Franchise Financing

Franchise banking attract planners
Monday, 30 June 2008 1:05pm
The franchising industry may seem worlds apart from financial planning but Commonwealth Bank has found a way to tap into the franchising model to better serve the banking needs of dealer groups.Last October, Commonwealth Bank launched a specialist banking division, Financial Planning Banking, that specifically caters to the lending needs of dealer groups.The group did nine months of research to come up with a lending model that suits planners and, more importantly, used the lending template the bank has applied when lending to the franchisees of KFC, Gloria Jeans and McDonald's.“There are many similarities between the way these franchisees work and of course, lots of differences too. But from the experiences we've had in franchising, we're able to adopt that [successful model] to financial planning and we're able to do that because of the knowledge the bank has got in financial planning across the group such as at CFS, CommInsure for example," said Stewart Creighton, the head of the unit.Creighton said the idea to set up a specialist planning unit was borne out of the trends the bank was seeing in the planning industry. “A lot of older planners are now looking to retire in the next few years so for us that offers a lot of opportunities. There will be a lot of consolidation and a lot of acquisitions happening," he said.But to fund growth and acquisitions, dealer groups need additional funding, and that's when CBA's banking unit for planners comes in. Creighton said that unlike other lenders that could only lend around 1.7 to 2.5 times multiple of a planning practice's recurring revenue, the bank could lend up to 100 per cent or 2.5 to 3.5 times recurring revenue.The catch is that a dealer group that wants access to a higher gearing amount has to pass the bank's ‘accreditation' test. “We can help dealer groups grow their business much faster but we would look at their compliance structure, admin support, approved product lists, marketing, all of that are reviewed as part of the accreditation," said Creighton.To date, 10 dealer groups have signed up, including CBA-owned Financial Wisdom, and several more in the process of getting accreditation. “Given the success we've had, we've actually had to put a freeze on accrediting any more dealer groups," said Creighton.
Michelle Baltazar

Franchising In Czech Republic

A. CZECH MARKET ANALYSIS
The current trend of world trade globalization dissolves rational borders to transfer financial and intellectual capital. Franchising, as a method of making business, has arrived in the Czech Republic as well. The franchising sector in the Czech Republic is steadily growing in proportion to the developing consumer purchase power and the concept of franchising is becoming familiar to an increasing number of companies and individuals. The number of franchises operating in the Czech market grew from five in 2000 to more than 90 companies in 2004. In addition to large multinationals such as McDonalds, KFC, OBI, Baumax, Marks&Spencers and Yves Rocher, which have already created their own franchise networks within the country, national companies have established their own franchise concepts and have often created successfully operating franchise chains. Also in the Czech Republic franchising systems support especially small and medium sized enterprises in particular and Delta-owned Paneria bakeries, the restaurants Potrefená husa or Švejkovy restaurace and tire repair service Barum are a few well known success stories. According to statistical data, this method of running a business is currently most established in retail, where more than two thirds of franchise networks operate, followed by other services and gastronomy.
Limitation of Franchising
Franchising as a marketing method is not as extensively used in the Czech Republic as abroad and also its development is rather different than in other countries. Although known world wide since the 19th century, franchising commenced in our country only in 1991. Forty years of communism, insufficient knowledge of the method, lack of information and missing practice restrained franchising from faster expansion. The Czech market lacked experienced managers and an established business environment. The lack of comprehensive and integrated knowledge formed the attitudes and expectations of the business sector and resulted in a distrust towards this kind of enterprise. In addition, there was an absence of specialized literature presenting this topic and no consultancy services specializing in franchising. Another major obstacle facing franchises intending to enter the Czech market was the lack of available domestic capital.
Financing the Franchise
Today this most common obstacle facing a potential investor in franchising is the difficulty in raising the capital. An investment in a franchise is not cheap matter. Start-up expenses differ depending on the type of business and also type of franchising chain. Initial investment costs generally range from CZK 10 thousand to 15 million, whereas the costs of national franchises are usually much lower than multinational ones. The initial inability of the Czech banking sector to accept the distinctions of franchise financing was broken in 2002 through the cooperation of various banks, in particular Komerční banka, which now offers the possibility to obtain the funds necessary for entrepreneurs-beginners to enter the Czech market, as well as for companies already in business. In 2003, Komerční banka made its first special loan to a franchisee of the French cosmetics retailer Yves Rocher. Financial experts now provide qualified consultancy regarding other possible financial resources such as state programmes, EU structural funds, Venture Capital, etc.
Differences of the Czech Market
Although franchising can remove the administrative, economic and technological barriers, there are some national limitations which must be considered when entering the Czech market. Franchisors should take into account not only language barriers, which are mostly overcome, but also different attitudes and expectations from local franchisees. Franchisors are often mistaken when they have expected Czech customers to have the same shopping habits as customers in their home countries. For example, although Czechs have slowly adapted to Western types of fast food they still prefer traditional Czech cuisine. Understanding this fact, some companies have altered their strategies. For example McDonald´s Company introduced a product called McBůček. McBůček was inspired by a favourite Czech meal and produced solely for the Czech market. To succeed on this market does not always mean to offer standardized and original products. Prague`s first Pizza Hut restaurant, for example, had to be closed because it imported too many ingredients for just one existing restaurant was not profitable. In short, research of Czech customer habits and the local market can be as important as the choice of a local partner.
B. NATIONAL REGULATION OF FRANCHISING Special Legislation?
Despite the increasing number of franchise chains operating within the country, the Czech Republic has no specific law or regulations for franchising, therefore no legal definition of franchising exists. This fact might be confusing in particular for foreign entrepreneurs, but on the other hand this business method does not directly need any special legislation to be passed since particularities of franchising are in the marketing sphere. Moreover, sometimes a rigid law is not able to correspond with up-to-date trends in the business sphere and the practical needs of franchising and could constitute legal obstacles for both parties of franchises. Nevertheless, the absence of special regulation certainly does not imply the absence of regulation at all.
Franchises as Innominate Contracts
Presently franchises are subject to commercial law as innominate contracts (contracts sui generic) based on the substance of the agreement between two parties through which the franchisor grants to the franchisee the exclusive right to run a business under the franchisor`s name in return for payments. This agreement contains elements of various contracts, such as an industrial property license contract, a contract on commercial representation or a contract with an intermediary; whereas these contracts are regulated by the Czech Commercial Code which grants the parties an extensive freedom to arrange the business relationship according to their will.
Depending on the franchisor`s business plan and strategy, franchising in the Czech Republic as well as in other countries can be realized through company-owned operation, direct franchising, master franchising, area developments or joint ventures. The necessity to take interest in the Czech law and involvement of the franchisor depends on the chosen method.
Impact of Czech Law
When entering the Czech market, the franchisor should certainly consider the impact of various legal areas and suitably combine their provisions and possibilities. For leasing property or rental equipment it is necessary to refer to the Civil Code and the Code on Lease and Sublease of Non-residential Areas as well as other law relating to real estate. Moreover, foreign franchisors have to conform to the provisions of Foreign Currency Law.
Depending on the type of business to be franchised, both parties need to take into account the administrative law, especially the Trade License Code, the tax and custom law and also regulations regarding fees, charges and licenses in connection with importing goods and supplies. As franchising is often called business under someone else`s name, each franchising contract should contain provisions regarding intellectual property law, especially trademarks regulation.
Franchising as a vertical agreement also interferes with Competition Law. Under Czech law franchising contracts are excluded from agreements harming competition by a general exemption for vertical agreements issued by Czech Office for Protection of Competition.
As for the franchising agreements concluded between a foreign franchisor and a local franchisee, the Czech law enables the parties to choose foreign law to govern their agreements as well as to arrange a jurisdiction of foreign court, either regular or arbitration, without any limitation. Considering practical experience, the law of franchisors home country is usually applied insofar as it does not conflict with Czech law.
As previously stated, there is no special regulation for this business method. On the other hand, some aspects of franchising are regulated by the Ethical Code of the Czech Franchising Association adopting the wording of European Code of Ethics for Franchising of 1972. Although not legally binding this act constitutes a legal guide for constructing the franchising agreement according to Czech law.
Conclusion
In connection with the accession of the Czech Republic to the EU, EU law was implemented and harmonized, and relevant legal regulations mentioned above are at present already fully compatible with EU law. Foreign entrepreneurs may expect standardized conditions, legal certainty and therefore can feel secure to access the Czech market. The Czech Republic is unquestionably ready to offer credible business partners, new opportunities within a market, with lower competition and lower costs.
Further Information
The Czech Franchising Association provides entrepreneurs interested in information about franchising in the Czech Republic with necessary information support and service, acquaints them with the catalogue of franchise opportunities in the Czech Republic and assists them in entering into the Czech market. For more information refer to www.czech-francise.cz.
For further details please contact: Dr. Giese, Ernst or Ms Vaculínová, TerezaGiese & Partner, v.o.s.Palác MyslbekOvocný trh 8CZ – 117 19 Praha 1Czech RepublicTel: +420-221 411 511Fax: +420-222 244 469giese@giese.czwww.giese.cz

