Franchise Articles

When people chat with Dustin Winkle about the economy's effect on their business, he doesn't say much. He doesn't want to make anybody feel bad. Because the truth is that the economic downturn has been very good for his 11 dry cleaners in the Boise, Idaho, area. "Dry cleaning is pretty recession-proof, so we're doing fine money-wise," Winkle says. "When I bought the company two years ago, the economy was already starting to slide down. Things have been a little slower, but not a lot."

Whenever I speak at a franchise convention, I inevitably meet many struggling franchisees leasing commercial or retail space. These tenants desperately need a rent reduction ... right now. The recession is taking its toll on all industries including franchising; sales are down, business expenses are rising, and the high cost of leasing space is closing in on tenants. Your monthly rental payment to the landlord can be one of your biggest monthly expenses. Therefore, reducing this monthly lease payment is imperative for businesses like yours to stay viable.

Last issue we began the discussion of how buying assets out of bankruptcy court is time-consuming but usually easy - when done properly. But if you try to pick and choose, it can become more difficult. It's hard to determine a fair value for such assets. If you're not careful you could find yourself back in court fighting angry creditors who think you've cheated them.

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.

Let's face it, if you are looking into franchising, there's a pretty good chance that one of the reasons is that you are in search of a "culture" or leadership style that is a better fit than your career has been providing you thus far. Maybe you're coming from a background of working for a heavy-handed boss or a system that rejected forward thinking. You're beginning to see that strong leadership and a good cultural fit are important for your personal and professional success. Many franchise brands can offer this. When you begin searching for a franchise that might be a good fit for you, you will definitely want a sense of the system's culture and its leadership style. For example, when you begin dealing with the sales person, take careful note of their attitude, tone, and overall personality dynamic. Do they seem to really believe in the brand? Do they seem truly interested in telling you about the brand and determining if you would be a good fit? Chances are these "gatekeepers" are a reflection of the entire system.

Cell phones have become big business and the competition in the market can be fierce. Not surprisingly, social media tools are finding a niche in this industry, too. One example is three young entrepreneurs in the Northeast who have found a way to use Facebook and other social media tools to give them a competitive edge.

There's a year-end ritual I've always hated. No, it's not those standard resolutions to eat better, exercise more, and clean the piles off my desk. Worse. It's being asked to forecast where "X" will be in a year, "X" being the level of the Dow, the price of gold, the yield on short-term Treasuries, etc.

Anand Gala never planned on getting into the family business of operating franchised fast food restaurants. What he had planned on was medical school. But as he was working his way through his med school interviews, it dawned on him that he just wasn't all that interested in medicine. He's never looked back.

Each year at Franchise Update we survey franchisees across the U.S., toting up their brands, units, and locations, and ranking them by size for our annual "Mega 99" list. And, since not all franchises are created equal in terms of initial investment and ongoing support, we also compiled a second list, ranking the largest franchisees by industry. Numbers are important, of course, but they don't tell the story of the struggles, false starts, and failed endeavors each successful multi-unit operator has overcome in building their organization. Many have spent decades building their companies, brand after brand, unit after unit.

Bret Hooppaw, Luihn Food Systems' director of operations, had an "Aha!" moment when his 19-year-old daughter said she'd applied online for a summer job. When he asked, "Why don't you just go over there and apply in person?" her response was, "Nobody does it that way anymore, Dad." That's when Hooppaw, who helps oversee 90 KFC and Taco Bell locations, realized instant communication technologies are second nature to the Millennial generation--those who make up most of today's frontline employees--who will be his managers 5 years from now and who will be the organization's leaders in the next 5 to 10 years. "I knew I had to find a way to meet them on their ground," he said.

Glen Helton's lifelong career in franchising began as a teen with his first job at a Burger King in Fayetteville, N.C. Today the Texas native is president and COO of Strategic Restaurants Acquisition Corp. (SRAC), which operates 271 Burger Kings and 17 T.G.I. Friday's across 9 states. Helton, along with SRAC's CEO, Jerry Comstock (former Bennigan's CEO), have become known for turning underperforming restaurants into profit generators. They did it for the 226 Burger Kings they acquired out of bankruptcy 5 years ago, and they also have added 45 new ones. Today they're applying their turnaround skills to the 16 T.G.I. Friday's in New York and Florida that they bought out of bankruptcy in August 2008.

It's not difficult to see the opportunities offered by co-branding. Teaming related concepts together in one central location can certainly offer benefits in many situations. But even if you don't co-brand in the same location, there's a related twist some franchisees have used effectively by turning to complementary brands. Portland, Oregon multi-unit operator Steve Foltz knows all about the technique. Foltz got into the franchising business almost by accident following college in the mid-1980s. He was working as an assistant manager at a restaurant while job searching when he realized the restaurant business might offer a future of its own. A friend of his was in franchising and looking for a partner. Within a year the new partners had opened three Cinnabon's in the Portland area.

Jason Shifflett learned early in life that Domino's Pizza could offer him the keys to a successful life--and that he plans you make in your youth don't always come to pass. "I started with Domino's at age 14 and worked my way up in high school," says Shifflett. In college, he was a biology student and planned to attend medical school. He continued to work at Domino's as a general manager--and learned a few things there too.

David Timlin of Yakety Yak discusses the changes of technology and it's effects on the franchise industry.

