Canadian Franchising Magazine Spring 2013, Volume 1 Issue 2 by CGB Publishing

CANADIAN

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F R A N C H I S E E S w w w. c a n a d i a n f r a n c h i s e m a g a z i n e . c o m

VOLUME 1 ISSUE 2

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FINANCING 101

TOP 10

QUALITIES OF A SUCCESSFUL FRANCHISEE

CHOOSING THE BEST FRANCHISE

SOCIAL MEDIA SECRETS

THOMAS FR ANCHISE SOLUTIONS

VALUES BASED LEADERSHIP SUPPLIER FORUM

LATEST NEWS

FINANCIAL ADVICE FROM THE BANKS

TOP LAWYERS’ ADVICE

BUILD ON THE

LEADERSHIP

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RATED THE #1 TRAINING FRANCHISE

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FOR 10 YEARS INCLUDING 2012

Sandler Training is a global network of sales and management trainers with hundreds of training centers throughout the world. Become a Franchise Owner and be at the forefront of a business niche that is growing exponentially, with the support of a pioneer and leader in the training industry.

SANDLERFRANCHISING.COM 800-669-3537 ext. 2005

Canadian Franchising

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CANADIAN FRANCHISING VOLUME 1, ISSUE 2 PUBLISHER:

FROM THE

Colin Bradbury. colinbradbury@shaw.ca

EDITOR: Christie Hall. christie_hall@shaw.ca

SALES DIRECTOR: Vikki Bradbury. vikki.bradbury@shaw.ca

SENIOR SALES EXECUTIVE: Jenn Dean. jenndean@shaw.ca

PRODUCTION: Joanne Tuffy. production@cgbpublishing.com.au

Dusting off Ambitions for Spring

LAYOUT:

Here on the west coast we are fully embracing spring. Outside my office window, I can see a patch of snowdrops, daffodils tentatively poking through the earth, and a tree in full blossom. Spring has arrived! This time of year brings to mind the idea of spring cleaning; a time to clean out closets, scrub the baseboards, wash windows, and do away with clutter that has built up over the winter. I’m not much of a spring cleaner, to be honest. I like the idea of it in theory, but in practice, I’m more of a tuck it all in a closet if someone’s coming over kind of girl. It’s not that I don’t want my house to be neat and orderly, there just never seems to be a good time to make it happen. But when it comes to business, this is a great time of year for growth and change, and even for some spring cleaning. Let’s dust off our ambitions and blow the cobwebs off the goals we tucked away in the closet. It’s time for a breath of fresh air, and new beginnings. If spring has you feeling ready for new challenges, then you have come to the right place. Our spring issue of Canadian Franchising is teeming with franchising ideas that will inspire, and insights that will bring new life to your business goals. Our Expert Advice articles and industry profiles might be just the thing to do away with any leftover winter blues. It’s spring; time for a fresh start. It all begins right here.

Bergdis Design. bergdisdesign@gmail.com

COVER IMAGE: THOMAS FRANCHISE SOLUTIONS

CGB PUBLISHING 676 Wain Rd. Sidney, BC V8L 5M5 CANADA www.canadianfranchisemagazine.com Proud member of the IFA:

SUPPLIER FORUM International Franchise Association 1501 K Street, N.W., Suite 350 Washington, D.C. 20005 Phone: (202) 628-8000 Fax: (202) 628-0812 www.franchise.org

It’s time for a breath of fresh air, and new beginnings.

Christie Hall Editor

The information and contents in this publication are believed by the publisher to be true, correct and accurate but no independent investigation has been undertaken. Accordingly the publisher does not represent or warrant that the information and contents are true, correct or accurate and recommends that each reader seek appropriate professional advice, guidance and direction before acting or relying on all information contained herein. Opinions expressed in the articles contained in this publication are not necessarily those of the publisher. The publication is sold subject to the terms and conditions that it shall not be copied in whole or part, resold, hired out, without the express permission of the publisher.

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31 On the Cover 28 Top 10 Qualities of a Successful Franchise Wayne Maillet 54 Financing 101 for Franchisees Charley Scrivener, Charley Scrivener and Associates Ltd.

66 What’s the Best Kind of Franchise for You? Greg Kopchuk, Action Coach

10 Cover Story Thomas Franchise Solutions: Values Based Leadership 18 50+ Ways to be Part of the “Popular” Crowd Patti Hone As You Like It Marketing & Communication

canadian franchising

VOLUME 1 ISSUE 2

In Every Issue 06

Canadian Franchising News

Industry news from across the country

Women in Franchising Alana Gunn, Two Blonds and a Brunette Gift Co.

Feature Article

Food: Emerging Trends Essential for Your Consideration

Franchisor In-Depth

Right at Home

Franchise Focus Sandler Training

Have Your Say

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Lori Karpman

Canadian Franchising

Expert Advice 12

You Decide: Franchise or Traditional Business Start-Up?

David Banfield, Interface Financial Group

50+ Ways to be Part of the “Popular” Crowd

Patti Hone, As You Like It Marketing & Communication

Building Your Business Culture

Bette Fetter, Young Rembrandts, Inc.

Top 10 Qualities of a Successful Franchise

Wayne Maillet

Journey of Discovery

Vance Meyer, The Entrepreneur’s Source

Termination of Employment: What You Need to Know

Geoff Howard

Financing Your Franchise: The Five C’s of Obtaining Credit

Joseph Pisani, Bank of Montreal

Franchising Affordably and Intelligently

Jania Bailey, FranNet

Building Customer Loyalty

Dawn Taylor, Bad Ass Jack’s Subs and Wraps

Financing 101 for Franchisees

Charley Scrivener, Charley Scrivener and Associates Ltd.

Boosting Your Chances at Franchising Success

Rob Lancit, FranTech Media

Applying Lessons of Life to Your Business

Peter Christianson, Young Drivers of Canada

What’s the Best Kind of Franchise for You?

Greg Kopchuck, Action Coach

Is Reviewing the Franchise Disclosure Document Enough Due Diligence?

Ned Levitt, Aird Berlis LLP

A Lesson to Be Learned

Greg Harney, Shields Harney

Franchisee In Action 48

Liquid Capital

Anytime Fitness Page 5

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PREMIER MOBILITY & HEALTH PRODUCTS EXCEEDS GROWTH PROJECTIONS Premier Mobility Franchise Group Inc. has surpassed expectations and grown to 17 territories in its first year. Company President, Jim Karagiannis, says, “We are delighted by the growth we`ve experienced in such a short period of time. One of many factors contributing to this growth is the unique in-home personalized service from our well trained and experienced franchisees. Customers are thrilled with the convenience and ease of purchasing healthcare products in the comfort of their own home. Our model has been well received by franchise investors looking for a solid investment in a growing market. Premier Mobility Franchise Group Inc. and Franchisees are looking forward to the unlimited potential growth for 2013.” Premier Mobility & Health Products offers a complete comprehensive training program, along with continuous head office support.

Contact: Jim Karagiannis, President at (905) 889-2336 or info@premiermobility.ca for information. You can also visit the Premier Mobility website at www.premiermobility.ca

MISSION STATEMENT To establish Premier Mobility and Health Products as the leading provider of mobility needs in the Home Healthcare industry. Providing superb customer service along with a wide range of proven products, we will effectively satisfy the growing and emerging needs of the Home Healthcare market, while improving the lives for the many we serve.

PAPA JOHN’S ANNOUNCES 2013 DEVELOPMENT INCENTIVE PROGRAM FOR CANADA In an effort to capitalize on its strong North American growth, Papa John’s is offering Canadian franchisees an enticing package of incentives to grow within or join the Papa John’s family. Under the company’s 2013 Canadian Development Incentive Program announced today, qualifying restaurants opening in Canada in 2013 will pay no opening fees ($25,000 value), and receive up to 30 months of reduced royalty payments. “Our brand is poised for continued growth in 2013,” said John Schnatter, Papa John’s Founder, Chairman and CEO. “We are proud to offer this Development Incentive Program to help our franchisees grow with us and deliver our ‘Better Ingredients. Better Pizza.’ to an increasing number of consumers throughout Canada.” The program is generally available for new Canadian unit development agreements signed by qualifying franchisees through August 30, 2013, for new restaurant openings on or before December 29, 2013. The incentives are subject to the complete rules and eligibility requirements of the program at the time of signing a development agreement. Full program details are available upon completion and review of a Franchise Application. Contact: www.papajohns.com

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Canadian Franchising

VALPAK® EXPANDS POSITION IN CANADA Adding Strength in Circulation, Territories

DOGTOPIA ANNOUNCES FIRST INTERNATIONAL DEVELOPMENT IN CANADA Leading Dog Daycare Franchise Targets British Columbia & Alberta for First Step in Expansion Dogtopia®, a leading U.S. dog daycare and spa franchise, announced today plans for its first international expansion in Canada. The company is now seeking regional developers to open locations throughout the country, with an initial focus in British Columbia and Alberta. “Dogtopia is a strong, well-established business in the U.S. with tremendous international growth potential, as pet spending in Canada alone is estimated to top $8.9 billion according to the Pet Industry Joint Advisory Council of Canada,” said Amy Nichols, chief executive officer of Dogtopia. “We are now seeking entrepreneurs to help expand our footprint and serve as local representatives for the brand, ultimately positioning Dogtopia as the leading dog daycare and spa franchise in North America.” Since Dogtopia launched in 2002, it has grown to 22 franchise locations and four

company-owned locations in the U.S., in addition to six locations in development. The company recently entered into a strategic partnership with Thomas Franchise Solutions, Ltd. (TFS), an investment firm dedicated to guiding and growing select unique franchise concepts. “Dogtopia’s year-over-year growth has proven that consumers want to find a safe, friendly, and fun environment for their dogs while they are away, either just for the day or while traveling,” said Peter H. Thomas, chairman and CEO of Thomas Franchise Solutions, Ltd. “With the help of qualified regional developers, we plan to develop locations throughout Canada and look forward to providing more families with an exceptional dog daycare experience.”

Valpak, a leader in local print and digital coupons will expand its print circulation and footprint in Canada, beginning immediately. In collaboration with Valpak of Toronto East, 360,000 additional homes in the greater Toronto area will begin mailing each month starting in April, in addition to the current 80,000 household circulation. “This is the first step in embarking in our collective effort to expand our position in Canada as a leader in print and digital marketing solutions,” said Michael Vivio, president of Cox Target Media, provider of Valpak. “Having a strong presence in Toronto is a key component to expanding our circulation throughout the rest of Canada.” Currently, Valpak has eight franchises in Canada, with a circulation of 7 million households. The Valpak growth strategy calls for increasing circulation by 2.7 million households in 2013, and further increases in 2014 and 2015. In addition to Toronto, other major target markets in Canada that Valpak is seeking for immediate development are Vancouver, Calgary, Winnipeg, Halifax and Montreal. Contact: Todd Leiser at todd_leiser@valpak.com or (800) 678-2743 or visit www.valpakfranchising.com.

Contact: Renee Dee at renee@thomasfranchisesolutions.com or call (480) 330-3737.

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canadian franchising

BETTERBEER.COM BEGINS FRANCHISE EXPANSION

TIM HORTONS Still Has Plenty of Room to Grow in Canada It seems you can’t drive anywhere in Canada without running into dozens of Tim Hortons restaurants. Their coffee is everywhere, their donuts omnipresent and their Roll Up the Rim to Win promotion is one of the most popular in the country. So it would seem like there’s nowhere else for the chain to grow, forcing them to look internationally to expand their business. But while the company has begun an aggressive expansion operation into the United States, there is still plenty of room for them to expand withi n Canada. Tim Hortons began in Hamilton, Ont., and so it’s reasonable that most of their locations are currently concentrated in Eastern Canada. Despite there being 3,435 Tim Hortons locations in Canada, a solid number of Canadians are actually under-served by Tim Hortons. Breaking down Tim Hortons locations by postal code reveals more than 4.5-million Canadians don’t have access to a Tim Hortons in their postal code. That’s nearly 13 per cent of the Canadian population. As Tim Hortons rolls out the Roll Up the Rim campaign for a 27th year, it’s important to note how far the company has come to be a national icon. But looking at the data, it’s obvious the company isn’t anywhere near done yet. Contact: w ww.timhortons.com

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Whitby, Ontario based hospitality services provider, BetterBeer.com® has started to offer its unique franchise across Canada. BetterBeer.com is an innovative, professional and results-driven hospitality service business, providing unique draught beer quality audits, certification and training programs to restaurants, bars and other establishments pouring draught beer; helping breweries and hospitality professionals pour better quality beer, save money and increase sales. Steve Riley, CEO of BetterBeer.com and of only nine Certified Cicerone (Beer Sommelier) in Canada, said “After spending ten years managing restaurants and bars across Canada, I realized that there was no complete solution in the market for the large amount of money that went down the drain in draught spillage. For the past twelve years we have been developing and growing a program that addresses the establishment’s draught equipment and the staff who pour the

beer. We are excited about being able to offer our very exciting franchise across Canada, where our high level of support, training and unique programs will help us to develop quickly and cement ourselves as Canada’s Draught Quality Certification Program. We have already noticed a great deal of interest from across the country – people love beer! We offer a franchise system that is different from all the others on the market – it’s in the beer business.”

Contact: www.BetterBeer.com/franchise.

GOTIRE MOBILE TIRE SHOP PIQUES INTERESTS OF DRAGONS The pitch Business and life partners Heather Murphy and Craig Howes share a strong entrepreneurial spirit and three children under the age of three. The Red Deer, Alta., couple had five franchise territories in the custom window treatments business when they hit on the idea for GoTire, a mobile tire service business they plan to franchise across Canada. They had built and developed each franchise territory separately, then sold them off over six years. “We knew we always wanted to move into the chair of the franchisor because we felt together we had value we could add to develop a system,” Mr. Howes said. Research revealed a service gap that Ms. Murphy and Mr. Howes quickly set about translating into a business opportunity. Mr. Howes hopped on a plane to Britain to look at business models. “There hasn’t been a lot of innovation or

change in the tire industry,” he said. Consumers can purchase tires online via the company’s website or over the telephone. GoTire is a full-service tire shop that comes to your doorstep — whether that’s your place of business or your home or the side of the road. It also offers windshield repair and replacement, and detailing. Within the next three months, several new service lines will be added, which will provide additional revenue streams to the franchisees. Contact: www.gotire.com

Canadian Franchising

MASTER FRANCHISOR FOR MENCHIE’S FROZEN YOGURT IN CANADA SELLS CANADIAN RIGHTS Yogurtworld Franchising Corp, Master Franchisor of Menchie’s in Canada, today announced that Yogurtworld has sold its rights to develop and operate Menchie’s in Canada. In particular, the primary assets that were purchased/assigned/ transferred were the Master Franchise Agreement for Canada, all the signed Franchise Agreements and all Multi Unit Development Agreements with all Canadian franchisees. Michael Shneer, President of Yogurtworld Franchising Corp, stated, “Over the past few years, with restaurants from B.C. to Newfoundland, we have developed Menchie’s Frozen Yogurt into Canada’s only national chain of self-serve frozen yogurt restaurants in the country. We are thrilled that we have been able to achieve this dominant leadership position and we are confident that the new owners will continue to maintain and further build upon our leadership position.” Menchie’s success comes from helping guests create memories in a family-

friendly environment that is warm, welcoming, interactive and fun, providing guests with comfortable indoor and outdoor seating areas, family-friendly music, chalkboards for children to colour on, and party rooms for birthday parties and events. As the only frozen yogurt store that provides toys and giveaways to children, Menchie’s has become every child’s favourite destination. Menchie’s makes guests smile by serv-

ing an unlimited mix of yogurt and toppings at a unique self- serve station with more than 100 rotating yogurt flavors and more than 70 rotating toppings. Contact: www.menchies.com

CARSTAR EXPANDS IN ONTARIO MARKET WITH OPENING OF CARSTAR KINCARDINE CARSTAR Automotive Canada Inc. is

proud to announce the opening of its newest store, CARSTAR Kincardine, located at 441 Broadway Street in Kincardine, Ontario. CARSTAR Kincardine is owned and operated by Scott Rowe, Jamie Rowe and Kim Wheeler. Scott decided to join the CARSTAR network after successfully running his own dealership for close to 10 years. Understanding that in order to maintain the success of his dealership he would have to increase his service offering, Scott believed it was the perfect time to expand his collision repair centre and join CARSTAR. “CARSTAR is a leading collision repair network across Canada and its strong brand presence will be embraced by the community in Kincardine,” said Scott. “After looking at other options, CAR-

STAR was the best choice for us based on

brand recognition, the training programs offered and the strong relationships CARSTAR has established with its key partners. The team and I are eager to begin adopting the processes and systems that CARSTAR offers.” “Scott is one of the most enthusiastic partners I’ve met in my career,” said CARSTAR Executive Vice-President Larry Jefferies. “I think CARSTAR Kincardine will work towards becoming one of our top best in class locations in the Ontario marketplace.” CARSTAR would like to congratulate Scott, Jamie, Kim and their staff on the opening of this new location! Contact: www.carstar.ca

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cover s tor y

Thomas Franchise Solutions

VALUES BASED LEADERSHIP IN FRANCHISING At age 33, I had an epiphany at a Young Presidents’ Organization gathering in Hawaii. Red Scott was the fellow who taught the class. He took us through an exercise of aligning our daily activities and goals with our values.

I When your values are clear your decisions are easy. PETER H THOMAS

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realized that hardly anything I did aligned with what I was truly passionate about, what I stood for. That’s when I made the pivotal decision to bring this new way of thinking into my life. I attribute much of my personal and business success to this philosophy, which I have refined over the years and decided to share with individuals around the world, from all walks of life, through a four hour program that I teach called LifePilot. Being grounded in my values is what ultimately helped me over the loss of my son Todd to suicide in 2000. Nothing comes close to the loss of a loved one. Even when one of my partners declared bankruptcy on national television and I saw my net worth dropping from $150,000,000 to some minus $70,000,000 virtually overnight, it was nothing compared to losing Todd. Money can always be made again. Through this experience I had to rely on my values and what was really important in my life – Health, Happiness, Freedom, and Integrity. In my travels over the past decade, I had come to realize that entire economies are driven by small businesses. Indeed, I believe small business is where the opportunity lies for the future, especially since North America is not a manufacturing economy anymore. But small

business people hate risk and volatility, and that’s why so few people actually start businesses, and why so many of them fail. Franchising can “fix” that. Why? Because a franchise is a business in a box. If you follow the guidelines set out in a Franchise company’s Operating Manuals and through the training programs you receive it is very difficult to fail. A franchise is an amazing opportunity for entrepreneurs. Just imagine you have a partnership with a group who only get paid if you make money and the split is usually 93 percent and 7 percent, with the franchisee receiving the 93 percent. If a franchisee hired one full time executive that alone would cost them $100,000 per year. With a franchise they have the value of several very knowledgeable executives who again only get paid if the franchise is successful. I have always thought that was a pretty amazing deal. As a franchisee, you may be a small business, but if you follow the predetermined plans and goals set by the franchisor, you will succeed. Franchisees who do their diligence well are buying into a replicable business model with an operations manual, a training program, and a Franchise Disclosure Document (FDD) that tells them where the risks can be. You wouldn’t dream of buying a franchise

Canadian Franchising

As a franchisee, you may be a small business, but if you follow the predetermined plans and goals set by the franchisor, you will succeed.

whose FDD did not also contain the final Article 19, or the franchisor’s financials. At this moment in life, one of my goals is to minimize risk both for myself and for my partners. When I took a look at getting back into business, I looked at the real estate business first, because I’ve been in it before. But it’s a big player’s game now, much more volatile, and controlled by forces outside of myself. In the stock market, the same was true. There, if I invested my money, I have no control whatsoever, and I could get whipsawed by the ups and downs that had nothing to do with how good a business person I am. Everything led me back to franchising. Stable, almost immediate cash flow. Very sustainable. And sellable as an exit strategy. As I dug deeper into the opportunities that investing in franchising brings to an

investor I found two remarkable factors taking place in the franchise world. First was the introduction of Private Equity into the funding game. Until a few short years ago the only money available was money from banks and we all know that banks are not the place to go if you need money. Now each city has their “Private Equity Players” and these folks are getting very hungry for good, well executed franchise opportunities. The second unique difference from a few years ago is the dramatic effect technology has played, is playing, and will play in future franchise opportunities. Even in our Dogtopia Day Care Centers all over, we can, through the internet and with cameras, let the doggies’ owners view their pet 24/7. This factor alone creates a very compelling selling proposition. Thomas Franchise Solutions’ business

model reflects my values-based leadership style. I can invest money in companies whose values align with ours, and help them grow. That in turn is a good way to help other people develop small businesses that really work for them. Thomas Franchise Solutions was founded to invest in many brands, of which Dogtopia, a dog day care concept, is the first. We are just starting to grow that brand, and still looking for other brands to help. TFS looks for companies who have a proven franchise model and are looking for funds to grow and expand nationally and internationally. We have the sales force in place to do that. We are not looking to invest in start-ups at this time. Each of the brands that pass our scrutiny will have the best practices brought to it by my experienced team. We refuse to let any of them fail. When we start to help a brand grow, we will make sure it has its infrastructure in place to support its growth, and that it can successfully create businesses and jobs for thousands of people. PETER THOMAS, of Thomas Franchise

Solutions, has a business background rooted mainly in real estate, as both a developer and lender. He recently came back to the business world after a ten year retirement spent writing a book called “Be Great,” and starting both a foundation and a leadership skills program called Life Pilot (www.lifepilot. org). Thomas Franchise Solutions invests in values-based franchise opportunities, helping others bring their ideas to fruition. For more information: www.thomasfranchisesolutions.com

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expert advice

David Banfield, President, Interface Financial Group

YOU DECIDE

Franchise or Traditional Business Start-Up?

