Canadian Franchising Magazine Summer 2013, Volume 1 Issue 3 by CGB Publishing

CANADIAN

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M A G A Z I N E

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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

FEATURE ARTICLE

VOLUME 1 ISSUE 3

$5.95

MOBILE FRANCHISING

FINANCIAL CONVERSATIONS FOR FRANCHISEES

FOX AND FIDDLE

TAP INTO SUCCESS SUPPLIER FORUM

LATEST NEWS

FINANCIAL ADVICE FROM THE BANKS

TOP LAWYERS’ ADVICE

Canadian Franchising

Franchising canadian

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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

FROM THE

CANADIAN FRANCHISING VOLUME 1, ISSUE 3 PUBLISHER: Colin Bradbury. colin@cgbpublishing.com

EDITOR: Christie Hall. christie@cgbpublishing.com

SALES DIRECTOR: Vikki Bradbury. vikki@cgbpublishing.com

SENIOR SALES EXECUTIVE: Jenn Dean. jenn@cgbpublishing.com

LAYOUT: Bergdis Design. bergdisdesign@gmail.com

COVER IMAGE: FOX AND FIDDLE

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

Scientia est Potentia: Knowledge is Power We all make dozens of different decisions every day. We calculate risks, and choose the best possible alternative for any given circumstance. Sometimes the stakes are reasonably low. Do I take the whipped cream on my latte, or do I opt for the skinny version of my caffeinated beverage? Other times, the future of our business or home or family hangs in the balance. Is now the best time to buy a business? Do I have proper financing in place? Do I fully understand the contract I’m signing? In life, and in business, the greatest rewards are often the result of the greatest risks. Play it safe, and you miss the opportunities when they’re available. Risk too much and you could lose everything. In each decision we make, we must walk the fine line and find the perfect balance of risk and reward. How do we do this? By being informed. The latin phrase scientia est potentia (translated: knowledge is power) illustrates this point nicely. When we have done the job of collecting information or knowledge, we have the power to make the best possible decisions. The aim of Canadian Franchising is to provide new and seasoned franchisees with all the information and resources they need to make informed decisions in all areas, and in all stages of their franchising careers. In this issue, you’ll find a collection of “Expert Advice” articles

When we have done the job of collecting information or knowledge, we have the power to make the best possible decisions.

that will help you build your franchising knowledge base, and will give you the power to make solid and sound business decisions for your franchise. This month we cover everything from how to have those important initial financial conversations, debunking misconceptions about franchising, how to negotiate a commercial lease, dispute resolution in franchising, the importance of forming partnerships, and much more. We hope that you will find this collection of articles useful, and that you will feel empowered to take risks and be successful in your franchise career. 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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28 On the Cover 10 Fox and Fiddle: Tap Into a Successful Business Opportunity 18 Five Financial Conversations for Franchisees

28 Feature Article: Mobile Franchising

canadian franchising

VOLUME 1 ISSUE 3

In Every Issue

Franchisee In Action

Canadian Franchising News

Sandler Training

Industry news from across the country

Boston Pizza

Feature Article

Get Up and Go! With Mobile Franchising

Franchise FOCUS

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Franchisee Profiles

RAMMP

Dogtopia

Franchisor In-Depth

Right at Home

ci gusta!

Canadian Franchising

Expert Advice 12

Franchise X-Perts Are Here to Help

The Franchise X-Perts

BUYING A FRANCHISE:

New Systems vs. Mature Systems

Ned Levitt, Aird & Berlis

Five Financial Conversations for New Franchisees

Peter Knight and Kate Groom, Smart Franchise

Cash is King: Managing Cash Flow

Joseph Pisani, BMO

Misconceptions About Franchising

Wayne Maillet, Franchise Specialists

A FRANCHISE OMBUDSMAN:

The Newest Method of Resolving Franchise Disputes at an Early Stage

Frank Zaid, Hoskin & Harcourt

Doing Business in La Belle Province: Can You Really Afford To Ignore It?

Lori Karpman

TIPS FOR FRANCHISE TENANTS:

Negotiating Commercial Leases and Renewals for Dummies

Dale Willerton, The Lease Coach

An Alternative Funding Option

David Gens, Merchant Advance Capital

Lessons Learned Along the Way

Dawn Taylor, Bad Ass Jacks

Love ‘Em and Leave ‘Em

Patti Hone, As You Like It Marketing

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AUSSIE PET MOBILE AWARDED THE

FRANCHISEE’S CHOICE DESIGNATION AWARD Aussie Pet Mobile has been honoured as a recipient of the Franchisees’ Choice Designation Award for the 2nd consecutive year at the 22nd Annual Canadian Franchise Association (CFA) National Convention in Montréal, Québec. The Franchisees’ Choice Designation is awarded to CFA member franchise systems who voluntarily took part in an independently-administered survey. This year, over 50 CFA member franchise systems participated in the survey. Franchisees were asked to assess their franchisor in key areas of the franchise business model, including the franchisee selection process; franchisee Informa-

tion package; leadership; business planning and marketing; training and support; ongoing operations; and the relationship between the franchisor and franchisee. “We strive for excellence and are always trying to exceed our clients expectations on a daily basis. This is a key ingredient to our success. One of my key roles is making myself available as a mentor, coach and friend to our team of dedicated owners. Life is a learning process, we all learn each and every day,” said Richard Avis, President of Aussie Pet Mobile in Canada. Contact: www.AussiePetMobile.ca

JAMBA JUICE RENEWS PARTNERSHIP WITH ROCK ‘N’ ROLL MARATHON SERIES Jamba Juice Company, a leading healthy, active lifestyle brand, today announced the renewal of its partnership with Competitor Group, Inc., the leading active lifestyle sports media and event entertainment company. Jamba Juice is now the “Official Blended Fruit Beverage and Smoothie” sponsor of 14 events in the popular Rock ‘n’ Roll Marathon Series. The partnership kicked off this month a Rock ‘n’ Roll Pasadena Half Marathon Benefitting CureMito! “Last year, thousands of participants were able to enjoy our array of delicious and better-for-you offerings, which are a great fit for those seeking convenient, nutritious products to complement their healthy, active lifestyles,” said Julie Washington, Chief Brand Officer, Jamba Juice Company. “We are thrilled to continue the partnership this

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year and to increase the number of races we will participate in, allowing us to broaden our engagement with endurance enthusiasts looking for refreshing options like our fresh-squeezed juices and All-Fruit™ smoothies.” “We are very pleased to renew our partnership with Jamba Juice,” said Sean Clottu, Vice President, Competitor Group. “Jamba Juice is a brand that aligns with our runners’ passion and interest in living a healthy and active lifestyle. With all the athletic performance and health benefits of consuming real whole fruit and juice, we know our participants will be excited to see Jamba Juice return to many of our Rock ‘n’ Roll races.” Contact: www.jambajuice.com

Canadian Franchising

ABOVE GRADE LEVEL: A SMART INVESTMENT WITH HIGH PURPOSE AND LOW OVERHEAD Above Grade Level is an in-home tutoring service that uses an outstanding proprietary curriculum to help children of any grade level live up to their potential in the classroom. With over a million dollars in development, they have created a winning program that helps children succeed, parents be happier and franchisees run a successful business. The program works so well, they even guarantee the students’ improvement! Above Grade Level is actively seeking potential franchise owners who are passionate about helping children and families in their community; possess high morals and ethics; and are driven to achieve financial success and independence through business ownership. Single and multiple unit territories in premium locations are available to individuals and investors with the requisite management skills and financial resources. Prior experience in education or small business is not necessary to be successful. Above Grade Level is selective and will wait to partner with the right franchisees. Mission: Being passionate about families, their children’s educational advancement, and their lives. Working in the most interesting, explosive and impactful space, supplemental education, through the delivery methods of a very cool, youthful and progressive business franchise brand, whose strength lies in the real assets of proprietary world class Curriculum and Teaching Tools. Every Student Is Unique...Their Tutoring Should Be Too!

Interested in opening a Franchise in your city or neighbourhood? Contact: Jim Gormley Email: jim@the franchisexperts.com www.thefranchisexperts.com www.abovegradelevel.ca Phone: 1-855-5TUTOR5

THE KEG ROYALTIES INCOME FUND’S CASH DISTRIBUTION The Keg Royalties Income Fund (the “Fund”) announced that its April 2013 distribution of eight cents per unit has been declared and is payable to unit-holders of record as at April 21, 2013. The April 2013 distribution will be paid on April 30, 2013. The Fund is a limited purpose, open-ended trust established under the laws of Ontario. The Fund indirectly owns certain trademarks and other related intellectual property used by Keg Restaurants Ltd. (“KRL”) in its Keg Steakhouses & Bars. In exchange for the use of those trademarks, KRL pays the Fund a royalty equal to 4% of the sales of all Keg restaurants in the royalty pool.

Vancouver-based Keg Restaurants Ltd. is the leading operator and franchisor of steakhouse restaurants in Canada and has a substantial presence in select regional markets in the United States. KRL continues to operate The Keg restaurant system and expand that system through the addition of both corporate and franchised Keg steakhouses. Aon Hewitt has named Keg Restaurants Ltd. one of the “50 Best Employers in Canada” for the past ten years. For more information on our brand visit www.kegsteakhouse.com. Contact: Karyn Byrne Investor Relations 416-6464960 karynb@kegrestaurants.com

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SECOND CUP ANNOUNCES 2012 RESULTS AND QUARTERLY DIVIDEND The Second Cup Ltd. (“Second Cup” or the “Company”) reported financial results today for the thirteen weeks ended December 29, 2012 (the “Quarter” or “Q4”) and year ended December 29, 2012 (the “Full Year”). The Company’s shares are traded on the Toronto Stock Exchange under the symbol “SCU”. All amounts in this news release are presented in thousands of Canadian dollars, unless otherwise indicated. In 2012 we continued to improve the café network,

with the opening of 18 new cafés and the closure of 17, most of which were underperforming locations. System sales of cafés and same café sales growth are presented in reference to the sales performance of all cafés in Canada. The Company believes they are useful measures as they provide an indication of the top-line sales on which the royalty that is Second Cup’s direct source of income is based. Contact: www.secondcup.com

CARL’S JR. LOOK TO CANADA FOR FRESH OPPORTUNITIES

Billy Newell’s banking on burgers: American burgers, to be precise. Newell holds the Vancouver franchise for American powerhouse Carl’s Jr. and he’s counting on locals to eschew their salads and chomp into half-amillion guacamole bacon burgers instead. But popular American restaurant chains such as Carl’s and Famous Dave’s now making forays into Canada can expect to find themselves bumping heads with sturdy local competitors who’ve also identified Western Canada for growth. Without a doubt, the flat and food-saturated U.S. economy makes Canada look attractive. But U.S.-based brands trying to make an entry here over the last year or two have had “varying” degrees of success, Fulmer said. Real estate is hard to come by, and there’s limited room for newcomers, he said. When Carl’s Jr considered Vancouver seven years ago, food costs were too high, Newell said. But today, more competition among suppliers has changed the calculation, he said. Carl’s Jr. expects to open five to 10 restaurants in Canada this year, of which five are planned for B.C. Contact: www.carlsjr.com

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Canadian Franchising

CANADIAN BOOMERS

CATCH ENTREPRENEURIAL BUG For Canadian boomers, the road to retirement may include a stop as a small business owner. Whether starting freelance consulting work, buying a franchise or opening a specialty business, a recent TD Canada Trust survey found more than half of boomers (54%) have started or considered starting a small business prior to retirement (15% and 39% respectively). According to the research, the top reasons boomers consider starting their own business before retiring include being their own boss (58%), having the opportunity to make more money (53%) and having a sense of personal achievement or pride (50%). Of those who thought about opening their own business, two-thirds (67%) said it would be a new venture outside of their current field of work. The survey also found that boomers believe the greatest challenges to starting a small business would be securing finances (42%), taking on additional debt (38%), finding new business or clients (37%) and balancing business and personal finances (36%). Small business owners can also look to online resources for additional support. For example, TD Canada Trust’s Canadian Business Community on LinkedIn provides a network of small and mid-sized business owners and industry experts. Contact: Additional resources, including an online business planner, can also be found at the Small Business Resource Centre on www.tdcanadatrust.com.