Franchising in India

Franchising in India
International Franchise Lawyers Association e.V. (IFLA)
IntroductionThe franchising industry rightly deserves to be called the wave of future businessin India. The phenomenon of franchising developed at the end of Second WorldWar and the system has taken its roots in the United States of America, wherealmost 50% of all retail sales are through franchise outlets. Decades later, Indiahas begun to see the growth of both domestic and international franchisesbalancing the philosophy of the free market with the philosophy of swadeshi(indigenous) products.Franchising encourages spirit of entrepreneurship with its essence lying in anagreement between two independent undertakings, the franchisor and thefranchisee. The consideration is the payment of some fee or royalty to thefranchisor against the rights granted to the franchisee to market the goods andservices of the former with their brand names using the franchisor’s trade marksand business methodology for which the franchisor would also provide the knowhowand technology.
Emergence of the Indian marketOne of the primary factors which control the success of a franchising business inan emerging economy like India is the ability of a foreign franchisor to identifyand seize the appropriate moment when the business environment is favorableand reap its rewards. Home to over a billion people, including a flourishing classof urban consumers possessing considerable amounts of disposable incometogether with the continued growth of the economy have strengthened India’sclaim to be a viable and beneficial destination for a foreign franchisor.India ranks as the fourth largest economy globally in terms of purchasing powerparity (PPP) with GNP of US $ 2.91 Trillion (2001-02). According to a recentreport by UNIDROIT, the foundation of a successful franchising industry in anycountry lies in the existence of a “healthy commercial law environment” whichhas been defined as one with a ‘general legislation on commercial contracts, withan adequate company law, where there are sufficient notions of joint ventures,where intellectual property rights are in place and enforced and wherecompanies can rely on ownership of trademarks and know-how as well as onconfidentiality agreements’. The Indian business and legal set up is characterizedby all these attributes, a fact which has been acknowledged as well as exploitedby numerous foreign companies.
India offers vast openings for a franchisor to set up its business; createawareness for his products or services and exploit the enormous market offered.As a result, it comes as no surprise that India has recently been declared as thesecond most attractive destination for retailers among 30 emerging markets.Though current investment regulations of the Indian Government bar foreigninvestment in the retail sector, it hasn’t deterred foreign participation. Rather thanshying away from the enormous market that India offers, international companieslike Marks & Spencer, the global retail chain of stores have taken to entering intodifferent forms of franchising arrangements, ranging from just use of its trademark for a fee to the standard model of allowing its system to be used for afranchise fee.Seasoned franchisors such as McDonalds were one of the first to realize thewidespread prospects offered by India and extended its services into this market.The international recognition of its brand together with the adaptation of itsproducts to suit the preference of Indian consumers, which include offering morespicy items in its menu, has resulted in McDonalds becoming a household namein India.An important aspect which determines the feasibility of any franchising businessin a country relates to the class of consumers it caters to. India is a country withthe largest young population in the world; a staggering 870 million people arebelow the age of 45 years, a market that will suit the products and services ofmultinational franchising companies primarily dealing in Food &Beverages (F&B)and lifestyle products. Indian consumers have experienced the standard ofservices offered overseas and have sufficient exposure through media, whichhas further fuelled their expectations. They now want to avail of the benefits thata foreign franchisor can generate for them.However, to state that a franchisor can rely on the international recognition of hisbrand and proven business system to ensure a successful venture in India wouldbe nothing short of an oversight. Almost every product or service has a market inIndia but sometimes, innovative strategies like ‘indianisation’ of its products andmarketing techniques must be employed by a foreign franchisor to further accessthe sizable market of India. A notable example in this regard is the deliberateexclusion of beef by McDonalds giving due consideration to the religioussentiments of the Indian public. Majority of India’s population is follower of theHindu religion which preaches that the cow is considered sacred and is thereforeanti cow slaughter.
The Legal Framework in IndiaThere is no specific legislation regulating franchise arrangements in India, butthere are various laws which affect the relationship between thefranchisors and franchisees, including intellectual property laws, taxation, laborregulations, competition laws, property and exchange control. A deepunderstanding of the laws related to the business of franchising is imperative fora foreign franchisor which is planning a foray into the India market.The Government permits foreign franchisors to charge royalties up to 1 % fordomestic sales and 2 % on exports for use of the foreign franchisor’s brand nameor trade mark, without transfer of technology. In effect, this means that by lendingjust their brand name or trade mark to an Indian company, a foreign companycan receive royalties. The laws in India also permit lump sum and royaltypayments to be made by Indian franchisees to their foreign counterparts for useof foreign techno logy, which includes manuals, systems etc. Lump sumpayments up to US$ 2 million are permitted and royalties of 5% on domesticsales and 8% on exports can be paid to the foreign franchisor. In addition, foreigncompanies can enter into consulting agreements and receive up to US$ 1 millionper project. Amounts in excess of these can also be received but with thepermission of the Indian Government. These rules allow a foreign franchisor tostructure its business in India in such a way so as to ensure that it can repatriatethe maximum amount from India.
A foreign franchisor also needs to decide whether to appoint a master franchiseefor the entire country or appoint franchisees around the country independently orthrough its subsidiary which acts as a master franchise. The franchisee will notonly be responsible for developing and adapting the foreign prototype to a newand different market in which it has limited name recognition, but will also beresponsible for implementing the expansion plan of the franchisor for an entirecountry. It is important to recognize that a potential master franchisee in NorthernIndia may have an extremely strong network in that part of the country but maynot be able to provide similar resources in other parts of the country. India is ahuge market and demands, networks and languages vary from region to regionand state to state. It may be a better idea to appoint different franchisees fordifferent regions rather than trusting one master franchisee to control theappointment of suitable sub-franchisees around the country. Further, it is vital toconduct a thorough financial and legal due diligence or feasibility report on one’spotential partner, which includes a check on the owners, directors, financialstatus and its ability to invest and expand the business.
Taxation is another issue which deserves due consideration. It is important toknow the local sales tax, property tax and withholding tax. Eventually, the localtax laws and the existence of treaties between the countries involved mayhave considerable influence on the structure adopted. Where the franchisorreceives royalties, service or franchise fees, tax has to be paid under theincome tax act (as income arising and accruing in India), whether thefranchisor is an Indian or foreign party. In a case where the foreign franchisorsends training personnel and supervisors to India, the salaries payable tothese persons may be subject to personal income tax, whether anarrangement is made to deduct the tax at source or they are taxed as selfemployedpersons (if they come as consultants).
In calculating the amount of tax payable by the franchisor or the franchiseecompany, the deductions available in tax laws of India can be important for taxplanning purposes. Some of these relate to rent, repairs and insurance inrespect to premises used for business; depreciation and expenditure onresearch; and, expenditure of capital nature on acquisition of patent rights orcopyrights. However, the availability of tax advantages would depend on thetype of franchise, the product of the franchise and where the unit is to belocated.It must be noted that the above is subject to double taxation avoidanceagreements (DTA) involving India and any foreign country. The tax liabilitywould accordingly be reduced. The income tax law in India gives recognitionto this and double taxation agreements take precedence over the terms of theIncome tax act.A signatory to the international conventions on intellectual property rights,India offers adequate protection to trademarks or brand names as well ascopyright and designs of the foreign franchisor. A significant step takenrecently is the recognition and protection extended to service marks in Indiaenabling the foreign franchisor to license its mark to a franchisee in order toextend the services synonymous with him to the consumers in India.Enforcement mechanisms are becoming more reliable, which has previouslybeen a bone of contention for foreign corporations.The key issue to a beneficial relationship between any franchisor and itsfranchisee is related to the smooth transfer of technology and training ofpersonnel followed by regular assistance provided by the franchisor in therunning of the business. Like other developing countries, India had, tillrecently, a restrictive technology policy which attempted but didn’t succeed inattracting substantial foreign technology. Owing to this, franchisors initiallypreferred to spread their business in countries which were investment friendlyor culturally similar to the country of their origin.
India: New OpportunitiesPost 1991, India has liberalized the economy and has also emerged as aninformation technology and outsourcing hub. These, coupled with theomnipresent knowledge of English language amongst Indians havesubstantially bridged the cultural divide between India and the westerncountries. Indian franchisees have successfully comprehended andimplemented technology which initially may have been alien to them and haveprovided the required impetus to the franchising industry. In addition tobringing down the costs for the franchisors, the increase in the level ofeducation amongst Indians has created a pool of talent and skill which can berelied on by the foreign franchisors for beneficial partnerships and its fruitfuloutcome.
India offers a large and expanding consumer market with an increasingpurchasing power which amounts to almost 350 million, more than the entirepopulation of some European countries put together. World EconomicReform’s Global Competitiveness Report, 2002-03 has declared India ashaving the best technology licensing regime causing an upturn in the interestof foreign companies to invest in India.One of the most vital tools for the expansion of any business relates to itsadvertising, marketing and brand management. The competence of theadvertising and media sector in India is globally recognized. An extensive medianetwork is always at the disposal of the foreign franchisor to reach the populationof India of over a billion and create awareness of its services and products.Sponsorship of events and festivals by franchisor companies is a commonoccurrence in India.
ConclusionForeign franchisors should take time to understand the huge potential Indiaoffers to their business. Like any business expansion strategy, a foray into theIndian market would require a detailed feasibility study and calculation of risksattached to it. On the other hand, the Indian Government must be open toconfidence building measures in favor of the international franchisors includingpolicy amendments and adoption of a single focus approach to the promotionand regulation of the franchising industry in India.
Note about authors and firm:Srijoy Das (sdas@archerangel.com, +91-11 26261302) is a Partner with the lawfirm of Archer & Angel, based in New Delhi, India with offices in Chennai andMumbai. The firm advises on franchising, intellectual property, foreigninvestment, technology and corporate law.Kartik Srivastava (ksrivastava@archerangel.com +91 -11 51641302) is anassociate in the Corporate and IP department.For further details please contact:DAS, SrijoyARCHER & ANGEL AttorneysK-4 South Etension - 2New Delhi - 110 049IndiaPhone + 91-11-26261302Fax + 91-11-26261303sdas@archerangel.comhttp://www.archerangel.com/

