Yukon Territory Feature Articles

Jason Mann learned early that a career in advertising sales could get you just so far in life. And he wanted to go much, much further. So in 1999, at the age of 30, Mann stepped out of his sales role and joined forces with his father to enter the franchising business.

This is the last of three parts about how to maximize the effectiveness of your Discovery Day. Companies schedule Discovery Days in different ways: once a month, once a week, or anytime a candidate can make it! As your system grows, you'll be forced to schedule more frequent and specific dates so you don't overtax your home office resources. But sooner is better. Like a cold steak, your opportunity can lose its sizzle the longer the wait for Discovery Day.

Just like any business, the franchising business is one that I have seen evolve tremendously over the past 30 years. While many of the cornerstones and crucial elements - product, simplicity, control, and support - remain the same, so much is changing.

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.

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.

Franchising continues to grow--not only in size, but in complexity--and in recent years, a huge part of that growth is attributable to multi-brand franchising.

It was only a few years ago that, for the first time, multi-unit franchisees controlled more units than single-unit operators did. That moment marked a shift that had been building for decades as franchising matured into today's world of dominant multi-unit and multi-brand franchisees--along with multi-brand franchisors offering several brands from under one roof. To paraphrase the old car slogan, "This is not your father's franchising." Or perhaps we should say, "not your mom-and-pop's." Franchising has grown up and it looks a lot like multi.

Not surprisingly, winning in professional sports has a lot in common with winning in the franchise business. If there's to be any chance of victory, individuals must work together, follow a strategic plan, and remain devoted to a collective cause. Seen in this light, it makes perfect sense that a number of former professional athletes--most of whom have competed in sports since they were tots--turn to franchising when their time on the field runs out. They understand hard work and dedication, and they know how to follow a system where each individual has a role that benefits the greater good of the team.

In the previous issue of Franchise Law News, Terrence Dunn and Michael Einbinder authored an article on how to strengthen your franchise agreement. This article expands on that theme, focusing on the role of the franchise agreement in the franchise system.

Just like any business, the franchising business is one that I have seen evolve tremendously over the past 30 years. While many of the cornerstones and crucial elements - product, simplicity, control, and support - remain the same, so much is changing.

Pizza franchising is a tough market. The competition is stiff and the recent economic recession really put the squeeze on many franchise operators. But despite pizza price wars and price-sensitive consumers, operators like Glenn Ajmo have discovered a few silver linings that are helping him sustain growth.

Your franchise plan should include a well-rounded checklist Joining the world of franchising can be an exhilarating - and often frightening - process. It requires a tremendous amount of research mixed with a bit of intuition and gut feel. To do it properly requires the careful development of a plan of action. One of the best ways to plan for something significant is to create a checklist and make sure that you cover and review each step.

Franchisors typically have developed franchise agreements that have been tailored by time and experience to address the issues that most often arise in the development of their franchised businesses. However, even the most polished agreement can benefit from a periodic review and revision. Here are five areas that frequently require attention to enhance enforcement rights, protect against competition, protect intellectual property, and protect against claims by third parties.

Market dominance is the measure of the strength of a brand, product, or service relative to the competition. Emerging franchise companies that are the first movers in their market niche need to be agile to establish their market presence before more aggressive or better capitalized companies move into their niche and overtake their first mover advantage.

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

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.

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.

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.

"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.

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.

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.

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.

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.

The beauty of the franchise business model is that it allows individuals to start their own businesses without the sweat equity and headaches associated with starting a business from scratch. No reinventing the wheel here. Hundreds and hundreds of franchise systems have already perfected the products, services, and delivery mechanisms into a proven and successful formula. That's a distinct advantage. But as a first-time franchise prospect how can you ensure that you choose the right system? Are some systems more suited for you than others? What will be your strategy for choosing the right franchise opportunity? These are all important questions that we'll try to answer in this section.

Multi-unit and multi-brand operations are where the action is today in franchising. Whether the economy stalls, falls, or climbs, an increasing number of multi-unit franchisees are not content with just one unit--and many are not content with just one brand. Multi-concept franchising offers power in numbers--units, brands, territory, and income--as well as the security gained by spreading the risk across different brands in a franchisee company's portfolio.

With the trend of multi-unit franchising continuing to drive franchising into the 21st century, some progressive franchisees are looking for the next logical step in the progression of franchising's ongoing and complex development. Many are finding that next step is through multi-brand franchising. Multi-brand franchising can offer a great additional growth tool for multi-unit franchisees who have seen their fortunes rise simply from adding new units of one brand. Adding additional brands and units makes logical sense. If following the franchise system works for one successful brand, it will most likely work in another, then another--if you choose wisely. With a streamlined infrastructure, solid capital base, and strong unit economics, more profit can flow your way with each passing year and additional brand.

As franchisors prepare for the upcoming renewal season, increased efficiency is likely a top priority for your franchise system. Our franchise team at Faegre & Benson has identified 12 tips to help you save time and money in preparing for a successful 2010 renewal season.

"The world of franchise development has changed during the last year and will never be the same again," says Art Coley, vice president of global development for AlphaGraphics. "You can't just put up an ad, throw money at the portals, and sit back and wait for the leads to come in anymore." That's exactly why he has spent most of the last three years at AlphaGraphics assembling, training, inspiring, and leading his new sales development team toward system growth.

When it comes to generating leads and identifying prospects, it's important to act effectively and efficiently. It's a competitive market, with quality leads difficult to come by. Franchisors with aggressive recruiting strategies and practices are more likely to find the best candidates and turn them into successful franchisees. They're also more likely to be recognized as winners of Franchise Update Media Group's Annual STAR (Speaking To And Responding) Awards.

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.