit franchisees about how they are growing and the kind of financing it takes for them to achieve their goals and objectives. It's an important topic and sometimes we get some very candid responses.

Airport concessions may, at first glance, seem like a risky endeavor. Traffic has been steadily declining for a year - down nearly 12 percent in February 2009 when the FAA released its last traffic statistics - and the barrier to entry remains high. But consider the upside. The largest U.S airports host an average of 60 million passengers each year. Not one U.S. air carrier offers their coach passengers breakfast, lunch, or dinner service on domestic flights. Locations offering healthy, fresh, portable options are limited, yet travelers often have hours to wait for delayed flights, missed connections, or - in the best case scenario - a shorter than average security wait time.

Jake was visibly upset when he came to see us. He had been planning to retire in 3 years by age 55, based on the combined value of his personal investments and his company. This was now on hold for an indefinite period of time. Like many, he had suffered a significant hit in the 2008 through 2009 stock market declines. He wanted to visit about the benefits of a comprehensive wealth plan - something he hadn't taken the time to explore in the past.

It seems there really is a silver lining in every cloud. And the recent economic downturn has deposited a little of that silver at the feet of some multi-unit franchisees who can tolerate risk and don't mind a little "remodeling" work. Today, opportunities abound to buy distressed franchise units from other troubled or bankrupt franchisees--often for pennies on the dollar. If they have the stomach, these "rescuers" can snatch up these units, turn them around, and watch the dollars flow in.

Franchise training. It's likely one of the fundamental reasons you've selected a franchise business opportunity. It's all there - product and service information, operations details, marketing, accounting procedures - everything you need to know to operate a business is typically covered in some degree of detail by the franchisor. That's because the franchisor knows how the system works, they've refined it and they can offer that valuable knowledge to you as a new operator.

Back in 1989, I had an experience that remains vividly clear even now. I was driving through the small town of Monroe, La. Even though my windows were rolled up, there was an awful stench seeping into my rental car.

Keeping up on the rapidly evolving social media scene, and how platforms such as Facebook, Twitter, LinkedIn, and others can be used to help achieve your business goals is like trying to catch Jamaican sprinter Usain Bolt in the 100-yard dash.

In our July column we identified five common mistakes franchisors make in their franchise development activities. These mistakes were discussed by state regulators as part of the IFA 2009 Legal Symposium's "Ask the Regulators" session. This column identifies a second group of five mistakes, each addressing specific FDD disclosure requirements. Our objective here is to identify issues or best practices that will enable franchisors to more effectively address state registration/disclosure matters in connection with their franchise development efforts.

By now you probably understand that the franchising model can make many business start-up decisions quicker, easier, and more efficient. You've bought into the fact that you have a proven product, an effective system of distribution, and a regionally or nationally recognized brand, among other benefits. But when you're ready to sign on with a franchise company and open your store, they may assist you in the site selection process and maybe even lease negotiations, but you will most likely be required to handle land acquisition, construction, and building matters on your own. It's an important - and capital intensive - strategic issue and you want to do it right. Commercial real estate and property or land acquisition can be a complicated matter, but it doesn't have to be. Look for a real estate company or agent with a solid reputation and, preferably, one with experience in franchise operations and building. Work closely with them, seek their advice, and heed it.

Featuring: Tom Wood, President and CEO of Floor Coverings International, along with Franchisees: James Brooks of Flagstaff, Arizona and Jason Nichols of Toronto, Canada.

The Inside Franchising Podcast features leading franchisors and their franchisees together like you've never heard them-We discuss real world franchising stuff -- business models, systems, training and support, marketing challenges and franchisee success stories.

I just returned from the Multi-Unit Franchising Conference in Las Vegas and, compared with the other industry conferences I've addressed so far this year, it was a welcome breath of fresh air. At other industry group presentations this year, attendance numbers were off (one conference was even cancelled at a tremendous cost to the organizer) and the prevailing mood at all of them could best be characterized as an oppressive atmosphere of economic uncertainty and pessimistic forecasts. Not so with the Multi-Unit Franchising Conference group of movers and shakers.

The historical consolidation of franchise finance sources (local and regional banks, and other institutions) has led to only a handful of major players financing franchised companies over the last several years. These institutions, all well-known household names, have dramatically decreased leverage multiples while increasing interest rates and, most importantly, are tightly preserving capital until general economic conditions show signs of stability. As these lenders limit the flow of debt capital to franchising (or shut off lending completely), there are some trends all franchise owners should consider to ensure their financing needs are met during this recession.