Ricky Warman already knew a lot about finance when he left his job as an investment manager for Prudential Securities in Miami to start a life in franchising in the early 1990s. Warman was a friend of Jenny Craig and started in franchising with nine Jenny Craig weight loss centers. He would go on to try other franchise brands, including Schlotzsky's. Today he's wholly committed to the Papa John's brand, operating 42 pizza locations. (He had 53, but recently sold 11.)

Ben presented us with a situation common to many business owners who find out too late they are not in a position to exit on their terms. Ben had founded and built a very successful business supply business. He had customers across the country and was consistently earning solid profits under his management. He had decided he was ready to retire in the near term.

Looking to open a new franchise location? You might want to consider using Facebook. That's what multi-unit franchisees like Adam Saxton are doing - and they're getting results. When the Saxton Pierce Restaurant Corp. was looking to open a new McAlister's Deli location in Texas last spring, the company called on Facebook.

Thomas "Tab" Broome has spent most of his professional life in the restaurant and franchise business. He's seen it all - learned a lot - and is one franchisee who knows how to manage a chain of restaurants. His professional story begins with a restaurant group in Raleigh, N.C. At the time, the company ran a string of Darryl's restaurants - a place that looked a lot like Applebee's, only with a little more variety and flair - a group of 11 Pizza Inns, and the Angus Barn. 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.

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.

Buying assets out of bankruptcy court is time-consuming but usually easy. But if your target is a franchisee and you get choosy - meaning, for example, that you want to buy only 10 outlets in a bankrupt 20-outlet franchise restaurant chain - things get dicey. Why? Because it's hard to determine a fair value for such assets, and if you fail to do so, you could find yourself back in court fighting angry creditors who think you've cheated them.

I love Tivo. At least, I used to. But then I had to interact with live people. Now this is not the beginning of a rant about bad service. It's the beginning of a rant about bad service design. Because when employees are directed to follow processes that drive customers crazy, that failure of service design is management's responsibility.

Since mid-2008, the economy, consumers, and the restaurant industry have been in the vice grip of the country's deepest and longest recession since the Great Depression. Finally, a light at the end of the tunnel is beginning to emerge. Most economists are now saying we have reached or passed the bottom. While the going is certainly still rough, business conditions are beginning to improve, unemployment is stabilizing, and consumers are dipping their toes back in the spending pool. Capital flow is increasing, with equity investors coming off the sidelines and lenders beginning to seriously pursue new debt facilities for borrowers.

Franchise Update Media Group (FUMG), the leading industry resource for franchise development, today announced that submissions for the 2010 Multi-Unit Franchisee "Top 99" lists are being accepted through Friday, Nov. 20, 2009.

Did you do your homework? In my last article, I discussed taking a broader look at the concept of "performance measurement." Rather than allowing a simple percentage change (or even a percentage change relative to a broader index) drive how satisfied you feel with your portfolio's performance, I suggested thinking longer and harder about defining success on your own terms. After all, what good is a "good" performance number if it doesn't leave you with a portfolio that can help you achieve your goals?

After graduating from the University of Maine, Michael Kern landed jobs at top advertising agencies including Young & Rubicam and McCann Erickson. He later held top marketing jobs for KFC and Long John Silver's, at one point serving as worldwide chief marketing officer for Long John Silver's.

This episode of the Inside Franchising Podcast features Tom MacMahan, Chief Operating Officer at Play N Trade. Tom discusses his experience with Activision and Starbucks and how it assisted in the launch of the Play N Trade Franchise. For more information about Play N Trade franchise visit: http://www.franchising.com/playntrade/

Taking a franchise brand international is, in a sense, the final frontier for growth. It's where many franchise brands that have begun - and been successful - in the U.S turn when they seek expansion. It's a strategy that often occurs in part because of growth that has saturated domestic markets and territories. Typically, larger more established franchise brands begin looking across borders for untapped markets and potential growth. It's an expansion strategy that's not new. But during the past couple of decades as franchising has continued to grow as a popular business model, the international growth strategy has been on the rise. International franchising can also provide opportunities for new and existing franchisees looking for expansion options. There are opportunities as near as Mexico and Canada and as far as the Middle East. In one sense, international franchising can be a relatively smooth and easy process. After all, the franchise concept is built around infrastructure, simplicity, replication, and streamlined operations. What works in one place generally works in another. And many international markets are wide open and untapped and offer enormous potential for franchisors - with the right products, services, and business culture.

By now you're most likely familiar with pop culture buzzwords like tweets, friending, and texting. But if you haven't had much firsthand involvement in these activities, chances are you will very soon. These ubiquitous and participatory endeavors are all part of a "social networking" trend that's spreading like wildfire online and, some say, is poised to create a new frontier in 21st century marketing.

Robert came to us to help him develop a 5-year Transition Growth Plan so he could sell his company and retire. He had high expectations for what the sale would net him financially, based on his presumed growth rate. Unfortunately, his presumptions were well beyond business reality. He had never utilized a written strategic growth plan or a business model innovation program. And the stagnant state of affairs which made up his company were proof of this.

Tasti D-Lite's coming to Arizona...and Facebook is helping spread the news. Jonathan Kaufman is the area developer and multi-unit franchisee for the state, where he's scheduled to open more than 40 Tasti D-Lite units. But it's his first store opening that has kept him busy this fall and Facebook has been one of his strategic marketing tools.