How To Succeed As A Franchisee

How to Succeed As a Franchisee

Pick a franchisee that matches your interests and abilities.Make sure you have enough money to operate without profits for the first few years.Research the opportunity carefully before committing.Related How-TosHow to Finance a Franchise PurchaseHow to Select a FranchiseFeedbackSend Feedback on this How-To Guide » While franchising’s prevalence in the U.S. economy indicates that franchisees can succeed, hundreds of franchisees fail each year. The most frequent causes: lack of funds, poor people skills, reluctance to follow the formula, a mismatch between franchisee and the business, and poor management. Often, it’s the small stuff that separates winners from losers.

A critical initial decision is picking a product you care about. Consider hiring a consultant to analyze whether you are a good fit with the business opportunity you are thinking about buying into. You also have to couple passion with discipline, avoiding too-fast growth at the expense of high-quality expansion.

Among the most common mistakes new franchisees make is signing on before adequately researching the business. Study what it will take to run the business successfully. And be realistic. Owning a franchise is rarely a get-rich-quick scheme.

Contact current and former franchisees to get their feedback, using names from the franchise circular from the franchisers. Never make a commitment based solely on information provided on the Internet or over the phone.

Sometimes, franchisers are to blame. Franchisers may be inexperienced themselves, a situation often found in very small systems. Or they may expand too aggressively, rendering them unable to service franchisees. Brokers or consultants selling concepts may be more interested in a sales commission than in making a good match between business and franchisee.

Another pivotal decision early-on is location. Think twice before locating a franchise using only your intuition. A location on the outskirts of town might be more affordable but may be too remote for customers to reach conveniently. Other factors may be at play. For example, one franchisee thought his spot on a college campus was perfect for his fast-food franchise. Students were a built-in source of employees and customers. And they were — when they were around. But they disappeared for football games and vacations. At the end of each semester, they had little spending money left for take-out or delivery. The location had no parking and so had no other customers. It eventually moved to a freestanding building with a big parking lot. It still delivers to campus, but now also serves families, whose average order is much higher than a typical student’s tab.

To find potentially successful locations, national chains use what’s called geographic-information-systems software that layers census and consumer-trend data upon every street and byway in the country. These tools can cost thousands of dollars. For a few hundred dollars, you can buy demographics reports for any ZIP Code in the country that will analyze population characteristics, income levels, lifestyle trends and even traffic patterns within about a mile of potential sites. You might want to pinpoint, for example, a high-traffic area with at least 40,000 cars a day, 50,000 people living within a two-mile radius, and retail locations nearby. Also consider whether adequate parking is available.

Another key to a franchise’s success is good customer service. That may include making additional investments to improve customer experiences, working overtime to satisfy customer time demands, and putting out extra effort to ensure products and services are done right.

While franchise systems offer pre-set business formats, flexibility and versatility help a lot. That’s especially true when it comes to marketing and promotion. To bring customers in the door, successful franchisees report using tactics such as discount coupons, free samples, direct-mail ads and fax blasts. No marketing job is too small or difficult for a franchisee determined to succeed. Many have success with community-based marketing initiatives, such as those involving schools.

For every franchisee chasing success, there are many competitors engaged in the same pursuit. Studying the competition by visiting their locations and looking for help-wanted signs signaling expansion plans, for instance, helps long-lived franchisees know when to initiate marketing plans to counter rivals’ efforts.

Franchisees can’t succeed without good employees. Winning franchisees treat employees well, so they will treat customers well. Some franchise businesses, such as fast food, have high employee-turnover rates. Providing corporate-style benefits such as medical, dental and retirement benefits can go along way to helping workers feel as though a franchise job is a career. Making sure employees are properly trained and executing according to the rules is vital.

That goes double for your managers. Franchisers say the No. 1 reason for a franchisee’s failure is that they don’t hire the right managers. Franchisees who lack management skills themselves might want to choose a business that could be run by just one or two people. Or, consider hiring someone skilled at motivating others.

Don’t forget: You have to follow the rules, too. Franchises aren’t designed for the independent-minded. They depend on a by-the-book execution of a business plan, adherence to time-tested systems, and a willingness to follow directions.

Insufficient funding is a prescription for failure in any business. With a franchise, the initial fee is clearly stated, but newcomers often underestimate operating costs. A slow beginning or unanticipated event can quickly drain and doom an undercapitalized franchise.

Unrealistic optimism also can be a recipe for financial distress. Borrowing to expand just before a downturn, for example, can lead to rapid bankruptcy. Franchisees need a financial cushion to weather unexpected situations. Experts advise new franchisees to have a nest egg for emergencies and assume they will lose money the first two years.

Franchisees who leave the management of their units to managers and who may or may not be on the premises every day are also less likely to succeed than owners who take a hands-on approach. They may not know if the help is showing up, what customers are complaining about, or whether employees are dipping into the till. Theft can be contagious and contaminate an entire organization if not stopped immediately.

Francorp at the Florida Restaurant Show

Florida Restaurant Show wraps upRichard Slawsky Contributing Editor16 Sep 2008
Despite the threat of Tropical Storm Hanna drenching the Orlando area, more than 550 exhibitors and 15,000 restaurant professionals turned out for the 2008 Florida Restaurant & Lodging Show, held Sept. 5-7 at the Orange County Convention Center.

The show offered a glimpse of the latest in industry trends as well as the tools available to help operators better control the basics of restaurant operation.

Technology took center stage at the show. One exhibitor, Mainstreet Menu Systems, displayed restaurant signage ranging from basic backlit signs to the latest in high-tech menu boards.

“The biggest thing that we have been offering as far as a recent product is the digital menu board,” said Mike Harris, who was manning the Mainstreet Menu Systems booth at the show. “There is a lot of interest among people who want to be able to change their dayparts easily without having to do it manually.”