GREAT WEST LIFE AND SHOPPERS DRUG MART LAUNCH NEW HEALTH SUPPORT PROGRAMS With the prevalence of chronic disease conditions on the rise, Great-West Life and Shoppers Drug Mart have entered into an agreement to introduce two new health support programs for Great-West Life clients. Through the new agreement, participating Shoppers Drug Mart pharmacists will offer a diabetes support program for eligible Great-West Life plan members who are living with diabetes, as well as a comprehensive medication counseling program for eligible Great-West Life plan members who are taking one of the specific maintenance medications. “This agreement demonstrates and accelerates the expanded role that pharmacists perform in helping patients better manage their health and utilizes pharmacists’ knowledge and trusted patient relationships,” says Dr. Dorian Lo, Executive Vice-President, Pharmacy & Healthcare for Shoppers Drug Mart. The diabetes support program was developed to provide Great-West Life plan members, who are living with diabetes, the opportunity to connect with a participating Shoppers Drug Mart pharmacist trained in diabetes management. Additionally, plan members will have access to more than 450 Shoppers Drug Mart pharmacists who are Certified Diabetes Educators. The diabetes support program will include A1C testing, medication therapy recommendations and lifestyle management counseling. Contact: www.shoppersdrugmart.ca

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cover

Fox and Fiddle

TAP INTO A SUCCESSFUL BUSINESS OPPORTUNITY Since 1989 the tried and tested concept of the Fox and Fiddle British-style pub has appealed to a broad base of consumers, and has established itself as a neighbourhood pub with a comfortable and inviting atmosphere, a place where patrons are recognized and welcomed back to enjoy first rate service, quality food, and great entertainment.

aving recently undergone a successful re-branding, Fox and Fiddle is enjoying a new modern look with an urban feel, that still maintains the cozy pub atmosphere. Comfortable seating with couches, coffee tables, and great outdoor patio spaces invite guests to settle in for a relaxed visit while they enjoy some of the great offerings on the Fox and Fiddle’s menu. A new menu features all the expected comfort food and pub favourites that patrons have grown to enjoy over the years, but also includes contemporary dishes like Pad Thai, a variety of flatbread appetizers, and an unbelievable salad hi-lighted by cranberries and spiced pecans with a Fox signature vinaigrette dressing. There’s a reason the Fox and Fiddle is known as the place where fine fare and great friends are found. The Fox and Fiddle’s owner-operators are well-established and recognizable members of the communities in which they operate, and they share a strong focus on giving back and getting involved in the community by participating in community events and sponsoring sports teams, etc. Their restaurant locations are not just the place where they go to work; they are key components of their local neighbourhood space. When it

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comes to getting to know their patrons, Fox and Fiddle management are not just the people who surface when a problem arises. They are the people who get out front to meet and interact with patrons, getting to know them, developing relationships, and learning their needs so that those needs can be met. Along with providing a great pub setting and superior quality food, stellar customer service is a key priority for the Fox and Fiddle management and staff. The goal is to have patrons feel relaxed and at home during every visit. With a vision of controlled expansion and a focus on finding the best locations, Fox and Fiddle is actively looking for new franchisees across Canada and into the US market as well. The company is excited to work with franchisees who share their interest in community involvement, and providing a local homey feel to the restaurant.

There are a lot of reasons to own a Fox and Fiddle Franchise. Here are their top ten:

Popular Concept

The Fox and Fiddle version of the traditional British-style pub concept continues to show strong popularity.

Favourable Royalty Fee

Successful Track Record of Expansion

Solid Management Support

The oil that makes the engine run is typically derived from Royalty Fees applied to each location; however, at the Fox and Fiddle, they don’t believe in gouging the franchisee. They want your business to be successful and have a set program in place to offer a competitive Royalty Fee that is easy to budget and manage.

The Fox and Fiddle Group of Restaurants has grown to 20 profitable locations and has firmly established an important critical mass in the Greater Toronto Area. Outside that, the vision for the Fox and Fiddle concept goes well beyond Southern Ontario, with controlled expansion north, east, west and south into the United States. The franchise success rate is outstanding with strong partnerships evident in multi-unit owners. The management team brings a wealth of experience and expertise in the bar and restaurant industry to provide franchisees with all the support they’ll need to make the best decisions possible.

Canadian Franchising

There’s a reason the Fox and Fiddle is known as the place where fine fare and great friends are found.

Extensive Training and Development

Purchasing Power

Increased Credit Options

“All for One” Attitude

Chain-Wide Promotions

Franchise ownership at the Fox and Fiddle begins initially with extensive staff training and management development to put franchisees on the early road to success. Better insurance rates, lower food costs and greater advertising opportunities are some of the benefits. As part of an establishment and successful chain of restaurants like the Fox and Fiddle, more financing options become available to you. The Fox and Fiddle team has established a strong inter-store network to provide all the benefits that enthusiastic teamwork brings to group success. This includes regular meetings to discuss trends, upcoming promotions and general store management. Fox and Fiddle has strong relationships with many food and beverage suppliers and are constantly working with them to develop exciting promotions and advertising to increase customer satisfaction and benefit franchisee bottom lines.

True Entrepreneurs Welcome

The Fox and Fiddle applauds initiative and encourages all franchise holders to exercise their creativity to earn the highest possible success for themselves and the entire company. The goal: for you to own and operation your own successful turnkey business. For More Information: www.foxandfiddle.com/franchise/franchise-canada

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expert advice

The Franchise X-Perts

Franchise X-Perts Are Here to Help For many, the dream of entrepreneurship and franchise ownership remains just that. A dream. After almost 20 years in the movie business operating one of Canada’s largest and most successful video and game rental franchises Jumbo Video, Jim Gormley decided to dedicate the next chapter of his career to helping others find their success and achieve their goal of franchise ownership.

ranchising is a great way to replicate and grow a tried and proven business concept. While many businesses that are excellent prospects for franchising, they can find it very daunting and difficult to deploy in other territories or countries. NOT because of any lack of commitment on their part, but because there’s just not enough time in the day to run their business and also package the business for duplication or set up an efficient and cost effective franchise sales, franchisee recruitment, franchisee disclosure, and real-estate group, internally, especially internationally. As President & CEO of The Franchise X-Perts (TFX), Jim Gormley is doing just that. “Having spent the bulk of my career as a franchisor it felt timely to help navigate the landscape for others to achieve the same success. I wish I had TFX 20 years ago to lead me through the process. What we are offering at TFX is really a one-stop-shop for franchisors and those who want to be one.”

Taking the Guess Work out of Franchise Ownership TFX is an organization that is committed to providing both established franchisors, and developing franchisors, with innova-

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tive franchise growth solutions and to working with emerging franchisors, and with businesses considering franchising to assist them in the development of their franchise concepts on a local, national and international level. TFX strategically connects the resources and guidance from the parent company franchisors to replicate success attained in their home country in Canada and abroad. TFX modus operandi “if its not broken don’t fix it” falls in line with its core belief that if the franchisor is inclusive and supportive and the franchisee is the right “fit” for the culture they will both succeed. So what is a franchisee or area developer looking for in a franchise before deciding to invest in that system? Franchisees join a network because they want to be part of a successful organization and part of a highly motivated TEAM. There is NO “I“ in TEAM particularly in a successful franchise. Only when both the franchisor and the franchisee are working T-ogether for the benefit of E-veryone they will A-chieve M-ore

Canadian Franchising

Franchisees are also looking for a Franchise system with SPIRIT! One that: Has a proven Has ongoing Has Recognized Brand Can generate recurring Can provide a reasonable ROI And provides ongoing

S P I R I T

– SYSTEM – PROFITABILITY – IDENTITY – REVENUE – INVESTMENT – TRAINING

TFX harnesses the power of a team of dedicated franchise professionals, all with cross-discipline expertise in franchisee recruitment, franchise sales, social media and traditional marketing, web site and SEO management, franchise operations, POS management, site selection and site build-out management, and franchise administration. “Our business model is quite revolutionary, and I think it’s the reason we are seeing a shift in the demographics of new franchisors,” says Gormley. “Franchisors can successfully satisfy the desire to rewire rather than retire from their current profession or career and start their own businesses. While it’s not new for people to aspire to be their own boss, it is far more attainable now regardless of age or level of career history with reliance on

our tested concepts. It’s a daunting task to start from scratch so we’ve taken it out of the equation. Our intrepreneurs as we call them can attest to our easy approach” An intrepreneur is someone with entrepreneurial skills but works best within a franchise system. Intrepreneur’s, by definition embody the same characteristics as an entrepreneur conviction, passion, and drive.

What Role Does The Franchise X-Perts Play TFX understands the Global Franchise category and recognizes the potential of finding new and emerging franchise concepts eager to develop their systems in Canada. Utilizing TFX resources they are able to source and negotiate master franchise opportunities to bring to Canada. TFX will also source, recruit, validate, secure, and disclose franchisees and area developers for their clients. They understand the importance of not only finding a new franchisee but also finding the “RIGHT” franchisee. This, they believe above all, is critical to the development and ultimate success of any franchise.

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expert advice

The Franchise X-Perts

TFX in conjunction with each client will: • Determine the target candidate. Source the candidates and assess their capability. • Feed the plan and deploy the sales strategy • Engage the right franchisees. • Encourage internal validation of the system. • Start a relationship and not just close a sale. • Assist with the preparation and maintenance of all franchise legal documentation including but not limited to the Disclosure Document, Franchise Agreement and lease negotiations. • Target, source and negotiate Area Developer opportunities • Source and negotiate real-estate site -selection • Identify the best new social media marketing platforms • Manage all Franchise Trade shows • Develop a local emerging market strategy TFX franchising method improves the chances of a seamless transition and expansion into the franchise system in Canada. It sets the foundation to successfully, and quickly recreate the system while providing new growth for the system in another market. An integral part of the franchising business is to have fluid two-way communication between the franchisor and subsequent franchisees. It is vital that the Franchisor support team maintains a consistent understanding of the franchisees in order to protect its brand, grow its revenue and succeed as a franchise. Likewise it is imperative that the franchisees have access to the documented expertise of the franchisor, along with marketing and business processes. By properly identifying and duplicating the business processes, from sales, recruitment, real estate to franchisee support, the process of organizing and deploying a franchise becomes much more simplified. And the chances for success are heightened.

