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Each year franchising needs debt capital in excess of $10 billion to fund more than 30,000 new units and transfers of existing units. That's a lot of money, and the lending community doesn't seem that likely to meet the demand--even though collectively there's ample lending capital available. It's clear that access to capital will be an issue for the franchise community for the next few years at the very least.
  • Darrell Johnson
  • 4,999 Reads 5 Shares
In 1998, a young Canadian attorney named Fiorenzo Bresolin traveled to Florida to work on a large real estate transaction. It wasn't long before he fell in love with the state--and its booming real estate business. The outgoing corporate lawyer went on to develop, along with partners, a 500-acre corporate park in South Florida owned by the late Mel Simon of the Simon Property Group; today he's knocking on doors to place his restaurants in some of those malls.
  • John Carroll
  • 8,980 Reads 569 Shares
So you got the franchising bug. You heeded the calling to go into business for yourself. But you decided you didn't want to go it alone and you've teamed up with an operating partner to launch the new unit. It's now time for a reality check. When you first identified a partner, the two of you seemed to really hit it off. Your personal and business interests and philosophies seemed to blend, your skill sets complemented each other, and your eagerness to "run your own business" was infectious. Now, however, you are a few weeks or even months into the business and you're working long hours and spending a lot of time with each other. You're facing stress and important decisions like how to market the new unit, hire and train employees, manage supplies, and many other operational issues that must be efficiently overseen. It's these reasons that make it so important to create boundaries and job responsibilities – for you and your partner - and then stick to them. The level of success for your new franchise business depends on it.
  • Kerry Pipes
  • 26,731 Reads
Despite the surging growth in franchisors using multi-unit development strategies over the past 20 years--especially the past decade--this approach is not always a sure bet for successful franchise growth, and certainly not for every franchisor. For example, the multi-unit model may make a great development tool for an established retail-oriented brand seeking heavy market penetration in a given territory, but it may not be right for a newer service-based brand testing a smaller market
  • Kerry Pipes
  • 4,922 Reads 21 Shares
Historically, franchising has accepted EBITDA as the benchmark for establishing valuation. However, as seen over the past several years, valuations can vary widely across franchisors, franchisees, and company-owned concepts. Franchising has seen transaction multiples ranging from the low single digits up to lofty double digits. So what is the justification for this wide range in transaction multiples? What makes a buyer willing to pay 8x for one deal, but only 4x for another?
  • Dean Zuccarello
  • 17,585 Reads 1,834 Shares
If you haven't already done so, it's time to face the facts. Your customers are online and they're using social media. Here's what many of them are doing - connecting with their friends on Facebook, chatting up brands on Twitter, and spending quality time with companies through videos on YouTube. They are writing and reading blogs, listening to and participating in podcasts, and connecting on LinkedIn. Want to reach them? You can if you're at the right places.
  • Multi-Unit Franchisee
  • 3,458 Reads 1 Shares
Anil Yadav likes to think big. The multi-unit, multi-brand franchisee in Northern California owns 155 Jack in the Boxes and 26 Denny's restaurants in California and Texas. In fact, he's Jack in the Box's largest franchisee and he owns one of the largest privately held franchise companies in the country - which just happens to employ more than 4,000 people. Apparently, all that's not enough.
  • Multi-Unit Franchisee
  • 3,914 Reads 1,023 Shares
In his book, <i>Hire the American Dream</i>, Domino's Pizza multi-unit franchisee Dave Melton outlines much of his own personal journey and roadmap to discovering how to hire the best and most productive employees, and create a culture that leads to success for everyone in the company. It's a task that all franchisees encounter and Melton's tried and true methods can be applied to almost any situation.
  • Multi-Unit Franchisee
  • 3,234 Reads 12 Shares
As "The Lease Coach," I am a magnet for leasing questions. In fact, I receive hundreds of questions from independent and franchisee tenants each year; I am approached after my seminars, e-mailed, and called. One telephone call that I received was from a woman who had recently purchased a franchise. She started by telling me that her franchisor had offered to do her site selection and real estate work for an extra $3,500. Not knowing much about commercial real estate, she had thought that was a great deal and had accepted the franchisor's proposal for help. According to the franchisee, she was to meet and spend the day with a local real estate agent looking at sites, which she did.