Many of us have considered expanding our career horizons and branching out on our own, but making this a reality is often more difficult than it first appears. There are many factors to be considered and many decisions to be made. What kind of business are you looking to build? How will you find the support you need? Where do you start? For many, the answers lie in franchising. So why consider a move into franchising? Firstly, it’s significantly less risky. Numerous studies have shown that while the failure rate of independent startups in the first 5 years is very high, the comparable number for franchises that fail in that same period is very low. This is often due to the established history that a franchised business can offer. Reputable franchises with a longstanding history have proven that they

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have a successful business model and are, therefore, more likely to appeal to both investors and consumers; meaning that those opening a franchise already have an advantage over their independent competitors in that their business is already, from day one, ‘tried, tested, and proven’. You also need to consider that the support available to franchises often surpasses that which is available to independent entrepreneurs. With support in areas including training, problem solving, finance and even advertising and marketing, franchisees can feel safe and secure in the fact that they are never alone. This backing falls across all areas of the business, so when you take into consideration that those who set up on their own rarely receive any assistance in these areas, it’s no wonder that so many independent businesses fail before they’ve even celebrated their third birthday. Independent entrepreneurs, no matter how enthusiastic they are, are seldom experts in all aspects of starting and running a business. Of course, there are several advantages to setting up your own business that are worth taking into account. As an independent trader you are free to make all of your own business decisions, and don’t need to conform to the guidelines that are sometimes put in place by franchisors. You will also have more of an opportunity to pursue your own ideas and enjoy the flexibility that comes with being your own boss. In many cases, however, this is equally as true of franchising, sometimes even more so. While those managing an independent business may be concerned with challenges such as making a

name for the company, franchisees are often able to take on as much, or as little, business as they feel comfortable with. In many instances today franchises are crafted so that franchisees can in fact run separate businesses alongside their franchise thus creating multiple revenue streams. One good way to determine the pace at which you should be working is to consider where you are in your career. A young ambitious entrepreneur may be keen to put more time into the business

Canadian Franchising

than someone approaching retirement, but the right franchising model can work for both demographics. That may not be true of an independent approach to a new business. Another advantage which franchising holds over setting up on your own is the ability to resell. When it comes to reselling, potential buyers are proven to be more interested in purchasing a franchised business. This is mainly due to the fact that, in most franchise situations, customers are loyal to the business, not the individual. All in all, it seems that setting up your own business has few benefits that cannot also be achieved through purchasing a franchise. Itâ&#x20AC;&#x2122;s really a case of weighing up the feeling of complete control and creativity that comes from starting a business from scratch against the sense of safety, security, and that all-important dedicated support network that a franchise has to offer. So, whether you are determined and ambitious or looking to transition into re-

Numerous studies have shown that while the failure rate of independent start-ups in the first 5 years is very high, the comparable number for franchises that fail in that same period is very low. tirement; if you have a desire to advance your career without losing support and security, then consider franchising as the career path for you. DAVID BANFIELD received his profes-

sional credentials in banking and credit management in the United Kingdom, where he held positions in both the banking and factoring industries. In 1975, after fifteen years of service in various sectors of banking operations, David was appointed Vice President and Manager of Mercantile Bank & Trust Co. Ltd. From 1978-1986, he was Vice President of Walter E. Heller Financial Corp. He was

subsequently named President of Interfax Financial Services Limited, a position he held from 1986-1990. David was named President of the Interface organization in 1991 and has played a significant part in the successful development and growth of the Interface organization. For more information: www.interfacefinancial.com

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expert advice women in franchising

Two Blonds and a Brunette Gift Co.

REVOLUTIONIZING THE GIFT BASKET

Alana Gunn has two major criteria for her company’s products. Unique, and quality.

s a franchisee, owner, CEO and President of Two Blonds and a Brunette Gift Co., those two words define each and every item that makes an appearance in the company’s selection of unique and luxurious gift baskets. No questionable cheeses or processed meat products here. Alana’s baskets, and those of her franchisees, are home to only the finest treats, treasures, and tidbits. In the winter of 2002, there were, in fact, two blonds and a brunette who decided to transform the world of gift baskets by using tasteful and clean packaging, and filling their baskets with a selection of high-quality items, handpicked and personally tested. They saw a hole in the market, and decided to fill it by creating gift baskets that they would have been happy to receive. In the process, these women built a unique business that has made quite a name for itself.

The Baskets

The concept is simple. From a home office or non-storefront warehouse space,

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franchisees build tasteful and chic gift baskets with products ordered from an approved list of items ranging from Hand Cut Tahitian Vanilla Marshmallows and Aussie Green Apple Licorice, to French Lilac Soy Candles and Lemon Meringue Bath & Shower Gel. Franchisees order their stock and build gift baskets for a variety of themes including Corporate, Girly Girl, Manly Man, Bath & Body, Funky Baby, and Gourmet Food. Each franchisee has an online ordering system, so clients can see what is available and select the pre-designed gift basket that best suits their needs. Or, custom baskets can be created. Two Blonds and a Brunette Gift Co., or 2B&B as they like to call themselves, serves clients across a range of demographics. Corporate clients, varying from large corporations to small businesses, appreciate the ease with which a tasteful and appropriate gift can be selected and delivered. Individual clients appreciate the personal touches involved with the creation of a special basket. 2B&B

has also gained a reputation among the Hollywood set. Talent agencies recognize the unique and chic offerings at 2B&B and send baskets to their clients working on location in Canada and the US. On the lucky list of recipients: Luke Wilson, Zooey Deschanel, Bill Paxton, Kristin Cavallari, Matthew Goode, Piper Perabo, Rob Schneider and Paul Walker. Oh, if these baskets could talk!

Multi-tasking

Alana Gunn wasn’t one of the original three women of 2B&B, but she was the first franchisee to sign on to the franchise concept. With a background in Marketing and Communications, being an entrepreneur is a natural fit for Alana, and as the company evolved, with the original women re-locating and interests changing, Alana had the opportunity to take over ownership of 2B&B. Currently Alana runs the head office of 2B&B, while managing her own franchise. Time management is the key to maintaining a healthy work/life balance

Canadian Franchising

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women in franchising

Alana Gunn of Two Blonds and a Brunette

Believe in your product. Be passionate and love what you do.

while juggling the many demands of the business. Alana’s job is not a regular 9-5, and the flexibility of setting her own hours allows this mom of 13 years to wear multiple hats on any given day. She loves being her own boss, and having the freedom to come and go as needed. Alana prides herself on never missing a game or a function where her kids are involved, and she can be home to make dinner at the end of the day. That’s not to say the job doesn’t come with its challenges. The nature of the gift basket industry is that it is seasonal. During the busy winter holiday season, Alana spends a lot of time in her basement work area, steadily creating beautiful gifts on behalf of her clients. There are times when communication with her family takes place through the heating vent between floors. There are days, Alana says, that having the kids clothed and fed is paramount to success. Alana receives significant business support from her family. As a successful chiropractor, her husband is a good source of business advice, as are her mom and step dad who run a research firm. Her grandparents owned a bakery that is still in business after 70 years with her father at the helm. Alana also uses her personal business background on a daily basis. Previous to buying the company, when she was a franchisee only, in an average week, Alana spent three days marketing and making contacts, and two days building baskets for her clients.

Passion for Product

One of Alana’s very favourite baskets in the 2B&B regular line-up is the Charlotte. Named after the Sex and the City character, this Girly Girl basket really is everything a girl could hope for. The description reads: “The quintessential girly gift! A glamorous and Girly Hatbox adorned with Pink Boa and filled with fabulously fun treats, necessities, and

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luxuries, including Belgian Chocolate Sushi, Old-Fashioned Peppermint Chews in keepsake tin, Cinnamon Spiced Pecans, French Chocolate Caramels, Enrobed Cafe Latte Morsels, Leopard Cocktail Napkins, Sniff Stiletto Tissue, Martini Shaker and Glasses, Designer Photo Album and luxurious Hand-Poured Soy Candle. A girly girl’s dream gift.” Another memorable and all-time favourite basket was a custom football-themed basket with a five hundred dollar budget. There are eight 2B&B franchisees in locations across Canada. Franchise locations are currently available wherever there is an open territory, but Alana specifies that the west coast is a particular area of interest they would like to see filled. Joining the 2B&B franchise is about more than just gift baskets. The Cupcakes Apron campaign, for example, is something that Alana says everyone in the company is especially proud of. While it’s not a gift basket, the Cupcakes Apron fits the standard of the other 2B&B offerings. A gorgeous lingerieinspired apron, white with pink satin ribbon, is a must have for every diva in her kitchen. A portion of the proceeds

from each apron benefit breast cancer education, research, and support. 2B&B looks for opportunities to give back to the community, and will have fun doing it. Fun is a big part of the corporate culture of 2B&B. With such a small number of franchisees currently, they get to know each other well. Their conference calls, are a lot of fun, says Alana, and not to be missed. But before you join the 2B&B franchise, or any franchise, Alana has the following advice. “Do your research. Be comfortable with the franchise model. Understand the role that you’ll be playing as a franchisee.” And most importantly, “Believe in your product. Be passionate and love what you do.” If you have a creative, entrepreneurial spirit, the drive to build your own business with the support of an established franchise system, and an appreciation for unique quality gifts, Alana Gunn of Two Blonds and a Brunette Gift Co. would love to hear from you. For more information: Email: alanagunn@twobandb.com www.twobandb.com

With a range of mobile platforms for any device, when potential franchisees search for new possibilities, theyâ&#x20AC;&#x2122;ll find you here.

Contact Jenn Dean, Senior Sales Executive, for global solutions on your multi-media advertising approach. Email: jenndean@shaw.ca Phone: 250-590-7116

www.canadianfranchisemagazine.com Page 17

expert advice

Patti Hone, President, As You Like it Marketing & Communication

IS YOUR FRANCHISE BEING ANTI-SOCIAL?

50+ Ways to be Part of the “Popular“ Crowd

Marketing research shows that it takes seven to 30 “touches” to make a sale. That can add up to a lot of $$$$ in traditional marketing, so supplementing with social media is a good idea. How can I use social media to REALLY make a difference for my company? Try using tips; how-to videos; interviews; Q and R’s; and blogs. Facebook is perfect for sharing media content and engaging in conversation with customers, while Twitter is perfect for sharing tips, sharing links and posing questions to your customer base.

What social media can do:

Never before has it been possible or affordable for small and mid sized companies to be able to use the same marketing tools as the major corporations. Social media is as accessible to single unit owners as it is to international chains. Social media offers a conversational, low pressure way to remain in the forefront of a potential customer’s awareness and can keep existing customers engaged and informed to offers, product launches and store openings. Social media shouldn’t be used to send out a barrage of buy now messages but as a way to engage and educate the customer and convert and retain their business.

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• Raise your visibility to clients, prospects and media, • Help you stay in touch with clients with more frequency, • Enable you to connect with people all over the world at a fraction of the cost of traditional marketing, • Improve your search engine visibility/ rankings, • Create more opportunities for bloggers, reporters, media, etc. to find you and your products in order to endorse and promote them and, • Build your data base of prospects, customers and supporters creating a more extensive sales funnel

Blogs

Content is key in the blogging world. In fact blogs have created real competition for traditional news media like magazines and newspapers as most blog writers have a personal edge to their content as well

as a passion for what they are writing about. This has made blogs popular with customers who are looking for information straight from the source. Think of a blog as an easy to update website that you can share information, videos, photos and create a dialogue with your readers.

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Why blog?

• Its easy to use and easily updated so you can add new content faster than updating your website, • Your blog can highlight information you may have used in articles, presentations and speeches, • Your blog will give readers an idea of your companies mission and vision as you comment on trends and the market-

place, and blogging gives your brand a personality,

Considerations Prior to Blogging

• Make your blogs “helpful” but don’t sell (readers don’t want to be pitched, they want advice, insight and relevant information). • Put a link to your blog on your email signature.

• Make sure your brand is consistent with the look and feel of your blog. • Write about what you know; establish yourself as an expert. • Keep your blog professional but give it personality. • Let your data base of customers know you have a blog; send and email blast inviting them to follow you. • Keep your blog current; your updates

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expert advice

Patti Hone, President, As You Like it Marketing & Communication

may only be a paragraph long but they need to be done regularly or readers will fall off quickly. • Use links to your Facebook and Twitter accounts. • Understand that blogging is about adding value to your customers so ensure that what you write connects with their needs and interests. • If writing a blog seems a daunting task, use a ghost writer or create a series of posts well in advance and schedule the updates on a regular basis.

Facebook

• Share tips, links to articles, short videos and audios to enhance your credibility and increase your exposure. • Meet new people and keep in touch with existing clients and prospects, • Find and renew connections with colleagues you’ve lost touch with. • Invite your “friends” to events on-line and in real life and then post audio and video footage of the events afterwards. • Make sure you post your facebook address on your website to invite visitors

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to join you online. • Use Facebook’s photo feature to showcase your products and locations. • Post answers to questions on other sites to help build a reputation as an expert and to add credibility to your own site. • Keep your Facebook site up to date with an RSS that automatically posts your blog, twitter and pod casts. • Answer any customers questions on Facebook, whether they originate from an email or Twitter as it will help foster conversation. • Brand your page so it is instantly recognizable, and post photos of products, menus, locations, events and promotions. Pictures tell a story better than any words can. Facebook has many applications available to help promote your business. One popular application is Events. This is a free application that enables you to promote an event. When you create an event it has its own page, wall, photos, etc. You can invite customers and potential franchisees. They are asked to RSVP. If this

is not a “private” event, encourage others to invite their friends. This will increase traffic to your site and get your message in front of more customers very quickly. Additionally, there are applications that can enable you to take reservations for your restaurant through FB: enable you to share project documents and schedule meetings. Many of these cost extra but can be very useful tools if used correctly

On linkedin, the goal is to strengthen connections with people you already know, even if you don’t know them that well. In fact, you are not allowed to invite strangers to link with you without an introduction. Linkedin’s strength is the power to connect, refer and recommend others. Only people who you accept as a connection can view your other contacts…its like sharing your business email address list with them, so make sure you only connect with people you trust and that you think will further your business and not steal it!

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Social media is free in terms of not costing money to sign up for sites like Facebook , Linkedin and Twitter, but its certainly not free in terms of the time it takes to put social media marketing strategies into action. How it use Linkedin to promote your business: • Create a profile that promotes your experience and expertise, • Be generous in giving recommendations and ask you contacts to do the same for you, • Join groups and add value by participating (these “virtual” chapters of professional associations are great sources for connections and exposure), • Let your contacts know what kind of new projects you’re doing as well as what you would “like” to be doing, • Reconnect with old colleagues and associates to broaden your base of connections, • Use the link applications available to ensure your tweets, blogs and videos are automatically updated, • Keep your profile current and professional, • Use the six degrees of separation indicator to encourage your connections to refer you to others, • Create a “group” that ties into your companies loyalty program (customers and suppliers are then kept informed and tied in even closer to your business), and • Encourage employees and franchisees to use Linkedin in order to increase your SEO rankings.

Twitter

Twitter posts are a public domain and anyone can see them at anytime now or in the future. Like any form of marketing, twitter posts reflect your brand and your reputation so before you tweet, make sure what you are saying has meaning and benefits to your company. Unlike Facebook and Linkedin, people “followers” can connect to you without being invited or approved, so whatever you share “tweet” you must remember that anyone

and everyone who wants to can read what you have said. The key to using Twitter for business is think about what you can share to your customers and prospects in 140 characters or less that will interest and engage them and keep them following you: • Share tips on saving money, staying healthy, marketing, etc. related to your area of expertise, • If you have any articles published, send a teaser tweet that includes the preface to your article and a link to the rest, • Send links to coupons and offers to your followers to keep them engaged, • If you have daily specials, send out daily tweets, • Monitor your competitors, • Set up searches for keywords related to your brand so you don’t miss a customer complaint or compliment (and react and act quickly to customers needs as close to real time as possible), • Re-tweet when others talk about you, • Make sure your Twitter profile has some wow factor (you only have 140 characters so only include info that will set you apart), and • Remember, twitter is a constant stream of information so not everyone who is following you will have a chance to read every tweet you send. You may need to tweet more than once or twice a day in order to reach your entire audience.

your social media strategy will pay in dividends. Using these readily available and simple tools will keep your company top of mind and popular with customers, franchisees and media. Don’t be afraid to share with others and engage in conversation. Being social will increase your popularity and your bottom line. Don’t be a social wallflower, with a simple plan and readily available tools your too can be part of the popular crowd. With over twenty years of advertising experience and a proven track record, Patti provides As You Like It¹s clients with complete marketing and communications services. Patti began her career as a copywriter before undertaking the position of Marketing Director for a national chain of drug stores. On the agency side, Patti specializes in retail and franchise accounts, where her creative campaigns have won eighty international advertising and marketing awards for her clients. In addition to managing and directing all agency projects, Patti served on the Board of Directors of the Canadian Franchise Association for seven years and is past chair of the Franchise Support Service committee. Patti is a popular writer and speaker and has been retained by companies across North America to bring their brands to life. Patti is proud to celebrate As You Like It’s 15th year in business. For More Information: http://www.asyoulikeitmarketing.com

Social media is free in terms of not costing money to sign up for sites like Facebook , Linkedin and Twitter, but its certainly not free in terms of the time it takes to put social media marketing strategies into action. You won’t automatically “get more business” just because you have a Facebook page or Twitter account. It requires constant attention, updating and monitoring. Nurturing

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expert advice

Bette Fetter, Founder and CEO, Young Rembrandts, Inc.