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The Bottom Line The ability of the franchisor to provide a concept and system that can offer franchisees: • A strong franchisor • A reasonable initial investment • A reasonable return of investment • Incremental and recurring revenue from multiple sources • Profitability • Enduring and deep relationships TFX can help your Franchise system check all the boxes. TFX is committed to franchising and will help each client realize its vision and maximize its growth potential in Canada, and Internationally. “Our website http://www.thefranchiseexperts.com/ is a good place to start if you are considering opening your own franchise,” says Gormley. “We invite anyone remotely thinking of entering the franchise business to participate in the webinar on our site. It’s a remarkable tool we offer free of charge. Then set up a consultation so we can access your goals and flush out a plan for you. We are your savvy business partner with you ever step of the way as you achieve success. Its really that simple.” TFX works with Canadian, U.S., European and Australian franchise concepts and is currently deploying other franchise systems in Canada the U.S. the Caribbean, South America and Australia. Their roster of clients includes ci gusta! Canada, Dogtopia Cafe2U, Planet DVD Kiosk and Above Grade Level. For more information: www.thefranchisexperts.com

Midas Franchise Opportunities Midas Franchise Opportunities

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Midas is one one of of the theworld’s world’slargest largestproviders providersofofautomotive automotiveservice. service.WeWe offer a range of total offer a range of total car car care options options to to fitfit today’s today’sconsumers’ consumers’demands. demands. industry serving a growing vehicle As a Midas franchisee franchiseeyou youbecome becomepart partofofa amulti-billion multi-billiondollar dollar industry serving a growing vehicle population. Join Join us uswhile whilewe wecontinue continuetotoexpand expandthroughout throughoutCanada. Canada. With new you establish your Midas location. With new trade trade areas areasalready alreadyidentified, identified,we weare areready readytotohelp help you establish your Midas location.

Build your the Midas touch! Build your future futurewith withaaleader leader. .. .. .put putyour yourtrust trustinin the Midas touch!

Contact Us Contact Us Now! Now! You Youcan canvisit visitour our website www.midasfranchise.com website www.midasfranchise.com or call or call 800.365.0007 800.365.0007

expert advice

Edward Levitt, Sr. Partner, Aird & Berlis LLP

BUYING A FRANCHISE

New Systems vs. Mature Systems

W Buying power, name recognition, expertise (both in the business and in the business of franchising), advertising clout and research and development are some of the benefits prospective franchisees expect when buying a franchise.

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ith the newer systems, these benefits may not materialize for several years, if at all. There is no question that the risks for franchisees in the start-up franchises are higher than with the mature franchises. However, advantages can be found in the newer systems. For example, the prospective franchisee will have many more locations and territories to choose from in a franchise system that has not grown enough to reach saturation in prime areas. The entry costs may be lower and the rules less strict, which may appeal to the more entrepreneurial franchisee. Depending upon the depth of market penetration by the franchisor and the franchisee’s proximity to the franchisor’s established markets, there may even be a significant name recognition value for the franchisee. In all successful franchise systems, the franchisor has developed substantial expertise in the core business and in the business of franchising. Even the new franchisor may have a well-developed business model, but it will be impossible for the prospective franchisee to know how the franchisor will grow the franchise system and react to issues that impact upon its franchisees. With the older systems, there are many ways a prospective franchisee can investigate the franchisor’s all important franchise skills, before making the investment. One of the most important investigative tools

is to ask as many existing franchisees as possible how the franchisor runs the system and responds to the needs of its franchisees. In the newer systems, the number of existing franchisees are small and the ones that do exist may be far to new themselves to be able to give a clear picture of the franchisor’s strengths and weaknesses. A careful review of the franchisor’s disclosure document will provide valuable insights about the franchise offering whether or not the franchise system is new or mature, as all franchisors in Alberta, Manitoba, Ontario, Prince Edward Island and New Brunswick must deliver such a document to prospective franchisees. Many franchise systems operate in the retail sector, where the location of the store is critical to the franchisee’s success. Again, this is where there are differences between new and mature franchise systems. The more developed the franchise system, the more likely the landlords will be willing to deal with franchisees in the system and the more likely the franchisee will be able to acquire desirable locations on more favourable terms. When it comes to lease negotiations and negotiations on renewals, the mature franchisor will provide greater expertise and market knowledge to the benefit of the franchisee. Assuming that the prospective franchisee accepts the greater risk of purchasing a franchise in a newer system, in order to gain the advantages, then what

Canadian Franchising

can be done to make the investment a little safer? While it is an accepted fact of life that franchise agreements of mature franchisors are non-negotiable, this is not necessarily the case with the new franchisors. In fact, there are important changes that should be made to the franchise agreement, for the very purpose of reducing the risks. New franchisors, anxious to start growing the system and wise enough to know that quality franchisees are necessary all the time, but especially at the beginning, will be amenable to changes to the franchise documentation that will not be tolerated later in the franchise growth cycle. Control of the location by the franchisee, reduction or elimination of the franchisor’s discretionary powers, freedom to purchase inventories and supplies anywhere, more limited post-termination obligations of the franchisee, are but a few of the areas of possible and valuable change. It is not just how large a franchise system is that matters, but how quickly the franchise system has grown. A large

One of the most important investigative tools is to ask as many existing franchisees as possible how the franchisor runs the system and responds to the needs of its franchisees. number of franchises sold over a very short period of time, may, in fact, indicate a troubled system, as rapid growth without attention to growing the franchisor support structure and the system culture may create problems for every franchisee in the system. While purchasing a franchise in the “best” system may be a worthy objective, what is “best” for one franchisee, may not be “best” for another. The wise approach is take stock of yourself first, assess your tolerance for risk, determine what industries you find most fitting, then investigate, investigate and investigate more.

EDWARD (NED) LEVITT is a senior partner

of Aird & Berlis LLP, Toronto, Canada, and chair of its franchise law group. He served as General Counsel to Canadian Franchise Association from 2000 to 2007 and, as a member of the Ontario Franchise Sector Working Team, was instrumental in the creation of Ontario’s franchise legislation. Among his many publications is Canadian Franchise Legislation published by Butterworths/Lexis Nexus.

For More Information: Phone: 416-865-4628 Email: nlevitt@airdberlis.com

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expert advice

Peter Knight and Kate Groom, Smart Franchise

FIVE FINANCIAL CONVERSATIONS FOR NEW FRANCHISEES

“Honey, let’s buy a franchise!”

Whether or not your spouse or partner works with you, financial conversations are very much a part of business life. It’s best if they start before the doors open.

ey honey, looks like we need to invest $100,000 to buy this franchise”, he says. “No worries”, she says, “that’s great… where do I sign?” Rarely would a conversation go like this, unless it’s in your dreams! The initial rush of enthusiasm to buy the franchise you love will usually get tempered by the need to discuss it fully with your partner, bank and adviser. If you don’t have a partner, you still need to talk through the financial implications for your life. Investing in a business has financial implications for the whole family. With research showing around 40 percent of franchisees work with their spouse, it clear that family support makes a difference to business performance. Full and frank conversations are the best way to set this up from the start. If you’re thinking about getting into business there are financial conversations

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to be had. But what should you discuss and with whom? Here are five financial conversations which will help you clarify and address important financial issues right from the start.

Personal and family conversations

Your business will be a huge part of your life, so it’s important to consider how it will fit in your life. Start off by considering your goals and family life. What do you want from the next few years of your life? What sort of lifestyle do you want? Consider financial and non-financial aspects. Discuss this with your spouse if you have one. Also, it’s helpful to talk to a few business owners and ask them about the impact of business on their family and personal life. For example, what was it like

at the start? How have things changed throughout their business ownership? Once you’ve thought through all this it’s a good idea to write down your goals. Your business will form part of how you achieve them Next, think through the financial aspects of business and how it might affect your financial situation. Hopefully you’ve received financial information from the franchisor or the person you’re buying the business from. At this stage detailed budgets or calculations aren’t necessary, but you should have a sense of how much revenue and profit the business can make and how long it takes to become profitable. You’ll also need to know how much it costs to set up the business.

Here are some questions to discuss. • What is the upside of taking on this business? • What is the downside, what are the risks, what could go wrong? • How long might it take to become profitable and be able to pay ourselves a wage? • What impact will there be on the family budget? Can we trim our family budget if we need to, and what areas would we make savings in? • How much do we need to buy the business and fund the start up period till we can take an income? • How much can we make from the business? • What will be the impact on other investments? How does this investment relate to wealth creation for the family?

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Talk to an accountant

Part of the process of investigating a franchise or business opportunity is getting advice from a qualified accountant experienced in small business advice. It’s not just about help to set up a business structure or deal with tax. The idea is to find someone who can work through the financial aspects with you so you understand the implications and can make an informed decision. With your accountant, work out detailed financial goals and produce a budget and cashflow for the business. This lets you see if the business will generate enough money for you to have the life you pictured. To work out the budgets, use information about sales and costs from the franchisor. Also your own research if needed regarding customer numbers, rent and other costs. With your budget, consider what happens to the results at high, low and mid range sales, and also what the figures look like if costs increase. It’s important to do this so you can work out how you’d cope financially under different circumstances. Now you have detailed figures, again consider your family situation. How do these insights change things?

Talk to a banker

Another financial conversation you’ll need to have is with a banker. Running your business finance is different from personal so talk to the experts to get the right types of account in place. Your banker should be able to give you advice on financing options and also account types, credit cards and merchant facilities so customers can pay you. They can also help with superannuation and insurance if needed. Many of the banks have specialist franchise bankers who understand the franchise industry, so make sure you ask for them. The bank will want to see evidence of how you’ll be able to repay loans. So be prepared to show them that. It means having a business and personal budget, and also being able to demonstrate your plan and commitment. So, be prepared with a business plan.

5 If you’re thinking about getting into business there are financial conversations to be had. But what should you discuss and with whom?

Talk to a financial planner

Even if you don’t have a financial adviser at the moment, it can be a good idea to get advice from a financial planer who can review your savings, investments and superannuation. Taking on a business can be a big change in your life and it’s a good idea to take a look at any changes needed to your financial plans. The adviser can also give you advice on what insurance to consider, for example life and sickness or disability cover. Your accountant should be able to recommend a financial planner and work with them if needed.

Talk to a lawyer

Really? Financial conversations with lawyers? Yes, absolutely! When getting advice on the legal aspects of becoming a franchisee, make sure you get an explanation of the financial implications of the arrangements you’re making and contracts you’ll sign. If you’re in a relationship, it’s a very good idea to get individual legal advice on the financial aspects of business ownership, not just the franchise aspects. This allows both partners to ask their own questions about the risks and responsibilities – and to do so individually. Then you should talk through things as a couple. Owning a business can be a fantastic opportunity to build wealth and achieve family goals. But don’t neglect the financial conversations. PETER KNIGHT, FCPA and KATE GROOM

specialise in the financial side of franchising. In their business, Smart Franchise, they offer advisory services, training and workshops for franchisees and franchisors. PETER is an accountant with over 25 years in professional practice advising business owners. KATE has worked with and run franchise businesses for almost 20 years, focusing on strategy, planning and business improvement. For More Information: www.smartfranchise.com.au

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feature

Mobile Franchising

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Canadian Franchising

Get up and Goâ&#x20AC;Ś WITH MOBILE FRANCHISING!

Over the past few years there has been much debate on the economy of the world and its direct effect on Canada. Although we have appeared to fare decently well compared to the USA, Greece, Cyprus and many other countries of the world, Canadians are still well aware of the impact global economic instability has on all economies throughout the world. Page 21

feature

Mobile Franchising

MAID SIMPLE HOUSE CLEANING BY MAID BRIGADE Required initial investment $10, 001- $25, 000

Maid Brigade remains North Americaâ&#x20AC;&#x2122;s leading residential cleaning company with 30 years of experience. Maid Brigade offers both a standard franchise package as well as their new mobile, home based franchise, Maid Simple. A major bonus for Maid Simple franchisees is a part of their franchise model which includes a customer acquisition program helping provide immediate sales for a new franchisee. Maid Simple is also the only Green Certified maid service company in the world and provides franchise owners an advantage over competitors in a time where environmental awareness is more important than ever before.

lthough the economy appears to be improving, people within Canada still tend to be very budget minded and this trend has carried over into the Franchising world as well. More and more frequently franchise brands are out selling non-franchised ones and the stability, laid out structure and proven management system of a franchise, is very reassuring to the up and coming entrepreneur.