And dozens of vendors displayed technology designed to help operators run their businesses via the Internet. Ft. Lauderdale, Fla.-based Pinnacle Hospitality Systems demonstrated digital surveillance systems that allow operators to check up on their stores remotely, while Longwood, Fla.-based Orderup.com demonstrated a system that allows operators to easily add online ordering.

“You can pretty much assume that technology drives the way we do business these days,” said Thomas Lay, president of Orderup.com. “Many experts estimate that online ordering could be responsible for as many as 20 percent of delivery and takeout orders by 2012.”

Recognizing innovation

Despite the emphasis on technology at the show, some of the most interesting offerings were innovative ways to perform the most mundane of chores. The winner of the Best in Show in the Innovative New Product Gallery was The Glass Flipper, a device that allows restaurant operators to flip entire racks of clean drinking glasses at once so they can be filled with ice or beverages.

The device eliminates the necessity of having to flip each glass by hand after they've come out of the dishwasher.

“We launched The Glass Flipper on the first day of the show and could not be more thrilled that we were awarded the best product in the show,” said Lee Greenburg, partner of the company. “We had a great show and met with many potential customers including ones from Universal, Disney and Doral, to name a few.”

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The first runner up in the Innovative New Product Gallery was Customer 2 You, for its Nowline software product, which allows operators to easily post their menus online. The second runner up was Joe Sixxpak for their bottle caddy.

Other events at the show included The Ultimate Barista Challenge USA , hosted by Whole Cup Coffee Consulting. Professional baristi faced challengers on the exhibition floor where they prepared their signature espresso beverages for a panel of discerning judges.

Educational seminars at the show included “6 Reasons Why You Should Franchise Your Restaurant,” presented by Tom Dufore, executive vice president of Francorp, “Energy Efficiency For The Hospitality Industry,” presented by Marilyn Arnall of Florida Power & Light and “Sustainable Food,” presented by Becky Malamut of the Green Restaurant Association.

Something for everyone

Co-located with the event was the Orlando Pizza Show, which featured dozens of pizza-related vendors along with the US Pizza Team trials. John Howe from Pizza Hut won the Fastest Pizza Maker competition; Scott Childress from East Coast Pizza won the Largest Dough Stretch; and Ryan LaRose from Dali’s Pizza won the Free Style Dough Tossing Competition. Nino Coniglio from Il Brigante in New York City won the overall competition and was awarded a spot on the U.S. Pizza Team, which will represent the nation’s pizza industry in international competitions in Europe.

Liz Hertz, marketing manager for precooked meats producer Burke Corp., offered samples of some of the company’s new products to show attendees.

“We have our new chorizo topping, which has been very popular, and also an all-beef Italian-style sausage, which is very popular as well,” Hertz said. “A number of our customers are interested in using all-beef as opposed to pork for people who don’t eat pork.”

Several operators talked about the difficulties they had faced over the past few months as the economy continued to stagnate.

“We’re having a good year, but it’s been a tough year,” said Richard Dunfield, president of the San Antonio, Texas-based Roto-Flex Oven Corp. “We will sell more ovens this year than we did last year, but last year I was ordertaking. This year I’m having to sell.”

At the close of the Florida Restaurant & Lodging Show, exhibitors donated 3,571 pounds of food to the Second Harvest Food Bank of Central Florida . The donation is the equivalent of more the 4,460 meals that will be provided to those in need in Central Florida.

The 2009 Florida Restaurant & Lodging Show will be held Sept. 11 - 13, 2009, at the Orange County Convention Center in Orlando.

www.francorp.com

Veterans Buying Franchises

Entrepreneurs
Captain Franchise, Sir Michael Bobelian, 07.16.03, 7:00 AM ET

NEW YORK - U.S. soldiers are in demand--and not just by Uncle Sam. A large number of American forces stretch across the globe: 1.4 million servicemen and women are on active duty, and another 1.3 million reservists and National Guard members remain on call. Last week, General Tommy Franks indicated to Congress that the Pentagon will maintain a high level of troops in Iraq for the foreseeable future.

But those who do come home and retire can take comfort in the fact that corporations have begun their own campaigns to recruit highly prized veterans.

Just one catch: There may not be enough retirees to go around. This spring, the International Franchise Association, an umbrella group with 853 members--including Dunkin' Donuts' parent Allied Domecq (nyse: AED - news - people )--dusted off a program first offered after the Gulf War a decade ago to help military retirees buy and run franchises.

Exxon Mobil (nyse: XOM - news - people ), which relies on franchisees to run its gas stations, recently became the 100th member to join VetFran. Don J. DeBolt, president of the IFA, expects about 200 to 250 franchisors to sign up and suspects that many more will offer incentives to veterans without joining the program. Rather than set one comprehensive program, the IFA encouraged participants in VetFran to agree to offer potential franchisees their "best deal," often a discount on the cost of ownership. Allied Domecq is offering a 20% discount on all three of its brands, which also include the Baskin-Robbins ice cream chain and sandwich maker Togo's. VetFran participants crave the unique training veterans acquire through military service. Randy Burzynski, manager of franchising for Allied Domecq, cites organization skills, discipline and leadership experience as critical ingredients for successful franchisees. And then there's the contrast veterans offer to today's scandal-plagued economy.

Drew Myers, a former Marine captain and president of Recruit Military Inc., a Cincinnati-based headhunter that has placed veterans in nonfranchise positions at Coca-Cola (nyse: KO - news - people ) and General Electric (nyse: GE - news - people ), says his clients "are now eager to have character, work ethic and high integrity" in their employees. While the IFA's DeBolt notes that 80% of franchises cost less than $250,000 and financing is abundant, VetFran is clearly aimed more at the older, wealthier veteran. (Retirees with 20 years of military service receive a pension equal to at least one-half of the salary earned in their final year for the rest of their life.) Sears Carpet and Upholstery Care, a VetFran participant and a unit of Sears, Roebuck (nyse: S - news - people ), requires an initial cash investment of up to $94,500 and a total investment reaching $362,300.