Building Your Business’ Culture management and employees. Things like hiring practices, employee relations and everyday communication are all part of the company’s culture. The business culture an owner establishes can be positive or negative; intentional or unintentional but ultimately plays a significant role in the success of the business. These are some of the ways a businesses culture can affect performance:

Successful Staffing

As a new business owner you have the opportunity to decide what level of communication you want to implement. For many of us, buying a franchise can fulfill the dream of becoming our own boss. Franchises provide new business owners with an established system, eliminating guesswork and many of the errors start up businesses often face. While franchises come with an established brand, marketing strategies, technology tools, training and support; there are still opportunities for the new business owner to make his mark in the corporate culture he or she creates. After buying a franchise, the new owner will be immersed in rules and ‘how to’ manuals for running the business. But a businesses culture is less about the rules and more about how the owners think, feel and act while implementing those rules. These attitudes are expressed in the written policies and procedures implemented at the unit level, but also by the unwritten, often unspoken, actions of the

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When you understand your own culture, you can be very intentional about hiring people that align with your needs. Along with assessing a candidate’s knowledge, skill and abilities, you’ll want to look for characteristics that demonstrate that their values are in alignment with the culture you want to create. If you’re team oriented in your approach, you’ll look for people with a collaborative nature. If you prefer self-reliant individuals, hire employees that have experience working independently. Hiring personnel that are well suited to your company culture means increased job satisfaction, lower turnover rates and a stronger chance for success.

Policies and Procedures

Franchises come with policies, procedures and best practice recommendations. That’s good news for a start up business owner, but the way you execute and enforce those policies is a key part of your culture. For example: many franchise systems provide guidelines for the work attire of employees that have direct contact with customers. In these situations, the franchisee’s implementation, encouragement and follow up on dress code procedures impacts the success of the program overall. This applies to your attitude on all the systems and procedures recommended by your franchisor. If you value them and see how they affect your

product, profitability and success of stakeholders, your employees will follow suit.

Communication

The way organizations share information varies enormously and can dramatically impact employee morale. As a new business owner you have the opportunity to decide what level of communication you want to implement. Do you want to create an environment where people feel well informed and an integral part of the team? Or would you prefer to keep people focused on the task at hand while you keep the information to yourself? Do

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your employees know enough of what’s happening and what’s coming, so they can work effectively with the customers? Or are they just as surprised as the customers when changes are made or polices aren’t implemented? Whatever communication style you choose; understand it has a direct impact on the success and potential failure of your business.

Emotional Climate

As a leader, do you rant, rave and shout insults when mistakes are made? Or do you keep calm and collected: able to assess the situation and people involved?

Whatever communication style you choose; understand it has a direct impact on the success and potential failure of your business. When the culture dictates calm, cool and collected, employees are safe to admit mistakes and seek direction, leaving managers to see where retraining or new procedures are needed. Feeling secure in the workplace has a profound effect

on employee morale and directly affects interactions with customers.

Employee Relations

Along with creating a safe environment, corporate culture is also reflected by the

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expert advice

Bette Fetter, Founder and CEO, Young Rembrandts, Inc.

way you regard employees. All too often people live in corporate America feeling disposable, undervalued and even invisible. As a leader you have a choice about how the people in your organization feel. You can choose to reward employees for excellence or even valiant attempts. You can share the wins, announce victories and celebrate successes. When positive behaviors and outcomes are celebrated, it results in increased solidarity and a willingness to pull together in the good times and bad.

Is The Customer Always Right?

Sadly we have all experienced that unreasonable, inconsolable customer. But what’s important is how we respond to challenging situations and how we equip our employees to respond. Thorough training in business operations prepares staff in best practices and procedures, but how will they respond in unusual circumstances, the situations not covered in a training manual? Your company culture sets the tone for the employee - customer relationship. How will your employees know when to seek input from management? How will they know when things have crossed the line? Is it safe for them to seek input from management? Will you use them as a scapegoat or will you have their back in extreme circumstances?

Share the Vision

It’s important to tell people where you’re going as an organization. Paint the big picture. Share your vision for the business. Be as transparent as you can as a business owner. Do you want to be the top producer in the region? Do you want the highest score in customer satisfaction? The more your team understands your goals and objectives, the more successful they can be in helping you achieve them. Your level of sharing and communicating the company’s vision can mean the difference between a scattered group, pulling in different directions; or, a team focused on success, all rowing towards the same goal. As a franchise owner, you have the opportunity to create your own company culture. When you purchase a franchise you are choosing to start a business, ripe with experience, proven business systems, marketing, training and support. But as the business owner, your personal-

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ity and influence are an integral part of the equation. As you work to establish the culture of your organization, you can recreate a great experience you had in previous work experiences; or you can correct a bad experience, by making yours the kind of place you always wanted to work. Either way, you have the opportunity to make your business a place people want to be – where employees matter, where their voice is heard, where they can contribute, where they know their success is your success. Whether we realize it or not, corporate culture exists in every organization. Think about what you want to create, understand the affect it will have on business outcomes and be intentional about crafting a culture that sets you on the path to success for yourself and the people on your team. BETTE FETTER, Founder and CEO of

Young Rembrandts, Inc. and Author of Being Visual, began her career as a professional artist with a Bachelor of Fine Arts degree from Northern Illinois University. Through her education, participation in various forms of the arts and

experience with Montessori education, Bette gained first-hand understanding of the value of the arts on developing young minds. Her passion for the arts and early childhood education led Bette to develop Young Rembrandts, a unique teaching methodology focused on developing foundational art and drawing skills in young children. Bette franchised her business in 2001 and what began 24 years ago with eight kids at her kitchen table now reaches tens of thousands of children nationally and internationally. Young Rembrandts Inc. has a presence in the US, Canada and international countries; Germany, South Korea, Saudi Arabia and Jordan.After 24 years of teaching and developing art curriculum for kids, Bette shares what her experience, clinical research and educational experts have to say about the value of arts on early learning development for children. In her recently published book, Being Visual, Bette illustrates the value of right-brain, visual-spatial thinking and its relation to much needed innovative thinking. For More Information: www.youngrembrandts.com

COMES ACROSS THE BORDER TO CANADA

I Last year Michael Martino, a retired businessman, encountered a business opportunity too promising and too close to his heart to let pass by.

n the recent past, Michael learnt first hand how overwhelming it can be to unexpectedly have a family member encounter an unexpected health issue. Complications with cancer recovery affected the mobility of Martino’s wife, “For a number of years I have assisted her in doing a number of things to maintain her quality of life. Having experienced this first hand, I know what a difference it makes to have support.” Michaels career involved numerous roles in the business community where he served for over four decades as a lawyer, chief executive officer, senior consultant and, notably, Chairman of the Board of the Canadian Franchise Association. Prior to retirement Michael was serving as the founder and chief executive officer of Mailboxes Etc. in Canada and the CEO of Mailboxes Etc. in the United Kingdom and Ireland. “After I sold Mailboxes Etc. Canada, a mature 300 unit franchise system, in April 2003, I decided to stay involved in business on a part-time basis,” said Michael. One of the tasks he adopted was President of a condominium association, “Two thirds of these people were women living alone in their early to mid eighties. They were all tussling with their living arrangements. Many of them were having mobility issues, daily activity challenges, and other basic struggles that made it tough to stay in their homes. It hit me; a service that helped these women stay in their homes was greatly needed.”

The Full Spectrum of Care

That’s when Michael’s business-oriented mind started turning. Canada was lacking a good company that presented

options for the full spectrum of care services. Right at Home, a business whose roots were in Omaha, Nebraska, started in 1995 and began to franchise in 2000. Michael knew this was a market that was unarguably continuing to grow thanks to our aging population and baby boomers entering into the retirement phase of life. Not only that, but these services are ones that would be valued and needed regardless of the wavering economy. “The government is struggling to fund health care in our country. Eventually, what will happen is, our Federal and Provincial governments will download a lot of private enterprises to take care of people within their homes,” shared Martino. This download to the private sector is already happening in certain provinces. So, in 2012, Michael purchased the Right at Home master license for Canada. “We’ve been in business for just over a year now. Our first Area Franchisees and area-Operating Unit is in Burlington Ontario. It’s also where our home office is,” shares Michael. Care comes in many forms with Right at Home. The company emphasizes passion, patience and true quality care. Right at Home understands that this is a people business and that aging or care scenarios are unique, affecting every family and each person differently. They are keen to listen and treat their customers like members of the family. The list of services offered is extensive. Right at Home offers companionship, personal care and hygiene, nursing and therapy, Alzheimer’s and Dementia care, hospital discharge programs, disability assistance, and hospice/ palliative care support to name just a few. At this point in time, Right at Home

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f ra nchisor in depth

Right at Home

fexpert ra nchisor advicein depth

Right at Home Canada, Michael Martino

seems to be the only business of its kind in the marketplace offering every care service a family could require. “Our customers don’t have to look around for different services. We have a great continuum of services and a strong team: strong affiliations with the medical and health community and a strong executive team with years of experience,” explains Michael. “We expect that a huge source for our success will be attributed to the fact that we do offer it all. This calls for more specialized training, and health care professionals must be our employees. So we have to staff ourselves a little differently, but I think it’s worth the effort because five years from now the successful people in this business segment will be whole home health care companies.”

A System Built for Success

Right at Home Canada is growing first through Area Franchisees, followed by Unit Franchisees building out the geography of the Area Franchisee’s large Area. Right at Home Canada has sold two Area Franchises, the Greater Toronto Area and Southern Ontario respectively. They are looking to find eight additional Area

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When you put us around a table, all you see are big smiles and big hearts.’ We work together as a family and as a group. It’s indicative of what we’re trying to communicate to the communities we work in and the clients we serve.

Franchisees: one for all of BC; one for all of Alberta, one for both Saskatchewan and Manitoba; one for all of Western Ontario; one for all of Eastern Ontario; one for Montreal and West of the River; one for East of the River and Quebec City; and one for all of Atlantic Canada. “Our expansion program is not an Area Developer model,” shares Mark Goliger, Chief Operating Officer. “Franchisors who expand by an Area Developer model are only interested in a warm body and franchise fees. We are expanding through Area Franchisees, a concept of tried long-term motivation. Area Franchisees operate their own Unit Franchise in addition to mentoring all the other Unit Franchisees that make up their Area. Through operating their own Unit, the Area Franchisee becomes a true expert and a better mentor. This is important as the Area’s mentorship, field training and support, lead to Unit success,” continues Mark. “Part of the Unit Franchisee’s franchise royalty is shared with the Area Franchisee, creating a tied motivation. We want the Unit Franchisee to succeed, which is how the Area Franchisee and the Master Franchisor succeed. You have

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heard of win/win, well this is a triple win,” laughs Mark. Area Franchisees will be very accessible and an important source of knowledge and support for Franchisees within their area. The Master Franchisor produces new programs and initiatives and the Area Franchisee helps the Unit Franchisees to implement the system and anything new with the regional considerations in mind. “You can’t be inflexible with your system. We respect that each Canadian region is slightly different. The key is communication; listen to your Area Franchisees and Unit Franchisees. After all, they are your partners and they are in the field,” says Mark Goliger. Who are Michael and the Right at Home team looking for? Right at Home franchisees come from a wide variety of educational and business backgrounds ranging from successful business owners all the way to engineers. There really is no ideal background. But there is an ideal owner: someone who wants to help individuals and communities. Right at Home recruits franchisees that understand the value of a good system. Their operating systems are proven to help local Right at

Home owners grow their business. If you’re considering any role within a Right at Home business, it doesn’t take long to discover it’s more than an average job. “To me, the easiest way to summarize not only our corporate culture but our promise to our clients, is we have a very family based approach at Right at Home. We are acting as an extension of the families we serve. We have very open door policies: nothing is too great to ask us. At a corporate level, we say, ‘When you put us around a table, all you see are big smiles and big hearts.’ We work together as a family and as a group. It’s indicative of what we’re trying to communicate to the communities we work in and the clients we serve,” explained Dani DiPetrello, Vice President of Health Care Services. After multiple decades in the business world, Michael really emphasizes the importance of relationships, “To me the lesson I’ve learned more than anything else, is it’s all about partnership. It’s a question of working together in a spirit of partnership. We call it a franchise but everyone has a job to do. Franchise business is all about belief and trust in one

another and is dependant on both parties working together to do what needs to be done to be successful.” This passion and understanding trickles down through the entire company and is the source for much of Right at Home’s family-focused culture. Right at Home is a new franchise for our country and it’s one to take note of. Michael intends to materialize his vision of expansion into a national force over the next five years. For many people, supportive in-home care is the best solution for comfort, safety, independence and loving family relationships. Right at Home promises peace of mind for the family. Michael was proud to share, “This is a feel good business. We strive to provide the best experience possible, because our customers expect nothing less. This is a company that believes in caring from the heart. This cannot be taught. Right at Home has a passion for caring.” For further information please visit the Right at Home website at, www. rightathomecanada.com. Mark Goliger can be reached at (905) 331-4663 or mgoliger@rightathomecanada.com.

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expert advice

Wayne Maillet, President, Franchise Specialists

TOP 10 Qualities of a Successful Franchise know that their success is dependent upon them. Successful franchisees will hold themselves accountable through business plans and goal setting. If things are not going according to plan, successful franchisees take responsibility and make adjustments to get things back on track, rather than placing blame, making excuses or being in denial.

ver the years great franchise companies have become more selective in whom they grant franchises to. Strong franchisors know the qualities of successful franchisees and will watch for them as they recruit new franchisees into the system. They might do this through interviews, aptitude tests and/or observation. Franchisors recognize that no one is perfect. They are motivated to identify your strengths and weaknesses so that they can guide you to fully utilizing your strengths and coach you to hire employees who will offset your weaknesses. Below are the 10 qualities that are most commonly found in successful franchisees. Rate yourself and see how you compare.

OWNERSHIP, ACCOUNTABILITY AND RESPONSIBILITY Successful franchisees take ownership for their own success. They rely on the franchisor for support and assistance. They will seek input possibly from the franchisor and other franchisees, but

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WILLINGNESS TO FOLLOW A SYSTEM Successful franchisees are committed to following a system. They recognize that a brand is created through consistency and that there is a need for all franchisees to follow the franchise business model. Some individuals are too entrepreneurial, not willing to adapt but instead want to do their own things. These individuals are best to open an independent business. Successful franchisees are team players, knowing that the brand is created through uniformity and the customer having a consistent experience, no matter which location they are at.

CUSTOMER SERVICE FOCUS Building a profitable business is all about getting and keeping customers, while maintaining adequate margins. Successful franchisees have a high desire to provide exceptional customer service. This is how you build a long term viable business. It is far easier and more impactful to have existing customers coming back more often, buying more products and services, than trying to get new customers.

LEADERSHIP/ MANAGEMENT APTITUDE Successful franchisees have the ability to get things done through others. Although the franchisor can teach you management skills, it is your attitude towards employees that will make a difference. Successful franchisees see employees as a valuable asset rather than an expense. They will communicate to employees what is in it for them. Their employees are treated as individuals, with respect and trust. The successful franchisee inspires others to a common vision.

OPTIMISTIC OUTLOOK Business will always have ups and downs. You will be faced with challenges (i.e. employees not showing up for work, running out of inventory, etc.). Successful franchisees donâ&#x20AC;&#x2122;t let these issues take away from their long-term positive outlook. They always see the glass half full, not half empty. They respond to the issues knowing that it is simply a small speed bump and not an insurmountable mountain.

FAMILY SUPPORT Over the years franchisors have learned that there is a high correlation between business success and the franchisee having family support. If both spouses are active in the business there is an even greater probability of success, although this is often at the expense of work and family life balance. Franchisor will look favorably on the fact that both spouses are active in the franchise review process.

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REALISTIC EXPECTATIONS Initially starting a business may require long hours. Successful franchisees recognize that starting business will require a lot of long hours and hard work during the initial start-up phase. It may take one to two years to build the business to solid profitability. Successful franchisees are not expecting to get rich overnight. They may not get rich at all. Instead, they are going into the business knowing that the business will provide a great income and will allow them to build long-term equity. The franchisee will reap the benefits of independence, flexibility and pride of ownership.

DRIVE, HIGH ATTAINMENT Successful franchisees have a habit of setting goals and working hard to achieve them. Ideally the goals are written. They are fully committed and focus on the achievement of their goals. Despite obstacles and challenges, the successful franchisee does not give up. They know that every problem has a solution, every solution may have a complication but every complication has an alternative.

A PASSION FOR THE BRAND Successful franchisees are excited about the brand that they have chosen. They are constantly promoting the brand in the community and with friends. They are excited about getting up in the morning and going to work. They strongly believe in the products and services that they offer.

10.

FINANCIAL ABILITY A common reason why businesses fail, often within the first two years, is because they are undercapitalized. Successful franchisees have the financial investment required to invest in the business initially as well as provide for the working capital needs during the start up phase of the business. The successful franchisee is not borrowing all the funds and having all the profits going towards servicing debt, but instead have anywhere from 30 to 50 percent unencumbered funds, or cash, to invest. Depending upon the industry, franchisors will look for certain experience and skill sets. It might be industry specific knowledge, sales skills or management experience. But often these skill sets can

Successful franchisees are fully committed and focus on the achievement of their goals. Despite obstacles and challenges, the successful franchisee does not give up. They know that every problem has a solution, every solution may have a complication but every complication has an alternative. be taught. More frequently it is an attitude that makes the difference and it is attitudes that are reflected in the majority of the ten qualities outlined. Franchisors will actively look for the right attitudes when selecting their next franchisees. Most successful business owners will have a variation of these ten qualities and character traits. It is what has made them successful. How do you compare?

No person is perfect but if you have the majority of these qualities, you have what it takes to be successful in your own franchise. Set yourself a goal to find the right business that you can be passionate about and precede with confidence knowing that you have what it takes to be successful. WAYNE MAILLET is President of Franchise

Specialists, a franchise consulting firm based out of Vancouver. Wayne Maillet is a leading Canadian franchise management consultant with over 20 years of practical experience in all aspects of franchise operations. Prior to consulting Wayne Maillet worked for the corporate offices of such franchise companies as Keg Steakhouse, Uniglobe Travel and Realty World. Although the industries were different, the principles, challenges and opportunities of franchising were found to be the same. Wayne Maillet is an active member of the Canadian Franchise Association. Respected within franchise circles, he brings a realistic, practical understanding of business and franchising. Wayne Maillet has spoken across Canada on how to franchise your business, written several articles and is often quoted as an authority in franchising. For More Information: Email: wmaillet@franchisespecialists.com www.franchisespecialists.com

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feature

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Food: Emerging Trends

ESSENTIAL FOR YOUR CONSIDERATION Page 30

Canadian Franchising

he McDonald brothers’ met Ray Kroc in 1954 in business. Kroc was their milk shake mixer salesman. He was selling so many mixers to the two because of a high-volume production system that they were operating their business on. Kroc seized this opportunity and was soon their licensing agent, recruiting franchisees. Seven years later Kroc bought out the McDonald’s and assumed the role of chairman. By 1988, there were 10, 000 McDonald’s franchise restaurants. Kroc is unarguably the man who inspired the wave of franchising we are familiar with today. Many people consider the food industry when investigating franchise ownership. Canada has experienced a continuously growing surge in the popularity of eating out. Not only are Canadian households eating out more; they are spending a higher percentage of their income on restaurant meals. The food industry has an exhausting list of choices depending on your level of investment and area of interest. While the most popular food and beverage at Canadian restaurants proved to be French fries and coffee, Canada has been experiencing a number of emerging trends that can be used as a valuable insight for potential franchisees considering a franchise in the food industry.

A businesses marketing focus towards fun, novel-tasting, extravagant food, will often entice customers: consideration of the health implications of consuming that food is quickly thrown to the wind. This is evident by the long-standing popularity of globally recognized franchises such as McDonalds or Tim Hortons.