  • Dale Willerton
  • 4,202 Reads 113 Shares
Over the past few issues of the Multi-Unit Franchising Report we have highlighted a handful of franchisees and their efforts to keep better tabs on the income and expenses of their units. Such unit economics strategies have become central to many franchisee operations. As the old adage states, you can't manage what you don't measure.
  • Multi-Unit Franchisee
  • 3,065 Reads 62 Shares
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 [email protected]
  • Eddy Goldberg
  • 10,467 Reads 93 Shares
Tropical Smoothie Cafe
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Referrals are vital to franchise system growth. As noted in the May FUSR, studies validate the power of referral sales. Close rates for direct referrals are typically three times higher than for other leads. According to Franchise Update Media Group's Annual Franchise Development Report, referrals continue to be a top franchise sales producer every year.
  • Steve Olson
  • 6,987 Reads 4 Shares
Most prospective franchisees want financial performance information as part of their due diligence process when deciding whether or not to purchase a particular franchise. Prospective franchisees are understandably hesitant to invest thousands of dollars if they have no idea what kind of financial performance exists at the outlet or unit level. Financial performance information can be a powerful selling tool for franchisors because this information responds to a prospective franchisee's compelling need for information concerning the possible financial results of their investment.
  • Brian Schnell
  • 22,479 Reads 8 Shares
Franchisors seeking to grow in a tight credit environment and slow economy are turning to private equity to counter a slowdown in financing and cash flow. For struggling systems, capital "infusions" or outright acquisition by private equity firms can replace diminished royalties and franchise fees; for successful brands, this source of additional capital can be used to accelerate growth and provide a competitive advantage.
  • Eddy Goldberg
  • 4,660 Reads 58 Shares
As we all hope for the best in 2010 and realize we have weathered the biggest part of the economic storm, we need to look at the franchise development world differently--in this case, under partly cloudy skies.
  • Marc Kiekenapp
  • 4,621 Reads 5 Shares
Before signing on as a multi-unit franchisee, Rob Parsons already had an insider's view of franchising, having spent time at Denny's and Popeyes working with franchisees on the real estate side. At Popeyes, Parsons worked with Jim Lyons, an industry veteran who is now chief development officer for Del Taco and Captain D's. Lyons played a key role in mentoring the young Parsons. During a five-year stretch at Popeyes, Parsons played a key role in pushing the brand's New York market from 58 to 101 locations.
  • John Carroll
  • 4,053 Reads 3 Shares
Franchise Update Media Group (FUMG) the leading industry resource for franchise development, today announced that 300 CEOs, presidents and franchisor executives representing more than 200 brands are expected to attend the 12th annual Franchise Leadership and Development Conference, which will be held at the Ritz Carlton Buckhead in Atlanta, Sept. 22-24, 2010.
  • PRESS RELEASE
  • 5,708 Reads
1. Should I make a financial performance representation (FPR)? Yes! Any type of representation, oral, written, or visual, that suggests or implies a specific level or range of actual or potential sales, income, gross or net profits qualifies as an FPR. You can't make an FPR unless it is in your franchise disclosure document (FDD). Between 20 and 30 percent of all franchisors make an FPR, which means some of your competitors share their numbers with your prospects. What impression do you leave if you don't share yours? If you have solid numbers, consider making an historical-based FPR. If you do, the law allows you to make specific written representations outside the FDD about a particular location or highlighting specific variables (e.g., a kiosk variation to a traditional retail format). Without an FPR, you may not make financial representations on your website (the first place prospects check in investigating a concept) or anywhere else.
  • Rochelle Spandorf
  • 7,074 Reads 195 Shares
With all the emphasis on providing customers with "value," I asked about 100 attendees at the IFA Convention in February to describe what value meant. The top five answers on the board:
  • Jack Mackey
  • 4,941 Reads 1,014 Shares
There are many different ways to approach the day-to-day operations of a franchise unit. Some people prefer to have operational partners and divvy up responsibilities. This might make sense when you have two or three people who each possess different skill sets. Perhaps one is better with organization and accounting, another more adept at marketing and customer relations, and so forth. It can be a good management tool but it's not for everyone. Remember it means profits are divided among the partners. Besides, some entrepreneurs like to have their hands on all aspects of operations and maintain a more centralized control.