UPS Store franchises of United Parcel Service (nyse: UPS - news - people ) require only a $7,500 initial cash investment, but the company screens out applicants with a net worth below $150,000 and lacking less than $50,000 in cash or liquid assets. Few twentysomething soldiers can fulfill these qualifications. But younger military who decline to reenlist remain in high demand at large corporations, particularly junior officers, says Myers. At 26 to 30 years old, they already have four to eight years of "stringent, stressful, quality leadership experience." Plus, 98.3% of commissioned officers hold a college degree, compared to 3.5% of enlisted soldiers. Capital One (nyse: COF - news - people ) hires hundreds of officers annually (usually as analysts) because of their higher education, according to a spokesman. CSX (nyse: CSX - news - people ) seeks engineers and mechanics for its technology-oriented operations, according to Myers, while AutoNation (nyse: AN - news - people ) recruits veterans to be controllers in its stores. So far, participating franchisors have signed up only 28 veterans and the rest may be hard-pressed: Military retirements are well off their historic highs.

A Department of Defense report shows that 44,714 servicemen and women (about 3% of all active personnel) retired with maximum benefits last year, down from about 66,000 in the years following the Gulf War. And the current state of U.S. involvement in Iraq all but rules out a spike in retirements this year. Myers notes that a so-called "stop loss" program currently in force prohibits many Marines from retiring. (The officer corps has been shrinking, too, to 217,011 in 2001 from 304,595 in 1988.) Despite the low supply of veterans, franchisors remain eager to recruit them. "We'd like to sign up as many as possible," says Allied's Burzynski. Like the soldiers' families waiting for their loved ones to return home, he will have to wait. With American forces scheduled to remain in Iraq for the foreseeable future and a perpetual war against terrorism raging across the globe, a glut of veterans will not enter the workforce anytime soon.

www.francorp.com

Francorp Malaysia

About Francorp Inc
Francorp Inc was founded 30 years ago by its Chairman Don Boroian and has counseled more
than 10,000 companies and helped more than 2,000 businesses join the ranks of franchisors in
the USA, Europe, Middle East and Asia. Among its clients are Kentucky Fried Chicken, Omni
Hotels, Holiday Inns, Ace Hardware, Damon’s, USA Baby, Auntie Anne’s Pretzels, Culver’s,
Jollibee, Jimmy John’s, Jersey Mike’s Subs, Texaco, Shell and BP Amoco.
In Malaysia, Francorp’s clients include Wardrobe (men’s tailoring maestro), CN Health &
Beauty (beauty solution services), Kamdar (textile superstore), GDO (lighting and furniture),
Ridpest (total pest management control system), and EOA (pre-owned car dealers). Francorp
Malaysia is also developing franchise programs for other clients like Amee Philips (specialty
jewelry), Bao Bei (Mandarin language centre), Felisa (beauty spa), Lo Hong Ka (bird’s nest
retailer), MyKamera (photography shop), Gift & Logo (corporate and premium gifts), and Syed
Bistro (restaurant).
Francorp is a global leader in the franchise consulting industry with a unique approach that
remains unmatched by any other firm in the world. With a team of experts whose talents are
coordinated seamlessly to create customized materials that fit the specific needs of its clients,
Francorp has the global reach to help clients expand their business and creates a local presence to
adjust their business to fit each country's unique culture and laws.
About Affandy Faiz
A well-sought speaker in franchising, Affandy has more than seven years experience in the
franchise industry, coupled with auditing, corporate finance and direct marketing experience of
more than 10 years. He has undergone the Francorp's system training program in Chicago, USA
and the first Malaysian to qualify as a Certified Franchise Executive (CFE), awarded by the
Institute of Certified Franchise Executives (ICFE) of USA. Affandy has been featured in
mainstream Malaysian electronic media (TV and radio) and regularly contributes franchise
articles to leading newspapers and business journals.