Ethnic Food

This societal quest for entertaining, exciting food could also in part be influencing the growing popularity of Ethnic Food Restaurants. Zing Asian Noodlery, Mucho Burrito, Taste of Mediterranean, and Teriyaki Experience are all franchises that appeal to this growing desire. Canadians are now branching out from the typical sandwich and coke or burger and fries.

Growing racial and ethnic diversity throughout Canada is also a huge contributing factor to this emerging market. The George Morris Centre released research estimating that by 2017, more than half of the Greater Toronto population will be non-European in origin. This is an avenue that franchises should take note of, and at the very least consider. Multiculturalism is continuing everywhere in Canada and European-Canadians are showing more interest in ethnic foods as well. Bento Sushi, a sushi kiosk franchise is a great example of a business taking many trends and combining them into one business. This franchise can be found in major grocery stores and malls. Bento Sushi appeals to consumers looking for an ethnic experience for their taste buds; it’s considered a healthy option in comparison to a fat-filled burger, and it’s

Food as Entertainment

Canadians are spending a higher percent of their income on meals and snacks outside of the home: on average 30 percent. This is most likely attributed to the evolution in our motivation to eat for entertainment opposed to eating to nourish and sustain our bodies and our daily functions. We are experiencing a cultural shift in the way we view food. This is especially true in the younger generations. No doubt, businesses understand this and marketing efforts reinforce this attitude.

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expert advice feature

Food: Emerging Trends

easy to “grab on the go”. Their website, www.bentosushi.com provides prospective franchisees a thorough outline of the steps involved in franchising and more company information.

The “Health Conscious” Consumer Be it a grocery store, coffee shop, or restaurant it’s hard to go anywhere without seeing, “Low-carb”, “Vegetarian”; “Gluten-free”; or “Organic” options. According to a McGill University research report, the first of it’s kind done in 25 years on eating patterns, Canadian eating

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habits have improved. Of particular consideration when targeting this market, are the female, parent, pregnant, and senior populations. Women tend to be more concerned with their body image and health. Healthy establishments therefore often appeal to female consumers. That being said, a growing consumer group to pay attention to, is health-conscious men. Secondly, as childhood obesity is a global epidemic, parents are closely monitoring their children’s diets. These parents are on the hunt for healthy, nutritional food products to feed their children. Finally,

our senior population is growing steadily. Life expectancy is much older, and quality of life is increasing for seniors. This population of our community is highly motivated to maintain vitality and healthy lifestyles well into their elder years. Therefore, Canadian seniors are seeking out healthier foods. Salad Loop has capitalized on the health conscious consumer. This franchise was founded in Vancouver, British Columbia in 2000. This build-your-own salad concept is aimed at delivering fresh and healthy food that is also “mouth-

Canadian Franchising

Canada has been experienc ing a number of emerging trends that can be used as a valuable insight for potential franchisees considering a franchise in the food industry.

watering”. They bring healthiness to the fast food industry like never seen before. They are currently extremely interested in further expansion into the East Coast of Canada. Their website provides further information and franchisee contact details, www.saladloop.com.

Tasty, Convenient Food

All health considerations taken into account, taste is still the number one reason why consumers choose a particular food. Something that is taste appealing to a consumer may often sway that

individual away from a healthier choice. The food industries customers also have another request: make it easy; make it fast! Take-out and quick meals have become a necessity for many young singles and busy families. The percentage of meals prepared in restaurants but eaten elsewhere increased to 61 percent of all food service meals in 2004, up from 53 percent in 1994. And while it’s well and good to find something healthy, the taste and convenience a coke, burger and fries delivers is at times unbeatable. Even the classic burger franchises are

taking note of our countries concerns and going back to the basics. Take Big Smoke Burger, a franchise concept founded in Toronto. The company takes a fresh approach to burgers. Their fresh six ounce burgers are made in house daily. This burger joint, like many nowadays, offer healthy alternatives like salads (although I’m not sure who could resist a burger once in the front door) and are open about their preparation methods and interest in using “healthier” preparation options. You can check Big Smoke Burger’s franchisee criteria out at www. bigsmokeburger.com. For many Canadian consumers food has evolved from a source of survival to an experience of luxury and enjoyment. If you look at the trends above, it is clear that Canadians are spending more time thinking about food and more money on food. The food industry will always see up and coming franchises emerging from the woodwork. Most understand that it is a wise idea to choose a franchise with a long history of success. In the food industry, those businesses can be a large investment. While it can be a risk to buy into a new franchise, in the food industry it can pay off. Just as new trends are emerging, there will be new businesses to meet those demands. Choosing a new concept isn’t a definite “no” if you spend enough time researching the franchisor, speaking to current franchisees and investigating the corporate team that will guide you through the process. There has never been so much food for thought in this industry! On average, Canadian households will visit a restaurant for a meal or snack 520 times each year. Your job, as a prospective franchisee is to find a business that is convenient, emotionally appealing, and tastes good. If you can combine that with something healthy then you’re job is done: all you have to do now is set up shop and open the doors for business! Sources: FranChoice Statistics Canada Dianne Morris FCC–FAC.ca Agriculture and Agri-Food Canada

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expert advice

Vance Meyer, Regional Developer TES, The The Entrepreneur’s Source

Journey of Discovery Taking an inventory of your skills, education and experiences can be a good first step. Included in this should be a realistic assessment of the available capital resources that you are able to use in starting and/or acquiring a self-employment option. An educated and experienced coach can effectively gather and display this data to help you begin to focus in on possibilities.

eginning early in life we find certain subjects and/or activities we are good at and enjoy. As adults we are exposed to new challenges and we continue our development and growth. Again, these opportunities help us identify new interests and skills and develop new capabilities. Research has identified that about 75 percent of adults at one time or another have thought about doing something on their own; becoming self sufficient. Many adults never get beyond thinking about self-employment. Why is that? There are numerous reasons and concerns such as do I have the skill sets and abilities required; financial resources necessary; personal traits and characteristics that are needed; opportunities available that will excite and energize; and, the desire and confidence to move beyond the inevitable uncertainties and fears that arise? Before gathering all the information for the above concerns, identifying your desire and confidence to move beyond the inevitable uncertainties and fears that arise, is a very important first step. Why do you want to look, what are you looking for, why do you want to be self employed. We have begun using a very valuable new tool, only one page, but a very important first step in defining the value of your YOU2.0TM; providing valuable information for your Journey of Discovery.

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Three areas that most all individuals need support on are: leadership, relationship and opportunity. Let’s look at each of these. Leadership is when a friend or coach can come along side of you who understands the changed economy and role of employment in the future. The corporate world has let us down, we can be confused and who can you trust? This is the place where a coach can come along side you right at the beginning of your Journey of Discovery, as you look into and learn about self-employment. Friends and family can sometimes care too much and be too close. At this point your coach and you have the chance to discuss the question, “Looking forward one year, what has to happen both personally and professionally, for you to be happy with changes and progress you have made?” The answer to this question needs to address the dangers, opportunities and strengths you are facing or likely to face. Dangers need to be identified, ranked and then you can determine how you might address and/or overcome the key ones to start. Most individuals think about obstacles but these are really barriers or detours to reaching a point where one can focus on the opportunities. Again, like dangers, you should explore all the opportunities and be open to learning about them on your Journey of Discovery. Here the coach can ask questions and help you

identify those that would help you reach your long term income, lifestyle, wealth and equity; your ILWE which can result in meeting your defined dreams. How can you be sure of reaching or being able to capture the most important opportunities? What are the strengths you have to make this possible? This step is identifying the talents, capabilities, attributes, adaptability, personal work ethics, values, etc. that will enable not only capturing an opportunity, but being successful at this self employment option. From here the coach can help lead you through steps one through the other factors empowering your success. Taking an inventory of your skills, education and experiences can be a good first step. Included in this should be a realistic assessment of the available capital resources that you are able to use in starting and/or acquiring a self-employment option. An educated and experienced coach can effectively gather and display this data to help you begin to focus in on possibilities. The coach can also employ a personal assessment. A personal assessment can help address the qualitative aspects of the opportunities available that will excite and energize us as well as our desire and confident to move beyond uncertainties and fears. There are numerous assessments that can be used but again having a coach that can explain and bring this to

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life for you is key. Why is this important? It will help identify your approach to dealing with others and activities related to particular business processes; say marketing and sales or analysis. For instance, if someone is looking at a business possibility that requires a considerable amount of selling and door to door calling on businesses or households but their assessments indicate that they are not so interested in others and like to analyze issues, then considering a possibility where selling is key would result in not enjoying the business and not wanting to do provide the extra effort required to begin a business. Therefore in all likelihood the individual would likely fail at this possibility if pursued. Having a coach that can help with this personal assessment and point out these traits can be vitally important before going too far on your Journey of Discovery. It is helpful to have someone point these things out which we often overlook or forget within ourselves. The coach can take all of this information and objectively organize it, in order to identify possible businesses and figure out questions that specific individual has to answer before making a decision. The biggest advantage this process brings, is it avoids having to, â&#x20AC;&#x153; look at everything.â&#x20AC;? What is needed is a way to focus, focus and focus on those possible opportunities that will best help meet the various informational criteria that you and your coach have identified. Again why is this important? Because there is a plethora of information to gather to validate each opportunity to both see how each business opportunity compares to your goals, needs and expectations and how they compare to one another. So focusing is vital to do the best evaluation possible on your own behalf. The rapport and trust developed with the right coach is important. Guidance at this juncture solidifies what information to gather and where to get it, who to speak with and what to ask, and assistance in focusing on what is learned and being sure it is reflected correctly back on your YOU2.0 TM . A good coach, who you have learned you can trust, who will be honest with you and with who you have a good rapport, is very important at this stage. Again: why? This is the place so many will encounter uncertainty

Looking forward one year, what has to happen both personally and professionally, for you to be happy with changes and progress you have made? and FEAR. Coaches have the resources, to build your confidence to match your strengths to an opportunity option that will enable you to reach your goals, your ILWE, and will push you through when your mind considers not moving forward. The FEAR in most every instance is really false evidence appearing real. Hopefully you do not let FEAR either blind or stop you. Here again the coach will guide your focus towards everything you have learned on your Journey of Discovery to help with exploring any final perceived dangers be they financing alternatives, if needed, or any assistance understanding other financial, legal or competitive issues. Remember trust all your YOU2.0 TM

working through the dangers, opportunities and strengths, using the personal assessment tool to follow your traits and attitudes enabling you to reach your ILWE. The assessments, tools and coaching can guide and enable you to move forward beyond uncertainties and FEARs and at the end of your Journey of Discovery become self employed and reach your dream . VANCE G MEYER is Regional Developer

at The Entrepreneurâ&#x20AC;&#x2122;s Source (TES). Vance has acted as VP Finance, Director Corporate Development, Manager Planning, Finance and Business Development, Regional Controller, Manager Accounting and sales. He has served as the CFO for nonprofit organizations and has experience in reporting, cash planning, investment banking, and consulting . He can be reached directly at meyeresource@ comcast.net or (616) 844-2272. For further company information please visit www.theesource.com/vmeyer or www.YOU2-0-com/?vmeyer .

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expert advice

Geoff Howard, Partner, Gowling Lafleur Henderson LLP

TERMINATION OF EMPLOYMENT:

What You Need to Know Often first-time employers, franchisees (and franchisors as employers) need to be aware of their legal obligation when terminating employment. As this article will explain, some basic advance planning can make dismissals much less stressful and costly. The article concludes with discussion of the advantages of employment contracts to better define those rights.

The “Two Doors” for Terminating Employees

The modern workplace is characterized by constant change, resulting in more frequent termination of employment for employees in every sector, including the fast-growing franchise sector.

Generally speaking, when terminating employment, the employer must provide “reasonable notice” of termination (with some exceptions below) or, more commonly, pay severance equivalent to what an employee would have earned over the notice period, unless, the employee has signed an employment agreement which defines rights on such a termination. The only times employers can terminate without any advance notice or pay in lieu are: a) where they can prove “just cause” for firing, which is often difficult as explained below; or b) after a very lengthy absence due to disability with no prospect of returning to work (and in some provinces statutory minimum severance is still payable). Thus, the vast majority of terminations are “without cause”, a term which covers everything from an employee who has performed poorly or misbehaved but where the employer has not done warnings or cannot prove suspected misconduct (e.g. abusing sick days), through to employees who are just not a “fit” and employees being laid off due to lack of work, closure of the franchise location or even to stave off bankruptcy.

Firing for Just Cause

The onus on an employer to prove “just cause” is a heavy one. Only where an em-

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ployer can prove serious misconduct (e.g. fraud, theft, conflict of interest) will the employer be able to terminate immediately. In the much more common scenario where the employer has complaints about the employee’s performance or behavior (e.g. lateness, poor productivity, errors, failure to follow direction), the employer will be required to provide warnings before terminating. Even where warnings are given, the courts reserve the right to determine whether the standards were reasonable and evenly applied, whether the warnings were adequate and will considering any mitigating factors. The onus of proving just cause is always on the employer. Thus even where an employer has real suspicions about employee abuse of sick time, it is the employer who must prove the employee lied when he claimed he was sick the day after the long weekend, not the employee who must prove he was really too sick to work.

Terminating Without Cause with Notice

When terminating without cause, the employee will generally have two entitlements: a) To statutory minimum notice or pay in lieu under provincial employment standards legislation, which is usually around one week per year of service to a maximum of 8 weeks (but this varies considerably by province); and b) To contractual notice or severance. As noted above, unless the employer and employee have signed an employment agreement defining what notice or severance is payable (see discussion below), the courts will require “reasonable notice” of termination. The contractual liability must be no less than the statutory minimum and is typically much more (see below). The statutory minimums are easy to

Canadian Franchising

The statutory minimums are easy to determine and not too costly. By contrast, many franchisees are shocked to learn how much the courts will award as â&#x20AC;&#x153;reasonable noticeâ&#x20AC;?. The courts set reasonable notice periods on a case by case basis.

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expert advice

Geoff Howard, Partner, Gowling Lafleur Henderson LLP

determine and not too costly. By contrast, many franchisees are shocked to learn how much the courts will award as “reasonable notice”. The courts set reasonable notice periods on a case by case basis. A common misconception amongst managers and professionals is that they are entitled to one month’s notice per year of service. Only in a minority of cases do court awards correspond to that formula. The major factors considered by the courts in setting a notice period are: • length of service, • level of responsibility, • age (in some cases), and • availability of alternative employment. Although the courts will consider other factors in certain cases. Until recently, retail and other non-managerial franchisee employees might have received only 2 weeks per year, but recent court awards, such as one in B.C. where a part-time deli clerk of eight years employment was awarded eight months notice, may mean higher awards are coming for these employees. Since each individual employee’s notice entitlement within that range will vary, it is critical that legal advice be sought by both employees and employers. Length of service is the single most important factor in setting the notice period. However, employers are often surprised by court awards for relatively short serving management employees with only a few months or years’ service, which can be as high as 3, 4 or even 6 months. Under the last factor, availability of alternative employment, the courts will consider both the marketability of the employee’s skills (i.e. the number of potential alternate employers), as well as any evidence as to the demand for such skills at the time of termination.

Compensation Payable As Severance

Employees often assume they are automatically entitled to lump sum severance on termination. In fact, under the common law, an employer can provide all or a portion of the contractual notice in the form of working notice. In some industries, such as construction and related professions, it is relatively common for advanced working notice of termination of employment to be given. The vast majority of employers prefer to remove

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Because firing employees for “just cause” is difficult, employers need to be familiar with their potential severance liabilities.

the dismissed worker from the workplace by terminating employment effective immediately and offering a severance package. They have learned from hard experience that an employee singled out for termination often becomes demoralized and affects the morale of others. When preparing a severance offer, the general rule is that the employee must receive, by way of severance, everything the employee would have earned by working the notice period. In applying this rule, the courts have awarded wrongful dismissal damages for a variety of non salary forms of compensation, including dental or medical expenses incurred during the notice period that would have been covered by an employer benefit plan, car allowance, loss of pension benefits that would have accrued over the notice period and, for employees regularly earning commissions, estimated commissions over the notice period. One of the most frequently disputed forms of compensation is bonus payments. Bonuses that relate to pre termination service are almost always payable. Where

Canadian Franchising

reduces the amount of the claim. The exception is where there is a termination clause which can be interpreted as requiring payment of an amount without possible deduction for mitigation earnings e.g. “on termination without cause, employer will pay employee 2 weeks’ salary per year of service within 7 days”.

Structuring Severance Offers

the employee was eligible for bonus during the notice period, the courts will generally award compensation where the bonus was payable based on primarily objective standards (e.g. profitability or revenue) and evidence indicates they would have been met. By contrast, a totally discretionary bonus will not be recoverable. Only where the bonus plan or employment agreement is very clearly drafted can the employer avoid bonus or commission liability during the notice period.

The Duty to Mitigate

On being terminated without cause, the employee must use reasonable efforts to look for alternate employment during the notice period (known as the “duty to mitigate”). More importantly, if the employee manages to earn alternate employment or self employment earnings during the notice period, those earnings will be deducted from the former employer’s severance liability. In practise, many wrongful dismissal claims are settled because the employee finds a new job before the end of the reasonable notice period which

As mentioned above, employers may provide some or all of the notice in the form of working notice. If paying severance, an employer can choose between two main severance package structures: lump sum and compensation continuance. Under the traditional lump sum approach, an employee is offered a number of months’ salary and, where appropriate, compensation in lieu of other non salary compensation, such as bonus. For employees with longer notice periods, the duty to mitigate means that the employee may be prepared to accept a lump sum less than the full notice period a court might award on the assumption that re employment income can be generated from a new job before the end of the notice period. Under the “compensation continuance” format, the employer continues to pay salary and typically continues other benefits (other than disability benefits) for whatever the employer estimates the notice period to be, on the condition that if the employee finds other employment during this time, compensation continuation ceases. Typically, the employer will offer to pay the employee a portion of the salary payments left in the notice period (usually 50%) on re employment. This severance structure is designed to allow the employer to save on severance if the employee re employs prior to the end of the notice period.

The Advantages of an Employment Contract As stated earlier, the entitlement to reasonable notice can be superseded by a valid employment contract. For employers, employment contracts can be used to significantly reduce the potentially onerous liability for reasonable notice at common law. Both parties can benefit from the greater certainty a contract provides, avoiding disputes over what the period of reasonable notice is. For fran-

chise employers, this is an opportunity to define clearly and reduce the otherwise uncertain and onerous reasonable notice obligation that should not be missed. To be enforceable, employment agreements must be implemented properly. For example, requiring employees to sign a form of employment agreement after they have already started working, with no real opportunity to review the contract and seek legal advice, would likely render the contract unenforceable. Ideally, employment agreements should be forwarded to employees at the time of the job offer and an adequate opportunity provided for the employee to review, then seek advice if they wish and then sign.

Conclusion

Because firing employees for “just cause” is difficult, employers need to be familiar with their potential severance liabilities. They must also plan terminations with sensitivity to avoid Wallace mental distress awards. Because common law termination rights are potentially onerous for employers and prone to litigation over issues such as the length of the notice period, pro active employers should introduce employment contracts with termination clauses setting out acceptable levels of severance payable on termination of employment without cause. The investment of a few thousands of dollars in legal fees for a template form of letter employment agreement quickly repays itself when the first employee is terminated and the amount of notice or severance is clearly spelled out at an acceptable level. Not only is the severance owed less, but there is no need to incur legal fees defending a wrongful dismissal claim. MR. HOWARD was called to the Bar in

1989 and has practised in the area of employment law since 1990, first in Toronto and then in Vancouver. He is a partner at Gowling Lafleur Henderson LLP, one of Canada’s major national law firms and advises both employers and employees in wrongful dismissal disputes, employment standards, human rights complaints and employment contracts. For more information: Phone: 604-683-6498 Email: Geoffrey.howard@gowlings.com

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focus

Sandler Training

TAKE CHARGE OF YOUR FUTURE Sandler training is so effective because rather than treating training as a one-time event, the system builds their training on the concept of incremental growth and change – supported by reinforcement, coaching and accountability.

came out of corporate America and bought a Sandler franchise because I wanted to control my destiny and have influence over my income and my lifestyle,” says Mark McGraw, Sandler Training Franchise Owner. McGraw is part of Sandler Training’s team of over 250 licensed trainers in 29 countries. Sandler training provides a full range of sales and management training programs, with powerful coordination and customization benefits throughout its extensive franchise network. Founded in 1967 by David H. Sandler, today Sandler Training consists of more than 250 offices worldwide, providing instruction in 14 languages.