  • Kerry Pipes
  • 13,173 Reads 1 Shares
"Explain your development strategy as it relates to recruiting single-unit versus multi-unit franchisees. Do you look for both? Why or why not?" During the past five years, most franchisors have changed their concept of the ideal franchise candidate. Today larger franchisors are focused more exclusively on recruiting multi-unit/multi-brand players, rather than the single-unit operators most systems were built on. As an established, nearly 40-year-old brand, Popeyes Louisiana Kitchen markets franchising opportunities toward the top-tier multi-unit/multi-brand category franchisees, while simultaneously considering single-unit candidates. We currently have more than 1,900 locations in 44 states, the District of Columbia, Puerto Rico, Guam, and 27 foreign countries.
  • Franchise Update
  • 6,505 Reads
Jeff's Bagel Run
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By now everyone knows what social media marketing is. In fact, many of us are sick to death of hearing about how great Twitter, Facebook, and iPhones are. What smart franchise brand managers want to know is how to make social media and mobile marketing convert to business, driving bodies through doors and positively adding to the bottom line--and if that's even possible.
  • Lisa Wehr
  • 3,221 Reads 1 Shares
Businesses spend an average of $28.87 per hour for each employee, according to recent figures from the U.S. Department of Labor's Bureau of Labor Statistics. This figure includes salary plus benefits such as health insurance, vacation time, and workers' compensation. Overall, 69.7 percent ($20.13) goes toward salary and 30.3 percent ($8.74) to benefits, with 1.6 percent ($0.47) of that benefit percentage going to workers' comp.
  • Kerry Pipes
  • 7,184 Reads 253 Shares
About two years ago, at the behest of a friend, Nick Vojnovic, president of Beef 'O' Brady's, made his first foray into a nontraditional franchise location, opening a restaurant at the TradeWinds, a resort in St. Petersburg, Fla., with 1 million annual visitors. It wasn't exactly on his radar, but Vojnovic decided to give it a go.
  • Eddy Goldberg
  • 4,336 Reads 1 Shares
Going into business for yourself can be a risky and yet ultimately rewarding experience. As with any new business, a franchise unit is going to require upfront capital. And in most cases it takes a significant amount of financing to get started. For those individuals who choose to join the franchising world, there are two distinct ways to finance entry into the business - on your own or with partners. In this section we will take a look at the strategy of getting into franchising on your own and without a financial partner. First, let's consider the cold, hard facts of the financial side of franchising.
  • Kerry Pipes
  • 15,447 Reads 6 Shares
Jim Sullivan is the CEO and founder of Sullivision.com, a company that designs and delivers operations and leadership training programs for companies and franchisees worldwide. Clients include The Walt Disney Company, McDonald's, Panera Bread, Regis Corp., Jiffy Lube, Wal-Mart, American Express, Applebee's, Domino's, Dunkin' Brands, and Coca-Cola. Three years ago Sullivan's company began researching the best practices of high-performing multi-unit leaders.
  • Kerry Pipes
  • 13,898 Reads 2 Shares
Rob Parsons knew all about franchising. He had worked on the inside at Popeyes and Denny's assisting franchisees with real estate. He had learned the ropes.
  • John Carroll
  • 5,427 Reads 194 Shares
I keep hearing Baby Boomers moan, complain, and quite frankly, just whine about Gen Y. I am sick of it. If you are whining, then you are not a leader. If you are a leader, you will look at this situation and say, "Okay, we have 70 million super-sharp young men and women coming into the workforce, and we are going to get them ready for early leadership positions..." instead of sitting around saying, "They are so entitled, they are so into their own thing, they are always on Facebook, blah, blah." If you are saying this, then maybe you are the one who is entitled. As I always say, "If you spot it, you got it!"
  • Bea Fields (adapted with permission from her blog)
  • 3,572 Reads 116 Shares
So often, franchise tenants come to me stating that they are not profiting because their rent is too high. While this can be true, frequently the tenant has simply leased too many square feet.
  • Dale Willerton
  • 4,250 Reads 1,015 Shares
Dave Melton oversees a half dozen Domino's Pizza locations in the Big Apple. The New York City market is one of the toughest in the country and yet Melton has flourished since beginning his life as a franchisee 20 years ago. But he hasn't just built a successful business in Manhattan, last year he made the New York DMA the most successful market in the Domino's organization. Now that's power.
  • Multi-Unit Franchisee
  • 6,062 Reads
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