www.francorp.com

Franchise Article, 1988

Your Money; Franchises Offer Profits and Risks
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By LEONARD SLOANE
Published: January 16, 1988
LEAD: JAMES Goodman, executive vice president of the Morehouse School of Medicine in Atlanta, recently decided to leave his position and go into franchising. So he bought the Seattle-area rights to open franchises of Jiffy Lube International Inc., a fast oil-change and lubrication system for automobiles.
JAMES Goodman, executive vice president of the Morehouse School of Medicine in Atlanta, recently decided to leave his position and go into franchising. So he bought the Seattle-area rights to open franchises of Jiffy Lube International Inc., a fast oil-change and lubrication system for automobiles.
''I've put in a lot of effort and energy for other people,'' Mr. Goodman said. ''I'm at a stage now where I want control over my own destiny.''
Rocky Paolini bought a franchise three years ago and now has a thriving printing and copying center under the Sir Speedy name in Wakefield, Mass. Before going into business on his own, he had worked at the Monsanto Company in sales and marketing for 14 years.
''I love it,'' he said. ''You'll never see me going back to corporate life.''
Mr. Goodman and Mr. Paolini are among the hundreds of thousands of Americans who have started their own businesses through franchising. Government statistics indicate that franchises stand a better chance of success than other independently owned small businesses. Nevertheless, prospective franchisees should understand the many pitfalls - indeed, some people have lost their entire investment rather quickly. Before opening an establishment and paying $1,000 to $500,000 for the franchise, investors should carefully study the business.
''Treat this as an extremely serious business investment,'' said Stanley L. Williams, director of education at the International Franchise Association. He urged investors to examine the entire situation carefully before they put up any money.
Franchising is a method of distributing brand-name products or services under license. A franchiser provides the business system and trademark and a franchisee operates the business under the franchiser's name.
There are two major franchising arrangements. In the business format, the franchiser establishes a fully integrated, continuing relationship with the franchise owner. In a product trade-name arrangement, the supplier and dealer establish an independent sales relationship, like those found in such industries as automobiles, soft drinks and petroleum products.
The business format has been responsible for much of the franchising growth in the last three decades.
Total sales of franchising companies amounted to approximately $591 billion in 1987, up about 6 percent over the previous year and representing one-third of all retail sales in the United States. Approximately a half-million franchised establishments exist, with business-format arrangements proliferating in such industries as real estate, rental service, cleaning and maintenance and, of course, the ubiquitous fast-food restaurant.
''You're buying someone else's experience,'' said Ray Bard, an Austin, Tex., management consultant and co-author of the book ''Own Your Own Franchise.'' ''You're getting their systems, their product development, their image in the marketplace and their supportive services.''
In addition to having the opportunity to participate in a tried-and-true business model and to receive both start-up assistance and follow-up support, franchisees may obtain other benefits. These potential advantages include sharing in the good will built up by other outlets bearing the same name, obtaining location analysis, getting continuing advice and training from the franchiser and receiving counsel in organizing, leasing, merchandising and advertising.
But franchising does have its drawbacks. A franchisee must comply with the franchiser's controls, standards and procedures or risk losing a valuable franchise. Also, a franchisee must usually spend more money to go into business than would be required without the trade name.
''The relationship between franchiser and franchisee is the key element to the present and future success,'' said Andrew Kostecka, a franchise specialist for the Commerce Department. ''A franchiser can develop superior procedures and programs, but they are meaningless unless franchisees put them into operation in the marketplace.''

www.francorp.com

Francorp Client - LuluLemon Athletica

Lululemon's Next Workout
Can Christine Day broaden the yoga clothier's appeal?
by Aili McConnon
BW Magazine

Incoming Lululemon CEO Day and co-workers Chris Buck
Lots of chief executives talk about keeping an ear to the ground. Few do it. Even fewer do it literally. But on a recent Sunday in Vancouver, B.C., Christine Day, the incoming CEO of yoga apparel retailer Lululemon Athletica, was on her hands and knees in a fitting room hemming pants. That's standard operating procedure at Lululemon. Every worker, from the C-suite to the accountants to the design team, must spend at least eight hours a month working in stores—an unusual mandate for a retailer. It's a way to keep close to the company's carefully cultivated and well-heeled clientele: the burgeoning Yoga Class.
Serving that niche with a laser-like focus has paid off for the Vancouver retailer. In 2007, sales rose 85%, to $275 million; profits leapt 300%, to $31 million; and the company raised $344 million in an initial public offering. Lululemon fans shell out $92 for a pair of workout pants, compared with $60 at Nike (NKE) or $70 at Under Armour (UA), according to research firm ThinkEquity Partners. No wonder, then, that at most of its 86 warehouse-chic stores, Lululemon sells $1,710 worth of gear per square foot—about triple the rate of red-hot retailers Abercrombie & Fitch (AWF) and J. Crew (JCG). "It's the best growth story in retail today," says Paul Lejuez, a senior analyst at Credit Suisse (CS).
As Day takes over—her official start is June 4—Lululemon is at a precarious point. It plans to increase its U.S. store count from 38 to 69 this year, with a goal of 300 over the next few years. But inventory problems have crimped margins, since the company had to pay extra to ship out-of-stock items to stores by air. Amid worries over cash-strapped U.S. consumers, the stock price, which rocketed to 60 after going public at 18, has fallen back to 31. How Day manages the rapid growth will determine whether Lululemon fades away, like so many once-hip retailers, or becomes a lasting franchise.
Day most recently ran Asia-Pacific operations at Starbucks, which serves as both a growth template and a cautionary tale for Lululemon. "At Starbucks, we moved too quickly away from the authentic Italian espresso," she says. CEO Howard Schultz hired her in 1986 as his assistant. She took care of everything from bookkeeping to human resources and quickly moved up the management ranks. In his memoir, Schultz credits Day for her early insight that the coffee chain's stores should be designed as "sisters—each with an individual appearance, but clearly from the same family." In her most recent post, as head of Asia, Day oversaw a side of Starbucks' business that is still growing furiously even as U.S. stores slump.
Lululemon has been quietly growing since 1998, when it was founded by Dennis "Chip" Wilson, a Canadian entrepreneur who had previously founded a surf, skate, and snowboard company. After attending a yoga class, he found the cotton-polyester blends most people wore to the studio were uncomfortable and ill-fitting, and they collected sweat. He created a black exercise pant for women made of fabric that would wick away perspiration and fit well, too. In 2000, Wilson, still the company's design chief, opened a small design and retail space in Vancouver that doubled as a yoga studio. He created clothing during the day and tweaked it based on feedback from students who took yoga classes in the same space at night.
Linking with local gurus has been crucial. Before Lululemon opens a store in a new city, it approaches yogis or other fitness class teachers. In exchange for a year's worth of clothing, they become Lululemon "ambassadors," wearing the duds in front of students and giving the company design feedback. They also host students at private sales and free classes sponsored by Lululemon in unmarked lofts or condo spaces.
Now the pressure's on Day to expand Lululemon beyond yoga into sports such as running, swimming, and biking. Outgoing CEO Robert Meers, who previously led Reebok International, put together a management team of retail vets from the likes of Nike, The Limited (LTD), and Abercrombie (RL). Day, though, has been visiting stores and picking up tips from workers on the line. At regular breakfast meetings, she's fond of asking employees: "What's the most idiotic thing we did in the last 60 days?"
SIDESWIPED BY SEAWEED
Early on, Lululemon dodged a bullet. In November, The New York Times reported the company made false claims about a line of clothing infused with seaweed that purported to moisturize skin during exercise. Lululemon says third-party tests confirmed its garments contained a seaweed derivative, but it removed the claims from labels.
A more pressing challenge is inventory. Analysts say stores in coastal areas often run short of small sizes and those in the Midwest sell out of larger sizes. Day says the company has rolled out a new inventory-management system and will spend up to $1 million on a direct-sales Web site. Day is quite aware that, in a recession that's punishing other retailers, she'll have a brief window in which to fix the glitches. "You can't be complacent about blaming the economy," she says, "when it's probably some operating...issue you're trying to get right."
To watch a video interview with incoming Lululemon CEO Christine Day, go to businessweek.com/go/tv/lululemon.
Back to the Hot Growth Table of Contents
McConnon is a staff editor for BusinessWeek in New York.