Effective Ongoing Training

The mission of Sandler Training is to de-

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velop top-performing sales, management and executive teams that excel in a fluid, fast-paced, global business environment. Sandler’s goal is to help clients initiate substantive, measureable and sustainable growth. This goal is achieved through a non-traditional selling system that promotes lasting changes in behaviour and attitude, something that is not possible with a typical quick fix sales seminar. Sandler’s services have proven successful in small to medium sized businesses, as well as Fortune 1000 companies, with a system that includes quality support materials, ongoing training workshops, individual coaching sessions, Sandler Online Internet reinforcement, and accountability. Sandler training is so effective because rather than treating training as a one-time event, the system

Canadian Franchising

Providing a needed service to businesses and corporations of all sizes, a Sandler Training franchise is a great fit for people who are passionate about sales and about helping people make a difference in their lives. builds their training on the concept of incremental growth and change – supported by reinforcement, coaching and accountability. The Sandler Training business model is based on the idea of reinforcement by providing opportunities to generate income from a wide range of client services, including: the President’s Club, private on-site training, management training, customer service training, leadership training, coaching, and global accounts. The President’s Club is the backbone of the company, providing public training to front line salespeople, business owners, and managers, and acts as a jumping off point for establishing a solid client base.

Take Control of Your Life

Sandler Training provides an incredible opportunity for franchise ownership. Providing a needed service to businesses and corporations of all sizes, a Sandler Training franchise is a great fit for people who are passionate about sales and about helping people make a difference in their lives. When the corporate rat race is no longer satisfying, Sandler Training is an opportunity for franchisees to take control of the future, their income, and their time. Sandler franchise owners come from varied backgrounds and many different fields, but they share a common goal in their desire to make change and to be in control of their future. Experience in training and coaching is not required, although sales experience and middle/upper management skills will be an asset. Sandler Training provides franchise owners with eight days of

intensive training at their headquarters in Owings Mills, Maryland, as well as ongoing coaching once the business is up and running. Sandler Training franchise owners are among the most satisfied according to a 2012 report released by Franchise Business Review. In fact, the report found that Sandler Training was ranked #5 out of the Top Franchises in the Midsize Class, which is classified as those businesses which have systems with 50 to 199 units. In addition, Sandler Training was ranked as a Top 50 Franchise, coming in at #11 as a “Best of the Best” company. “This distinction is so meaningful to us because we work diligently to support our franchise partners, and this award confirms that,” says Ron Taylor, Vice President of Franchise Development of

Sandler Training. “We are all invested in the success of the franchise partners, so when franchise owners succeed, it’s a huge corporate win at Sandler Training.” Among its many achievements, Sandler has also been awarded the #1 ranking for training programs in Entrepreneur Magazine’s “Franchise 500” in 2012. “It’s a great time to own a Sandler franchise,” says Sandler Training Franchise Owner Rich Gorman. “Our economy needs additional sales from companies in order to spur growth. And in order to generate those sales, you need good quality people – well-trained, capable of servicing the client’s needs – and what better system than Sandler to do that?” For more information: www.sandler.com

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expert advice

Joseph Pisani, Director of National Franchising Services, Bank of Montreal

FINANCING YOUR FRANCHISE

The Five C’s of Obtaining CREDIT If you are in the process of buying a franchise or have plans to expand your existing location, chances are you will seek some level of financial assistance.

tion include? Where does one even start? The answer lies in knowing who to speak to and in the creation of a well developed financing proposal which addresses the key points as often communicated by the banks to the marketplace through various brochures and publications.

What exactly is a “Bank Financing Proposal?”

In most situations, this scenario would require that you submit an application for financing to your local banker. What is important to know in advance is what will the banker expect to see in your application and what evaluation criteria will the banker use in assessing your application? Quite often a business owner will experience some hesitation or even frustration when preparing their financing request. Some are simply not sure as to how to go about it. How do you communicate what is needed? What should the applica-

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In very general terms, a bank financing proposal is a business plan/ presentation that a potential borrower will use to convey the following to the banker: 1. An outline of the business activity 2. The amount of money required and from what sources 3. How the money will be used 4. How it will be repaid 5. What financial return to the business the banker may expect 6. What security will be provided All the major financial institutions provide publications on this very subject and in some material even provide examples

of what should be included and how to present it. There is no need for you to guess and there are no excuses for you to not be aware of what the banks are expecting.

Keep it Simple

While all business proposals are addressed as soon as possible, it is likely that your banker is dealing with a number of concurrent proposals. Keep your proposal simple and factual, and honestly recognize any risk/downside the applica-

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tion may entail (the latter will illustrate that you are aware of the relevant risks and how to manage them). Including a succinct one or two-page summary that briefly describes your business, its history, where its future lies and the money you require to get it there, can make a strong initial impression on your banker and help to set your proposal apart. Your proposal should include/address: • Business name, address, key contact names

• Table of contents (including page numbers) • Summary • Industry overview (key drivers, demographics, trends) • Management structure (background, qualifications, responsibilities) • Product / service offering • The market (size, competition, supply, overall standing) • Financing outline (emphasize the use of requested funds) • Basic corporate information (share-

holders, lawyer, accountant) • Appendices (biographies, product literature, historical financial statements, forecast income and cash flow statements) Having presented this information to the banker, it is equally important that you understand how your proposal will be assessed and what areas in particular will the banker focus on. Your banker will be keenly interested in all areas that touch on the six points mentioned earlier.

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expert advice

Joseph Pisani, Director of National Franchising Services, Bank of Montreal

These key elements will be specifically considered as the banker conducts their due diligence – their assessment – with both observations and questions likely emanating from one or more of the following “5C’s of Credit”:

Character

Probably the most important part of the overall assessment process and decision to extend credit is the stability and commitment to the business from the owner. The banker is looking to identify critical character traits such as trustworthiness, demonstrated good judgement, credibility, honesty and reliability. Business

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experience or previous employment, stability, education and overall integrity are also considered. In your proposal, and particularly if you are a new customer to the bank, it would not be unreasonable for you to also include two or three personal or business references.

Capacity

Does the business proposal seem realistic and consequently does it appear that the business will generate sufficient net earnings to service both their day to day and longer term credit obligations. The assessment would include an evaluation of various business ratios, sales as-

sumptions, operational obligations and carrying costs. In addition, what possible financial reserves may be necessary should the need arise. Be as accurate and realistic as possible – even to the extent of being conservative. Any exaggeration of expectations may be to your disadvantage in the long run. The banker’s assessment would also look at owner salaries and what personal debt servicing obligations exist. In summary, will the borrower have the capacity to repay their debt obligations over an acceptable timeline?

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Credit

This is simple enough to evaluate as it primarily involves an assessment of the borrower’s credit history. This would include both a review of the owner’s personal credit history as well as the business’s track record. Needless to say, it is important to maintain a good credit rating and to divulge all credit obligations (again both business and personal) to the bank as part of your proposal. Not conveying or trying to conceal financial problems (both previous and current) may eventually be to your detriment when it comes to receiving a favourable response from the bank.

Capital

This deals with the owner’s personal financial commitment to the business. Notwithstanding how convincing the business proposal may be, banks generally expect owners to provide a reasonable level of their own cash into the business. In addition this element deals with the financial stability of the business; being adequately capitalized at the outset and having a reasonable cushion to fall back on – a reserve for contingencies. Other reasons for having owners provide a reasonable level of their own capital into the business include: • It represents a tangible commitment on behalf of the owner and to some extent is an indication to the banker of their confidence level in the proposal. • In new/start-up situations and particularly in franchising businesses, there are often certain capital requirements that the banks normally do not finance. These would include items such as the franchise fee, training expenses, preopening expenses, security deposits – often referred to as intangibles. • Banks also have fairly rigid criteria in terms of the maximum level of financing available for certain business assets such as equipment, leasehold improvements, inventory and accounts receivable. • In more simple terms, the business simply cannot afford to be 100% financed at the outset as this would place significant strain on the business in terms of meeting its debt obligations and maintaining enough reserve for its daily working capital needs.

It is imperative that your business proposal be realistic and convincing in order to establish financing arrangements that are reasonable and attainable from your perspective and that of the banker.

Collateral

Collateral is simply the value of assets available to support the various loan facilities requested. For example: • Operating loans are often supported by a pledge to the bank of all inventory and receivables but the extent to which the bank finances and accords a lending value to these assets is limited and will vary with individual circumstances. • Term financing is usually provided to support capital purchases such as equipment, vehicles and leasehold expenditures. While these assets certainly have a tangible value, the lending value of these assets and corresponding loan availability would be less than the actual cost – hence the need for owner equity as a down payment towards these assets. • Important to note that there are certain loan facilities such as financing arrangements under the Canada Small Business Loans (often referred to as the Government Guaranteed Loans program) that would permit a higher level of financing and corresponding collateral support to the Bank. • For new borrowers where there is no financial history or limited track record or where the bank requires an additional level of security to support the application such as, a collateral charge on real estate. It is not unreasonable for the banker to request personal guarantees from the owners. It is important to understand that in terms of business banking, the bank does not look to their security as the primary source of loan repayment. Business profits and surplus cash, repay bank debt. Therefore, it is imperative that your busi-

ness proposal be realistic and convincing in order to establish financing arrangements that are reasonable and attainable from your perspective and that of the banker. One of your primary objectives in both your written proposal and in your subsequent discussions with the banker is to present a “sound” business case as opposed to one that is more focused on safety – the safety of the bank’s funds. During your initial discussions with the banker, and regardless of the results of your negotiations, you should pay particular attention to the terminology that apparently is important to the banker as they review your proposal. Often you will hear terms such as liquidity, leverage, debt to equity, debt servicing capabilities, just to name a few. Your awareness of these key points, and ensuring that they are addressed in any subsequent loan applications or at time of your next business review, will definitely improve your chances of receiving a favourable reply. In most business banking situations it is likely that banking arrangements, including credit lines, will be subject to review on an annual basis. In this regard, and as your business moves forward, demonstrating profitability and building tangible net worth, the banker should be in a position each subsequent year to more easily complete their assessment of the business as per the “5C’s”- probably resulting in an even stronger overall assessment – which will be to your long term benefit. JOSEPH PISANI is Director of National

Franchising Services for BMO. Bank of Montreal. For More Information: Phone: 416-927-6025 Email: joseph.pisani@bmo.com.

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expert advice

Jania Bailey, President and COO, FranNet

FRANCHISING

Affordably and Intelligently

All eyes continue to be on the economic recovery of the US and Canada. The US has been engaged in a prolonged struggle for better stability over the past four to five years. Although Canada has not been as badly affected by the economy, it hasn’t been exempt from feeling the effects of the worldwide downturn.

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Several economists and financial sources cite that, while things have steadily improved, America may be in the midst of a “new normal” in terms of its level of improvement. The unemployment rate appears to have leveled to the mid to low sevens. While the nation’s unemployment average has seen wild fluctuations over the last few years, the current unemployment level is in a near identical range as when the crisis began to unfold. For its part, Canada has also seen some settling near the seven percent unemployment range, a stat that has steadily decreased since the early part of 2011. Due to the new normal facing many today, those affected are increasingly turning toward business ownership – specifically franchise business ownership – as they write the next chapter in their lives. But how much does it cost to invest in a franchise business? You’d be shocked at how many times I hear “at least a million dollars.” And I hope you’re more shocked to hear that guess couldn’t be more wrong. Of course, there are franchises out there that expensive, but they are the disproportionate minority of opportunities. In reality, a full one-third of the more than 3,100 franchise business opportunities require an average total buy-in cost of $100,000 or less. And nearly 60 percent cost less than $250,000 total buy-in. As a rule of thumb, we suggest our clients need about 25-30 percent of liquid capital available to them in order to invest into a particular franchise. So for a $100,000 franchise, you’d need about $25,000 - $30,000 in liquid capital to get going. The rest can be secured through a myriad of financial lenders, which are

more likely to lend to a franchise concept than a start-up business based on historical success. However, the most intriguing and opportunistic source of the liquid capital could be immediately available to you. How would you like for your initial investment amount to fall into the tax-free and penalty-free category? Funds from your personal 401k or IRA accounts can be “rolled over” to provide the capital necessary to get your franchise up and running. And all of this is available to you without the dreaded “early withdrawal” penalty. When you include your 401K or other cash assets, business ownership becomes a lot more feasible when talking in those terms. Plus, many franchisors have internal financing programs that will finance the largest portion of funds necessary to begin. Others may choose to invest with a partner or perhaps use available home equity to secure the other lines of credit necessary to take control over the business futures through business ownership. All of a sudden, a dream of franchise or small business ownership can be converted into a path leading to financial independence. But how does the success add up? FranNet studied all the placements the company made from 2006 to2010, during the heart of the economic downturn. We found that nearly 92 percent of all placements were still in business after two years. That compares to about 67 percent of all small businesses still in business after two years, according to the U.S. Census Bureau. Further, we found about 85 percent of the placements FranNet made were still in business after five

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a full one-third of the more than 3,100 franchise business opportunities require an average total buy-in cost of $100,000 or less. years, which compares to only 50 percent of other small businesses studied by the U.S. Census Bureau. We think it speaks volumes to the success of franchise ownership when a person is paired with the ideal concept for them. In reality, franchise business ownership is not beyond your reach. And achieving financial independence on your terms instead of relying on the old normal is becoming a safer bet in these “new normal” times.

And with a little creativity, franchising can be done affordably and intelligently. JANIA BAILEY joined FranNet in August,

2006 as President and COO. Under her tenure, FranNet has seen astonishing system-wide sales increases of nearly 1000 percent, has more than doubled the number of FranNet offices across North America, and has transitioned FranNet to a franchise business model. Bailey was recently named to the Board of Directors

for the International Franchise Association (IFA) and is a certified franchise expert. She also serves on the IFA Membership Committee and the IFA Supply Forum Board, and is also an active mentor to new franchisors as a volunteer in the IFA FranShip program. Her background includes over 25 years experience in the banking and franchise industries. Bailey also authored the book, “Thriving – The Journey to Success in the Business World.”

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fexpert ra nchisee advice in action

Dan Effa, Franchisee, Liquid Capital

A NUMBERS MAN IN IT FOR THE PEOPLE

n September 2004, Dan Effa returned back to work from summer vacation. For almost fifteen years Effa had worked his way up the BC Tel (now Telus) ladder. This was the time for employee performance reviews. Effa received a six, two points lower on the scale from the prior review. His boss informed him that in order for his score to be raised next year or if he was interested in any company advancement, Telus would need his working hours to increase. For several years Effa had off and on been considering another career path but having three children and a wife who

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he was financially accountable for, this seemed the best position to stay in. This conversation with his boss made it clear that now was the time for Effa to move on and take a risk. “I live by a key principle: ‘In the absence of direction, stay put.’ This principle is based on my belief that God will guide my life if I let him. Direction now came together in many ways. Yes this was a risk, but it was right and felt comfortable,” recalls Effa. Effa had seen an advertisement for FranNet and went to speak to a man in regards to franchise opportunities that would best suit his personality and skill set. “The man I sat down with was not only a FranNet franchisee, but a Chartered Accountant, like me, and a Liquid Capital franchisee as well,” said Effa. Effa chose to open a Liquid Capital franchise because it was a good match to his skills and interests.

A Natural Numbers Guy

From an early age, Effa knew he’d be involved in accounting or business of some kind because of his hard-working, detail-and results-oriented nature in addition to his strong aptitude for numbers and his interest in business. After high school, Effa enrolled in the University of British Columbia’s bachelor of commerce program majoring in accounting with a minor in finance. His working career began for Ernst & Young in the auditing

department articling. He moved to BC Tel as a senior internal auditor when his wife was working there. They both knew that with their plans of starting a family BC Tel was a sensible move for Effa. Two years later he was acting audit manager, moving a couple years later to a revenue forecasting position, then on to Controller of various business units and finally a career in Human Resources.

Change is in Order

Effa recalls starting his Liquid Capital business in a small basement office in his home. As the starting stages of business began for Effa most of his efforts were channeled towards networking and building his business. Liquid Capital provides franchisees with comprehensive training. Liquid Capital has a strong corporate infrastructure and their back-office administrative support system operations are streamlined for franchisees. Franchisees are provided with resources including customized marketing materials, webbased seminars, a contact management system, and franchisee intranet. Liquid Capital provides marketing systems geared to marketing the individuals’ franchise in the most cost effective and profitable manner that will help build their referral base. “I have great colleagues. Now, I’m doing some mentoring. Liquid Capital has really high caliber people within their system,” shares Effa.

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I take fewer vacations, because I don’t feel the need. My hours are less constricted to a time period than they used to be. While I clock those hours, I can often work at a slower, more relaxed pace than in cor porate Canada, where I’m more in control, and with no commute. I actually often feel like I’m semi-retired. xxxxxx

Factoring is the purchase and management of commercial accounts receivable, which provides needed working capital to small and medium businesses. The Liquid Capital Franchise Training Program begins with an intensive fiveday curriculum covering all aspects of factoring, accounts receivable management, security issues and credit related matters. Franchisees become well versed in the field and ready to grow in the role of local factoring expert.

Franchisees are fully mentored for the first three months their business is up and running by a seasoned Liquid Capital mentor who ‘knows the ropes’ of the business and will ensure franchisees hit the ground running. Much of this is done over the phone. One of the wonderful parts of this work is that site selection is typically not necessary and many work from home as Effa does. “Working from home helps so much with having a family that has diverse needs and time commit-

ments. My work had and still has a huge impact on our family. Being able to help my kids when they needed it, then get back to work later was great. I may work until seven or nine, but I get to take the dog around the block mid-day or garden when there’s a sunny break,” smiles Effa. Each franchisee is in constant collaboration with Liquid Capital’s Management Advisory Team. These individuals are experienced factoring professionals dedicated to supporting all aspects of

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f ra nchisee in action

Dan Effa, Franchisee, Liquid Capital

business and guide the ongoing success of franchisees.