Francorp Client - Huffman Builders

Huffman Builders, “Building a Business, Not Just a Building”, had met with Francorp,
the leader in Franchising, based in Chicago, IL. Francorp invited Jerry Huffman, founder
& CEO of Huffman Builders for a week long session as a new client of Francorp.
Huffman Builders “Building a business, Not just a building” is more than a slogan for
Mr. Huffman, who specializes in custom medical facilities, medical office condos, and
professional custom offices in multiple states.
“We are more like advisors, “Huffman Advisors,” with an end product that is customized
for each customer assisting them with our in house professionals from site selection,
lending, architects, interior design, technology & equipment, and marketing,” says Jerry
Huffman, President & CEO of Huffman Builders, a Texas based company. “We build
businesses, not just buildings. Ownership of office space creates an atmosphere of
pride and a great return on the investment. We help our clients realize their aspiration!”,
Huffman the 2006 Ernst & Young Entrepreneur Finalist of the Year concluded.
Francorp expects Jerry Huffman’s “business in a box” to help grow many businesses
nationwide. According to Francorp, they will build an alliance with Huffman Builders.
Huffman Builders will be part of Francorps’ clients, which includes many global companies
such as; American Express, Ace Hardware, Bridgestone/Firestone, Churches Chicken,
Holiday Inns, IBM, MetLife, Sharper Image, Xerox.

Borders

Some interesting items from Borders (BGP) 10-Q Inventory:
During the first quarter of 2008 the Company implemented an initiative to actively reduce inventory in its stores. As a result, the Company significantly reduced inventories in the music category, as well as space allocated to that category. In addition, the Company reduced inventories in book and DVD categories as well, in order to make its inventories more productive. These two factors significantly contributed to the reduction in inventories and generated $88.9 million in cash in the quarter. As a result of the decline in inventories, account payable decreased $56.5 million during the first quarter of 2008. The Company will continue to actively manage inventory levels throughout 2008 to drive inventory productivity and to maximize cash flows.CapEx:

The Company expects capital expenditures to be between $80.0 and $85.0 million in 2008, compared to the $142.7 million of capital expenditures in 2007. The Company has critically reviewed all capital expenditures to focus on necessary maintenance spending and projects with very high return on capital. Capital expenditures in 2008 will result primarily from investment in management information systems, the Company’s new e-commerce Web site, as well as a reduced number of new superstore openings. In addition, capital expenditures will result from maintenance spending for existing stores, distribution centers and management information systems. The Company currently plans to open approximately 14 domestic Borders superstores in 2008. Average cash requirements for the opening of a prototype Borders Books and Music superstore are $2.8 million, representing capital expenditures of $1.6 million, inventory requirements (net of related accounts payable) of $1.0 million, and $0.2 million of pre-opening costs. Average cash requirements to open a new airport or outlet mall store range from $0.3 million to $0.8 million, depending on the size and format of the store. Average cash requirements for a major remodel of a Borders superstore are between $0.1 million and $0.5 million. The Company plans to lease new store locations predominantly under operating leases.The real good news is the level of disclosure prior to the filing. There aren't any "what?" items in the filing. A good measure of this is probably because the book business is not overly complicated and more still is because Ackman is the largest shareholder. CEO George Jones does deserve some credit though, he has been totally upfront up until this point with shareholders. Good.

Gymboree

Gymboree Investment Highlights
Children's apparel has a necessary replacement cycle.
By nature, children's apparel needs to be replenished several times a year, usually by a mature female demographic with a propensity to spend on their children. Yes, the Gymboree brand carries higher price points than its publicly-traded specialty competition - Carter's (CRI) and Children's Place (PLCE) - and the mass channel private labels.
However, the average Gymboree customer represents a high-end audience with limited exposure to rising gas prices and other negative macroeconomic factors. We also expect a modest sales boost in coming years from baby boomer retirees who will likely have more time and resources to devote on their grandchildren.
With the combination of established brands that resonate with mothers everywhere (Gymboree and Janie and Jack) and still-emerging brands (Crazy 8) , we anticipate robust sales growth (at least mid-teens) through the balance of the decade and likely beyond.
Strong financial footing.
When evaluating a consumer stock investment, the most important factors to evaluate are:
Top-line growth (including mature and new store growth),
The likelihood of sustained profitability and return on invested capital,
Cash generation and flexibility,
Debt requirements, and
Inventory turnover.
Gymboree generally passes the test on each of these considerations, with solid top-line growth, sector-leading operating margins and returns on invested capital (nearing 20%), ample cash on hand, a debt-free balance sheet, and inventory turnover over 4.0x (excellent for a mall-based apparel retailer).
Investment Risks
Valuation. Admittedly, we are a bit concerned about Gymboree's valuation, given the stock's impressive run this year (the stock has climbed back from a low of $27 in January to a recent close of just under $44). However, at about 14x forward earnings (the consensus fiscal 2009 estimate is $3.16, according to Yahoo Finance), we still find this stock relatively cheap to its peer group (about 15x, aided by Children's Place inflated valuation) and anticipated earnings growth (mid-to-high teens). As such, we would comfortable with owning Gymboree's stock into the high-$50 range.

Investing in a Franchised Business

It is a known fact that franchise owners usually have a better chance of success as a business operator than an independent start up owner. The likelihood of success can be attributed to a proven and tested business model, existing market brand, support and training from the franchisor. The question is, are there advantages to investing in the public stocks of franchises?
Comparing the actual ownership and operation of a franchise to owning the stocks is like comparing apples to oranges. In terms of just an investment hypothetical, there are some clear advantages. We will take McDonald’s Corporation (NYSE:MCD) as an example.

The start up capital requirement for owning a McDonald’s franchise ranges from $500K-$1.6M. It would take a number of years to break even and turn a profit on the money invested. Since it is a franchise business, there are royalty payments to be paid and the time expenditure of running a business can be hefty.
On the other hand, you do not need much to really own a piece of McDonald’s; in fact you can be an “owner” for $54.10 (current share price). If you are independently wealthy and just happen to have an extra $500K at your disposal and bought MCD five years ago at $13 per share, today you are sitting on at least a cool $2M in profits assuming proper trailing stop loss management and you got out at the $63.69 high.
Not a bad ROI for about 20 minute’s worth of work placing trades and without all the hassles of running a brick and mortar business. Ok, ok I hear what you are saying. This was an ideal situation, hindsight is 20/20 and no one in their right mind would plop down half a million on just one stock.

The point of this exercise is to demonstrate the potential of publicly traded franchises as a unique class of stocks to invest in. Entrepreneur magazine just recently released their “2008 500 Franchise Rankings” of both private and public franchises. McDonald’s and Yum! Brands (NYSE:YUM) were among several of the many publicly traded franchises which made the top 20 on this list. Owning a carefully chosen basket of these stocks would have performed well.
The University of New Hampshire’s Rosenberg Center compiles an index that tracks the market performance of the top 50 U.S. public franchisors every quarter. Over 98 percent of the market capitalization of corporations involved in the business of franchising is represented by the RCF 50 Index. This composite index of franchisors has beaten the S&P 500 in the past 5 years as shown in the published 2007 3rd quarter report.
Professor Udo Schlentrich, director of the University of New Hampshire’s William Rosenberg International Franchise Center has this to say about the performance of the RCF 50 Index during and interview with Blue MauMau:
“Although the Fran 50 companies have out-performed the S&P 500 companies for the past 5 years, there is no guarantee that they will continue to do so in the future. We believe some of the reasons we have seen this growth is that franchising, as a business model, has become better understood and valued by the investment community. For example, franchised companies are, by their very nature, less capital intensive. In addition, the financial risk is largely borne by the individual franchisee. Also, franchisee-owned stores are seen to operate more effectively in a retail environment than corporate-owned stores — however, there is still some controversy on this subject. Finally, many franchise systems have been able to effectively penetrate international markets, thus achieving additional growth and spreading economic and political risk.” –Udo Schlentrich
Fourth quarter 2007 and this year may see an overall drop in the index because of recent franchisor consolidations, market volatility and uncertainty, but if past performances are of any indication, the trend in the RCF 50 Index may continue to outperform the S&P 500 –even in this downturn.

Franchise Basics

Franchise Basics Are you thinking about buying a franchise? We've got all the information you need to help you decide whether franchising is right for you.
Franchise Basics
Are you thinking about buying a franchise? We've got all the information you need to help you decide whether franchising is right for you.