Fast Food

Government at various levels already says buckle your seatbelt, don't smoke and be sure to recycle, so it shouldn't be any surprise that the Los Angeles City Council is preparing to tell people to eat their peas. Council members, concerned about the proliferation of fast food restaurants in a low-income area of South Los Angeles, are considering an area ban on additional fast food joints such as McDonalds (MCD), Burger King (BKC) and Wendy's (WEN).

Libertarians and other cranks might ask: Is this a legitimate role for government and, by the way, where's the legal authority for such action? So far, government's answer is: Never mind - we know what's best for you. Hush, now. The Los Angeles City Council says fast food restaurants lead to obesity and seeks to encourage sit-down eateries that serve salads and other healthy food to set up shop in the area. But how likely is it that Darden Restaurants (DRI) would open a moderately expensive Olive Garden in a low income area - especially when the eatey's Italian-themed menu offers ample opportunity to be naughty with pasta while skipping the vegetables? What would the City Council say about Chipotle (CMG)? You can eat smart with chicken, vegetables, rice and salsa or, if you're feeling wicked, you can gunk up your meal with guacamole and sour cream. Perhaps the answer is a city monitor, tape measure in hand, stationed at each restaurant to quickly assess the girth of each customer and say yay or nay to piling on the guac. Cynics would say the monitors could be unionized and become a reliable voting block for council members seeking life-time tenure in city government, but you know cynics. Few would argue that fast food restaurants serve health food. But some states require restaurants to post the nutritional value of meals in plain sight, including calories, grams of fat and salt content. Isn't providing the information needed to make an informed decision enough? Don't citizens make their own decisions in a free society?

Probably not. Some bright, concerned member of the City Council is bound to ask: What if people make the wrong decision? Fast food restaurants provide jobs and appear to be the only industry that wants to be in the low-income area of Los Angeles. How does limiting employment, especially for young people who are learning how to balance outside responsibilities with school, benefit low-income residents? Don't ask. The all-knowing City Council probably has a ten-point program for that, too. Those same philosopher kings also appear ready to take on the weighty problem of plastic shopping bags. A ban appears likely, which is sure to upset environmentalists because someone has to cut down trees to make eco-friendly paper bags. Anyone who takes out the trash will be certain to curse the council, because paper bags get soggy and the bottom falls out. Perhaps this unfortunate circumstance requires community classes teaching folks how to mop the kitchen floor - and be happy about it.

The possibilities for "good for you" government intervention are endless. There's always chatter somewhere about banning cigarettes and other merchants of coffin nails, never mind the legality of tobacco products or the unhappy experience with Prohibition in the 1920s. But maybe it's simpler than that. If you're a Los Angeles City Council member, why worry about inadequate public transportation, building in canyons prone to wildfires and mudslides or even potholes when you can preen and bellow about fast food?

Francorp Client, Dunn and Bradstreet Article

Dunn and Bradstreet

When economic conditions get tough and revenues start to decline, sales and marketing departments have traditionally battened down the hatches - employment freezes, training is cut back and layoffs often occur.But is this the right approach?The answer is an emphatic no. Cutting back in a challenging economy is the worst thing a business can do. A deteriorating economy should be the trigger for businesses to ensure their marketing and sales focus is unwavering, if not strengthened.But the approach must be focused to ensure maximum results are achieved and meaning you need to reach targets most likely to respond to your offer.There are two key groups - current accounts and the ones that got away! Selling to peoplewho know your business is always easier than forging new relationships. A slow economy provides the perfect opportunity to leverage your customer relationships, remind your clients you were there for them before times got tough, you are there for them now and you'll be there when conditions improve. They'll appreciate the message and the attention, and will likely reward your loyalty with their own.Now for the ones that got away - former customers and previous prospects who may have chosen an opposing product or service are ripe for the taking. If your competitors have battened down the hatches in an attempt to survive the downturn its highly likely they aren't giving their clients the attention they deserve. Take advantage of the situation, make your competitors clients feel loved. Winning them over could be as simple as a face-to-face visit.An economic downturn also presents an opportunity to pump up and prepare your sales force so they are ready to hit the streets when conditions turn the corner. It's likely that many companies will be forced to lay off staff, don't fall into this trap. Hire the talented people that other businesses are letting go and use the time to train them thoroughly on the products and services you offer. Current and new staff should be included in this process. Ensure that everyone understands the business goals, that sales leads are good, that marketing materials are in order and that the ideal customer profile is well and truly understood.When the economy turns the corner, confidence returns and cash begins to flow again, it is important not to let the diligence and discipline slip away.It is easy to throw money around when it's flowing through the door; however industry leaders maintain their focus and use the positive economic conditions as an opportunity to examine every line item in the budget.Value needs to form the central focus of this exercise. Investments that have value to you and your clients should absolutely remain while those that don't need to be let go.Consider the value of your current budgeted activities and determine whether slight tweaks could enhance the impact on your clients and prospects. A slow economy is an excellent opportunity to improve the quality and size of your sales force, double up your efforts to get people on the street and capitalise on the strengths of your executive team. A solid economy on the other hand is the time when businesses can improve their cost base by thinking outside the box and questioning every investment the business makes.Top performers do not allow external factors to control their success, instead they use these factors to their advantage.
Christine Christian is the chief executive officer of Dun & Bradstreet Australia

Franchise Success in Omaha

If your house is messy, your stomach is rumbling or your grandpa is rattling around alone in his house, don't blame Omaha.

