New Hampshire Feature Articles

Working to restart the economy's engine of job creation, President Obama announced Monday that the Treasury Department would invest as much as $15 billion to boost lending to credit-hungry small businesses.

Looking for deals in today's economy? Look no farther than the franchise agreement--but look carefully (and bring a lawyer). Written by franchisors to protect their brand and their interests, franchise agreements have historically favored franchisors, with little room for negotiation, especially among more established brands. That not only is changing, it already has--the result of fundamental shifts within franchising itself, accelerated by today's economic upheavals.

In my inaugural column as chair of the 2009 Multi-Unit Franchising Conference (right around the corner from April 15-17 at the Bellagio in Las Vegas), I wrote "I think it is important, more than ever, that multi-unit owners like ourselves have the opportunity to hear from others dealing with similar challenges, and to network with them in an open, informal setting. Because as hard as it might have been for some of us last year, the times are even more difficult as we head into 2009."

It's no surprise that multi-concept franchising continues to soar. So much so, that for a second consecutive year, we have devoted an issue of Multi-Unit Franchisee to covering it in detail. This high-flying approach to expansion is growing in popularity for a multitude of reasons. As a growth strategy it offers more units, brands, territory, and income--while spreading risk across the different concepts in a franchisee company's portfolio. Multi-concept operators typically have a solid infrastructure in place that, among other things, allows them to hire and retain talented individuals by providing growth paths within the organization. And of course there's the leverage of economies of scale in this type of operation.

First, let's set the record straight on what's going on. This isn't just a credit crunch crisis. It may have been triggered by credit issues, but it is much bigger than that now and won't be solved by governments throwing money at it, although that is a necessary first step. This crisis will get solved when consumer income and debt levels can support a stable level of demand, not just in the U.S., but worldwide.

"How has the capital market for franchise financing changed in the last 3 to 6 months, and what are you doing differently in franchise sales in the next 3 to 6 months?"

Everyone knows what the McDonald's logo looks like and what the "Golden Arches" represent. No matter where you go in the world, if you set foot inside a McDonald's you can order a Big Mac or Quarter Pounder and know exactly what it's going to taste like. Established brand awareness, reliability, and uniformity are part of the power of franchising.

Franchise Update Media Group (FUMG), the leading industry resource for franchise development, and digital marketing leader Oneupweb today announced a unique pairing of resources. Oneupweb will deliver comprehensive digital marketing services to Franchising.com, including enhanced search engine optimization (SEO) and social media marketing. The companies have joined forces to develop industry-leading white papers and studies, and Oneupweb will also deliver important online marketing resources, including webinars and white papers to the franchise community through Franchise Update Media Group.

Does it affect all aspects of franchising? Does it affect all industry categories? How can operations and franchise development work in harmony to have the franchise system thrive (yes, thrive) in a tough economic climate? Let's take a seven-step approach to "Tuning Up Your Franchise System" in an uncertain economy.

There may be some lag time, but experts note that every recession since the 1950s--with its rising unemployment and weakened economy--has been tied to an increase in crime, most notably property crimes and robbery.

You'd think selling franchises in one of the worst economies since the Great Depression would daunt even the hardiest franchisor. But many franchisors, both well-established and new to the scene, keep on plugging when the economy goes south. Some even consider this a great time to grow.

Many franchisors have reached their limit on expanding into suburbia, but the imperative to grow remains strong. In response, an increasing number are training their sights on America's cities.The move to the suburbs has been a decades-long trend in the United States, and franchisors have followed suit. But more than half of the U.S. population live in the country's top 25 metropolitan areas, and nearly 80 percent live in the top 100 metro areas.Cities are complex, crowded places, running the gamut from blighted ghettos to luxury high-rises. Suburban commuters flood into them by the millions each day to work and shop, creating a vibrant marketplace. And the under-served inner cities are hungry for retail goods and services, jobs, and entrepreneurial opportunity, making them fertile ground for franchisors who take the time to learn, understand, and develop relationships with the people who live there.The Initiative for a Competitive Inner City (ICIC), founded in 1994 by Harvard Business School Professor Michael Porter, studies inner cities with a focus on economic development. According to ICIC, "[T]he inner city retail market offers significant profit potential for retail companies now operating in the highly competitive, over-saturated suburban markets." According to an ICIC study, the country's inner cities contain:

Franchise Update Media Group (FUMG), the leading industry resource for franchise development, is sponsoring the premier event in multi-unit franchising, the 8th Annual Multi-Unit Franchising Conference, April 15-17, 2009 at the Bellagio Hotel in Las Vegas. This is the only conference in the country with an exclusive focus on multi-unit franchising, the fastest-growing sector in the industry, where franchisors can meet and network with successful multi-unit franchisees looking for new opportunities.

Greg Hamer, Sr. grew up working in his father's Louisiana oilfield service business. But in 1982, he began to put time and money into growing a franchise business that has since grown to 50 locations.