If buying an existing business doesn't sound right for you but starting from scratch sounds a bit intimidating, you could be suited for franchise ownership. What is a franchise--and how do you know if you're right for one? Essentially, a franchisee pays an initial fee and ongoing royalties to a franchisor. In return, the franchisee gains the use of a trademark, ongoing support from the franchisor, and the right to use the franchisor's system of doing business and sell its products or services.
In addition to a well-known brand name, buying a franchise offers many other advantages that aren't available to the entrepreneur starting a business from scratch. Perhaps the most significant is that you get a proven system of operation and training in how to use it. New franchisees can avoid a lot of the mistakes start-up entrepreneurs typically make because the franchisor has already perfected daily operations through trial and error.
Reputable franchisors conduct market research before selling a new outlet, so you'll feel greater confidence that there is a demand for the product or service. Failing to do adequate market research is one of the biggest mistakes independent entrepreneurs typically make; as a franchisee, it's done for you. The franchisor also provides you a clear picture of the competition and how to differentiate yourself from them.
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Finally, franchisees enjoy the benefit of strength in numbers. You'll gain from economics of scale in buying materials, supplies and services, such as advertising, as well as in negotiating for locations and lease terms. By comparison, independent operators have to negotiate on their own, usually getting less favorable terms. Some suppliers won't deal with new businesses or will reject your business because your account isn't big enough.

Recession?

10 Reasons to Love a Recession
by Jay MacDonaldThursday, June 26, 2008provided by

Chicken Little and I differ on the coming recession. He hears the "R" word and immediately thinks "financial ruin."

I hear "recession" and think "disco!"

If you are old enough to have worn a mood ring, Earth shoes or bell-bottoms the first time around, you probably recall the "stagflation" days of the 1970s with a bemused mix of humor, national pride and nostalgia.
iThe forecast was just as dire back then, and for good reason. In 1975, inflation topped 14 percent, unemployment approached 6 percent (but doubled that in some locales), and fuel and food prices were headed skyward.
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Most of us would be well into the Reagan years before our wallets grew appreciably heavier.
The funny thing is, I don't remember the sacrifice. We drove used cars and lived within our means, since car leasing and credit cards were not yet widespread.
We rented and shared apartments, since the average home mortgage rate hovered around 10 percent.
We shouldered none of the financial burden of such modern conveniences as cell phones, high-speed Internet or fitness center memberships.
No one wants a recession, of course. It can cause serious economic pain for millions.
Happy Slowdown!
However, economists tell us there are some reasons to actually welcome and perhaps even embrace a recession. After all, a recession is the ebb part of the natural ebb and flow of the U.S. economy.
Just as surely as hot markets cool and bulls turn to bears, capitalist economies take a breather every so often to pause and reflect. If they didn't, these corrections would be far crueler.
So, let's smile, lift our half-full cups of regular unleaded and toast these 10 very good things about impending bad times.
Family Dinners
Want to start a revolution? Try eating dinner together as a family.
Recessions tend to foster family mealtimes as the pin money that drives fast-food meals and overscheduled lives dries up. Nothing could be better for America, according to the Substance Abuse and Mental Health Services Administration of the U.S. Department of Health and Human Services.
Research has shown that family meals promote a healthier and more balanced diet, foster better communication and ward off teen suicide, eating disorders and substance abuse.
But no, we can't make your little sister stop kicking you under the table.
Shorter Lines at the Pump
It seems like only yesterday we witnessed the thrilling rush-hour road rage exchanges at every metropolitan gas station across America as gas hogs great and small furiously jockeyed for the pumps.
Not anymore.
Ever since gas topped the magical $4 tipping point, you can fill up, wash the windows, check the oil, enjoy a leisurely roller-cooked hotdog and a 32-ounce giant gulp, and even grab a power nap before the next customer appears in your rearview mirror.
Can curb service of Red Bull and Slim Jims be far behind?
Less Junk Mail
Thanks to the presumptive recession, many of us have recently glimpsed the back of our mailboxes for the first time in years.
According to the Chicago-based research firm Mintel Comperemedia, credit card direct mail volume has dropped 19 percent since last October.
Last year, credit card issuers cut their mailings to current customers by nearly one-third (30 percent). That will free up delivery space for the junk mail we enjoy receiving: coupons.
More Coupons
When the going gets tough, the tough clip coupons to help maintain their lifestyles.
A February survey by Toronto-based ICOM Information and Communications found that 67 percent of Americans are likely to use coupons during a recession, regardless of their income.
Traffic to online coupon sites is growing rapidly, with page views up 38 percent to 281 million in March compared to the previous year, according to the research firm comScore.
Restaurants in particular typically resort to buy-one, get-one-free offers and other discounts to fill their tables in hard times.
Peter Meyers, marketing vice president at ICOM, says coupons can save the average family 25 percent on their grocery bill, or $2,400 a year based on an $800 monthly outlay. How's that for an economic stimulus?
Free Fitness
What's the official vegetable of good times? The couch potato, of course.
But as gas prices skyrocket, alternative modes of transportation are once again gaining traction. When you ride a bike, walk to the bus stop or hoof it to the train station to commute to work, you get a free workout along with saving gas money.
You can extend your free workout in other ways. Throw in a little cardio (by skipping rope, jogging or rowing) and add some upper body (with push-ups, sit-ups and free weights) and you can save the $35 to $40 a month that CostHelper.com estimates we spend on average for a single fitness club membership.
Bargain SUVs
Not all prices go up in a recession. Case in point: gas-guzzling trucks and SUVs. Once gas approached the $3.50 mark, prices of new and used SUVs, pickup trucks and minivans plummeted.
Ford and GM recently announced plant closures and production cuts at their truck and SUV facilities in response to the swift public migration to fuel-efficient compacts and hybrids.
If you've long coveted an SUV, make your move now. Heck, you may drive away with a year or two of free gas in the deal.
Business Startup Opportunities
What do Microsoft, Hewlett-Packard and Disney have in common? They all started during economic downturns, as did more than half of the 30 companies that comprise the Dow Jones industrial average.
In fact, entrepreneurial startups by laid-off and downsized employees, managers and executives often help get the economy growing again.
Recessions are a great time to open your own shop: Wages are down, rents are cheaper, competition is scarce and the cost of goods and services can be found at a discount. There's no better time to become your own boss.
Growth in Gardening
A recession is the perfect time to get back to nature. Bid your lawn service adieu and put your mind and body to work tending your grounds yourself.
The benefits are numerous. Regular gardening provides cardio and strength training, improves flexibility and relieves stress. These health benefits help fight heart attack, type 2 diabetes, obesity, high blood pressure and osteoporosis.
The fruits and vegetables you grow also encourage a healthier diet. And the money you save by mowing, raking, pruning and mulching yourself will more than pay for your equipment, fuel and next year's plantings.
Musical Inspiration
Do economic downturns inspire great music? A case can be made that hard times help produce heartfelt anthems that cut through the anesthetic musical drone of the day. This has been true of everyone from Woody Guthrie to Bruce Springsteen to the Clash and even Kurt Cobain.
Given the current state of popular music and its obsession with an affluence that is quickly disappearing, the climate would seem right for the emergence of new artists who can rekindle passion and urgency in American music.
More from Yahoo! Finance: • 4 Ways to Pay Off Debt• 18 Low-Impact Ways to Spend Less and Save More• Credit Card Users Turn to Support Groups
Visit the Banking & Budgeting Center
New Perspectives
Perhaps the greatest boon of a recession is the time to reflect and reassess the true meaning and goals of our lives.
For instance, it's doubtful that today's green movement would be where it is today without the small-is-beautiful mental reset of the '70s.
If history is any indication, we humans are inclined to resume our consumption full speed once the economic engine starts rolling again. But our progress toward a more sustainable future comes in increments during those times when we are forced to do without.
We may not be the ideal stewards of the planet yet, but we're making progress. Temporary setbacks like recessions prompt our collective course corrections.

Article on Financing a Franchise

Financing Franchise Business
Author: Todd AndersSource: Franchising World October 2004; www.franchise.org
When considering the purchase of a franchised business, potential acquirers often begin by targeting third-party funding sources, asking who would provide the debt or equity required to purchase the target company.

There are two other potential sources that should be considered before targeting third party financing: the target and its shareholders; and the internal resources of the acquirer.

The Target and its Shareholders
If the acquirer gains a complete understanding of the target’s assets (e.g. real estate, equipment, machines, vehicles, buildings, receivables, inventory, patents trademarks, other intellectual property, and franchise agreements), each of these items can be examined for how it might be used to raise cash for acquisition. If the target has substantial real estate holdings, they may be used to provide funding through sale/leaseback transactions. Underperforming units might be sold to reduce financial drag and provide cash that can be used to pay down the acquisition costs. Receivables and other streams of income like royalties from franchise agreements can be used to support cash-flow borrowing. Intellectual property, such as trademarks and patents, can provide additional security to third-party lenders or investors. Each category of the target’s assets has value and should be exploited to provide cash or access to third-party financing.
Secondly, the acquirer should consider how the existing shareholders of the target might be used to provide funding. This will necessitate conversations to determine if the shareholders are open to providing seller financing (on a subordinated basis) and, if so, on what terms. Alternatively, will the shareholders take a portion of their compensation as earn-out, or some other form of contingent payment? If so, how can this be structured to provide the maximum benefit to the buyer without putting too much at risk for the selling shareholders? This negotiation often entails finding the optimum amount of earn-out, the period of time over which it will be paid, the line of the income statement to which it will be tied, and any minimum or cap to be placed on the earn-out. In addition to owner financing and earn-outs, the acquirer should consider the selling shareholders’ willingness to accept equity in the acquirer in exchange for some or all of their stock in the target company. If they are willing to take some portion of the purchase price in stock, issues around exchange rates, forms (i.e. class of stock, options or warrants), and amount of equity will need to be considered. All of these structural mechanisms can be used by creative acquirers to reduce the cash outlay and provide financing for the transaction.