Roots Established in the Ground

Now, Effa spends the bulk of his time working with clients on their needs, “I’m significantly a relationships manager. Which is perfect for me. If I was out selling all the time that would be tougher for me. I’m still a Chartered Accountant at heart, not a salesman.” Effa has built up enough of a client base and reputation that new clients come almost completely through referrals. “It makes the selling portion of the job different. Now, really, I’m just meeting with a friend and that makes it very comfortable,” said Effa. Effa enjoys a workload that encompasses diverse tasks. With that comes new products and information. Still, Effa engages in training sessions, most of which are webinars. If Effa encounters an unfamiliar case he is able to call the head office for their expertise. Liquid Capital Pacific Corporation is an Imagine Caring Company. Imagine Caring is Canada’s leading corporate citizenship initiative. Effa has committed himself to numerous volunteer positions, and is Past President of the Surrey Foundation. As part of this program, we invest half of our giving locally through the Surrey Foundation. The rest goes to micro loans for small businesses in third world countries, to enable poor but

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entrepreneurially minded people to start of strengthen their businesses. Now that Effa has been with Liquid Capital for some time, his workload hasn’t exactly lightened, “I’m guessing I work about 45 hours a week on average, taking most weekends off. It’s harder to get away on vacations now, because a lot rests on me. That being said, I take fewer vacations. My hours are less constricted to a time period than they used to be. While I clock those hours, I can often work at a slower, more relaxed pace than in corporate Canada, where I’m more in control, and with no commute. I actually often feel like I’m semi-retired.” Dan currently has six others working for his Liquid Capital franchise. In Effa’s experience there are three lessons that he believes are key to every new franchisees success. The first is having a ‘go out and do it’ attitude towards networking. “I amazed my wife with how I networked. In the beginning, a lot of your success is about self-motivation: your phone will never ring if you don’t go create that business,” explained Effa. Secondly, welcome patience: “There will be discouraging days, but it will get better.” Lastly, Effa could not stress enough the strength behind the Liquid Capital franchise itself. “When Liquid Capital advises you on something, take their advice really seriously. Don’t go outside the box. They have years of experience

and know what they’re doing inside and out,” he said. “The required qualities for a franchisee hold true. A Liquid Capital owner must have integrity, be self-motivated and willing to network. A financial background is also very helpful,” confirms Effa. “I really felt that God directed our path in regards to my career change. It’s gone very well thinking in a ten-year span. But back then it was somewhat risky. If you don’t have some gut feeling that you should be changing something, I’m not a believer in taking random paths for the sake of it. These are decisions that must be carefully considered,” said Effa. He is still blown away by what a feel good business this has turned out to be. The enormous difference that Liquid Capital owners are able to make in the clients they work with is very fulfilling. “We’re providing capital to businesses that have encountered an unexpected difficult time or who need a little help expanding. Our services, at times, make the difference in our clients getting a sound sleep at night. We make such a big difference.” For More Information: www.liquidcapitalcorp.com

JOIN OUR FAMILY EXCELLENT LOCATIONS IN CANADA STILL AVAILABLE!

If you are passionate about family, great food and outstanding customer service then the Bâton Rouge opportunity was created for you. Ranked #1 in Quebec for its specialty, succulent babyback ribs, this family restaurant has a varied menu that offers something for everyone, from newborns to 99. With over 30 restaurants across Canada, and a long history of providing strong returns on investment for its franchisees, Bâton Rouge is a unique and rewarding business opportunity.

As a fr anchisee you can expect

outstanding support including: • A comprehensive menu including ribs, steaks,

Lori Karpman

Director of Franchising

EMAIL fresh fish, seafood, pasta and salads • The support and security of being a part of a lkarpman@imvescor.ca publically traded company (IRG on TSX) • A dedicated and committed franchisor whose OR CALL only goal is your success x 242 • Site selection and lease negotiations Assistance with restaurant design, planning • TOLL FREE and construction • Comprehensive training at a designated training store x 242 • On-site pre and post opening support • On-going operational and marketing support • Volume purchasing power • New product development by a respected Canadian Executive Chef • Continuous research & development on all aspects of the business • Constant attention to detail, to improvement, and to increasing franchisee return.

514-341-5544

1-866-346-4537

A typical Bâton Rouge location is 5,000 - 8,000 square feet and the investment level will vary depending on the size of the location as well as many other factors. The total investment will range between $1.5 to $2.8 million dollars and you will need 40%-50% of this amount available and unencumbered for investment. The rest may be financed by a bank. Bâton Rouge is aggressively expanding across Canada and many great locations are still available so CONTACT US NOW and reserve yours before its gone! Please visit our website at www.batonrougerestaur ants.com to learn more.

expert advice

Dawn Taylor, President, Bass Ass Jack’s Subs and Wraps

Building Customer Loyalty

here are many issues that capture the attention of business owners today. In an ever-changing economy, the survival of business is reliant on loyalty; loyalty of one’s employees, loyalty of one’s customers and loyalty of the community surrounding your business. Time and resources invested to build the loyalty of one’s business will result in a successful, thriving company that will stand the test of time. Building lasting relationships is the cornerstone to building loyalty. People do business with people they like and people they trust. The cost of attracting new employees, new customers and new members from the community is much higher than taking care of the people you have in and around your business that currently support you. This is enough incentive to take care of the core people that are essential to the success of your business.

TEN TIPS TO BUILD LOYALTY

Direct communication with your customers. It is important to set up

a system that communicates with your current customers. It can be in the form of a newsletter, an email, a flyer, cards for their birthday or Christmas, or even

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a blog. It is not about advertising to your customers, it is about educating them about your products, touching base with them to help them get to know the people behind the business. Communicating helps customers know what you value and that they are valued. Dedicating time to keep a current database of your customers is of paramount importance.

your employees is critical in moving your people and company ahead. Employees who are taken care of and who feel that you are investing in them remain loyal. As a leader of the business it is important that the employees see you also investing in your own education. It gives them confidence in your leadership and builds excitement in the company.

incredible customer service. 2. Provide

5. Provide incentives for customers.

This means going the extra mile to meet customer needs. Customers remember how well they are treated. Positive customer experiences result in repeat business and in referrals. Welcome feedback from customers; don’t be afraid of their concerns and complaints but rather see it as an opportunity to build the relationship. Feedback allows you an opportunity to resolve their issue and to improve your service. It is important that customers have clarity in the means in which they can communicate to you and that they have a direct person they can communicate their concerns with. This helps the customer to feel heard and valued. Loyalty starts from the top and works its way through the company. Being competent earns employees respect, having integrity instils employee pride, and makes employees want to work for you. Trust is built with consistency of a leader’s decisions and actions and the leader’s willingness to protect his or her employees. These qualities build loyalty to you and your business and also create a vehicle for your employees’ loyalty to be passed to your customers.

3. Build employees’ loyalty.

quality training for your employees. 4. Provide The employees are the face of your company. They are the brand and the reputation in which your company either flourishes or dies. Training empowers your employees and makes them feel valued. Investing in

This gives customers a reason to give you repeat business and to refer you to others. The incentive program should be part of your marketing efforts and should be appropriate for your target audience. This can range from special promotions, shopper points, rebates, etc. It is so important that you know your products and services and that they are of the highest quality. Make sure your employees know which are the products that sell well, which products historically are peoples favorites, and new trends that are occurring. It is also important to know what your customers like so that you always have it in stock. Knowing your product and service gives customers a sense that you are an expert in your business and that you can be trusted.

6. Know Your Product.

7. Build a reputation of reliability.

Always under promise and over deliver. Your company’s reputation is aligned to the quality of your product and service. Customers want to know what they are getting and what they can expect when they deal with you. The customer then begins to depend on you and you become a part of their regular routine of where they invest their time and money. Each customer is an individual.

8. Be flexible with your policies.

Each customer has unique circumstances and needs. Do everything within reason to solve customer problems or complaints. Stay away from assuming

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that you understand the situation until you have heard the customer’s perspective. When you show the customer that you’re listening, there is a higher probability of retaining their business, even if you can’t fully solve the problem. Inflexibility is a sure way to lose a customer and to lose potential customers, as word of mouth can either work for you or against you.

Be real and don’t hide behind technology. While people like the

new gadgets and like how technology makes things simpler, they want a real human being when they want to be heard. The more difficult you make it for a customer to talk to a real person; the less likely they are to continue doing business with you. Remember that building loyalty is about building relationships and you cannot build a relationship with technology.

10. Know Your Customers Names.

A name is very important to a person. It makes them feel like they matter and that you remember them. Have employees get to know the names of their

regular customers. They will feel valued and respected. Also have the employees create an environment of trust by having them share their name. It lets customers know that your employees are willing to be held accountable and it gives the customer a human point of contact. It also helps to create an environment of mutual respect, comfort and warmth. Loyalty does matter. If you want your company to be one that is strong then employee loyalty, customer loyalty and community loyalty are crucial. The better that you serve your community, the more likely they will want to be a part of what you are doing. Sharing your values is done through the behaviors that you as a leader and that your employees demonstrate consistently. The old saying actions speak louder than words has never been more relevent. In order to gain loyalty as a business you have to create an environment where you give loyalty through your service. The best businesses are those that take care of their employees, their customers and give back to their community. When you have achieved loyalty at

all levels and have a business that is built on strong relationships, your business will stand the test of time. Raised in Terrace BC, DAWN TAYLOR started her first business at the age of nine, much to her parents dismay! She was a hard working child and teen and always wanted to own her own business. In 2002, she graduated from the Business Career College with a diploma in Office Administration and Bookkeeping. She went on to become a National Construction Safety Officer and was in head management by her 25th birthday. Buying her first restaurant in 2008, she decided that this was the industry for her. She bought the franchise three years ago and has been working to build a stronger brand and the foundation needed to see huge growth. With plans to expand at a quick rate over the next few years she is a busy woman. She is happily married and lives in Edmonton. Keep an eye out for this girl. Big things are about to happen! For More Information: Email: dawn@badassjacks.com

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expert advice

Charley Scrivener, President, Charley Scrivener & Associates Limited

Financing 101s for Franchisees A good business plan discusses, among other things, the franchise systemâ&#x20AC;&#x2122;s product or service offering, its track record, the competition, and the things that the franchisor does to differentiate itself from the competition.

n my days as a small business lender I was often amazed at the lack of attention prospective franchisees displayed when considering the purchase of a franchise. The usual deficiencies were typically around financial analysis, planning, and projections. It was all the more surprising to me given that the would be franchisees were making the biggest financial investments of their lives and putting the bulk of

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their personal financial resources on the line. As a lender, I had to turn a number of franchise based credit applications aside because the applicant had no clue as to how the financial projections were arrived at. This is obviously important detail for lenders who are being asked to fund the purchase of a start up business. In order to get the most favorable reaction from a lender the applicant needs to build a business plan, which is effectively a road map to convincingly show how the business will be successful. A good business plan discusses, among other things, the franchise systemâ&#x20AC;&#x2122;s product or service offering, its track record, the competition, and the things that the franchisor does to differentiate itself from the competition. Then the focus needs to move to the location and why it will be successful. And how the applicant is qualified to run the business. The business plan needs to include an opening balance sheet, a cash flow forecast, and a projected income statement. The balance sheet will show the assets

the franchisee is buying i.e. equipment, leaseholds, franchise fee, and then how the purchase will be funded (a mixture of savings and bank credit). Much of the information on the cost side will come from the disclosure document. The income statement projections will require discussion with the franchisor (and your accountant). All franchisors are rightly most cautious with income projections; with the franchisee signing a waiver most will provide low, medium and high income projections based on existing store data. The cash flow forecast is probably the most useful document of the three because it will show how much cash the business will have on hand a month-bymonth basis. This is important to know for example when funding the business until financial breakeven occurs. Once you have the business plan done take the time to review and understand it. For example, bankers will want to understand and challenge the assumptions supporting the numbers especially on the revenue side. Be prepared for that.

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However, if you do get thrown a question for something you don’t have a ready answer, don’t make up the response. You will blow your credibility. Simply say that you don’t have the answer and that you will get back shortly. Turning now to the request for credit, most start up businesses use, or should use, a long-term loan to finance the bulk of the purchase. It is not just because of the type of assets you will probably be financing (longer life term such as equipment, leaseholds, fixturing) but so you can spread the repayment out over a number of years. This definitely helps with monthly cash flow budgeting. The loan term, or amortization, will typically be the lesser of the remaining term of lease and useful life of the assets. Fees and interest rates and conditions of credit will depend on the quality of security provided to support the loan. For example, strong supporting security such as a charge on your home should bring the spread over prime rate very close, if not down to, prime rate.

But not everyone has the means, or wants to, pledge their home as security. My way of thinking is that it is optimal to leverage the business to support the business loan. While some larger franchise systems have financing programs in place with banks so that financing is easily and readily available for their franchisees most franchises don’t have that luxury. This is why many lenders will finance the franchise purchase through the Canada Small Business Financing Program (“CSBFP”). According to Industry Canada, over $1BN is lent every year through this program. In short, the Canadian government guarantees loans under the CSBFP. Loans can be advanced to $500,000 though not more than $350,000 can be used for furniture, fixtures and equipment. Banks are permitted to advance up to 90 percent of the cost of real estate, leaseholds, and equipment if they wish to. The loans are not to be used for intangible assets such as goodwill, franchise fees, working capital, research

and development costs. Loans carry a maximum rate of prime plus 3 percent. There is a 2 percent insurance fee paid by the borrower to the lender (and then paid over to Industry Canada), which can be financed. Lenders may choose to take personal guarantees up to 25 percent of the loan amount. Hopefully this short article will help you to successfully own your small business. Good luck and happy franchising! CHARLEY SCRIVENER is a consultant

to franchisors and those companies considering franchising. A 33-year banker with CIBC Charley is a past chair of the IFA’s Supplier Forum and past Treasurer of the CFA. For more information: Web: www.cscrivener.com

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expert advice

Rob Lancit, President, FranTech Media

Boosting Your Chances At Franchising Success Thereâ&#x20AC;&#x2122;s no need to reinvent the wheel when successful business leaders have already built a system you can simply pick up and start using. Taking the correct actions in the early stages of buying into a franchise will help you enjoy success much later down the road.

Success with Franchises

Starting a new business is generally easier when you join a franchise that is well established at a regional or national level. Page 56

Canada currently has the worldâ&#x20AC;&#x2122;s second largest franchise industry, falling just behind the United States. A total 40 percent of all retail sales are processed through a franchise store and over a million people are employed by these businesses. A large part of the countryâ&#x20AC;&#x2122;s economic growth comes directly from the owners of these widespread businesses. If you want to become your own boss without struggling to develop a complete business idea that will work in your town, consider

joining an existing franchise. There are hundreds of unique plans and systems to choose from, ensuring you can find something that appeals to local consumers and your personal interests.

Make a Plan

There is no way you can simply guess your way to success. Franchises may come with basic guidelines and framework to make it easier to set up the business, but you still have to know how you plan to proceed when your store or service opens. Failing to continue your marketing coverage or customer service expansion as your company grows will only limit your ability to reach new goals. Plan ahead by requesting the assistance of a business counselor or adviser. Speaking with a professional from the franchise company could also help you learn what

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to expect in terms of costs and workload during your first few years.

Become a Master of Networking

Growing your business will require you to be outgoing and ready to make new connections. Attending industry or local business events are the best ways to find new suppliers or clients that could provide a major boost to your bottom line. If you find a complementary company, you could exchange promotions to help each other improve. Learning tips and tricks from experienced business owners and other franchise leaders will only help you stay on top of trends and solve common problems with ease.

Learning about the Industry

Connecting with the biggest players in your franchise and overall industry will help you get a broader view of the market around you. Even though you aren’t an independent entrepreneur, attending conferences for your niche will allow for in-depth networking and dedicated learning. Subscribe to any industry journals or reports as well to learn about new trends before they pass you by.

Locations and Financing

Before you sign a single piece of paper with any franchising companies, consider where you will put your new business and how you will afford it. If all of the decent retail or restaurant spaces in your town are full, you may have to invest in property and a new building. The estimates for operating costs provided by the brand are usually quite modest. For safety, it is best to double the estimated costs for the first three years. If you don’t have a lot of cash on hand to keep the business afloat in the early years, you will need to leverage your credit score or collateral to secure funding. Many franchises offer franchising for new members, but you will need to check the interest rates and terms before signing away anything.

Investigating Your Options

Franchise companies want to sell you a business package, so you will need to look beyond their brochures and advertisements to find out the hard facts. Speak with current owners and people who have sold out of the system for one reason or another. You may find

Even though you aren’t an independent entrepreneur, attending conferences for your niche will allow for indepth networking and dedicated learning. Subscribe to any industry journals or reports as well to learn about new trends before they pass you by. out surprising details that aren’t clearly defined in the paperwork. Look for legal notifications regarding the company as well. Pressing actions may not indicate wrongdoing, but a number of cases that were ruled against the company should cause you to reconsider. Constant change in executive officers is another common indicator of internal trouble that is easy to spot from the outside. Don’t overlook your personal preferences when shopping

around. The most successful franchise opportunity still won’t succeed for long if you hate managing it and the day-today operations. Choose a system that fits your personal productivity style and that piques your interest.

Ask for Advice and Help

If you already know anyone that has started a business, don’t forget to ask them for advice and personal anecdotes. Talking with friends and colleagues can provide you with a lot of insight into the challenges and freedoms of running your own business. Even business owners in radically different industries can provide a lot of helpful information. ROB LANCIT is President of FranTech Me-

dia which operates the popular franchise directories BeTheBoss.ca, BuyThatFranchise.ca &PlaneteFranchise.ca which connect entrepreneurial Canadians to the newest franchise opportunities. Frantech Media also services the franchise industry’s social media, online marketing and SEO needs, making it a one-stop shop for Franchisors looking to attract the best & brightest business talent Canada has to offer. For More Information: Phone: 866-730-5553 Email: rob@frantechmedia.com

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fexpert ra nchisee advice in action

Brian Bazely, Anytime Fitness

FITNESSWithANYTIME ANYTIME FITNESS In 2007, Brian Bazely was hard at work as a Corporate Executive. Bazely was in a unique situation, “I was in my late thirties, talking with my wife about what the next ten years of our life would look like. We were living debt-free and fortunate to be making a comfortable amount of money. We started to look at retiring from full-time work and starting a new stage of our life.”

hat the Bazely’s desired was a shift in their work/life balance. It wasn’t that Bazely wasn’t enjoying his work at the time; he was! What wasn’t ideal was how his position interfered with his freedom and flexibility. The Bazely family had always resided in Waterloo, Ontario yet Bazely’s job presented a daily commute. With his two daughters entering the ‘tough’ teenage years and aging parents needing more and more support with daily living, Bazely wanted to be able to conduct business in his hometown. Brian Bazely had already spent over 20 years at a Senior Executive level running major retailers including Toys R’ Us Canada and The Beer Store. His career background up to this point was in Sales Marketing and Sales Operations with a specialization in retail (store design, strategy, marketing and sales). Bazely was involved with companies that were bringing anywhere from half a billion to three billion dollars in total annual revenue. An aptitude for business came quite naturally at this point in his career.

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Looking for a Lifestyle Change

At the beginning, the couple weren’t stuck on franchising; they were looking at any business opportunity that would be successful in their territory, generate a good income, and that wouldn’t confine the couple to a ‘nine to five’ workday. “Part of my criteria was a business with significant revenue potential that wasn’t reliant on many employees and inventory management,” said Bazely. So the couple compiled a list of what they did want in a business. The Fitness industry quickly caught the Bazely’s attention. Anytime Fitness was one of the franchises that they came

across that peaked their interest. After speaking to other franchise owners and the Anytime Fitness franchisors to get a sense of the company’s culture and climate, Bazely’s interest had grown. What was it that drew the couple in? “From a business model standpoint, Anytime Fitness has a flat rate cost structure. So the more successful I was, the more benefits I could experience. Of course I liked that. But what I really liked was the culture. The environment was very member-centric, focused on the services offered to the members, and franchisee-centric. The founders struck me as individuals that were in it for the long haul; who really wanted to see their franchisees succeed. The franchisors were passionate, hard working and not afraid to have fun. They had a good sense of humor,” explained Bazely. In March 2008, the Bazelys signed an Anytime Fitness franchise agreement at the headquarters in Minnesota. The couple stayed there for the following week going through the Anytime Fitness solid training program. This incorporated all the nuts and bolts of a fitness franchise: how to market the business, what’s effec-

Canadian Franchising

Some people get into this because they love fitness. But you have to love commerce first. tive and where a franchisee should spend his or her time. Even with his extensive corporate background, Bazely still found the experience full of learning and a great opportunity to meet the people who would be contributing to the growth and development of his business.