The allure of the Mobile Franchise When a future franchisee researches a potential investment to find a fran-

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chise that fits well with their needs and capabilities, the benefits of the mobile franchise are becoming more and more alluring. The mobile franchising market provides diverse business opportunities, and allows a franchisee to find their own niche, running a business that they are truly interested in, while providing services they believe in. From pet grooming to lawn care to tire changes, the choices seem endless and todayâ&#x20AC;&#x2122;s future franchisees are jumping at the chance to get a piece of the mobile pie. Mobile franchising offers a myriad of benefits over an independent business or

typical franchise location. A mobile franchise does not require a large and costly real estate space, a large work force or a lot of inventory. These components create a more manageable situation for the franchisee in regards to both time and expenses. There is no illusion that mobile franchising does not require secured funds and an upfront investment. There are still costs and reliable financial obligations required by the franchisee. However, the average mobile franchise has an initial investment of under $100, 000. This definitely allows these franchises to exist in the low-cost segment

Canadian Franchising

PROPERTY GUYS

Required initial investment: $25, 001 - $50, 000 Property guys was founded in 1998 and since has developed into North America’s largest and fastest growing private real estate network. The company won the Canadian Franchise Association’s Award of Excellence in 2008, reflecting their continuing success in maintaining strong and respectful relationships with their franchisees. Like many franchises, Property Guys offers superior training at their “Property Guys University” which educates franchisees on marketing, advertising and sales. Once completed, each franchisee is appointed a one to one coach who helps them with daily business practices and helps ensure they reach their personal goals. Although Property Guys is similar in many ways to other mobile franchises, there is one major difference. The company encourages their franchisees to be “structured entrepreneurs” that is, to follow the company’s successful modeled system, but also, due to the diverse nature of the real estate business, to learn and understand their own local market and modify the system accordingly.

HOME HELPERS

Required initial investment: $36,000 - $ 42, 900 Home Helpers offers varying types of aid to clients in their homes. Their primary target population are seniors whom they help with anything from person care to grocery shopping. However, Home Helpers also offer services for new mothers, individuals who require recuperative care due to an accident or medical event, as well as long term continuing care. This mobile franchise is a very low cost and recession-resistant business. It allows the franchisee to market their services and grow their client base all from the comfort of their own home.

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Mobile Franchising

WEED MAN

Required initial investment: $40, 000 - $50, 000 This well-known mobile franchise was founded by Des and Brenda Rice in Toronto Canada in 1970, began franchising in 1976, and expanded to the United States in 1996. Brenda Rice is still managing the company and as of January 2012 the Weed Man had 133 Canadian franchises, with a told of 350 franchises worldwide making it North Americaâ&#x20AC;&#x2122;s largest franchise lawn care company. Despite the uncertain economy, the Weed Man has continued to thrive and hire additional employees, employing over 2500 people directly.

GO TIRE

Required initial investment: $ 50,000 â&#x20AC;&#x201C; $100,000 Go Tire was founded by Craig Howes and Heather Murphy from Red Deer Alberta. Go Tire began as a tire sales and service mobile franchise and has expanded to include in their services: windshield replacement and repair, as well as auto detailing. Go Tire will come to your home, work place and even meet you on the side of the road to replace your tires and complete their services. The tire industry in Canada is a 4 billion dollar a year industry and has continued to be a growth industry despite economic downturn. Howes and Murphy have enjoyed growing success with their company, appearing on Dragonâ&#x20AC;&#x2122;s Den on January 13th 2012 where 25 percent of their company was purchased by two of the Dragons for $ 218, 000.

of the franchising industry and opens up new opportunities to an entirely new segment of the population. As with all other franchises, the mobile franchisor offers assistance with marketing and advertising, public relations, comprehensive training and ongoing assistance. These benefits along with a much lower start-up cost, low overhead, flexible hours, access to a wide number of customers and job stability is causing the mobile franchise to becoming more and more appealing and viewed as less of a risk than other franchise opportunities. Also, due to the lower start-up cost and flexible business

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The mobile franchise is the perfect option for the first time business owner, offering franchisees guidance, growth opportunity, schedule flexibility, and a rewarding lifestyle.

hours, many franchisees find it possible to initially maintain other endeavours, while continuing to grow their mobile franchise simultaneously. The mobile franchise is the perfect option for the first time business owner, offering franchisees guidance, growth opportunity, schedule flexibility, and a rewarding lifestyle.

Services at your door step

The vast array of services available to clients through mobile franchising is remarkable. The key is finding a portion of the market that is lacking or currently being covered poorly, and offering

Canadian Franchising

AUSSIE PET MOBILE

Required initial investment: $ 51,000 - $100, 000 Launched in Australia in 1996 and established as a franchise in Canada in 2009, Aussie Pet mobile have expanded to be 47 franchised territories strong in Canada spanning from Vancouver, British Columbia to St. Johnâ&#x20AC;&#x2122;s, Newfoundland. Pet care is a thriving industry in Canada and as Canadians we continue to lavish luxury on our furry family members. Offering grooming services, oral health care and healing products this business is an example of a very successful mobile franchise. Aussie Pet Mobile offers success to individuals who are passionate about acquiring a mobile franchise and are prepared to follow their proven and straight forward system on management and customer care.

that service in a superior manner. This along with ensuring things are as easy and worry free for the client as possible, while at the same time always delivering a superior service or product, is the recipe for a successful mobile franchise. Beginning with some lower initial investment options, through to some slightly more costly ones, letâ&#x20AC;&#x2122;s take a look at a few Canadian mobile franchises that have accomplished just that.

Driving straight to the top!

It is true that mobile franchising along with home related franchises are the

fasted growing sector of the franchising market. The reasons for this are varied. The initial risk is substantially lower than store front location based franchise and provides individuals with the security of starting out small. And because mobile franchising is a scalable business, it also allows franchisees to add vehicles and products as their business grows and as they are able to do so. As seen above, the mobile franchise provides potential franchisees with an array of specialties to choose from as well as diverse levels of initial financial commitment. This makes mobile franchising more appeal-

ing and accessible to a higher portion of the population. Whether you are interested in food services, lawn care, real estate, home care or practically anything else you can come up with, there is a mobile franchise opportunity out there for everyone. Offering more franchisee freedom than ever before, these business opportunities are catching on like wild fire across Canada and the United States.

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expert advice

Joseph Pisani, Director of National Franchising Services, BMO

CASH IS KING

Managing Cash Flow

ffective cash management starts with a cash flow plan. This plan should detail where and when, cash will be required (cash outflow) and where and when, it is expected to come in (cash inflow). The cash flow plan is not to be confused with a business plan or profit-and-loss projection â&#x20AC;&#x201C; while these are important management tools, they serve other purposes. The cash flow plan addresses areas that use cash, including inventory, accounts receivable, fixed monthly overhead expenditures and capital outlays.

The most important resource for starting and staying in business is cash. While sales, gross/profit margins and controlling expenses are also critical, a business that cannot manage its cash will probably be out of business, soon.

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Getting Started

A cash flow plan begins with certain assumptions regarding sales and the sales mix (cash, credit terms, etc.). The plan helps determine an acceptable level of sales that can be carried by way of accounts receivable, and the length of time they can be carried for. For example, offering 30 day payment terms is realistic for some companies, but not for others.

Sales Are Not Enough

Monthly monitoring of receivables activity is important. If customers are taking an average of 60 days to pay, but the cash flow plan assumes an average of 30 days, the business will eventually experience a cash-flow crunch. One should not expect to solve the problem by generating sales, since this does not ensure the business will have readily available cash to meet ongoing obligations. On paper, a transaction may indicate that a sale resulted in an operating profit, or even a net loss, but

either scenario can be problematic. For example, if a sale generates an account receivable rather than cash, it could be weeks before payment is received. A business relying on early-or near immediate customer payment to pay its bills, meet a bank loan payment or order stock may therefore find itself in a precarious position.

Keeping the Customers on Track

Selling on terms is attractive, and often necessary, for developing a larger clientele. Nevertheless, when customers must constantly be reminded to pay, or persist in delaying payment, the cost of carrying and monitoring their accounts will erode the initial profit margin. Selling terms to tardy customers should be reviewed â&#x20AC;&#x201C; even so far as to amend terms to COD only.

Establishing a Line of Credit

When accounts receivable are a significant part of business sales, the business will often establish an operating credit line with its local bank. The bank operating line will permit financing of outstanding accounts receivable up to a certain level, usually 75 percent of invoice value, subject to a number of conditions. Even at the 75 percent level, a cash flow plan should recognize that the business can only borrow $0.75 on every dollar carried as accounts receivable. This means at least 25 percent of this major current asset is tied up and cannot support any other business cash flow needs. Owners must be familiar with

Canadian Franchising

their bankâ&#x20AC;&#x2122;s receivable financing before extending credit to customers.

Inventory Movement

Inventory may or may not be easily converted to cash if emergencies arise. How much inventory the business carries depends on many factors, including: cash reserves, space, customer and seasonal demand, designated lines of credit and the possibility of early obsolescence of inventory. Bank financing is often arranged, and while levels vary, 50 percent of cost inventory is average. Thus, for every dollar of inventory held, the business must commit at least $0.50 of its own working capital. Should the business elect to carry merchandise for an extended period of time, it may cause the

true cost of goods sold to end up higher than the eventual retail selling price. Specialty items can require a different approach, since they typically remain in stock for longer periods, but their selling price must reflect this additional carrying cost. Periodically, owners should review product lines to ensure merchandise in moving at an acceptable rate. The longer inventory ages, the more difficult it will be to sell at a price that recovers costs, let alone generate a profit. You should compare inventory turns with industry averages and be prepared to sell at a discount, or negotiate return terms with suppliers.

Suppliers and Customers

Suppliers and customers can also contrib-

ute positively to business cash flow needs. Suppliers often provide terms such as net 30 days or offer a discount if paid within shorter period. For customers with terms, consider allowing modest discounts for prepaid orders or obtain deposits on speciality orders. It is always better when the money is in the companyâ&#x20AC;&#x2122;s bank account instead of some elseâ&#x20AC;&#x2122;s.

Seasonality

Seasonality also has a major impact on cash flow. With the Spring/Summer and Fall/Winter seasons and special holidays, inventory is usually required to be ordered well in advanced. Should supplier terms call for payment upon delivery, there is often a considerable time gap between when you pay and when you hope

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expert advice

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

to sell, so negotiate extended supplier terms whenever possible. During slow months where cash in-flow is reduced, clear out slow-moving merchandise. Negotiating principal payment terms on any major debt will ensure cash is not leaving the company when it is most needed.

What to Do With Extra Cash

Time and effort on the owner’s part may result in surplus cash being generated – cash not immediately necessary for day-to-day financial obligations. While having extra cash is not a problem, there can be “opportunity cost” when not working for the business. As such, there are several factors to consider: When cash results from increased sales it will likely be a surplus, but before using it, consider if this surplus is temporary (due to seasonality), or best earmarked for replacement inventory. (This will be the case in most retail operations.)

Cash from the sale of a business asset (such as equipment or surplus stock) is truly “extra” cash only when those assets need not be replaced.

If the owner has recently contributed extra cash-equity into the business, determine if it is for immediate use or for reserve. If it is for reserve, then a shortterm, liquid investment may be in order.

Should the business have a true surplus of cash, here are some strategies for maximizing its value: • Use all or part of the surplus to pay down long-term debt. While one may need to borrow additional funds at some later date, do not pass up the opportunity to save interest costs when it is prudent to do so; • Purchase additional fixed assets (those the business was planning to buy or borrow for in the near future); • Consider short, medium or long-term financial investments, but be sure the terms of investment and redemption are clear, and reflect the cash flow plan.

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when customers must constantly be reminded to pay, or persist in delaying payment, the cost of carrying and monitoring their accounts will erode the initial profit margin. Selling terms to tardy customers should be reviewed – even so far as to amend terms to COD only.