Internal Resources
In addition to potential financing provided by the target or its shareholders, the acquirer should consider leveraging its own assets to pay for the transaction. Just as it did for the target, the acquirer should consider its existing assets and how it might be used to make the acquisition. The acquirer should also consider its existing shareholders and whether they are willing to provide additional equity to consummate the transaction.

Some of these resources include:
assets that can be turned into cash through sale/leaseback or other transactions,
revenue streams that can be monetized for cash today, and
existing financing sources which may increase their lending based upon post transactions financial numbers.
Each of these options should be evaluated as ways to finance the transaction. If the acquirer and its shareholders believe in the transaction, they may be willing to take additional financial risk in exchange for gaining the financial rewards of the acquisition.
Third-Party Sources
Once the acquirer concludes that “new money” must be brought to the table to facilitate a transaction, it should begin the search for third-party financing sources that are a good fit for the transaction. In evaluating potential financing sources, the acquirer must consider the industry of the target, and the general terms of the deal. Groups that provide financing can typically be categorized by:
uses of the funds (e.g. growth capital, liquidity, acquisition);
type of financing (e.g. debt, equity, mezzanine debt);
industry preferences (e.g. retail, service, franchise, food);
size of financing (i.e. how much will they fun);
level of post-transaction involvement (e.g. control, minority, passive); and
other key deal characteristics (e.g. international, turnaround).
Each of these elements plays a part in identifying appropriate sources of financing. The more squarely a deal fits into a funder’s general criteria, the more likely it is that they will seriously evaluate the opportunity.
Acquirers who need third-party financing to get their deal done should not look at the usual suspects, but also be creative about who might have an interest in seeing the transaction close. One example of non-traditional third-party financing when the target is a franchise, is the franchisor. In cases where the target is an underperforming franchisee, acquirers occasionally receive royalty relief, loans, or even grants from franchisors. The phenomenon punctuates the fact that financing can be found in unexpected circumstances. There have been instances where vendors have provided financing to facilitate an acquisition by a friendly acquirer to avoid losing the business.
The International Franchise Association has on its Web site a list of debt and equity players who fund franchise deals, and organizations that host conferences specifically designed to help franchise companies locate financing. However, many of the best sources are available through research on the part of the acquirer, or by using a financial advisor who knows the players and types of the transactions they are interested in evaluating.-->

Francorp Clients - Math Monkey

Math Monkey Honored

Math Monkey has been awarded the winner of the 7th Asia Pacific International Entrepreneur Excellence Award 2008 under the category of Emerging Entrepreneur. Math Monkey teaches children concepts based on the principles of Vedic math from India. At the Knowledge Centers, children ages six to fourteen use Vedic math to solve mathematic problems within seconds-without the use of paper or a calculator. Fully aware of the role franchising consultants could play in their success, Math Monkey turned to Francorp in 2005. Together, they developed a simple and unique business system designed for franchisees who are passionate about children.

www.mathmonkey.com

www.francorpconnect.com

Francorp Clients - SealMaster

SealMaster Sells 32 Franchises

We are excited to announce that Francorp client, SealMaster, has sold 32 franchises and is planning to have franchisees in all 50 states.
SealMaster approached Francorp in 2000 to assit them in the development of their franchise program. Today, SealMaster is the industry leader in production of high-quality pavement maintenance equipment. Contractors, highway/street departments, and property owners have come to rely on SealMaster for quality products and service. SealMaster is driven by a philosophy of total dedication to the pavement maintenance industry.

Francorp Clients - Beadniks

Beadniks Joins Mall of America

Beadniks has recently closed a deal with the largest retail and entertainment complex, Mall of America.
After receiving a full development program from Francorp, Beadniks has become "one of the hottest new franchises in the U.S." according to the 2008 Bonds Franchise Resource Guide. Beadniks is one of the largest bead sellers in the world with seven locations including Martha's Vineyard, Chicago, and Santa Monica. Beadniks offers an inspiring and imaginative atmosphere in which customers can craft their own beaded works of art.

Denny's

Denny's announces new organizational structure
13th June 2008
By Staff Writer
Denny's, a family-style restaurant chain, has redesigned its organizational structure to support its ongoing transition to a franchise-focused business model.
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According to the company, it has completed an extensive review of its organizational structure. In April, the firm realigned its senior leadership with three executive officers reporting to the CEO. The company has restructured the organization under this leadership to effectively execute its new strategic direction with primary emphasis on sales, brand and franchise.
Additionally, the company has created four regional vice presidents of operations (RVP) positions that will have accountability for the performance of both company and franchise restaurants within a geographic region. The RVP's and their support teams will manage an integrated effort to drive guest counts, sales and profitability while ensuring operational excellence.
The new organizational structure increases brand and franchisee support, but also allows for consolidation of certain departments and job functions resulting in the near-term elimination of approximately 50 positions, the company said.
As a result of these staff reductions, the company expects to incur a restructuring charge attributable to severance and other expense of approximately $5 million in the second quarter of 2008, which will be paid out over the next 12 months.
Nelson Marchioli, president and CEO of Denny's, said: "Through the success of Denny's franchise growth initiative, the mix of franchised restaurants in the Denny's system is now up to 76%. In our quest to become a franchisor-of-choice in the restaurant industry, we must continue to evolve our corporate structure and mission to focus on driving sales, expanding the brand and providing valuable support to our franchisees."

Francorp Client - Red Robin Acheives 400 Units

Red Robin Achieves 400 Restaurant Mark
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2008-06-11 — Red Robin Gourmet Burgers Inc. (Red Robin) will open its 34th Washington restaurant and 400th restaurant in North America in Covington, located at 27193 185th Avenue SE, on the corner of 272nd and 185th Avenues in front of Home Depot, on Monday, June 16, at 11 a.m. As part of its grand opening celebrations, the Covington Red Robin restaurant will host a Burgers With A Heart fundraiser to benefit the National Center for Missing & Exploited Children (NCMEC).
Through Burgers With a Heart, Red Robin will donate 50 cents from every gourmet burger sold to NCMEC during grand-opening week from June 16 to 22. NCMEC is a non-profit organization whose mission is to help prevent child abduction and sexual exploitation; help find missing children; and assist victims of child abduction and sexual exploitation, their families, and the professionals who serve them. The money raised will help bring prevention education to children nationwide.
The 5,164-square-foot Covington Red Robin restaurant will seat 194 guests. Red Robin has 33 additional restaurants in Washington, including three locations each in Seattle and Spokane, two locations each in Bellevue, Redmond, and Vancouver, and single locations in Auburn, Bellingham, Burlington, Des Moines, Everett, Federal Way, Issaquah, Kennewick, Kent, Lynnwood, Marysville, Monroe, Olympia, Puyallup, Renton, Silverdale, Tacoma, Tukwila, Wenatchee, Woodinville, and Yakima.

Franchise Marketing Ideas

The Colonel Plays A Politcal Game Of "Chicken"
Posted By:Jane Wells
Topics:Marketing
Sectors:Food and Beverage Media
Companies:Cadbury Schweppes, PLC Yum! Brands Inc

Oh those marketing geniuses at Yum! Brands
YUM BRANDS INC
YUM
34.84 -0.29 -0.83%
NYSE
Quote Chart News Profile[YUM 34.84 -0.29 (-0.83%) ]
and Dr. Pepper Snapple (formerly Cadbury Schweppes
Cadbury PLC
CSG
49.12 -0.02 -0.04%
NYSE
Quote Chart News Profile[CSG 49.12 -0.02 (-0.04%) ]

Slogans like "Finger Lickin' Good," and people dancing around singing "I'm a Pepper" just don't cut it anymore in the age of dogs riding skateboards on YouTube and products which promote "going commando." Sigh. I miss wanting to teach the world to sing, in perfect harmony.
But we live in different times. Politically intense times. The era of eBay.
So KFC, owned by Yum! Brands, is playing a political game of chicken this election year by selling "Right Wing" and "Left Wing" T-shirts. (See images.) For undecided voters, there's a shirt saying "Tastes the Same to Me." The slogans are printed on American Apparel T-shirts (man, read Margaret Brennan's past blogs on THAT company), and all proceeds go to charity. While being sold at www.kfc.com, the company is also flooding Young Republican and Young Democrat events with the tees, and hoping to convince some celeb to wear one. But what about Bob Barr fans? "Wingless"? Ralph Nader? Maybe just an egg.
Dr. Pepper couldn't give a hoot about the election. He's a lover not a fighter. And he recognizes crass commercialization when he sees it! A Virginia bride named Kelly Gray auctioned off a spot at her wedding on eBay to help pay for the $7,000 event. The winner, out of 23 bids, was Dr. Pepper! Paying $5,700! Actually the winner was "Nick" from Dr. Pepper, as in PR guru Nick Ragone (www.nickragone.com) who came up with the idea. Ragone says the company will actually pitch in $10k for the wedding and supply all the drinks. Gee, what drinks they'll provide?
Ragone says, "We're finding that traditional media just isn't reaching our target audiences anymore, and so we're taking on more 'disruptive' tactics - things that get inside a story in a way that connects with people." ABC's "Good Morning America" is doing a story on the stunt, but, of course, being on my blog is the true sign of successful. After all, I "broke" the story when Dr. Pepper offered everyone in America a free soda if Axl Rose finished his 17-year-in-the-making epic "Chinese Democracy." "We've caught lightning in a bottle again," says Ragone, who makes more money than I do, thinking up stuff like this.
More posts
The Colonel Plays A Politcal Game Of Chicken
But you don't think Nick s actually going to the wedding, do you? Dr. Pepper plans to launch a website to help Gray find a guest to actually show up in Ragone's place.
Still...forget being a wedding guest! Fake Jane wishes she could just marry the good doctor...he's rich and famous, and he wouldn't require much from her. Plus, she can always "can" him in the recycling bin if things don't work out.