The Bazelys Hit the Ground Running

After the pair returned home, Anytime Fitness had arranged for real estate brokers from Ontario to help with the real estate selection for their franchise. During the site selection process the couple ensured their finances, business plan, costing approach, and customer fee structures were all taken care of. They were collecting data and planning for the Grand Opening. Thanks to all their planning when a surprise opportunity arose, the couple was able to respond: “We had researched 28 different sites and were negotiating on three in the final stages. Originally we thought we’d open one Anytime Fitness location and a second shortly after. By May, we had signed two real estate deals and decided to do both Grand Openings synonymously in August.” One of the first challenges Bazely encountered in the early stages of franchise ownership was the struggle to micromanage all the tasks a new business owner must manage, “When you’re a small business, you’re everything: the janitor, salesman, receptionist, and errand boy. Learning that quickly was important. I had never in my entire career had to think about all the little things. It was interesting to realize how prior, I took those details for granted.” Overall, Bazely never lost a feeling of gratitude. “We were fortunate to walk away from a significant income into another income that was still comfortable but that offered more freedom and flexibility,” shares Bazely.

Putting Business Before Pleasure

“Some people get into this because they love fitness. But you have to love com-

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fexpert ra nchisee advice in action

Brian Bazely, Anytime Fitness

merce first. Having a passion for the industry alone won’t cut it,” advises Bazely. He and his wife share a passionate for fitness and enjoy staying in shape but just as much love the business side of things. Another huge source of satisfaction that Bazely’s previous positions never allowed him to do, is giving back to the community that comprises his business. “The fitness facilities allow us to have a positive impact in our community at an individual level and we’re also able to utilize our businesses to assist charities around the community. Last year we donated over $100,000 in time services and money,” said Bazely. Owning six franchises Bazely stays plugged into the Anytime Fitness community at large. Roughly 20 percent of Bazely’s work-week is dedicated to helping other franchisees through emails, phone calls, etc. Bazely perceives these efforts as time well spent: if other franchisees generate more profit, it will help the Canadian brand as a whole. Bazely also volunteers as a member of the company’s Franchise Advisory Counsel and is therefore responsible to represent all franchisees to the franchisor. The Bazelys still finds great benefit in attending the annual Anytime Fitness conference and the annual Canadian training sessions. “The beautiful thing about working in such a progressive franchise is that there’s a ton of learning. Each year we find technology and information is updated and constantly morphing which keeps us focused and engaged in learning from other franchisees and corporate,” Bazely explains. The Anytime Fitness culture promotes a sense of accomplishment, community and ownership between the clubs and their members. A lot of work is done to encourage club owners and managers to create a sense of community with the members. It’s not what corporate does directly; rather the vision of what business should look like that gets parlayed through the business owners. Bazely discloses, “This is a business that’s similar to others in that it’s really important to work on marketing yourself as the brand. Some of the things you do are about building business over months and years, not just into the weeks to come. You have to be really committed to it.”

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It is imperative that your business proposal be realistic and convincing in order to establish financing arrangements that are reasonable and attainable from your perspective and that of the banker.

Bazely did not even hesitate to take a breath when I asked him what his final thoughts would be to prospective franchisees, “It’s a phenomenal business opportunity, if you’re interested. Don’t underestimate following the recipe. It doesn’t really need to be changed or modified. You must know full well that this will be your lifestyle and what you’ll be doing because it’s a big time and money investment. You can get a lot in the long run, if you put in a lot. Ultimately it comes into lifestyle. If you want a great balanced lifestyle you have the opportunity to do this with Anytime Fitness.” For more information: www.anytimefitness.com/franchiseopportunities

DOMESTIC HOUSEKEEPING FRANCHISE REINVENTED S AND GROWING FAST NCHISEE A R F DELE 00 A 1 N HA CONCEPT 1 T E R DOMESTIC HOUSEKEEPING MO • Every week or every two weeks • Investment starting at $38K • Franchise fee of $17,555 included • Only 15K cash requirement O.A.C.

Inspired by Five Star Hotels

CONCEPT 2 HEAVY-DUTY CLEANING • Investment starting at $63K • Franchise fee of $24K included • Only 25K cash requirement O.A. • Financing program available O.A.C. • Multi-location investors welcome • Premium territories available in Ontario* • Home based concept, no expensive real-estate, weekdays only • Build equity rapidly with high resale value • Adele’s client and employee management software and turnkey systems will help you become successful – fast

For Franchise Information, Please Contact:

1 855 MY ADELE 1 855-692-3353 Michel Germain

• 100% Canadian with H.O. located in Oakville, ON

• The maid with the chocolate on the pillow

E: mgermain@adeleinc.com

www.adeleinc.com ESTABLISHED IN 1994

*Immediately Available • North York • Vaughan • Toronto • Mississauga • Brampton

• Professional call centre

• Adele operates in Ontario, Quebec and Paris France

C: 905 699 5209

• Whitby • Aurora • Newmarket • Markham • Richmond Hill

• Extensive initial training on award winning cleaning products, methods, quality standards and marketing

• Etobicoke • Oakville • Burlington • Milton • Tri-City

expert advice

Peter Christianson, President, Young Drivers of Canada

Applying Lessons of Life to Your Business

n December 1st, 1947, just after 5pm, mother was driving directly into the sun on Highway 2, which was then one lane in each direction, not far from Trenton, Ontario. At four years of age, I was sitting between mom and dad in the front seat of our new Pontiac coupe. Dad was a surgeon recently back from the war and an amateur photographer. He had been taking pictures of the sun setting on the snow. The next few seconds were to provide the first clue as to my life’s purpose. Business coaches often teach us that everyone has an event in their childhood that changes who we are and stays with us throughout our lives. This moment can make you weak, which restricts your success or make you strong, which leads to success. Either way you are going to be defined by how this moment affects you.

“Sometimes life isn’t fair.”

Mother pulled out to pass a slower driver, probably bothered by the glare of the sun, when my dad tossed me over the seat in

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to the backseat. I heard my mom scream, “Ralph!” And then a horrific sounding crash, breaking the car glass. My dad had been tossed through the front window and died instantly when we crashed headon into an oncoming army bus. My mom was badly injured as she was thrown out the front door. I was protected by the seatback and the lack of doors in the backseat. The Pontiac crashed through a fence into a field. I had crawled out into the snow and was wandering around looking for mom and dad. Seatbelts had not yet been invented.

“There are always good people when you need them.”

The ambulance driver had picked up mother and as he was driving away, looked back toward the car and spotted me out in the field. He stopped the ambulance, ran into the field and scooped me up in his arms. The Paramedic ran us back to the ambulance and said, “We’re going to get your mom to the hospital and she’s going to be fine.”

Canadian Franchising

“A needless waste of lives.”

When I turned 16 I was afraid of learning to drive because I knew you could die in a car. I knew I had to be good to survive and spent a whole year practicing with mother. I was aiming for perfection and smoothness on every turn. In those days teens would spend a couple of weeks practicing and get their licenses in less than a month. A fellow high school friend, Philip, was killed in a head-on collision he didn’t know how to avoid. It was such a waste and there would be four more to follow.

“Do what you love to do.”

I had been practicing on the snake road to learn car control and perfection, becoming a very good driver in the process. I entered driving skill tests and rallies winning several trophies and ended up racing in the CanAm series against world-class drivers like John Surtees and Bruce McLaren. Without the massive funding required to get the best rides and the fact that race drivers were dying at a rapid pace in the sixties I decided it was safer to move on.

They say that the happiest people are those that take their passions and make them their life’s work. After leaving auto racing, I realized that I had lost a father and by 1965 a total of 5 friends, in traffic crashes. Something needed to be done to change this waste of lives. I became a Driving Instructor in 1967 and joined Young Drivers of Canada in 1975 to help create a world class curriculum that teaches collision-free driving with 41 Franchisees operating 143 classrooms across the country. We had developed a way to teach collision-free driving, head-on collision avoidance and a series of emergency maneuvers that would teach new drivers to brake and swerve in emergencies. My father was a surgeon who had saved many lives. The last life he saved was mine. I’m honoured to have been able to continue his work through the training of over one million Canadian drivers. Ten of the best concepts that have helped our franchisees succeed, are provided to help anyone looking to start or improve a business.

Build the best and charge what it costs

Utilize the best technology available

Use best practices when hiring with no compromises

Design a convincing service or product that consumers need and with a differentiator that makes you different and hopefully better than what is available already. Look for what is not being done today or what can be done better.

Always look for the best technology available and look for ways to utilize these technologies to reduce the cost of production or service. Web based platforms create huge savings for client management, communication and marketing.

Develop hiring practices that ensure the best talent available and provide the highest wages your business can afford. Look at employment services such as Workopolis to find applicants, OMS psychometric assessments to see if the job is a good fit, Wonderlic to see if they make good

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expert advice

Peter Christianson, President, Young Drivers of Canada

decisions and an interview process that shows you care about them.

Train, train and then train again

Charge what you have to, even if itâ&#x20AC;&#x2122;s more than anyone else

Train your staff using videos of your best staff at work so best practices are taught. Once trained, start a verification program of an hour a week immediately so you know they learned the skills properly. Ten weeks is suggested but you will be able to tell when they have the skills you need. Then bring them back every year for a recertification program. Money spent in training is returned many times over.

Charge what it costs to produce and provide what you are proud of. There is no point trying to race to the bottom of the pricing race. No one wins. Provide the extra service or add-on benefits that allow you to charge higher prices since somewhere between 20 and 30 percent of the public always look for the most expensive products and services.

Tell your story through marketing, again and again and again

The first advice is to stay loyal to your Franchisorâ&#x20AC;&#x2122;s marketing plan and stay in any franchise group advertising plan. It always saves money when you work together. Constantly use marketing to tell the world what you do and more importantly why you do this. Some of the most cost-effective marketing is often found on the web through Google Word ads or targeted Facebook ads.

Document all business practices including Quality Control practices that prove you will deliver what you promise to every customer or client. This will help prepare you for ISO:2001:2008 registration and this status will make you stand out among your competitors.

Surround yourself with people who have your values

Look for staff or franchisees with the same values as you and help them succeed in business. Provide the business tools and processes to ensure their success which will mean your success.

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Diversify to grow

10.

Build the best website you can afford

Look for products and services that connect to the products or services that you already sell. Sometimes itâ&#x20AC;&#x2122;s a similar product but different size, sometimes a similar service but to a different age group. If you sell ski equipment why not skiing lessons?

As you build your brand you will take a huge step towards success by building an interesting, well laid out website that is intuitive. It must have e-commerce capability so your clients can purchase your products and services or at least provide a phone or email depending on your staffing plan. I wish you well in building your business or franchise and trust that you will do so with integrity, high quality, great service as well as profit which should always be there. PETER CHRISTIANSON is the President of

Young Drivers of Canada. YD is a Driver Training Franchise operating since 1970 and offering an exclusive educational system. Management is efficient through our proprietary on-line business management system (YDBMS). We have 45 Franchises in Canada operating 143 YD Classrooms for new drivers and Collisionfree courses for fleet drivers. YD offers CogniFit cognitive assessment and training for students in Canada and the USA. Over one million graduates recommend YD. For more information: www.youngdrivers.com

IFG provides short-term working capital to small businesses by purchasing selected invoices at a discount n IFG Franchisees work primarily with small expanding companies that find it difficult to obtain conventional funding n IFG Clients can convert an invoice – due in 30-45 days – into a “cash-on-delivery” sale and that means immediate cash for them! IFG Franchisees buy assets – they do not lend money! n

Providing an in-demand & much-needed financial service for more than 40 years IFG has been in the invoice discounting business since 1972 and is North America’s largest alternative funding source for small business. IFG is uniquely positioned to take advantage of today’s rapidly changing economic & financial needs. The slow down of bank lending practices plays right into IFG’s hands.

The ultimate professional franchise Modest Investment n Exceptional ROI n Home-based n Outstanding Training & Support n NO Employees n Professional business-to-business environment n Comprehensive risk management program The IFG franchise gives you the opportunity to n be in control of your income potential n be in control of your capital n be in control of your work schedule n be in control of your life! n

Why work for money, when money when money can work for you?

Acclaim for the Interface franchise . . . Certified as a World-Class Franchise for the 7th consecutive year, by the Franchise Research Institute

Ranked #242 of 500 #64 in the Top Homebased category #179 in America’s Top Global Franchises

For more information about the extraordinary Interface franchise opportunity — David Banfield, President Tel: 800-387-0860 • Email: ifg@interfacefinancial.com • Twitter: @ifgdiscover Website: www.interfacefinancial.com

expert advice

Greg Kopchuk, Master Licensee, Action Coach

What’s the best kind of franchise for you? In Canada the franchise business is booming, and it’s easy to get caught up in what you think might be a great opportunity, when really it could be the worst decision you could make for you and your family. The only way that a franchise will work is if everyone is happy, the franchisor and the franchisee. So how do you figure out what is going to work for you? Let’s start by asking a couple of questions. 1. What kind of money do you have to spend? 2. What kind of time can you devote to your franchise? 3. How old are you? 4. What experience do you have? 5. What kind of personality do you have? 6. Is the franchise agreement going to suit all of your needs? The answers to these questions are the key to which franchise will be the best fit for you. If you can’t answer these honestly, then you might not be ready for this career. Franchises are lucrative because you are dealing with a known quantity. Most franchises have proven systems and if you work in those systems, you will succeed. But you need to research the franchise thoroughly so that you find that perfect fit. This is not something to be rushed because you think one day “Hey I could run one of these, how hard could it be?” It’s important to remember that all

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franchises are not the same. Just because a business has decided to branch out into franchising doesn’t mean that their basic methodology is going to be the same as others. Each franchising route is going to be different and have a different model that they follow. What type of franchise appeals to you and more importantly your expertise? The selection is vast so you have to hone it down to suit you. Will it be an automotive service, or home appraisals or home improvements, or will it be computer and telecom, or child care, a café or a bakery, or a quick food service, or restaurant (the two are different), or will it be retail food or lawn care, beauty or health and nutrition, or senior care? There are franchises for professional services like accounting, advertising, employment, finance, real estate, and moving and travel agencies. But the trick here is not to purchase a franchise that “does what you used to do before you went into business. If you are a qualified hairdresser, don’t buy a hairdressing salon. If you do, you’ll end up doing all the work. This is one of the biggest traps business owners fall into. It traps them into working in the business and not on it.” If you can make the distinc-

tion of being the business owner and not being the technician (doing the work) then buy the hair salon. If you can’t, then don’t. As well, you can’t jump into a restaurant franchise unless you know something about the food/retail industry. And that’s more than just being a server or because you like food. The restaurant franchise business is one of the most competitive in the market, and you need to know how to hire staff, including chefs, as well as have a palette for foodif you don’t at least have that then no business plan is going to help you gain and keep customers. So are you looking for a Product/Trade name one or a Business format? Whatever your choice, you will need to assess how much money you are willing to invest in the franchise and what that money looks like. Does the franchise have a lending program or do you need to have cash on hand? Some of the blue-chipcan’t-miss franchises are very expensive. And you need to look at their base costs, in addition to royalty and marketing/advertising costs. Some franchises require that you work as an employee in their industry for at least a year in the capacity of a manager before they will even look at your application. You need to have the entire breakdown of their requirements so that you can make an informed decision. You have to make sure that your financial needs are going to be met with the investment.

What kind of money do you have to spend?

You should go into this venture with some extra cash as a surplus to support you. It may take some time for the business to be profitable, and you don’t want to put yourself into a financial crisis while you are working on results. For

Canadian Franchising

example, a lower end daycare franchise with 55 franchise outlets in Canada can run from an investment fee of $28,000 with a franchise fee of $18,000. A mid range courier service could run you at an investment fee of between $114,000139,000 with an association membership required as well as a franchise fee of $25.000. A high end restaurant can be between $1,350,000-1,500,000 with a franchise fee of $50,000 and an association membership fee. You will need to determine ALL the costs of buying into the franchise.

What kind of time can you devote to your franchise?

Few people think about how much time they are going to be able to devote to their new business. If you are in your twenties, have decent capital, and have all the time in the world, and if you have made your business a priority, then chances are your investment will be profitable. But there are life factors that come into play here as well. If you are in your late 50s or early 60s, you will probably not want to put in the 80+ hour weeks that a new franchise requires. Even though you are working with a tried and true system it’s going to take some time to get the business under your leadership really working, so be realistic about the time you are actually going to be able to work on your business, while still devoting time to your other interests and financial commitments- like family, owning a home, buying a car, and taking a vacation.

How old are you?

Age is, just as they say, only a number. Everyone is different but you do have to take that into account. There are 80 year old “retirees” who have more energy than

Always ask yourself, do you have a passion for this? Do you want your franchise to be the BEST franchise?

a packed gymnastics class, and at the other end of the spectrum those in their twenties who love the idea of owning their own business, but really want to spend most of their off time socializing. And that might not work for this type of business. Remember, that even though you are going to be a franchise owner you are still self-employed. If you are in your late fifties with kids, and grandchildren, are you ready to start a new business or are you thinking about retirement?

What experience do you have?

Most potential franchise owners are between the ages of 31- 46 mainly because they have spent some time working in an industry for a paycheque and have either decided to strike out on their own because there isn’t any room for promotion, or they have an entrepreneurial drive and passion that won’t fit in with the normal office/retail based business. It is essential that you have some experience in the industry you wish to work in as a franchise owner because you will need to be able to communicate with the franchisor and draw on your contacts and networking skills to bring in those first customers.

What kind of personality do you have?

There are many kinds of successful people in business—success has no one defined character type. In general, though, they a) are never sick b) want responsibility c) want to be ‘where the buck stops’ d) take persistence to new heights e) are very good at “Getting To Yes,” that is, they rarely take “No” for an answer f) think of every problem as a potential solution and above all they work, work, work. Successful franchisees tend to be very driven people and not everyone is like that. A successful clock-puncher, a guy who was very good at showing up on time, getting his work done, and then going home, isn’t a lock to succeed at franchise work, no matter how good he was at his old job. Because it’s different work—and a different life. When you work for a large company or government, the pay and benefits are secure. (For the most part.) It’s not like that for new franchisees and sometimes the pressure can be difficult to handle. You need to make sure that you and your family are completely aligned with this decision, and that you have the support from everyone in your close circles, because it’s not an easy venture. Always ask yourself, do you have a passion for this? Do you want your franchise to be the BEST franchise? If so then the results will be there. If not, then you need to reconsider your career path.

Is the franchise agreement going to suit all your needs?

Once you have figured out which franchise is the best one for you, you

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expert advice

Greg Kopchuk, Master Licensee, Action Coach

need to look over the franchisor agreement to make sure it’s going to achieve your goals. Make sure to review the Franchisor’s Obligations to you and vice versa. The terms and conditions are the most important part of the contract. You will be most likely purchasing a licence so you need make sure the conditions are going to be acceptable with a reasonable renewal option. And as we all know location is everything. Don’t sign on the dotted line before you know where the location of the business is going to be and if that will fit in with the target markets you want to reach. Make sure that there is support provided for marketing and sales- as that is critical to the success of any franchise. Details like service equipment, signage, software and other products including even a website have to be approved by the Franchisor, and then there are the payments. Be clear on all

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the details of your relationship, your obligations and your rights of the agreement. As well, if the franchisor isn’t asking questions like ‘Are you happy with the amount of income you have, or the lifestyle you live, and if you are passionate about your work,’ then they might not be interested in your actual skills, but in a body to fill a role. It’s essential that your franchisor ask the amount of debt that you are carrying- and provide solutions to that if it’s going to be a problem. Your goal is to succeed in this new venture, so due diligence on all fronts is essential. In conclusion, you need to do a little soul searching as you research the best franchise. You need to select a franchise that will play to your strengths, interests and passion, and will achieve the goals that you have for yourself. Tap into all the emotional as well as business angles of what you really want out of life and you

will be on your way to a very successful career in the franchise industry. GREG KOPCHUK is the Master Licensee

of ActionCoach’s Alberta, Peel, York, and Halton regions of Ontario. When he became Master Licensee of the CanadianFranchise company in 2004, he managed to take it from bankruptcy and turn it into a multi-million successful national company. Greg has been awarded the Master Licensee award two years in a row from Brad J Sugars and Action International. He prides himself on being a hardworking, successful business coach who encourages all small business owners and entrepreneurs to stop at nothing to achieve their goals. For more information: www.actioncoach.com/gregkopchuk

2013

PROGRAMS & EVENTS IFA is the premier resource for franchise news, trends, and strategies. Plan your strategy for professional career, education and networking development.