When making investment decisions, the business owner must consider how much cash they need in reserve for daily expenses, working capital, debt servicing and planned capital expenditures. However, with the correct investment products and strategies, a business can maximize its investment returns without sacrificing liquidity. In this regard, business owners should also discuss the options and opportunities available with their local bank. Being complacent about cash flow will eventually have negative consequences. However, effectively managing cash flow will contribute to overall financial stability and improve one’s chance of surviving uncertain periods in the business cycle.

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

Let us show you the easiest way to get from A to B. Deciphering the multi-dimensional world of franchising can be a challenge for any business. At Aird & Berlis LLP, our lawyers have represented some of the worldâ&#x20AC;&#x2122;s foremost franchise systems and have provided legal services to Canadian and international clients on all aspects of Canadian franchise law.

se i h c n a r F made law sy. ea

Ned Levitt, Franchise Group Chair nlevitt@airdberlis.com 416.865.4628 Timothy J. Hill, Litigation thill@airdberlis.com 416.865.3432

Brookfield Place, 181 Bay Street Suite 1800, Box 754, Toronto, ON M5J 2T9

To see our full team of franchise lawyers visit: www.airdberlis.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 29

profile

Dogtopia

DOGTOPIA LANDS IN CANADA Pets play a major role in the lives of Canadians. In fact the pet industry has topped $8.9 billion a year. More than half of Canadian households (53%) own a cat or a dog with 13% owning both.

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n Ipsos Reid poll shows that 83% of Canadians consider their pet to be a family member with 4 in 10 believing that pets can be a good substitute for human companionship so it comes as no surprise that Canada’s pet industry is thriving. One company experiencing this trend firsthand is Dogtopia, a leading national dog daycare and spa concept with 24 franchise locations, five company-owned and four under development. Led by Founder & CEO Amy Nichols, Dogtopia has seen year-over-year growth since its inception in 2002. Nichols’ focus since the company was founded has been to provide dogs and their families with an exceptional dog daycare experience by creating a home away from home for their pets. “All my life I have owned a variety of pets, and after college I was working 12hour days and felt guilty that my Boston terrier, Griffin, was home by himself all day long,” said Nichols. “I did extensive research on the open play business

model, including attending multiple dog behavior seminars, and set about creating a business plan to open my own dog daycare.” Through a partnership with Thomas Franchise Solutions (TFS) established in the summer of 2012, Dogtopia is now positioned to become the leading dog daycare franchise in North America. The brand launched a regional developer (RD) program to rapidly grow its footprint to more than 400 locations in the U.S. and Canada over the next seven years. “We examined hundreds of established franchise concepts before deciding that Dogtopia has the greatest growth potential,” said Peter H. Thomas, chairman and CEO of Thomas Franchise Solutions, Ltd. “Due to high demand in Canada, we partnered with The Franchise X-Perts (TFX) to help manage the growth. The partnership has been seamless and we look forward to working with their team to successfully integrate Dogtopia into the Canadian marketplace.”

Canadian Franchising

The TFS partnership enables Dogtopia to strengthen its brand by investing in a new system-wide point-of-sale system (POS), an online university to enhance training, increased national marketing efforts to drive brand awareness and sales, and additional home office team members to enable superior support. Furthermore, a greater emphasis will be put on accelerating Dogtopia’s retail offerings to help drive store revenue for franchisees. It’s been steady business for TFX since they announced their broker agreement with TFS as the brand ambassador for the Dogtopia brand in Canada. “Our partnership with TFS is very exciting,” says Jim Gormely, President & CEO, TFX. “TFS is dedicated to strengthening the Dogtopia brand and its presence in Canada and the invaluable resources we extend at TFX are vital to ensuring its entry into Canada is solid. Its a natural fit, really.” Dogtopia owners benefit from four

distinct revenue streams, including dog daycare, boarding, spa and grooming, and retail. With multiple revenue streams, Dogtopia is able to uniquely serve the pet services segment, which is currently underserved. “At Dogtopia, we have a ‘live. love. play.’ philosophy that serves as the backbone for our business,” continued Nichols. “Dogs are truly loved and treated like family, and this in turn enables our customers to put their trust in our locations everyday.” Step into a Dogtopia location and you’ll instantly be drawn to the pleasing aesthetics and vibrant colors. Each playroom features an open play layout with climate-controlled rooms. The division of dogs between rooms allows Dogtopia personnel to control air quality, minimize the risk of disease and actively monitor play, as well as provide an overall stressfree atmosphere. Unlike other dog daycare businesses, Dogtopia does not discriminate against

any breed and welcomes social dogs of all ages, sizes and abilities. All dogs must first pass an evaluation before admittance to ensure the safety of all dogs and staff. Interested in opening a Dogtopia in your city or neighbourhood? “Our website http://www.thefranchiseexperts.com/ is a good place to start if you are considering opening your own franchise,” says Gormley. “We invite anyone thinking of entering the franchise business to participate in the webinar on our site. It’s a remarkable tool we offer free of charge. Then set up a consultation so we can access your goals and flush out a plan for you. We are your savvy business partner with you ever step of the way as you achieve success. Its really that simple.”

You can find more information on Dogtopia on our website or by contacting Jim Gormley directly at jim@thefranchisexperts.com

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expert advice

Wayne Maillet, President, Franchise Specialists

MISCONCEPTIONS About Franchising

very year there are Canadians who take steps to improve their lives by becoming a franchisee. Despite this undisputed success, there are often misconceptions or a lack of knowledge regarding franchising. Some individuals avoid franchising as a result of these misunderstandings, while others acquire a franchise for the wrong reasons. By understanding franchising you will be in a better position to make an informed decision and determine if franchising is right for you.

Franchising has had success in almost every industry across Canada. The franchise growth model has dramatically influenced the economy, responsible for the employment of over one million people in Canada and representing 40 percent of all retail sales.

Franchising is too expensive. Not true.

Often people will not consider looking at a franchise for they feel it is too expensive. They have heard of franchises requiring an investment in the millions of dollars. This is true, especially of some food and retail franchises that require costly equipment, furniture and leasehold improvements. However, today there are franchises available in almost any industry. Some home-based franchises require an investment as low as $10,000. One has to access the opportunity that fits best with their budget and is a business that will bring them personal satisfaction, based on their needs and financial constraints.

The more you invest the greater your dollar return. Not necessarily true.

This misconception stems from an investor mentality. It is normal for an investor to expect that if you invest a million dollars you will get a greater dollar return than if you invest $10,000. This formula has not proven to be the case. You can make a substantial return on a low investment. Unlike the stock

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market and other passive investments, a franchise investment and its return is largely dependent upon you and your ability to implement the business model and effectively manage the business. To accurately access what the return will be you will want to investigate the franchise thoroughly as well as access your abilities and skills as they relate to the needs of the business. Do not rely solely upon projections if they are provided to you by the franchisor. Contact numerous existing franchisees within the franchised system to find out what dollar returns they are experiencing.

Franchising does not allow for creativity. Not necessarily.

Some entrepreneurs will avoid investing in a franchise for they feel that their creativity would be hindered by the franchisor putting too many restrictions on the business and forcing complete compliance with the business operating system. In some cases this is true and it does require consideration. Franchising may not be right for some people. The reality however is that most franchises allow for franchisees to adapt the concept to there market and permit creativity to benefit the system as a whole. McDonaldsâ&#x20AC;&#x2122;s for example has strong consistency. McDonald franchisees have been allowed to be entrepreneurial, resulting in new products such as the McFish Sandwich and the Egg McMuffin, created by creative franchisees looking to improve their profitability. Many franchisors will allow controlled creativity. It is one of the benefits of franchising, where the combined experiences of the franchisees can come up with improvements to the overall business system that will benefit the system as a whole. The degree of creativity permitted will vary from franchise to franchise with new emerging systems allowing the most creativity. Research the franchise you are looking at to confirm that it will fit with your need to be creative.

As an owner, I can do whatever I want. Not true. Just as many franchisors do allow for creativity, it does not allow for the opposite extreme where a franchisee can

Canadian Franchising

do whatever it wants once it has acquired the franchise. This misconception stems from an ownership mentality. You must be aware that as a franchisee you are granted a license to operate the franchisorâ&#x20AC;&#x2122;s business model and use its brand. It is a license to use, but does not constitute ownership. A franchisee does not buy the name and logo, but simply acquires the right to use it within the guidelines set out in the license agreement and the operation manuals. A strong franchisor will maintain control over the use in order to protect the integrity of the brand. Consistency is important to develop the brand and allow the customer to have a consistent experience between franchised locations.

A franchise will eliminate risk. Not true.

Some entrepreneurs acquire a franchise thinking that they will eliminate risk and be automatically successful. Some misinformed franchisees have false expectations, thinking that they can just open the doors, sit back and the profits will start rolling in immediately. A good franchise will only reduce the risk. It provides a road map of a proven business formula. It still requires hard work and commitment to building your business. Different franchises will grow at different rates. You need to determine prior to opening your business what will be your growth rate and what will be required on your part to make it successful. Be sure that you are prepared to make that commitment and have set aside sufficient working capital to finance the initial months of the business while allowing you to pay your personal bills. A good franchisor will assist you in the review process and will have you go through an application process to determine if you have the necessary skills to be successful in their particular franchise. Franchising has had huge success and has allowed many individuals across Canada to achieve their dream and goals. Donâ&#x20AC;&#x2122;t make your business decision based on misinformation or misconceptions. Not all franchises are the same. Take your time to do your due diligence and find the opportunity that is right for you. Talk to existing franchisees of the system. Use the resources of a franchise consultant, a lawyer and an account-

Not all franchises are the same. Take your time to do your due diligence and find the opportunity that is right for you. Talk to existing franchisees of the system.

ant. Ultimately the business should be a vehicle for you to achieve what you want out of life. Everyoneâ&#x20AC;&#x2122;s dreams and aspirations are different. Today, prospective franchisees have a variety of different franchises to choose from. Identify the opportunity that will bring you the dollar returns you need and want, that is a business that will allow you the flexibility to be creative if you need to be and yet has the uniformity to provide the benefits of a strong brand.

WAYNE MAILLET is the President of

Franchise Specialists, a consultant with 25 years experience in franchising. For more information: wmaillet@franchisespecialists.com www.franchisespecialists.com

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expert advice

Frank Zaid, Partner, Osler, Hoskin & Harcourt, LLP

A FRANCHISE OMBUDSMAN

The Newest Method of Resolving Franchise Disputes at An Early Stage

Franchise disputes are most often resolved by negotiation between the parties without litigation.

f litigation is likely to be initiated, many franchisees want to mediate the dispute, as meditation is a relatively low cost and confidential procedure. If mediation is not used, or if used does not produce a resolution, some franchisors prefer to arbitrate the dispute in order to arrive at an enforceable decision with the proceedings and the final decision remaining confidential. If neither of these alternatives is acceptable or conclusive, the parties will ultimately resort to typical civil litigation before the courts. And if the dispute involves franchise law issues, in Ontario such disputes are eligible to be heard by judges with specialized commercial dispute expertise, and to be placed on what is known as the “Commercial List”. These disputes will

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be monitored by a single judge and will be fast-tracked through the court process. In addition to these traditional methods of resolving franchise disputes, an old method of dispute resolution is now gaining ground as an inexpensive and often successful method of dispute resolution – the use of an ombudsman (or, in contemporary gender neutrality, an ombudsperson). A franchise ombudsman procedure has been utilized in a number of well-known franchise systems. The ombudsman may be a retired member of the franchisor executive team, a former successful franchisee, a member of the franchise advisory council, an elected franchisee, a neutral third party franchise expert, or a combination of such persons. However, the most effective Franchise Ombudsman will be independent of both franchisor and franchisee, and will be appointed with transparent and mutually approved terms of reference. The terms of reference will address such procedural matters as remuneration, term of appointment, termination, process, payment of costs and fees (if any), and confidentiality. The terms of reference may be set out in a separate document, as an attachment to the franchise agreement, or in the franchise manual. The word ‘ombudsman’ dates back to 1809, when the Swedish Parliament created a new official known as the Justitie-Ombudsman, referring to public officials appointed to investigate citizen complaints against governmental agencies. Ombudsman loosely translates as ‘citizen defender’ or ‘representative of the people’.