Coca-Cola FEMSA completes Brazil Franchise Buy

Coca-Cola FEMSA completes Brazil franchise buy
Coca-Cola FEMSA completes $364.1 million acquisition of Coca-Cola Brazil franchise Remil
June 27, 2008: 06:54 AM EST

NEW YORK (Associated Press) - Coca-Cola FEMSA SAB de CV, the largest Coca-Cola bottler in Latin America, said late Thursday it completed the purchase of Coca-Cola Co.'s Refrigerantes Minas Gerais Ltda. franchise territory for $364.1 million.
Coca-Cola FEMSA said the deal will expand its footprint in Brazil by more than a third.
Founded in 1948 in Belo Horizonte, Remil sold 114 million unit cases of sparkling beverages, water, still beverages and beer in 2007. The franchise serves the cities of Belo Horizonte, Contagem, Curvelo, Divinopolis, Governador Valadares, Ipatinga, Juiz de Fora, Lavras, Leopoldina, Mariana, Montes Claros, Janauba and Petropolis.
Coca-Cola FEMSA's operations in Brazil, including both of its franchise territories, will now represent about 30 percent of the Coca-Cola bottling system in Brazil.
Mexico's Coca-Cola FEMSA produces and distributes Coke, Sprite, Fanta and other Coca-Cola drinks in Mexico, Guatemala, Nicaragua, Costa Rica, Panama, Colombia, Venezuela, Brazil and Argentina. The company has 30 bottling facilities in Latin America and serves over 1.5 million retailers.
Coca-Cola Co. owns a 31.6 percent stake in the company.
www.cocacola.com

Realty Franchises

BY ROBERT FREEDMAN2003 Franchise report, plus the five emerging companies

Is it time to brand your company? For many companies in the last year, the answer has been yes. The country’s residential real estate franchise companies are seeing healthy growth, an exclusive REALTOR® Magazine survey shows. Many of the national and regional franchisors surveyed posted gains in franchisees. The study also tracks companies, including Howard Hanna Co. and Long & Foster Real Estate, that license their brand name and services to affiliated offices. Of the three Cendant brands—Century 21, Coldwell Banker, and ERA—Coldwell Banker led the Cendant pack and the national franchises, reporting 150 new offices and 14,700 new associates in the past year. Those additions bring its totals to 3,400 and 104,900, respectively. Regional franchisors saw growth, too. In a typical case, Crye-Leike based in Memphis, Tenn., added four offices and 167 associates within the past year, giving it a total of 66 company-owned and franchised offices with 2,367 associates. This year we cover 26 companies that offer franchising or licensing opportunities—up from 21 last year. In addition to these, watch for five emerging players we’re beginning to track—from Realty United in Cary, N.C., which has just one office but hopes to grow nationwide through a profit-sharing model, to West USA Realty in Phoenix, which has grown in two years to 12 offices and nearly 2,000 sales associates with the help of Web-based transaction and lead management.

Francorp Client - Maui Playcare

Mom turns a need into a business into a franchiseBy HARRY EAGAR, Staff Writer
POSTED: June 26, 2008
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Bonnie McCarthy turned from construction to child care. After refining her business model, she is now offering franchises of the concept of Maui PlayCare.

KAHULUI - After leaving the construction business to become a stay-at-home mom - now, of four - Bonnie McCarthy found life could be hectic.
She didn't need all-day care for her kids, but she did sometimes want brief relief.
"I would go to the grocery store with a list of necessities but with the kids being kids, it was difficult to make it to the check-out line with all of the items from my list and my sanity intact," McCarthy said.
"The same went for my children's activities. While attending my 7-year-old's hockey game, my 5-year-old insisted I watch her take the bleacher steps two at a time. This would have been fine, except that it caused me to miss my other daughter's first goal."
The answer: a new business, which she opened in 2002 at Queen Ka'ahumanu Center. After seven years, she thinks she has a winner, so much so that she's formed another company to franchise the concept.
It has taken about 18 months to develop the business plan and obtain regulatory approvals needed to sell franchises.
McCarthy used FranCorp.
"They take you in hand" for the complicated business. Becoming a franchiser requires filing federal disclosure documents for each state in which the company plans to operate.
McCarthy hopes to have five in Arizona, two in Florida, three in New York and two in Nevada by the end of this year. The closest to opening is one in Scottsdale, Ariz.
Earlier this month, she had a group of potential franchisees visiting Maui for a look at her operation and a weekend sales pitch.
She told them the ideal Maui PlayCare franchisee is not an absentee owner but one that will constantly be aware of the center's day-to-day operations, with strong customer service abilities, experience with and the ability to work well with young children, well-developed people skills and high personal standards including honesty, integrity and a passion for excellence.
She said the right location for most cities will be in a strip mall or similar high traffic area, with 3,000 to 5,000 square feet required.
Total investment for a Maui PlayCare franchise ranges from $163,750 to $252,000, including an initial franchise fee of $40,000.
She said the process for her to become a franchiser "was really exacting," including several trips to California, where there are big franchise trade shows. She'll be going back in October for the West Coast Franchise Expo.
Potential franchisees want "to make sure you are sound as well," she's learned.
She hired other consultants such as franchiseopportunities.com and smallbusiness.com to help troll for prospects. She decided to concentrate on places where 12 percent of the population is between 2 and 10. Maui PlayCare is for kids 2 to 8, although children above the age of 8 are accepted if they have a younger sibling at the facility.
The Western states and Texas look promising.
With hourly rates between $9 and $15, franchisees will want to be in fairly high-income communities.
Since it's play care not day care, the typical stay will be measured in hours. In Kahului, Maui PlayCare stays open till 10 p.m. on Fridays and Saturdays to give parents a chance to go out alone once in a while.
Times have changed, McCarthy said, and with more people working from home, more activities for their children and, more to occupy teenagers who used to be available to baby-sit, Maui PlayCare will fill a need.
Staff will be trained, screened and drug tested, all will be required to obtain CPR certificates, everything on premises will be videotaped.
No memberships, reservations or monthly fees are required.
"Maui PlayCare is a solution for on-the-go parents who need their children monitored on an hourly basis rather than all-day supervision," McCarthy said.
She views it as a third option, when family and neighbors cannot lend a hand.
Since child day care operations are often closed on evenings, weekends, holidays and school intersessions, Maui PlayCare's nonmembership structure entices those parents whose children would normally be in day care during these peak times to utilize Maui PlayCare's services.
Information on her operations can be found at www.mauiplaycare.com.
Harry Eagar can be reached at heagar@mauinews.com.

Francorp Client - Cowgirls Espresso

Sexpresso? Seattle-Area Coffee 'Cowgirls' Show Skin to Get Business
Monday, January 29, 2007

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TUKWILA, Washington — Coffee-stand owner John Cambroto could not compete against the beautiful bikini-clad women selling espresso up the road.

"We had a much better atmosphere, good coffee. Unfortunately, they ran around half-naked and we didn't," said Cambroto, who finally threw in the towel last spring and sold his business to his rival, the operator of six Cowgirls Espresso stands in the Seattle suburbs.

The naughty baristas of Cowgirls Espresso represent a new trend in and around Seattle — perhaps the most caffeinated city in America — and illustrate how cutthroat the competition can be in the hometown of the massive Starbucks chain, which has multiple coffee shops competing on the same block.

Among the other coffee stands that are showing some skin: Moka Girls in Auburn, The Sweet Spot Cafe in Shoreline, Bikini Espresso in Renton and Natte Latte in Port Orchard.

One recent afternoon, there was a long line of cars at the tiny, black-and-white, cow-painted Cowgirls stand in front of a Tukwila casino.

Candice Law, leaning provocatively out the drive-through window in a black bra that didn't quite cover her shiny purple pasties, and Toni Morgan, wearing a skimpy halter top, see-through red lace panties and chaps, seemed to know every customer.

Most of the customers declined to give their names or be interviewed — "Nobody wants to admit to their wives that they're here," Law said. One who did, a 25-year-old diesel mechanic named Mike West, said he comes every day for the coffee.

"I could care less what they wear," he said.