Legal Symposium – May 5-7 – Washington, DC The 46th Annual Legal Symposium is developed by a task force of franchise legal experts. Blending topics focused on franchise business and law, programming addresses the latest business and franchise law developments and features knowledgeable franchise law practitioners, franchise executives and state regulators. IBA/IFA Joint Conference – May 7-8 – Washington, DC The 29th Annual IBA/IFA Joint Conference is developed in partnership with the International Bar Association’s Franchising Committee to create a program relevant to our friends in the international franchise law profession. Experienced legal counsel share invaluable information regarding the latest developments in international law. FranCamp 2013: Digital Marketing & Technology Best Practices Conference – May 14-15 – Atlanta, GA FranCamp 2013: Digital Marketing & Technology Best Practices is a new conference from IFA designed to help franchise professionals understand technology options and platforms. Includes case studies and best practices designed to integrate technologies like GPS, content management, communications, social, local, mobile and more into your business effectively. Public Affairs Conference – September 16-17 – Washington, DC Meet us in our nation’s capital for a gathering of our Board of Directors, committees, forums, councils and task forces to network and visit with their Members of Congress during IFA’s most important advocacy event. Leadership meetings will also be held in Washington September 15, 16 and 18 to conduct important association business. Franchise Development Seminars – July 17-18 – Philadelphia, PA // September 25-26 – Denver, CO // December 8-9 – New York, NY Participate in an in-depth exchange of information with franchise development experts revealing tips and tools for building your franchise brand, featuring programming focused on industry challenges, successes and what to expect for the future. International Symposium – June 18-19 – New York, NY The International Symposium focuses on the latest trends and strategies for increasing your franchise system’s presence internationally while meeting the people that can help you make it happen. With more and more countries opening their doors to businesses outside their own borders, executives from all over the world come together to discuss current trends and strategies. This year’s symposium will be held just prior to the International Franchise Expo. International Franchise Expo – June 20-22 – New York, NY Co-hosted with MFV Expositions, the IFE brings together hundreds of franchise concepts and thousands of qualified prospects from across the United States and more than 80 countries. West Coast Franchise Expo – October 24-26 – Anaheim, CA Co-hosted with MFV Expositions, brings together franchise concepts and qualified prospects from the growing West Coast market. Emerging Franchisor Conference – November 13-14 – Ft. Lauderdale, FL The Emerging Franchisor Conference is designed to address challenges and opportunities unique to franchise systems with 300 or fewer units. The Emerging Franchisor Conference is a prime networking and educational conference for franchisors that are ready to take their system to the next level. AND MARK YOUR CALENDAR NOW FOR THESE EARLY 2014 EVENTS Franchise Expo South – February 6-8, 2014 – Houston, TX Co-hosted with MFV Expositions, the FES brings together franchise concepts and qualified prospects from the southeastern United States, Latin America, and the Caribbean. Annual Convention – February 22-25, 2014 – New Orleans, LA More than 3,000 franchise professionals will gather to learn, network and chart the future of franchising. The Annual Convention presents multiple business and professional development opportunities along with a variety of ways to learn from and share best practices with successful franchise executives from various industries of all sizes. www.franchise.org

expert advice

Ned Levitt, Sr. Partner, of Aird Berlis LLP

Is Reviewing the Franchise Disclosure Document Enough Due Diligence?

Most often the difference between a happy franchisee and one that regrets buying a franchise is the amount of due diligence they did before signing the franchise agreement.

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In the bad old days, before the passage of the modern provincial franchise statutes, there was very little reliable information easily available to prospective franchisees. Now, provided the franchise is being purchased for operation in one of the 5 provinces with franchise disclosure legislation (Alberta, Manitoba, Ontario, New Brunswick or Prince Edward Island), there is a wealth of information literally handed to the prospective franchisee, before contracts are signed or money changes hand. These statutes compel franchisors to disclose, among other things, the names and background of directors and officers, the costs of establishing the franchise, the background of legal proceedings involving the franchisor, its directors and officers, any bankruptcy history of the franchisor or its directors and officers, financial statements of the franchisor, and information about the existing and past franchisees. While this information is crucial and very valuable, it is a huge mistake to assume that it is enough information upon which to make an informed decision about purchasing the franchise. Some of the most important things to know about

are not required to be disclosed by this legislation. For example: How sound (profitable) is the concept? How does the franchisor treat its franchisees? Is the franchisor knowledgeable about particular market in which the franchise is to be operated? Is there general contentment with the franchisor among existing franchisees? Are the system marketing programs effective? Does the franchisor assist the franchisees to acquire equipment, inventory and supplies at good prices? Does the franchisor invest in market research and keep up with changes in technology? And that is just the beginning of a much longer list. So what should one do in addition? Well, at a very minimum, a search of the Internet for news articles about the franchise system might reveal problems that have been exposed to public scrutiny. Talking to bankers, suppliers and landlords who have dealt with the franchisor or the franchisees in the system may reveal valuable information. Having the available financial information scrutinized by an accountant of other financial advisor and compared with available financial information on other similar businesses could be very

Canadian Franchising

revealing. A face to face meeting with employees of the franchisor can help you to gauge the quality and attitudes of the very people who will be responsible for supporting you as your franchise is being established. Without a doubt, however, speaking with existing franchisees in the system and former franchisees, if possible, is the most valuable thing a prospective franchisee could do, before committing to the franchise purchase. Face to face meetings are the best, but telephone conversations will suffice in order to save money and time for travel. E-mail exchanges are less fruitful, as the franchisees may be reluctant to reveal their attitudes to and experiences with the franchisor in writing, which could be shared later with the franchisor. The prospective franchisee should not simply accept the list of franchisees presented for such interviews by the franchisor and should endeavour to find franchisees on their own. Some attempt should be made to talk to franchisees who operate in markets and locations similar to what is planned for the prospective franchisee, i.e. mall locations or street locations. It is also a good idea to talk to franchisees who are new to the

Talking to bankers, suppliers and landlords who have dealt with the franchisor or the franchisees in the system may reveal valuable information. system, ones that have been around a long time and those in mid-term. In this way, the prospective franchisee will be able to get some sense of the direction in which the franchise system is heading. Once you have done as much investigating as you can with the amount of time, money and stamina available to you, it is time to distill and analyse what you have learned. This may require the services of a chartered accountant, franchise lawyer or other advisor. All of this takes time and effort and you should not feel rushed by the franchisor. The best franchisors want their prospective franchisee to investigate them as much as they will be investigating the prospective franchisee. The process should be more like dating than buying and selling. Regret is a terrible thing to have live

with, but regretting the purchase of the wrong franchise can also be financially disastrous. Following the best due diligence practices will make all the difference. EDWARD (NED) LEVITT is a senior partner

of Aird Berlis LLP, Toronto, Canada. He served as General Counsel to the Canadian Franchise Association from 2000 to 2007 and, as a member of the Ontario Franchise Sector Working Team, was instrumental in the creation of Ontarioâ&#x20AC;&#x2122;s franchise legislation. Among his many publications is Canadian Franchise Legislation published by Butterworths/ LexisNexis. For more information: Phone: 416-865-4628 Email: nlevitt@airdberlis.com.

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expert advice

Greg Harney, Senior Counsel, Shields Harney

A Lesson to Be Learned

In 2003, a Canadian Franchisor advertised the opportunity to become a franchise owner of a European style café bistro. The Franchisor historically operated as a regional franchisor based primarily in Quebec and Ontario.

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In the information presented to prospective franchisees, the Franchisor advertised a now national franchise system, having recently acquired two existing café chains operating across Canada. Through multiple channels, the Franchisor actively marketed to entrepreneurs across the western provinces. The franchise was poised as a turnkey franchise opportunity. A Victoria couple interested in opening a restaurant or café style franchise came across an advertisement for this particular franchise and began investigating the opportunity. In 2004, the couple entered into a franchise agreement with the Franchisor to become a Franchisee. The franchise would be located in a popular Victoria shopping center. Unfortunately, the franchise experience for this particular couple was fraught with challenges from the start. Contrary to the initial franchise agreement, the Franchisor did not hold a grand opening celebration for the Franchisee in order to promote the business. A local supply chain was not yet in place when the franchise opened for business. A lack of suppliers hindered operations from the start. Further, the Franchisor had significantly underestimated start-up costs for the café. A culmination of misrepresentations by the Franchisor contributed to the failure of this franchise. In 2005 circumstances came to a head and the Franchisee filed a claim against the Franchisor. Through an arbitration proceeding in 2006, an impartial arbitrator established the Franchisor had fundamentally breached the franchise agreement. The arbitrator awarded damages to the Franchisee in the spring of 2007.

After registering the arbitration award as a judgment in the BC Supreme Court, counsel for the Franchisee discovered the Franchisor had transferred all assets and income to a separate company. This quiet reorganization led to complicated litigation. Meanwhile, the Franchisor attempted to overturn the arbitration award and to have the jurisdiction for all legal proceedings changed to Quebec. Ultimately, both actions were unsuccessful. The Franchisor later declared bankruptcy, further challenging recovery for the Franchisee. The case ultimately settled out of court. The Franchisee’s experience is an unfortunate example of the risks associated with franchising, providing valuable insight for future franchisees. Engaging with a franchisor historically operating and franchising out of province compounds traditional risks associated with franchising. Geographical separation from the franchisor and the franchisor’s established supply chain places a new franchisee in a vulnerable position, especially at start-up when strong support and training are critical to success. When a legal dispute arises between an out of province franchisor and local franchisee, it can surprise franchisees that the law governing their dispute may be that of another province. The expense of travelling to an out of province arbitration or court hearing only serves to compound the cost of dispute resolution. Risks associated with franchising are heightened when a franchisor, traditionally limited to a particular region or jurisdiction, takes on an aggressive expansion. By far the most problematic scenario is the expansion of out of country franchises into Canada but province-

Canadian Franchising

to-province expansion also carries risks. Several Canadian provinces currently have franchise legislation. Among other considerations, expanding franchisors must adhere to provisions within each legislated province. Prospective franchisees must also consider the value of a local brand. The Franchisor in the story above had a recognized name in Quebec and Ontario, with dozens of franchisees operating under the franchise name. Success in one region does not necessarily denote success in another. Ultimately, the Franchisee did not have access to a strong regional network and support structure. While being first to market can be beneficial, having an operating network already in place can provide remarkable insight, training opportunities, networking opportunities, and established connections to supply chains. Entering into a franchise relationship is a comprehensive task. At the end of the day, becoming a franchisee requires research, careful planning, and professional advice.

Geographical separation from the franchisor and the franchisorâ&#x20AC;&#x2122;s established supply chain places a new franchisee in a vulnerable position, especially at start-up when strong support and training are critical to success. GREG HARNEY is Senior Counsel at

Shields Harney, and has appeared frequently before all levels of court in British Columbia, as well as before the TradeMark Opposition Board, the Federal Court of Canada, the Federal Court of Appeal, and the Supreme Court of Canada. Greg was called to the bar in 1983 and joined a medium-sized Vancouver firm at which he subsequently became a partner. He left that firm in 1998 to establish Shields Harney. Greg has been active in franchising issues for over 25 years including providing advice on franchise agreements

and drafting packages for developing franchisors. Greg Harney specializes in business litigation with an emphasis on franchise disputes, landlord/tenant, shareholder/partnership, regulatory and disciplinary matters, employment, and construction/development disputes. Greg advises clients across Canada as well as in the United States, and has arbitrated many times using the domestic and international arbitration rules as both counsel and arbitrator. For further information Greg can be contacted at (250) 405-7616 or gharney@shieldsharney.com.

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expert advice

Lori Karpman, President, Lori Karpman & Associates Ltd.

So You Want to Buy a Restaurant?

Food franchises are by far the largest segment of the franchise industry and most people are attracted to food franchises because they like to cook and think it would be easy. In actuality, it is nothing like having a dinner party. Food franchises are by far the largest segment of the franchise industry and most people are attracted to food franchises because they like to cook and think it would be easy. In actuality, it is nothing like having a dinner party. Being a restaurant owner is hard, often grueling

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work with long hours managing operations, staff and completing administrative duties. Success is based on the franchisee committing time, being 100 percent dedicated and having tremendous patience. However, those of us in the sector will surely tell you that while restaurants are the most challenging, they are also the most rewarding, fun and if properly managed, can be extremely lucrative. The success of any franchise system is based upon two intangible principals: consistency and goodwill. This is true regardless of the product or service, but especially in food. By consistency, I mean that the customer can expect to have the exact same dining experience in every location in the chain. McDonald’s is the best example since a Big Mac is a Big Mac no matter what location you are visiting. The second element, goodwill refers to the fact that brand awareness has already been generated for the brand long before your restaurant opens and as a result of that you are guaranteed to have sale from the very first day of business. The customers already have an expectation of the dining experience from service to food. If their experience is different and not in a positive way, not only will that customer not return to your location but he will boycott other locations and will encourage his friends and family to do the same. Therefore there is a loss of sales for other franchisees in the system that can provide the right experience. This is how the operations of one franchisee can affect sales of the entire system and can singlehandedly ruin the goodwill of the brand. Here is a real life example: When I was a Franchisor, I had an operator who was using an unapproved chicken product. We received tens

upon tens of email and phone complaints about the new chicken. We notified the franchisee of the default that advised that the next step would be to close his store, because his actions were affecting all the other operators. He refused and one week later we took possession of his location. A franchisor has a duty to protect the goodwill of their system on account of all franchisees and the closure of the location was the only remedy that could ensure that. The first decision that needs to be made when buying a food franchise is the proper format for you. This is primarily a quality of life decision as each format comes with different time commitments, amount of staff required and amount of administrative work to be done. There are a variety of choices such as: full service sit down, counter service only, food court model, and food cart to name a few. A full service sit down restaurant is obviously the most intensive and time consuming of them all being 24/7/365; however it is generally the most lucrative. A food court model has ‘mall’ hours, however this is not the best format if the revenue is intended to be the family’s sole source of income, unless the whole family will be working in it. Mall rents are very high and it is often difficult to generate enough sales to support a whole family but as a second income, in semi retirement or as a single person, this may be ideal. There is also catering which is an entirely different business to run because your hours are based on the jobs or events that you secure. If you are doing a large or important event, you will certainly want to attend the event to ensure its success so this may mean late nights and weekends, with free daytime hours.

Canadian Franchising

Even within categories there are choices to make, for example, if you choose full service and are not a morning person, don’t buy a breakfast franchise! So the first step is to narrow down your choice to a model based on your quality of life requirements and realities. The second factor is your budget. There are a number of financial considerations to take into account. When researching a franchise always ask the prospective franchisor for the TOTAL cost, what is referred to as the “TurnKey” cost, or the total amount it will cost for everything up until opening day. This is the amount you will need in total to buy and develop the franchise. As a rule of thumb you need to have approximately 40 to 50 percent of this total number unencumbered and available for investing. Reputable institutional financiers such as banks and credit groups generally finance the balance. Additionally you want to have at least three months working capital put aside to cover your initial financial needs until you can make your payments, such as payroll or restaurant operations. The beauty of franchising as a business model is that franchisees are not required to have any experience in the industry of choice. This is true of foodservice where no restaurant experience is required, but other skills that cannot be taught in a training program are essential. These would include: excellent supervisory and management expertise, great communication, organizational, and prioritization skills. Selling experience is always a plus. The franchisee has to bring to these skills to the table to be a success. The cost of the franchisor’s training program for you and one other person is covered in the Initial Fee, but travel, meals and accommodations are not. Depending on the complexity of the operation training will be anywhere from one to 16 weeks at a location to be decided upon by the franchisor. You will receive a training manual as well as the Operations Manual to keep and use in running your own location and training your staff. You need not worry about support because it is in the franchisor’s interest to see that your opening and first few months go as smoothly as possible. Once your opening period is over you can expect monthly support visits by a member of the operations team.

The success of any franchise system is based upon two intangible principals: consistency and goodwill. This is true regardless of the product or service, but especially in food.

The key financial indicators of restaurant success are food and labor cost. These are the only two controllable expense categories that when properly managed result in higher profitability (or reduced losses.) Almost all of a restaurant’s expenses are fixed. The only numbers that an operator has complete control over are food and labor. So imagine if your food cost target is 30 percent (of sales), but your actual food cost is 33 percent. Let’s also assume that sales are $30,000 per week. Being off by 3 percent doesn’t sound like much but annualized it results in a loss of $46,800 at the end of the year! The same applies to controlling

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expert advice

Lori Karpman, President, Lori Karpman & Associates Ltd.

When you finally select a concept, you become a goodwill ambassador for the brand. You have to ‘love” the food, be aligned with the brand’s values and understand what made you choose that brand over any other. labor cost. It’s a delicate balance to find just the right amount of labor, or the right amount of food to prepare to ensure that waste is at its minimum, but the work is well worth the effort. You will learn over time, the best formula for your restaurant and the franchisor will; provide you with the support you need to meet the targets. When you finally select a concept, you become a goodwill ambassador for the brand. You have to ‘love” the food, be aligned with the brand’s values and understand what made you choose that brand over any other. Competition in food is so fragmented that a restaurant does not only compete with others offering the same menu items but all other food outlets offering a meal in the same price range as yours. For example, you may offer a big salad for $6.99 but so may the local supermarket with their lunch buffet. Find out what makes your brand different. I recently performed this exercise for a very successful Quebec/ Ontario based brand called Baton Rouge restaurants. Baton Rouge is a very successful chain of upper scale full service family restaurants primarily in Quebec and Ontario, (one in Halifax, one in Calgary). This brand, while being number one in the rib and steak category in Quebec, also serves fresh fish, pasta and salads. To do my job properly, I wanted to understand why someone would buy this franchise over any other. I reflected on my own history and realized that I went there as a teen, a young married couple, a couple with children, and my then children went with their

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grandparents. On every visit the restaurant was full of tables with a combination of customers newborn to 99. This tells me they have a loyal following and generations growing up in their restaurant. They are intergenerational, uniquely ‘something for everyone’. While its competitors continue to direct their attention to the same small target of customers, as their current ones grow out of their age demographic, Baton Rouge does not have this limitation. In fact, it accounts for its success. It has longevity and is uniquely the brand for all generations. (And while this may seem like a shameless plug for a client, I took the mandate because I really believe in the brand, its people and vision, and what it has to offer their customers and franchisees.) The last but not least indicators of the success of the brand include first, the

number of multi-unit franchisees or master franchisees, and second, how many locations were sold in the past three years and do existing locations get sold frequently, called the “turn-over rate”. Hopefully this gives you some food for thought on how to select and evaluate a food franchise and some tips on managing the one you own. LORI KARPMAN is the President of Lori

Karpman & Associates an Award Winning full service consulting firm providing all the services required by a growing franchisor under one roof. She is a 30 year veteran of the franchise industry having been a franchisor twice and a provincial master franchisee. She is considered one of Canada’s leading experts on franchising. For further information please visit www.lorikarpman.com.

Midas Franchise Opportunities

Midas is one of the world’s largest providers of automotive service. We offer a range of total car care options to fit today’s consumers’ demands. As a Midas franchisee you become part of a multi-billion dollar industry serving a growing vehicle population. Join us while we continue to expand throughout Canada. With new trade areas already identified, we are ready to help you establish your Midas location.

Build your future with a leader . . . put your trust in the Midas touch!

Phone: (616)844-2272

Email: myeresource@comcast.net