A Franchise Ombudsman is helpful in franchise disputes when: • Uncertainty exists about which policy or procedure applies to the franchise situation; • Unfair or inequitable treatment or application of a policy or procedure is in issue; • A problem requires someone to help negotiate a solution, or to help facilitate communication with others; • A franchisee would like to find out who has the authority to make an exception to a rule or policy; and/or, • A franchisee wants to know the right person or office to whom to direct a formal complaint or dispute. A Franchise Ombudsman is a designated neutral person who provides confidential and informal assistance in resolving franchise conflicts. The Franchise Ombudsman investigates complaints, reports findings on an anonymous basis, and helps mediate fair settlements, occasionally between franchisees, but more commonly between an individual franchisee or group of franchisees and the franchisor.

The Franchise Ombudsman will usually engage in the following processes: • Listen to complaints, • Answer questions, • Analyze situations, • Explain policies and procedures, • Provide information and advice, • Explore solutions, • Help untangle or work through

Canadian Franchising

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expert advice

Frank Zaid, Partner, Osler, Hoskin & Harcourt, LLP

or around franchisor bureaucratic red tape, • Suggest appropriate referrals to alternate methods of dispute resolution, • Assist in pursuing a resolution, • Inform franchisor administration of significant trends, and • Recommend changes in policies and procedures The Franchise Ombudsman does not advocate for either side in a conflict. The role of the Franchise Ombudsman is to identify potential areas of conflict, wrongdoing or administrative abuse, and to provide information on individual rights. The Franchise Ombudsman provides an opportunity for informal discussion of problems outside formal channels. A Franchise Ombudsman is a neutral, independent resource who provides informal, confidential assistance to help with the resolution of concerns and complaints. The Franchise Ombudsman, as a designated neutral third party, has the responsibility of maintaining strict confidentiality concerning matters that are brought to his/her attention unless given permission otherwise. The only exception, at the discretion of the Ombudsman, is where there appears to be threat of serious harm. The Ombudsman must take all reasonable steps to protect any records and files pertaining to confidential discussions from inspection by any other persons. The Franchise Ombudsman should not testify in any formal judicial or administrative hearing about concerns brought to his/her attention. When making recommendations, the Franchise Ombudsman has the responsibility to suggest actions or policies that will be equitable to all parties. Any franchisee or the franchisor should be able to contact the Ombudsman if they wish to discuss an issue or concern regarding a franchise relationship with a neutral, objective person. Often the firs conversation is used to identify the root of the problem and discuss options. If the Ombudsman is not the appropriate venue for handling a particular issue, a referral will usually be offered.

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The Franchise Ombudsman does not advocate for either side in a conflict. The role of the Franchise Ombudsman is to identify potential areas of conflict, wrongdoing or administrative abuse, and to provide information on individual rights. There are certain procedures that a Franchise Ombudsman must follow: • Remain impartial, • Not advocate for anyone in a dispute, • Maintain confidentiality, • Not conduct formal or in-depth processes, • Not make management decisions, and • Not provide legal advice Both the Canadian Franchise Association (headquartered in Mississauga, Ontario) and the International Franchise Association (headquartered in Washington, D.C.) have established Franchise Ombudsman programs for their members. There usually is not charge for the service.

The purpose of these programs is to: • Enable franchisors and franchisee to identify disputes early and to assist them in taking preventative measures • Assist franchisors and franchisees by facilitating dispute resolution and recommending non-legal methods and approaches to resolving disputes • Encourage franchisor and franchisees to work together to resolve disputes • Provide confidentiality throughout the process • Provide objective and unbiased information and advice to all of the participants For the process to work, the Ombudsman must enjoy the fullest support and confidence of both the franchisor and the franchisee. The Ombudsman must be viewed as an impartial specialist in dispute resolution, and a neutral resource who provides confidential and informal assistance to resolve the dispute.

The IFA Ombudsman program provides benefits to both franchisees and franchisors Franchisees gain a low or no cost method and a resource to resolve disputes peacefully. It enables them to clarify issues about their relationship with their franchisor and work toward a fair and mutually beneficial franchise relationship. Franchisors also gain a low cost method to assist them in resolving disputes with their franchisees. For many franchise systems an internal ombudsman resolution process of this kind may not exist within their systems because of the financial and human resources necessary to create an internal program. Even with the existence of these inustry programs, fundamentally all franchisors, particularly mature systems, should be able to develop and implement an Ombudsman program tailored to their franchise systems. The results will be well worth the cost and effort, as many, if not most, disputes will have the opportunity to be resolved quickly and efficiently before they evolve into expensive and disruptive litigation between the parties. There is no better time than now to consider an independent franchise ombudsman program for your franchise system. FRANK ZAID has over 40 years of ex-

perience in Canadian and International franchising. He is a Partner in the franchise group at Osler, Hoskin & Harcourt, LLP in the firm’s Toronto office. He is also a trained Ombudsman, mediator and arbitrator with ADR Chambers in Toronto where he chairs a specialty panel to resolve franchise disputes. For more information: Phone: 416- 362-8555 Email: fzaid@osler.com fzaid@adrchambers.com

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RAMMP Hospitality Brands Inc.

PROFITABILITY and LONGEVITY

with RAMMP Hospitality Brands Inc. The secret ingredient to long term franchising is not really a secret at all, according to those in the know at RAMMP Hospitality Brands Inc. The secret to successful franchising is found in long term franchisee profitability. Page 38

AMMP has taken this common sense approach and turned it into common practice, with an everyday focus on ideas, execution and strategies that help their franchisees achieve sustained profitability. They have adopted the mantra, “We only win in the long term if our franchisees win.” RAMMP was created with the goal of building national hospitality brands by developing and supporting profitable franchisees with leading processes and practices at the franchisor level. Built by a group of senior restaurant industry professionals with over 100 combined years of experience, RAMMP has grown

into a thriving network of partners, franchisees, employees, brands and suppliers that share a rich history and a wealth of experience in the foodservice industry. The mission at RAMMP is to be the best foodservice company in Canada by selecting, training, and providing systems that help franchisees sustain profitability while staying focused on providing their guests the best in class guest experience within their community. RAMMP’s three brands, Mr. Mikes Steakhouse Casual, The Pantry Restaurants, and Rockwell’s Grill & Bar, all enjoy being part of the strong corporate culture fostered at RAMMP where each decision and action

Canadian Franchising

is based on the following values: Respect, Accountability, Making it Fun, Momentum, and Profitability.

The Right Fit

RAMMP’s focus on long term franchisee profitability is based on finding excellent franchisees who fit with our values, work ethic and long term focus, says Robin Chakrabarti, one of RAMMP’s founding partners. “Together we work with our franchisees to build and consistently improve the guest experience and enhance the brand while staying true to a strong community focus in the towns and cities in which we operate.” As franchisors, RAMMP’s role is to leverage their expertise on brand, consumer trends and operations to achieve long term success for each location. The franchisee’s role is to deliver an exceptional guest experience within the brand parameters and operational standards set by the franchisor and to provide constant feedback to the franchisor from the front line interactions with the guests. The biggest advantage of a franchise model is the benefit of entrepreneurial-minded franchisees who contribute back to the long term success of the brand.

An Important Partnership

Mr. Mikes is an example of a brand and franchise system that needed the addition of intellectual capital in order to realize its potential for long term success. RAMMP purchased the brand just over two years ago. With the help and input of the franchisee group RAMMP has made significant changes that are accelerating the success of the individual stores and growth in new locations. “When we took over the brand it had strengths such as longevity in the marketplace and an exceptional group of core franchisees,” says Chakrabarti, “But the franchise was in need of a realignment on the importance of the partnership between the franchisor and the franchisee and the brand needed repositioning to reflect what its’ true brand personality meant to its most loyal customers.” When they took on the Mr. Mikes franchise, what RAMMP found was a core group of franchisees who were passionate about the brand, and had a long term goal of growing with the brand. “These were the type of people, says

Chakrabarti, who have aspirations of multi-unit ownership, and who provide an exceptional level of customer service on a day to day basis.” “This fit perfectly with our belief that our ideal franchisees are people who believe ‘Execution is Everything’ and are committed to delivering on a great customer experience.” This type of passion for the brand allows RAMMP the opportunity to garner street level input from franchisees about everything from the menu, to branding, and beyond. It is this unique combination of franchisee input and franchisor expertise that creates positive change, long term success, and sustained profitability.

Successful Rebranding

As important as the input of the franchisee base, was the input and emotional response of the consumers to the Mr. Mikes brand. Through considerable formal customer research and market studies, augmented by countless hours spent in the restaurants interacting with customers on the front lines, RAMMP learned important details that led them to create and bring to life Mr. Mikes SteakhouseCasual (formerly Mr. Mikes Steakhouse and Bar). The customers told RAMMP that after 50 years it was time to celebrate all of the great things about Mr. Mikes that the loyal and passionate customers enjoyed: No fancy frills, no stuffed shirt attitude. Just real people and great food; everything customers want in a steakhouse, only casual. The rebranding to Steakhouse Casual has been a huge success, but even more than the success, RAMMP is most proud of the process that got them there. “Open communication built on trust with our franchisees and our customers provided

us the feedback we needed to create an exciting vision for the brand,” says Mike Cordoba RAMMP CEO. “We then applied our expertise and executed upon our commitment to continuous improvement that underlines everything we do.” The response to date has been outstanding with over half of the Mr. Mikes locations having already converted to Steakhouse Casual and the remainder scheduled over the next year. This process of open communication and building trust has paid off not just in previously owned locations, but in new locations as well. RAMMP has already sold enough new franchises to double the size of the Mr. Mikes chain by 2016 and the pipeline continues to grow. The new Steakhouse Casual restaurants are opening at record levels and existing franchisees are realizing their dreams of owning more than one unit. Chakrabarti reflects on the success, “We are not standing still and we continue to listen and learn from our franchisees and our customers and are always looking at new and innovate ways to further enhance the brands. Our franchisees long term success depends on it.” For More Information: Contact Rick Villalpando, Vice President Business Development Phone: 604-536-4111 Web: www.rammp.net

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fexpert ra nchisee advice in action

Sander Training

A SELF-STARTER FINDS

HIS FRANCHISE FAMILY

Hamish Knox was working for Canada News Wires when he found himself in Montreal for business. “One of my friends in Calgary had stayed in La Germaine and recommended I eat at a delicious Portuguese restaurant,” explained Knox.

eing a foodie, I was eagerly anticipating this dining experience!” Knox took a seat at the bar, as all tables were taken. “As I was enjoying my dinner, I looked up, only to notice my mentor at the time arriving at the bar.” The two began catching up, and Knox’s mentor asked if he was familiar with Sandler Training. He informed Knox that Sandler was a sales training company completely congruent to the way Knox thought and spoke.

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After that dinner, Knox went straight onto his computer, and began researching Sandler. “Perusing through Sandler’s website, practices, and blogs was like walking into a church and having God speak to me. My interest was sparked!” Knox filled out the ‘Learn More About Franchising’’ form and two weeks later Knox received a call from head office.