Lori Bowden, the owner of Cowgirls Espresso, opened her first stand, by the entrance to the Silver Dollar Casino, four years ago. Law and other employees suggested doing "Bikini Wednesdays." Bowden approved, and her stand immediately doubled the amount of money it was taking in — from $200 to $400 — on Wednesdays.

"Fantasy Fridays," "School Girl Thursdays," "Cowgirl Tuesdays" and "Military Mondays" soon followed. The stand now rakes in about $800 a day, Bowden said. The girls make minimum wage, plus $80 to $150 a day in tips.

Steve McDaniel, chief operating officer at the casino, saw the line of vehicles and knew there was money to be made. He opened Moka Girls last summer. Like Cowgirls, it features theme days and racy lingerie.

"Most guys like to see pretty girls when they get their mochas," said Sarah Araujo, who opened The Sweet Spot two years ago. "We just figured we'd be honest about it."

As long as the employees' breasts and buttocks are covered, they are not breaking the law. And the owners of the stands say they get few complaints.

Bowden said the baristas at one Cowgirls stand stopped signing the paper coffee cups "XOXO" — symbolizing hugs and kisses — after the wife of one customer complained, but that has been about it.

www.cowgirlsespresso.com

www.francorp.com

Franchise Statistics

q Franchised businesses account for nearly 50% of all retail sales in the United States.



q The International Franchise Association has reported that franchising is responsible for 760,000 businesses, 18 million jobs, 14 percent of the private sector employment, and over $500 billion in payroll!



q From January 2000 to December 2004 the index that tracks the performance of the top 50 franchisors increased 34.5% compared to a drop of 20.1% in the S&P 500 over the same period.



q A 1999 study by The United States Chamber of Commerce found that 86% of franchises opened within the last five years were still under the same ownership and 97% of the were still open for business.



q A U.S. Department of Commerce study conducted from 1971 to 1997 showed that during that time less than 5% of franchise businesses were closed each year.



q A U.S. Small Business Administration study conducted from 1978 to 1998 found that 62% of non-franchised businesses closed within the first 6 years of their existence due to failure, bankruptcy, etc.



q Total sales by franchised businesses are projected to reach over $2 trillion, this year.



q 1 out of every 12 businesses is a franchised business.



q A new franchised business is opened every 8 minutes of every business day.



q In 2000, the median gross annual income, before taxes, of franchisees was in the $75,000 to $124,000 range, with over 30% of franchisees earning over $150,000 per year.

Dogtopia Gives Back

Event Name: Dogtopia's 4th Annual K-9 Support Dog Wash

Description: Come to a participating Dogtopia on Sunday, July 13th, from 11 a.m. to 3 p.m and treat your dog to a mid-summer bath in support of canines working in harsh conditions overseas. Fun, food, games and prizes for everyone - furry and not!

We have been overwhelmed by the support we have generated through the 3 years of this campaign and we hope many folks will come out for the dog wash. You can get your dog bathed while having a great time supporting a worthy cause.

Aside from attending there are many ways you can help out! We need lots and lots of towels to dry all the dogs we'll be washing. We're accepting towel donations at each participating location. We're also in need of day-of volunteers. If you'd like to help out by washing dogs, collecting money or any other task please contact your Dogtopia to learn more and get involved!

The biggest thing you can do to help is spread the word! Send this email along to friends, family, co- workers - anyone you'd like. If you can assist by handing out flyers we have those, too!

Date: Sunday, July 13th, 2008

Time: 11:00am-3:00pm

Location: Dogtopias in White Flint, MD, Clarksville, MD, Tyson's Corner, VA, Manassas, VA, Alexandria, VA, Dulles, VA and Waco, TX

Address: Please visit your desired location's website for their address and directions

Phone Number: (240) 514-2242

Website: www.k9support.org

Re/Max

Overview of the Re/Max franchise program.

RE/MAX Int'l. Inc.
Founded by Dave and Gail Liniger in Denver in 1973, RE/MAX is now a global network of more than 116,000 real estate agents. In the RE/MAX system, agents are in charge of their own business and operate under a maximum commission concept.

No. of Franchises: 6,973
Franchising Since: 1975
Franchise Fee: $12,500 - $25,000

Training & Support
TRAINING

Available at headquarters: 5 daysSemi-annual convention and conference
ONGOING SUPPORT

NewsletterMeetingsToll-free phone lineGrand openingInternetField operations/evaluationsPurchasing cooperatives
MARKETING SUPPORT

Ad slicksNational mediaRegional advertisingOther marketing support: Brochures, magazines, videos, online extranet, business satellite network

7-Eleven and White Hen Pantry

7-Eleven to acquire White Hen Pantry.
Convenience Store Decisions, September, 2006
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In its largest acquisition in 20 years, Dallas-based 7-Eleven Inc. announced the purchase of White Hen Pantry Inc., the Lombard, Ill.-based convenience store chain that operates and franchises 206 stores in the Chicago area and Northwest Indiana, and licenses another 55 units in Boston. With the addition of the White Hen stores, the number of stores 7-Eleven operates, franchises and licenses in North America will increase to more than 7,100.

Holiday Inn Upgrades Chain

Holiday Inn chain upgrades with style

Enlarge By Jennifer S. Altman for USA TODAY

Daniel Gedna does security duty at a Holiday Inn in New York City. The hotel opens this week.

Enlarge By Jennifer S. Altman for USA TODAY

Wilma Fiore looks over some of the preparations.




Yahoo! Buzz Digg Newsvine Reddit FacebookWhat's this?By Barbara De Lollis, USA TODAY
NEW YORK — When the Holiday Inn in Chelsea opens Thursday, you won't find the chain's typical old wall-to-wall carpeting, floral bedspreads, a front desk cluttered with hotel brochures or rows of impatiens planted outside.
Instead, you'll see hardwood flooring, columns made from hand-laid river rocks, and slender Japanese planters outside.

This newly built Holiday Inn hotel is one of the first in the USA to bear the modern version of the green-and-white Holiday Inn logo — a sign meant to convey radical changes underway. As many as a thousand of the chain's existing 3,200 hotels worldwide are expected to earn the new sign this year, with the entire chain completely revamped by early 2010.

The new look is just one part of a sweeping, $1 billion overhaul that InterContinental (IHG) launched last year to revive the iconic brand.

The new design "brings us 20 years forward and projects us 10 years beyond," says Steven Porter, president of The Americas, InterContinental Hotel Group, during a tour of the hotel earlier this month.

FIND MORE STORIES IN: California | Virginia | Pennsylvania | Manhattan | Austin | Chelsea | Americas | Wichita | Santa Ana | John Mayer | Jack Johnson | State College | Kylie Minogue | Holiday Inn Express | Realtor | Kline | Holiday Inns | Created | Baby Boomer | Aloft | InterContinental Hotels | Element | Hyatt Place | Dumfries | Marriott-brand
Holiday Inn isn't just slapping new signs on old facilities. Instead, it stepped up quality inspections at all its hotels, and it's providing hotel owners with guidance on how to meet new standards.

The standards cover everything, including the entrance lighting, shower rods, lobby soundtrack and customer service training.

Before the makeover process began, Holiday Inn also stopped renewing contracts of hundreds of hotels that didn't meet standards or had exterior corridors that travelers perceive as unsafe. It also devised a stylish new look for newly built Holiday Inns such as the one in Manhattan to reignite development deals.

Some elements of the plan — such as illuminating the hotel at night in the brand's signature color — will also be carried over to Holiday Inn Express to unify the brands, but the newer Express chain doesn't need as dramatic a makeover.

Not aging gracefully

Created in 1954, the roadside hotel chain flourished by franchising as the USA's interstate highway system grew.

But it's been losing share in recent years as younger chains won over customers, and aging hotels appeared too dowdy.

Drastic action was needed to rescue the brand because older hotels were starting to outlive their lifespan, says Steve Rushmore, president of HVS, the hospitality consulting firm.

"Unless you do a significant renovation to existing properties, or a have them leave the chain, your chain starts to deteriorate and becomes old and obsolete," he says.

Once an existing hotel has been renovated, passed inspections and hung the new Holiday Inn sign, Porter says owners will see revenue per available room — a typical industry measure that considers rate and occupancy — increase by between 3% and 7% above normal inflation.

The contemporary design is meant to appeal to its Baby Boomer customer base, as well as younger travelers who might pick one of the stylish, midprice hotel brands recently launched, such as Aloft, Element or Hyatt Place.

Ellen Kline, a Realtor in State College, Pa., says she quit staying at Holiday Inns about a year ago because she didn't like not knowing whether she'd pull up to a good hotel or a poor one. Now, she stays mostly at Marriott-brand hotels.

"I like to stay in a place that's clean and up to date," she says.

Still, Kline, 50, says she'll consider staying in Holiday Inns once they're overhauled when traveling for conferences or on road trips with her teenage daughter. The chain fits her budget. Holiday Inn's average rate this year is around $97 a night.

But Holiday Inn has advantages beyond price, Rushmore says.

"Holiday Inn still has a very powerful name and reservation system, and being part of InterContinental Hotels has the advantage that they can cross sell," he says. "They're not starting out from ground zero like a new brand."

By the end of this month, about 40 Holiday Inns in the USA will have earned the right to install new signs. The list includes hotels in Dumfries, Va., and Wichita; and near the airports in Santa Ana, Calif., and Austin. Porter expects all 3,000 hotels will be completed by 2010.