David Ambinder spent more than 25 years on Wall Street, most recently as a senior vice president of global support services for Lehman Brothers. When he got a pink slip last summer - just months before the investment bank filed for bankruptcy - he turned his attention to more humble endeavors: fixing up people's homes.

Franchising depends on access to borrowed capital for new units, updating existing units, working capital, and the transfer of units between owners. Where is that capital going to come from?

John Smythe says he was a typical 21-year-old when he was drafted into the U.S. Army in 1965. "I was just kind of rolling through life and not really giving it that much thought," says the 62-year-old veteran today. The Army was a good experience for him, and where he learned the skills and philosophies he's using today as a CMIT Solutions franchisee in Everett, Wash.

For over a year, the headlines have been rife with dire warnings that seem to indicate the demise of the world as we know it. For example, we learned that in June we experienced the worst percentage decline in the broad market averages since the Great Depression. We also discovered that home prices are declining faster than at any time in recorded history, and that debt levels (personal and governmental) have never been so high--nor have gas prices, even factoring in inflation. Gold is going through the roof and the dollar is falling through the floor. Corn, copper, steel, soybeans, etc. are shattering more records than Michael Phelps. And woe is us: flu season is right around the corner. Could this be the year of the "Great Pandemic"? It's no wonder that consumer confidence has dropped to multi-decade lows, and that stock markets around the world are misbehaving. But what could actually go right as a result of this upheaval?

Standard operating procedure, or SOP, is a term widely understood by those who have served in the armed forces. SOP refers to a step-by-step method for how a mission or function will be carried out. Veterans understand the importance of implementing and following SOP for a task to be executed and the mission completed successfully. This systematic approach sounds very similar to the franchising model, and is why more and more veterans are finding successful post-military careers in the world of franchising.

As you may recall, in my last column I asked if the hiring managers in your organization know the answers to the 15 questions that make all the difference between success and failure in recruiting, selecting, and retaining the best employees. Here now are the answers.

Technology tools have become a mainstay for every multi-unit franchisee, used for planning, budgeting, forecasting, and many other daily activities. Today franchisees are embracing technology for demographic research and site selection.

On the Friday morning after Congress voted down the first, "unsweetened" $700 billion bailout package--and with credit frozen and the lending climate getting icier by the hour--franchise sales executives at Franchise Update's Leadership & Development Conference put their heads together in a Friday morning "mindshare" session to brainstorm answers to some tough questions on what they're doing to make sales.

The multi-unit operators highlighted in this issue of have gained both market dominance and respect for their achievements. Wouldn't it be nice to follow in their footsteps? How does one go about doing so? Bookstores are full of how-to books on every aspect of strategic and tactical business building. Yet, ultimately, it mostly comes down to trial and error because the single biggest factor is you and the people around you in your company.

The secret is out of the box. The mystery shopping has ended and the results have been revealed. Each year, for more than a decade now, Franchise UPDATE has conducted a mystery shopping survey of franchisors to assess their lead generation and recruiting efforts. Two methods--telephone and online--are "shopped" and objectively recorded. Each franchise organization registered for this year's annual Franchise Leadership & Development Conference by a specific cutoff date--nearly 150 of this year's attendees--was evaluated, and its data included in the study.

It was like a gut punch for Charlie Marshall. In less than a year's time, the Spring-Green Lawn Care multi-unit franchisee went from paying $12 per bag for lawn fertilizer to more than $25 per bag. "That will make you look for ways to streamline and cut costs," says Marshall. To add insult to injury, gasoline prices were skyrocketing, making it even more expensive to fire up his seven trucks and dispatch crews to care for his customers' lawns each day.

About 20 years ago, Greg Cutchall learned a crucial lesson. An investor group he worked with forced him out of a chain of KFC restaurants in Omaha, units he had operated and helped to build. That fired him up to make things happen for himself.

When you have only one location, it's pretty easy to work both in your business as well as on it. When you have two locations, most often it's still doable--you can manage it. Almost without exception, however, when you get to three or more locations, you'll find yourself stretched way past your limits. You will be so busy working in your business that you won't have any time to work on it, and that's a recipe for disaster. When the disasters start piling up, it's past time to recruit the unit-level managers (ULMs) you need to keep things running smoothly and help you grow your business.

All franchisors place a high priority on gaining new recruits and responding to contacts from prospective franchisees. But who's setting the pace on performance? Once again, Franchise UPDATE's mystery shoppers hit the phones--and the websites--checking out franchisors from coast to coast to see which were doing the very best work. The best and the brightest were recognized in the 10th annual STAR (Speaking To And Responding) Awards--from the three top national performers to the companies that excelled at fielding telephone contacts or quickly getting back to website leads.

Reciprocity Restaurant Group President Lyndon Johnson good-naturedly lets new acquaintances have a little fun with his name. That's because he's fine with his name. "I can think of a lot worse people to share a name with," says Johnson.

The daily flurry of bad economic and financial news recently has made it difficult to focus on time periods beyond weeks, days, or even hours. However, I'll try to put things in perspective for the franchise community and offer both a forecast and some suggestions on how we can make the best of 2009.