"Omaha has been a wonderful, wonderful city for franchising," said Tom Guy of the Ellis & Guy advertising firm, who was a part of the early franchise business in Omaha.The city has done its part to keep the nation well-fed, happy and clean through a type of venture that can spread rapidly worldwide and generate billions of dollars in sales.What is it?It's franchising, and over the past 35 years the city's entrepreneurs have spawned at least a half-dozen operations that have gone nationwide and, in some cases, worldwide.Every day, employees of Omaha-originated franchises clean thousands of homes, inspect thousands of properties, serve thousands of pizzas and sandwiches and perform chores for thousands of senior citizens, from Europe to Asia and all across the United States.
Franchise businesses with Omaha ties
Little KingFounded: 1968 Initial investment: $30,000- $80,000 Total investment: $140,000- $240,000 Royalty: 6%Outlets: 8 franchisees, 15 storesNational Property InspectionsFounded: 1987 Initial investment: $21,800 Total investment: $28,500- $31,000 Royalty: 8% Outlets: 262 in the U.S. and CanadaHome Instead Senior CareFounded: 1994 Initial investment: $32,500 Total investment: $44,000- $57,600 Royalty: 5% Outlets: 800 centers in 12 countriesGodfather's PizzaFounded: 1973 Initial investment: $0-$20,000 based on a number of factors Total investment: between $10,000-$550,000 Royalty: varies, based on a number of factors Outlets: about 620 in more than 40 statesRight at HomeFounded: 1995 Initial investment: $32,500 Total investment: $50,000- $80,000 Royalty: 5% Outlets: 155Merry MaidsFounded: 1979 Initial investment: $19,000- $27,000 Total investment: $23,350- $34,450 Royalty: 5-7% Outlets: 1,421The MaidsFounded: 1979 Initial investment: $10,000 Total investment: $74,000- $221,000 Royalty: 3.9-6.9% Outlets: More than 1,000 marketsSource: The Franchise Mall Those involved in franchising say Omaha's success is built, in part, on:• A service-oriented Midwestern mind-set.• A willingness to share the secrets of building a successful franchise.• The ability of key individuals to turn good ideas into businesses that can be replicated almost anywhere."Omaha has been a wonderful, wonderful city for franchising," said Tom Guy, who tied his marketing expertise into several successful franchises.Consider this history:Willy Theisen knocked a hole in the wall between his bar and an adjacent pizza restaurant and began selling pizzas to his customers. Convinced that the thick-crust pizza could compete with Pizza Hut's thin-crust version, he launched Godfather's in 1973. He sold the company in 1983 for $306 million.Dallen Peterson realized in the late 1970s that women joining the work force wouldn't want to come home and clean house. He started Merry Maids, selling it in 1988 for $25 million.Peterson protégé Paul Hogan and his wife, Lori, saw that elderly parents of busy and often far-flung children could thrive in their own homes with a little help from a caretaker. The Hogans started Home Instead, which is expected to generate $650 million in revenue this year on three continents."Dallen helped me rifle in on the senior market," Paul Hogan said.There's also Right at Home, a senior care company that includes in-home medical services; The Maids, another home-cleaning company; and Little King sandwich restaurants.A different kind of service franchise caters to businesses instead of individuals. National Property Inspections Inc. provides information on such details as home condition, energy consumption and safety features.Colin Bishop, executive vice president of The Maids, said developing a true, successful partnership with the franchisee is key. That sort of cooperation seems commonplace in the Midwest, he said.In 30 years, Bishop said, The Maids has had only two lawsuits, an outstanding track record considering the decades of business dealings with franchise holders.Merry Maids founder Peterson said Godfather's success inspired him, and he knew Tom Guy and Rick Ellis from working at Fairmont Foods' snack division. Their advertising firm, Ellis & Guy, handled Godfather's marketing campaign, which featured actor J. William "Bill" Koll as a tough-talking gangster who virtually ordered people to buy pizza.Peterson figured that if he could operate a successful home-cleaning service in Omaha, it would be the sort of business that could be franchised: Capital costs were low; most people could understand the necessary training; and the demand was nationwide.Guy helped develop the name - No. 12 on a list of 35 proposed names.Peterson said just being from Omaha was an advantage."The transportation in and out was good, and the work ethic of the people in Omaha was wonderful," Peterson said. "We were able to get talented people on our staff."
Franchises work best for a business:
• With a good track record of profitability• Built around a unique or unusual concept• With broad geographic appeal• That is relatively easy and inexpensive to operate• That is easily duplicated Once you have the right concept, he said, franchising is built on relationships, which in turn depend on choosing the right franchise holder.During the selection process, finalists came to Omaha to learn more about the company."Everyone who came to Omaha would come with a kind of skepticism," Peterson said. "But by the time they spent a week in Omaha, they always were so impressed. There's something about Omaha, the people, the culture, the work ethic, the integrity - all those things were factors."Success built upon success.Peterson and others who started franchise operations gave money to launch the International Center for Franchise Studies at the University of Nebraska-Lincoln, which attracted business students with franchising in mind.Franchises work, say Peterson and others, because they give franchisees a successful formula for doing business, letting them tap into an established brand backed up by training, advertising, equipment and other proven features.And franchises reward people who want to be their own bosses. The drawback, in comparison to starting an independent business, is that the franchisee must pay start-up fees and royalties to the owner of the corporation.An estimated 5,000 franchise companies operate in the United States, making $600 billion in annual sales. They created 1.2 million new jobs between 2001 and 2005, according to national franchise groups.Roland Bates was a contractor who saw a need for qualified inspections of residential and commercial properties. He started National Property Inspections in 1987."This is the kind of place that people still feel you can do business on a handshake and people keep their word," Bates said.Bates eventually met Allan Hager, a hospital administrator who had his own idea for a franchise: a senior care service that would provide in-home medical care as well as light housekeeping, errand and other services."He wanted to know more about what was involved in franchising," Bates said. "He picked my brain. We visited for months."The relationship has continued, Hager said."He was very generous in showing me the nuts and bolts," Hager said of Bates.For example, Hager learned that before offering a concept to franchisees, he needed to assemble and have in place all pieces of a franchise. Those include information technology, marketing, employee recruiting, legal details, pricing and screening of franchise applicants."I think the business climate here is terrific," he said. There's a trust factor in the Midwest. That's just the way people are here." • Contact the writer: 444-1080, steve.jordon@owh.com