Project green light

The revamped hotels preserve little from the past. The primary reminder is the splash of green in the Holiday Inn sign and entry lighting, recalling the old green-and-white-striped Holiday Inn towels.

Walking up to the Sixth Avenue Holiday Inn in Chelsea, guests see black Japanese-style planters and a modern steel-and-glass portico. At night, it is illuminated with that vibrant green lighting.

Guests will hear hip, chart-topping music by singers such as Jack Johnson, John Mayer and Kylie Minogue from built-in speakers both outside and inside the lobby. Rhythms will change by time of day.

In the lobby, they'll see a minimalist front desk. The "check-in" sign hangs from the ceiling, instead of resting on the counter, to reinforce the uncluttered look. Check-in counters will be kept free of promotional brochures, reflecting more sophisticated travelers who know what they want.

The beds feature white cotton duvet covers, white sheets and higher-quality mattresses. The shower has a curved shower rod and curtain that lets in more light.

Hotels have leeway in the design

Since the cookie-cutter look is no longer in vogue, Holiday Inn created design guidelines and color palettes that can be interpreted differently by hotels.

The plan doesn't address the restaurants, which serve at least breakfast, dinner and room service.

It also doesn't target the Holidome pool and activity area, although the chain adopted new standards in the last two years so that only hotels with the appropriate features hold that designation.

Guests, meanwhile, may see improvements before the new Holiday Inn sign appears, as the process can be lengthy.

At the 23-year-old Holiday Inn in El Paso, for instance, the hotel already has the new front desk, bedding and linens. A few more changes must be made before the new sign comes in October, but customers already show more enthusiasm, says owner Bill DeForrest, who's also CEO of Lane Hospitality. Guests have paid an average of $104.72 so far this year, or 13% more than the same period last year — a bigger jump than he would've received without the renovation, he says.

Occupancy and guest satisfaction levels also rose higher than normal, despite new competition in the past 18 months from limited-service hotels such as Hilton Garden Inn and Holiday Inn Express, he says.

"They're paying more and they're happier with the way the hotel's treating them," says DeForrest, who chairs the Holiday Inn owners' committee.

Readers, what amenities would you like to see at the revamped Holiday Inns?

Rug Decor

Rug Decor Franchise Recognized by Entrepreneur Magazine




February 1, 2008 - St. Louis, MO – Rug Décor, the nation’s leading rug retail franchise, announces it’s inaugural ranking in the Entrepreneur Franchise 500 listing. With an overall ranking of No. 369, the company is the highest ranking specialty floorcovering retailer within the esteemed list.


“Rug Décor fills a gap in the home furnishings market and by offering a huge selection of quality area rugs at great prices,” said Mark Jameson, vice president of franchise development with Rug Décor. “Our dedication to perfecting our turnkey business model and raising the bar in specialty retailing will continue to play a great role as Rug Décor continues its growth.”


Entrepreneur considers many factors in determining its rankings. Among the most important criteria are financial strength and stability, growth rate and size of the system. Also considered are the number of years in business and length of time franchising, start-up costs, litigation, and percentage of terminations and whether the company provides financing. All companies, regardless of size, are judged by the same criteria.


The company plans to have a strong placement in the ranking again in 2009 due to expansion plans calling for 40 new locations by the end of 2009.


Entrepreneurs interested in Rug Décor franchise investment opportunities can contact Mark Jameson at 800-466-6984, ext. 1136 or by email at mjameson@ccaglobal.com.



About Rug Decor

Rug Decor is a growing system of specialty retail stores selling branded, fashion oriented area rugs with operations in 37 markets throughout the United States. Backed by strong buying power among its affiliates, Rug Decor carries a selection of thousands of affordable area rug choices from the leading and private brands, including Kathy Ireland, Karastan, Urban Renaissance and Andy Warhol to compliment any room design theme. Purchased by CCA Global Partners in 2000, Rug Decor began franchising in June of 2000. Stores are available to qualified candidates in a limited number of U.S. markets. For Rug Decor franchise opportunities, please contact Mark Jameson at 800-466-6984, ext. 1136 or email him at mjameson@ccaglobal.com. Visit the company’s website at www.rugdecor.com


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FastSigns

FASTSIGNS International, Inc. Establishes New Store Development Team




January 17, 2006 - (CARROLLTON, Texas) — To provide more comprehensive support for new FASTSIGNS® sign and graphics centers in the United States and Canada, FASTSIGNS International, Inc. has established an opening support team comprised of a director and three franchise business consultants (FBCs), the company said. FASTSIGNS International, Inc. is the worldwide franchisor of FASTSIGNS® centers; there are nearly 500 locations in six countries.

Beginning this month, the new team will support centers from the time the franchise agreement is signed until the center’s sales consistently exceed the break-even point, said Trent Lensch, the company’s vice president of operations. Lana Daley, a former FASTSIGNS® center employee and corporate FBC, is the director of the new store development team. She will be joined by Mike Richards, Tammy Coil and Robert Shipman, who all have worked as FBCs supporting established FASTSIGNS® centers.

“Over the last 12 – 18 months, the adoption of new technologies such as flatbed and solvent printers has significantly changed our business,” said Lensch. “The feedback we’ve received from new owners is one reason we established the new store team. Lana and her team, who have in-store and FBC experience, will provide the operations, marketing, technology, production and management support that the new center owner and the staff need to be successful.”

Although it is not unusual for franchise organizations to have dedicated teams that provide short-term help for new locations, FASTSIGNS International is providing longer-term dedicated support for new centers, Lensch said, who has managed operations and sales for other franchise companies.

Daley, who worked in property management before joining the FASTSIGNS® network, has sales, operations and general management experience. Coil’s background in day-to-day FASTSIGNS® center operations, Richards’ knowledge of technology, and Shipman’s general management and sales skills round out the store development team.

In addition to establishing the new center team, FASTSIGNS International has promoted Mike McCabe, who previously was an FBC, to director of operations for the eastern U.S. and Canada. Scott Watson will continue as the company’s director of operations for the western U.S. McCabe and Watson oversee teams of FBCs that support established centers and new centers that “graduate” from the new development team.

FASTSIGNS International, Inc. has territories available for new centers throughout the United States, Canada and the United Kingdom, as well as in Brazil, Mexico and Australia, where locations operate under the SIGNWAVE® name, said Bill McPherson, the company’s vice president of domestic franchise sales.

All new FASTSIGNS® centers open with large-format, full color printers and other new sign-making equipment, which makes each location capable of producing large-format prints, vehicle graphics, trade show graphics, banners, exterior and interior signs, floor graphics and many other kinds of signs and graphics. For more information, visit franchise.fastsigns.com or call 800-827-7446.

Pet Butler Financing

Purchasing Pet Butler Franchises Just Got Easier




June 19, 2008 - DALLAS – Pet Butler, the nation’s leading pet waste removal service, has been approved for the Franchise Registry through the Small Business Administration (SBA). The SBA has been working with franchisors, franchisees, and lenders for years to streamline franchise loan processes.

By being included in the Franchise Registry, potential buyers can purchase a Pet Butler franchise while saving time and money. The SBA Franchise Registry assists participating lenders with eligibility decisions, providing speedy access to SBA financial assistance and streamlining processing during the loan review process in order to expedite the loan application. The Registry enables lenders and SBA local offices to verify a franchise system’s lending eligibility online.

The Registry selection process for franchise operations is a lengthy one. Pet Butler submitted applications and financial information to the SBA and FRANdata, the Registry operator. To date, Pet Butler is one of a few pet industry franchise operations included on the Franchise Registry.

“Being approved for the SBA Franchise Registry is important to Pet Butler because it provides approved franchise candidates with easy access to loans they might not be able to get otherwise. Many potential franchise partners looking to join the Pet Butler family can now move through the loan process much more quickly,” said Matt ‘Red’ Boswell, CEO (Chief Excrement Officer) of Pet Butler. “The SBA loan program enables franchise partners to secure the funding needed to launch their business at terms that are more competitive than traditional bank loans. This reduces the loan processing time and cost of borrowing money to launch their new Pet Butler business.”

Pet Butler launched its franchise operations in the fall of 2005 and has more than 125 franchises in 27 states. The company generated more than $3.5 million in revenue in 2007 and expects substantial growth, including the addition of 50 franchises, in 2008.

About Pet Butler

Pet Butler provides professional pet waste cleanup and removal services and supplies for individual yards, parks, and multi-family communities. The company’s mission is to make life more convenient, enjoyable, and safe for pet owners and to give them more quality time with their pets and families. Together with its nationwide network of franchise partners, the company has been cleaning up poop for 20 years. To learn more, visit the Pet Butler website at www.petbutler.com or call 1-800-PET-BUTLER (800-738-2885).

About the SBA

The mission of the United States Small Business Administration (SBA) is to maintain and strengthen the nation’s economy by aiding, counseling, assisting, and protecting the interests of small businesses. For more information, visit the SBA website at www.sba.gov.

About FRANdata

FRANdata is the only objective source for information about franchising in the United States. Providing research, analysis, data, lists and UFOCs, FRANdata services all audiences involved in franchising: franchisors, franchisees, and suppliers of all types. For more information call 1-800-485-9570 or www.frandata.com.