Sam and Louie had been in business for about ten years, operating a chain of retail clothing stores. They were 50/50 owners in the corporation. When Sam approached us he had already been working for about 9 months to try to come up with a proposal which Louie would accept for dividing up their operations.

Gaining access to and securing capital is more important for franchisees today than ever. Every week we talk with multi-unit franchisees about how they are growing and the kind of financing it takes for them to achieve their goals and objectives. It's an important topic and sometimes we get some very candid responses.

2008 was a big year for restaurant franchises to refranchise many of their corporate-owned units, according to a recent report from food service consultants Technomic. Top brands such as Applebee's, Pizza Hut, and KFC converted stores to franchisee operations.

I know few people who had money-making investments in 2008. On the flip side, I know many whose portfolios technically beat their respective benchmarks. In a rising market (like that experienced in 1999), beating the benchmark would have been considered a badge of honor--providing ample bragging rights on the golf course and around the dinner table. However, having relatively "less loss" in a down market isn't exactly considered a wonderful experience for most of today's investors.

What if there were a web-based tool that could help you create and organize your restaurants' menu quickly and accurately--while also collecting important data and ensuring consistent brand delivery? There is, and companies including Applebee's, California Pizza Kitchen, O'Charley's, Max & Erma's, and Papa Murphy's are now using the technology to create, design and order printed copies of their menus. The tool, MenuNet, is from Trabon Companies, which provides web-to-print restaurant technology and printing solutions.

Tony Lutfi came to California when he was 16, a Palestinian-Jordanian immigrant looking for a better life. He dreamed of growing up, getting an education, and becoming a doctor. To earn some money, he took a job working the graveyard shift at a Jack in the Box. Then fate stepped in. "The manager had a heart attack, and they promoted me. I helped the management team in the summer after I graduated from high school," says Lutfi. "It became my passion. I never went back to school, and I was promoted at Jack in the Box."

You've done your research, you've assessed your own strengths and weaknesses, you've thoroughly evaluated the franchise companies that were a potential match for you, you've got your financing lined up, you've even jumped through a few hoops along the way, now comes the moment of decision. When it's time to commit and move forward with a franchise, you will be required to officially sign on. It's a big day and is often - but not always - marked by a Discovery Day held by the franchisor. Discovery Days are often meant to serve as final meetings that are typically held at the franchisor's headquarters or other corporate facility. Often, the franchisor will cover some or all of the costs of the incoming franchisee. After all, at this point, you've both been in regular contact and things look pretty serious. These events are usually fun, informal, and characterized by high energy and positive words. It's a final chance to talk one-on-one and, if both sides are in agreement, sign on with the franchise. But keep in mind that you are not obligated to "come aboard" at this time, and the franchisor also reserves the right to not extend an invitation at the end of the day. As a matter of fact, you may even consider attending two or three different Discovery Days to help you make your final determination of a franchise concept. That being said, here are some things you should know and do to prepare for attending a Discovery Day signing.

Craig Horn is such a perfectionist that he'll probably never give himself a grade of "A" for performance as president and CFO of Fresno, Calif.-based JEM Management Corp. After almost a year-and-a-half at the helm of JEM, which owns 22 Wendy's and 15 KFCs, he gives himself a "B."

Thomas "Tab" Broome got an early start in the franchise business, going to work for a restaurant group in Raleigh, N.C., about 30 years ago. At the time, the company ran a string of Darryl's restaurants (which looked a lot like Applebee's, only with a little more variety and flair), a group of 11 Pizza Inns, and The Angus Barn steakhouses. General Mills swooped in and bought the pizza places and family restaurant business, and Broome got a chance to work for a large restaurant corporation.

Business owners often get trapped because they don't heed the messages their business sends and they don't pay attention to basic principles. The following checklist represents a clear set of danger signals - situations and issues - that have a clear and negative effect on cash flow.Take a few minutes under the harsh, cold light of reality to ask yourself how many of the following danger signals exist in your business and then evaluate carefully their implications:

Craig had a sales organization which he had built but had just recently suffered a serious setback when he came to us to talk about his Transition Growth Planning. He had helped develop three key employees whom he felt were primed and ready to eventually take over and purchase the business from him. Unfortunately, he had not yet communicated his vision for these employees to the employees themselves. Shortly before he met with us, these three key employees decided that their best future would be to develop a new business on their own. So they left Craig and took their book of business with them. Much of this business had been initially developed by Craig, who had been transitioning his contacts over to these three individuals.

Gaining access to and securing capital is more important for franchisees today than ever. Every week we talk with multi-unit franchisees about how they are growing and the kind of financing it takes for them to achieve their goals. It's an important topic and sometimes we get some very candid responses.