Hit the Ground Running

Things seemed to happen fast and Knox

Canadian Franchising

If you learn anything about entrepreneurship, it’s ‘do the things you’re good at.

took each opportunity and ran with it. “My wife gave up a trip to Vegas to come to Baltimore for Sandler’s Discovery Day with me to learn about the business. Knox decided to symbolically sign the Sandler franchise agreement on January 1st, 2011. “My final day with Canada News Wires was April 29, 2011 and in May, I was on a plane for my eight-day intensive boot-camp with Sandler.” The mission of Sandler Training is to develop top-performing sales, management and executive teams that excel in a fluid, fast-paced, global business environment. Sandler’s goal, whether training local businesses or Fortune 1000 organizations, is to help clients initiate substantive, measurable and sustainable growth. This three-decade old franchise achieves this through a number of training and consulting services as well as corporate training.

Time For What You Love

“If you learn anything about entrepreneurship, it’s, ‘do the things you’re good at’. If you’re a rig junkie, a dance studio might not be the route to follow. I love to sell, and I love to teach and help people

become better. I have coached sports teams since age 14. My passions are really congruent to Sandler,” said Knox. The other business and sales training programs Knox had worked with in the past required Knox to do everything. What he wanted to do was exclusively channel his energy towards selling and training. “Sandler takes care of everything else. They give me the curriculum, the process, the website, and the systems. Then they say, ‘adhere to the rules’, but how your sell, train, and deliver is entirely up to the franchisee. This was so huge for me. I was able to focus on what I love and I didn’t have to get caught up in the mechanical aspects I’m not that interested in,” expressed Knox. After graduating from Sandler’s eightday intensive training, there were a few paramount Sandler franchisees that imparted valuable wisdom to Knox. “I was told, when you first get in the business, control your expenses. For the first six months of business I trained at the Best Western once a week and made my phone calls from home.” Sandler provides franchisees with thorough initial inventory such as client kits, website templates, and

all that you may need. “When I started, I was working this way for about six months. Shortly after that I moved into a shared office space. Now, just over a year later, I have a lovely training center, 12 minutes from my home and a part-time administrator helping me.”

Buying a Community

One thing to take note of is the interactions and relationship between Sandler and their franchisees. “One of the hesitations I had about joining a franchise was most franchise models have royalties that are paid to the franchisor. These are basically a tax: a percentage of your total sales. Essentially, this de-incentivizes franchisees to have a really successful business. Sandler is a different model that actually incentivizes me to go out and build the business that I want to build,” said Knox. Sandler’s financial framework is cohesive to a one-man business through to a larger scale operation. “Head office is not a dictatorship; franchisees aren’t micro-managed. Sandler offers a framework and as long as your stick within their guidelines, you can build your business the way you desire.”

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fexpert ra nchisee advice in action

Brian Bazely, Anytime Fitness

The Sandler sense of community is remarkable according to Knox. “Sandler has three conferences every year: the global summit climate and two conferences in Baltimore at the head office. There is so much collective brainpower and excitement. Someone comes up with an innovative idea, and we’re all sharing and engaging with one another. We do a lot of work with franchisees. Franchisee amazement never ceases to be in regards to how open and accessible our network is. My impression is this scenario is a rarity,” said Knox. While you can pick up the phone and quickly get in touch with a knowledgeable franchisee at any point, head office and the corporate team is also constantly evolving the Sandler concepts. “When David Sandler came up with the system, we barely had fax machines and were still working on rotary phones. Head office is doing a very good job of taking what David Sandler invented and adapting it to a changing world. If you read Sandler literally, people can take it the wrong way, but if you take the lesson out of what he was saying or wrote, Sandler is a very progressive way of selling or managing. The only way we have been

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Head office is doing a very good job of taking what David Sandler invented and adapting it to a changing world. able to be this successful is thanks to corporate’s constant adaptation.” Knox thinks that prospective franchisees should know the importance of having their partner on board. “If you’re looking to join Sandler, your the business. Just as you have to feel a connection to the company at large and understand the commitments, so too does your spouse or partner.” At Sandler’s Global Summit last March, Hamish Knox was named ‘Global Rookie of the Year’. Knox was approached by a fellow colleague who was interested in knowing what the formula was to receive that accolade. “When I was approached with this question, I

responded, ‘I don’t know if there’s a list of points that you need to check.’ What I did know, that was essential to overall success for any business person, in any industry, were three key points. First, you must have a business plan. Second, you need to have a ‘cookbook’ or a prospecting plan. This is something that outlines how you will take your business plan into action. Finally, and most importantly, you must have the discipline to follow your cookbook to a tee. If you don’t, it will take you much longer to get where you’re going and you may lose momentum or stop all together along the way. These are the three keys I always give for success. As long as you’re moving towards the top of the mountain you set for yourself, you’re one step closer to success.” If you have a passion for sales; love to train and help people make a difference in their lives; and, want to control your income, the Sandler franchise, the company built on innovation, collaboration, respect, leadership, and excellence would be a strong fit for you! For more information about Sandler and franchising opportunities contact RON TAYLOR, VP of Franchise Development at (410) 559 -2033 or rtaylor@sandler.com.

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

Lori Karpman, President, Lori Karpman & Associates

DOING BUSINESS IN LA BELLE PROVINCE:

Can You Really Afford to Ignore It? I am a born and bred “Quebecoise”, and proud of it. I grew up and was educated in English in the Province of Quebec. I have lived through the turbulence of the sovereignty calls, the language laws, and the economic situation it has created. Notwithstanding all that, I still maintain that any company ignoring Quebec expansion for any of those reasons is doing so as its own risk.

uebecers are the most loyal consumers in Canada. Furthermore, their philosophy and buying habits are aligned with the European way of life, a ‘joie de vivre” not found in any other province. Over the past 25 years as a franchise specialist in a variety of capacities, it always surprises me how the most sophisticated and successful professionals regard this province much like the planet “Mars.” In fact, when I asked the President of a very successful franchise chain why she did not plan to come to Quebec, her answer to me was, I kid you not, “that’s like going to Mars!” Much like NASA grappling with the issue of even if there was confirmation of life and water on

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Mars do we still want to go? With respect to expanding to Quebec the answer is a resounding “yes”.

A Unique Market

Having had the luxury of doing business in almost all the provinces in Canada, both as franchisor and franchisee, I have come to learn the differences amongst different parts of the country. The first and foremost reason to develop the Quebec market is that one third of the Canadian population lives here. One third- that’s a big number. To me a market that size cannot be ignored no matter what it takes to develop it and yet, this is still not enough of a motivator for most brands. Secondly, Quebecers are the most

Canadian Franchising

loyal consumers around. Unlike their counterparts in many other provinces, Quebecers are much less price sensitive as they are value oriented and rate their experiences based on the overall quality of the product or services as well as the service and quality of the supplier. For example, if you are a coffee supplier to a brand who is then approached by another supplier who can provide the same or equal product at a lesser cost, the brand is not likely to change suppliers if they have a good relationship with their current one, even if they can get the product at a lower cost! Itâ&#x20AC;&#x2122;s the value of the relationship in total that is being assessed, not just the price of the product or service. The same applies at

the retail level; stores and restaurants enjoy tremendous customer loyalty if the shopping and dining experience provides value over and above the price, such as excellent customer service, free returns, loyalty programs and the like. Thirdly, given the joie de vivre in our DNA, Quebecers will not think twice about dining out for $150 on a Tuesday night for no particular reason. In many other provinces, a $100 meal is reserved for weekends and special events like birthdays and promotions. What this all translates into is (1) the ability to sell a product or service at a higher price (within reason) than in other provinces. This assumes that you are providing a full and valuable service experience that goes with it, and

(2) benefit from the ability to maintain relationships with your customers that are not based solely on the dollar. This being said, it is true that several franchises have come to Quebec and failed, but those who plan for entry thoughtfully and properly have been rewarded with higher ticket averages, higher royalties, greater brand awareness and very successful franchisees. Although the initial entry price may not be cheap, the undeniable size of the return from market development makes it almost impossible to ignore. Like everything else, itâ&#x20AC;&#x2122;s all in the planning.

Making the Move

The number one reason concepts fail in

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expert advice

Lori Karpman, President, Lori Karpman & Associates

their Quebec development is that they do not engage the services of local professionals. Many franchises expand into the province with a tremendously successful marketing strategy from other provinces/ states, only to find results are not as successful as anticipated. This is due to the fact that selling in Quebec whether it be franchises or products is different. Quebecers are interested in aspects of a business that may be positives/negatives in other provinces. For example when the proliferation of home based businesses began this was a very attractive and number 1 sales tool used to sell franchises. In Quebec however, when I represented a client with this attraction, I had to advise the client that a home based office is not a positive in Quebec as we are social beings, we like to be in offices, see people, make connections. So a home based office to a Quebecer is isolating and not a big selling point. While this is just one example, there are many more and this is the reason for which engaging local assistance is primordial to a successful expansion. One way to have local representation is to set up a small regional office in Montreal with a franchising director or regional manager. This establishes a presence in the market, which can be used for meetings and corporate visits. It is also cost-efficient and provides a sense of professionalism and permanence, reassuring to prospective franchisees. Alternatively, there are a variety of franchise consultants who specialize in Quebec development and can meet the needs of any out of province franchisor. To capitalize on the Quebec market, you must first be willing to make an investment, both in dollars and manpower. One obvious obstacle is the French language, which seems to strike fear in the minds and pocketbooks of senior management. Since French is the official language of Quebec, it must be predominant, even in bilingual materials. Simply stated, language laws require all documents, including the franchise agreement, operations manual, marketing materials and other papers used in the course of business, be available in French. This is a one-time start-up cost of doing business. While it is expensive, the investment is generally recuperated from initial franchise fees over time. Again it

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Canadian Franchising

is recommended that you use a Quebec translator as the French used here is not the same as that of other countries. Additionally, the Franchise Documents themselves often need some revision to bring them into accordance with Quebec law but the changes are minimal.

Ways to Develop the Quebec Market

Quebec has a vibrant franchise industry with more than 100 homegrown franchise systems, many of which have over 100 franchisees. If planning on entering the province, there are several business models to choose from a few of which are discussed below: • VIA A MASTER FRANCHISE AGREEMENT. In this case the master franchisee steps into the shoes of the Franchisor and provides all services that the Franchisor is obligated to provide, in the province only. Unfortunately, experience shows this model to be unsuccessful, as there is not enough money to be made by each party in a master agreement (at 50/50) where the Franchisor is so close geographically. However, to the extent that the franchisor is willing to lower their share substantially, then this can work); • VIA AN AREA DEVELOPMENT. One or many agreements are made and an individual or corporation is granted several years in which to establish a predetermined number of units in defined territory. This agreement, with a solid candidate who has both general business experience and the financial capacity, is an excellent way to go; • VIA A JOINT VENTURES. This approach, where the franchisor and Quebec franchisee are partners in a venture for Quebec development, is becoming more popular; and • VIA TRADITIONAL SINGLE UNIT DEVELOPMENT.

My recommendation to brands coming to Quebec is to operate a corporate store for at least six months to a year. To many, this step is optional, however, I believe if you are going to do business in Quebec, you should fully understand the mar-

those who plan for entry thoughtfully and properly have been rewarded with higher ticket averages, higher royalties, greater brand awareness and very successful franchisees. ket and its complexities. The only real way to do that is with a corporate store. Additionally, this gives you a ‘showroom’ from which to sell additional franchises and a cash flow to find franchise development. Later on, this store can be sold, or my preference, it can be kept as a corporate test center. Remember, what makes a good franchisee in one territory in Canada may not be suitable in Quebec. By having both local representation and preferably a corporate store, you will be best placed to evaluate exactly what qualifications a franchisee requires and if the candidate before you meets them.