Selling a Business in This Economy

Small Businesses on Discount By ELIZABETH OLSON
Published: May 27, 2008

To all the usual reasons that small businesses are put up for sale — personal problems and personnel squabbles among them — add economic woes this year. But even as for-sale listings rise around the country, so is buyer interest.Skip to next paragraph Enlarge This Image Julie Keefe for The New York TimesRichard Lightowler sold the nursery business attached to his general store in West Linn., Ore., for a lower price than he thinks he would have received in previous years. “When economic times get tough and people can’t find a job, they will go out and buy a job,” said Ronald W. Hottes, president of the Business Team, a broker in Torrance, Calif.The problem, though, for owners seeking to sell their businesses is that prices appear to be softening — a reflection of a variety of causes, among them tighter credit markets, rising costs and fewer customers.The country’s largest listing site, bizbuysell.com, has 50,000 businesses for sale — up from 43,000 this time last year, said Michael K. Handelsman, the site’s general manager. The number of businesses being sold also rose, to 1,795 listings that closed in the first quarter of this year, a 66 percent increase from 1,081 sales in the same quarter of 2007.In Gaithersburg, Md., mill3nnium.com reported that businesses for sale on its site had surged in the last year.

The site focuses on the metropolitan Washington area, and one reason for the surge was a decline in customers. Those businesses included delis, dry cleaners, dollar stores and gas stations. “We have 80 to 100 listings, double the number we had last year,” said the site’s owner, Moses A. Zuniga. “Every business is hurting.”Such sites can give only a snapshot of the market, Mr. Handelsman acknowledged, because “when a listing is removed, we always check to see if it sold, but the broker doesn’t always tell us.”Several brokers say that buyers typically are people who are retiring and looking for a second act or laid-off corporate executives looking for a business to run.Retirement, illness, divorce, death — and simple burnout — still drive the majority of owners to sell, but in the rocky economy, some otherwise solid businesses are now having a hard time. Their owners decide they cannot hold out for better times, so they sell for less, business brokers say. A decline in revenue was one reason that Richard Lightowler decided to sell the family’s retail nursery in West Linn., Ore., in January. When he took over the Willamette General Store from his parents in early 2007, he said, he evaluated the business. He said he found it difficult to manage the adjacent nursery, which specializes in ponds and pond supplies, as well as the store’s growing business in expensive Traeger barbecue grills.So he decided to sell the decade-old nursery, which had been bringing in $150,000 annually several years ago. Business had slipped even though nurseries generate higher margins than the hardware, barbecue supplies and food that are the core items at the blue-and-white clapboard general store, he said.“A few years ago — based on how it was doing then — I could have gotten $50,000 for the nursery,” said Mr. Lightowler, 40. “But I had to ask less, about $40,000, and accept $33,000.”Phillip L. Beukema, of Luxemburg, Wis., who recently sold his online business, Corporate Apparel Unlimited, may have been luckier in his timing. Over the last eight years, he and his family built the company, which sells promotional items like T-shirts on 13 Web sites, with some 25,000 clients, and recorded $2.8 million in sales in 2006.Then he and his wife, Charla, both 55 years old, decided last August that they wanted to retire. So last fall he listed the company with a business broker, Cornerstone Business Services, in nearby Green Bay, and the transaction — he did not disclose the sales price — closed on Feb. 15. The price, said Mr. Beukema, a former college dean, would probably have been less if he had tried to sell this year.“As the subprime situation hit last year, we noticed about a 10 percent slide in orders,” he said. “So if we had put it on the market in January, the asking price would have been in jeopardy. I don’t think we could have gotten the same figure for it.”

Pinpointing what is happening to sales prices nationwide is difficult because data is diffuse and unreliable. It is possible to advertise nationally on a Web site, but the buying and selling of most small businesses remains local. And most transfers of small businesses are between individuals, who are not required to register such transactions.Skip to next paragraph But both listing sites and brokers around the country say that sellers have become more flexible about price. In a survey by the International Business Brokers Association of its 2,000 members, nearly 73 percent predicted that 2008 would be a buyer’s market. The survey was released in January. Cress S. Diglio Sr., the association’s chairman and president of Corporate Investment International, which is based in Orlando, Fla., said that “this year the number of sellers will easily outpace the number of qualified buyers.”One reason is that a crucial small business financing tool, home equity lines of credit, has been drying up as house values fall. Traditionally, small businesses have had a hard time obtaining commercial credit, and that is worsened in rough economic times, several brokers said.“A year ago, people were using home equity loans,” Mr. Hottes said. “And now they are drawing down their 401(k)s.”Sellers — who historically have provided financing to sell their small businesses — are doing so more than ever, said Julie Gordon White, chief executive officer of BlueKey Business Brokerage in Point Richmond, Calif. Even so, an unpleasant truth is that many, if not most, businesses do not sell. For decades, the conventional wisdom was that brokers sold about one out of five businesses they listed. But a new study by Louis O. Vescio, owner of Sunbelt Business Brokers in Melbourne, Fla., found that the percentage was only 10.5 percent.The main reason, Mr. Vescio and others said, was that “most small business owners keep bad records,” so buyers cannot get an accurate financial picture. Confidentiality can also hamper sales, brokers said.“It’s not like a house where you want everyone to know it’s for sale,” said Mr. Diglio, who has been in the business for two decades. “You don’t want employees, customers or competitors to know you are selling.”

Francorp Offices - Francorp Malaysia

Francorp, Inc., the world's foremost franchise development and consulting group, headquartered in Chicago, USA, announced the availability of its services through Francorp Malaysia, a Southeast Asian regional office, based in Kuala Lumpur, to provide services to large and small businesses in Malaysia, Singapore, Thailand and Indonesia. Since its founding 28 years ago, Francorp has counseled more than 8,000 companies, and helped more than 2,000 businesses join the ranks of franchisors in America, Europe, Middle East and Asia. Among its clients are Kentucky Fried Chicken, Omni Hotels, Holiday Inns, Ace Hardware, Damon's, USA Baby, Auntie Anne's Pretzels, Culver's, Jollibee, Jimmy John's, Jersey Mike's Subs, Texaco, Shell and BP Amoco.
This announcement comes in concert with the Malaysian Government's initiative, to convert Malaysia into the franchise hub for the Southeast Asian region. Francorp Malaysia will provide a Full Franchise Development Program to all sorts of business concerns, enabling them to expand locally and into foreign markets (regional and worldwide) in a professional and profitable manner, without the burden of major investments in company owned branches.
Franchising has proven to be the most successful expansion method in the history of business. In the most advanced economies, franchised networks account for almost 50% of retail sales. In fact, most of today's large systems emerged from the obscurity of one or two modest retail outlets and have accomplished worldwide coverage and prestige through franchising.
Franchising, on the other hand, has become extremely competitive, especially since the international expansion exercised by the major companies has brought a completely new business culture to the rest of the world. No franchise should attempt to operate with any less than the highest standards to ensure success. Traditionally, small but successful business owners in emerging economies have encountered that as an insurmountable barrier to take a rightful place in franchising in their own countries and regions. Francorp's services ensure competitiveness in this difficult, but most rewarding, business arena, affording Malaysian businesses the strength and proficiency to franchise even in the United States, with the highest franchising industry standards.
Francorp also offers international brokerage services, bringing together franchise sellers and buyers. This service has proven effective in Francorp introducing 30+ American franchises into Japan and some Asian and Latin American franchises into the US. (Jollibee from the Philippines and Pollo Campero from Guatemala, among others). This service will facilitate both the import of franchises to the region, and the introduction of Asian franchises, particularly the Malaysian franchises, into the major world markets.
Affandy Faiz, Francorp Malaysia's President and CEO declared, "We are convinced that the government programs, supported by professional franchise development services, will place Malaysia in a most prominent place in the franchising map of the world in the years to come. Our reputation as the foremost franchise development and consulting group is committed to that effect and we will play a key role in bringing franchise opportunities to entrepreneurs throughout Asia. With talented individuals on our local and global team, we have not only strengthened our leadership position in Asia, but throughout the entire world."
"Francorp Malaysia is ready and willing to cooperate with the Ministry of Entrepreneur Development and Cooperative and other government agencies, chambers of commerce, business associations, financial institutions and other support institutions in assisting the Malaysian entrepreneurs to expand their business through franchising."
"For almost 30 years, Francorp has been the leader in the franchise consulting industry. In fact, we invented the niche. We have a unique approach that remains unmatched by any other firm in the world. We have assembled a team of experts whose talents are coordinated seamlessly to create customized materials that fit the specific needs of our clients. And as an international company, we have the global reach to help them expand their business, with a local presence to adjust their business to fit each country's unique culture and laws".
"We think global, and we act local". Affandy Faiz further added, "Francorp brings to Malaysia the highest franchising standards in the world. Many of those standards have been Francorp's own contribution to the industry. We created the Franchise Strategic Planning process that allows franchisors to define in advance every single subject and activity that will rule the performance of their network, before they sell the first franchise, so as to avoid hasty, costly decisions. Our method systematizes the managing of the system to ensure the quality of the franchisor's services, cost control and optimum operational performance, within the framework of a mutually rewarding relationship between the two parties".
Francorp provides every single service needed to franchise a business: Strategic Planning and Program Structure, Legal Documentation and Franchise Registration, Operations Services and Manuals, Advertising and Marketing Services, Franchise Sales Consulting, Training and Manual as well as Franchise Marketing and Sales Implementation in addition to General Consulting and Program Review.
Francorp regularly conducts a "Franchise Your Business" Seminar, which is highly recommended for entrepreneurs and business owners expiring to expand their business via franchising. This seminar is designed to provide the business owners a better understanding of the costs, time frame and working capital typically needed to grow through franchising. The upcoming seminars will be held on July 18-20, 2004, which will be led by Ramon Vinay, Vice President, Global Development, Francorp International and on September 3-5, 2004, which will be led by the Guru of Franchising, Donald D. Boroian, Founder and Chairman of Francorp Inc. We also conduct special seminars tailor fit to the clients' franchise needs.