Quebec legislation

When entering any new legal jurisdiction, your current contracts have to be reviewed to ensure compliance with the laws of the host province. In Quebec, there is no franchise legislation per se, and there is no legal obligation to prepare or provide a Disclosure Document. However, if you are from a disclosing province, it is always a good idea to provide prospects with your Disclosure Document so that they can have the same information as prospects in other provinces. The caveat is not to sign it. If you do you will be bound by it as you are in other provinces. Generally, it is provided with a cover letter and disclaimer stating that it is not to be relied on. It’s given as a goodwill gesture and because it answers most questions franchisees have. With regard to specific industry legislation Quebec, like all provinces has regulated industries such as pharmaceuticals, insurance, opticians, travel agencies, real estate brokers, and the like. Insofar as relationships, business or per-

sonal, these are all governed by the Civil Code of Quebec. This voluminous piece of legislation governs all relationships and imposes in every contract whether it is stated or not, a duty of fair dealing and good faith in relationships. Quebec is the only province in Canada that has a Civil Code. Lastly, Quebec’s security legislation while it has a different mechanism and name, achieves the same results as the Personal Property Security Act (PPSA), by granting a right in all movable property. Although, unlike other provinces, commercial landlords have the legal right to—and always do—register a prior charge against all the assets on the leased premises, both movable and immovable. The landlord’s charge is generally equivalent to the value of the gross rent for the term of the lease. The franchisor can still register a security interest, but it will be ranked 2nd to the landlord, or third if there is a bank loan. The Quebec market is both vibrant and vital. Quebecers love to try new concepts and the idea of being the “first in Quebec” to have a new concept, is a very appealing selling point. Contrary to what you see in the press, Quebec is not in the middle of a hostile civil war on language or anything else for that matter that should keep a franchisor from expanding here. On a day to day basis, it’s business as usual; one third of the Canadian population is willing to reward businesses by shopping more frequently, paying higher prices, and remaining loyal, all in return for a valuable experience and good value for the dollar. There’s a reason why it’s called “La Belle Province”, and it’s a lot closer than Mars! LORI KARPMAN is President of Lori

Karpman & Associates Ltd. The only full service management consulting firm that can respond to all the needs of a developing brand, provincially, nationally or internationally. For more information: www.lorikarpman.com Email: lori@lorikarpman.com

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expert advice

Dale Willerton, The Lease Coach

TIPS FOR FRANCHISE TENANTS

Negotiating Commercial Leases & Renewals For Dummies

W Since 1993, I have been coaching and consulting with independent and franchise tenants on commercial leasing matters. Both new and established tenants are continually amazed at just how negotiable a commercial lease can be, especially when they hear some of The Lease Coach’s case studies.

hen I am speaking at franchise shows my main goal is help tenants understand the power they wield as the landlord’s customer. Whether you are signing a new lease for the first time or looking ahead to your lease renewal, know that many of these points are quite negotiable. By knowing what to ask for – and how to best negotiate for it – tenants can greatly benefit. Having an expert help at these times can also greatly help; franchisee tenants are frequently at a disadvantage when negotiating with an experienced landlord (or a landlord’s real estate agent). Unfortunately, not all franchisors are willing or able to give franchisees the help they really need with their lease deals. Considering the importance and implications of proper site selection commercial lease negotiating, I have devoted a great deal of time and attention to this subject in my new book, Negotiating Commercial Leases & Renewals For Dummies. When it comes time for you to sign a lease for the first time or to renew your existing lease, here are just a few recommendations from my book:

Negotiate to Win

All too frequently, franchise tenants enter into lease negotiations unprepared and don’t even try winning the negotiations – opting for a negotiate not to lose approach which doesn’t end well. The Lease Coach knows that, with big commissions at stake, you can be sure the landlord’s agent, on the other hand, is negotiating fiercely to win.

Be Prepared to Walk Away

Try to set aside your emotions and make

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objective decisions. Whoever most needs to make a lease deal will give up the most concessions. When I used to be a shopping mall manager we never gave the tenant our best deal when he was sitting at the negotiating table – we did so only when he was walking away. A good franchise in a poor location will become a poor business.

Ask the Right Questions

Gathering information about what other tenants are paying for rent or what incentives they received will position you to get a better deal. Consider that the landlord and his agent know what every other tenant in the property is paying in rent, so you must do your homework too.

Brokers … Friend or Foe?

Real estate brokers typically work for the landlord who is paying their commission. It is not normally the agent’s role to get the franchise tenant the best deal – it is their job to get the landlord the highest rent, the biggest deposit, etc. The higher the rent you pay, often the more commission the agent typically earns. If you are researching multiple properties, try to deal directly with the listing agent for each property, rather than letting one agent show you around or show you another agent’s listing. Your tenancy is more desirable to the listing agent if he can avoid commission-splitting with other agents.

Never Accept the First Offer

Even if the first offer seems reasonable, or you have no idea of what to negotiate for, never accept the leasing agent’s first offer. In the real estate industry, most

Canadian Franchising

points are negotiable and the landlord fully expects you to counter-offer.

Ask for More Than What You Want Do you know how The Lease Coach got one multi- unit franchise tenant 12 months of free rent? We asked the landlord for 18 months free. No one ever gets more than they ask for. Be prepared for the landlord to counter-offer and negotiate with you as well. Don’t be afraid of hearing `no` from the landlord – counteroffers are all part of the game.

Negotiate the Deposit

Large deposits are not legally required in a real estate lease agreement. Deposits are negotiable and, more so than anything else, often serve to compensate the landlord for the real estate commissions he will be paying out to the broker or agent. The Lease Coach is frequently successful in negotiating to have a franchisee’s deposit returned upon signing a lease renewal.

Gathering information about what other tenants are paying for rent or what incentives they received will position you to get a better deal. Educate Yourself and Get Professional Help

I’ve recently returned from giving four lease negotiating seminars at Javits Center in New York. The rooms were packed with both independent and franchise tenants wanting to learn how to negotiate their leases and looking for help. If you want The Lease Coach to give a class or

lecture at your next franchise convention, tell your franchisor – and let’s get together. Don’t make the mistake of thinking all professional help is equal. The Lease Coach separates itself from the pack by working exclusively for tenants and only being paid by tenants. To receive a free CD called Leasing Do’s & Don’ts for Franchise Tenants and a noobligation consultation, simply e-mail me at DaleWillerton@TheLeaseCoach.com. DALE WILLERTON is The Lease Coach –

a Lease Consultant who works with franchisors and individual franchisees across North America. Willerton is author of “Negotiating Commercial Leases & Renewals For Dummies” he speaks frequently at franchise shows and provides real estate training to franchisors and chains. For more information: Phone: 1-800- 738-9202 DaleWillerton@TheLeaseCoach.com www.TheLeaseCoach.com

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expert advice

David Gens, CEO, Merchant Advance Capital

An Alternative Funding Option

In today’s environment it is very difficult for a small business to obtain a bank loan. Especially for store-fronts, such as retail stores and restaurants, applying for a bank loan is challenging and approval is seldom given without substantial personal collateral from the owner.

n the fall of 2009, David Gens was looking for an opportunity to strike out on his own. As a recent graduate for the University of British Columbia’s bachelor of commerce program, Gens landed a job at a mid-market private equity firm called CAI Capital Management. CAI focuses on private equity investments that typically range between $25 million to $75 million each. As an analyst, Gens got a thorough introduction into the world of capital and finance. On a drive back from Kamloops BC he first became aware of what’s referred to

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as the “merchant advance” industry. “My former partner, Kevin Ainsworth, told me about an article he had read in a major financial newspaper,” says Gens. “The idea of being able to finance a business by banking on a portion of future debit & credit card sales immediately appealed to me, and so we went into business.” The idea was simple. Even though store-front businesses lack collateral for bank loans, they make sales each day and a financier can bank on those sales. If a business has steady sales, pays its bills and has a viable business, then on a short-term basis a finance company can provide working capital in exchange for a percentage of those sales. Soon after the discussion with Ainsworth in the car, Gens founded Merchant Advance Capital to serve the Canadian marketplace. “I noticed that the business model had gained substantial market acceptance in the US over a 15-year period,” says Gens. “However the service was still very new to Canada – and still is today – so many people are unaware of the service, its benefits and drawbacks, and how to use it to their advantage.” A merchant advance is a purchase of a portion of future debit & credit card sales at a discount today. For example, the financing company provides $80,000 to a retail store for inventory financing. The retail store enters into an agreement whereby 8 percent of its debit & credit card sales are forwarded back to the financing company, until a total of $100,000 is repaid. Let’s assume in this example that the entire deal takes 9 – 10 months, which is a typical turnaround time for a merchant advance. While the cost of a merchant advance exceeds that of a typical business loan, its distinct features make it an attractive option to many Canadian small businesses. Specifically, the ease of acquiring the financing (no collateral required) and the variable repayment structure (as the

financing company only gets paid when the business makes sales) can be very beneficial. Merchant Advance Capital works with a large number of franchisees. “Many of the largest brand names in foodservice and retail are among our clients” says Gens. Funds obtained from merchant advances are primarily used for working capital or expansion purposes. “From our clients’ perspective, it is all about capitalizing on high return opportunities.” The most common use of funds in Merchant Advance Capital’s deals is to acquire inventory. Additional inventory allows a retailer to increase sales during their high season. The key variables that must be carefully analyzed are the gross margin on the inventory and the pace at which the inventory can be turned over. If the inventory turns fast enough and at a high enough gross margin, then using a merchant advance to finance its acquisition is a no brainer. “Sometimes people knock our service down because it is a more expensive alternative,” says Gens. “What people miss is that you have to compare the cost to the opportunity that’s being capitalized. We are willing to take a big risk when the banks aren’t, so that a business can get a critical growth capital injection to increase sales. For a small business raising this type of growth capital is typically only possible through raising equity from private investors, in which case a substantial portion of the business gets sold forever.” “We get a lot of glowing testimonials from our clients, and that makes what we do very rewarding,” says Gens. “When we make a bet on someone and that bet works out, it’s an extremely positive outcome for everyone involved. That’s what makes all of the hard work worth it.” Within the restaurant sector, merchant advances are typically used for capital improvements – whether that be in the

Canadian Franchising

form of a new patio, renovations, buying equipment, or even building a new location altogether. Since founding the company in 2010, David Gens and his team have now worked with hundreds of businesses across Canada. In the case of the major franchise systems with well-known brands, a bank-financing package is typically available. In these cases the business typically already has senior bank debt financing in place, usually in the form of a term loan. This, however, is not a deal-breaker for Merchant Advance Capital. “We are happy to come in second position behind the bank to support a business during a seasonal push,” says Gens. However, in these cases the merchant advance company will ensure that the business is not excessively levered and that it has the ability to repay the advance during its high season. The basic preliminary requirements for funding is that a business has been in business for at least one year and has at least one year left on their lease. Debit and credit card sales are preferred and allow the merchant advance to take place, but in the absence of debit and credit card sales

(for example, if a business’s transactions are entirely cheque-based or electronic funds transfer), Merchant Advance Capital will provide a short-term traditional business loan. “As of right now we believe we are the only merchant advance company in Canada to provide a traditional business loan in the event that the debit and credit card sales are not there to support a merchant advance. This greatly increases the number of sectors that we can be involved in and includes B2B scenarios as well as professional corporations.” Merchant Advance Capital’s plan for the future is to continue to grow within Canada. The United States is a more crowded marketplace with its own set of distinct features. “We have more than enough work to do here in Canada. Canada is also very unique in that its banking industry is highly concentrated, with five banks holding most of the share of the market. In my opinion, that makes it that much more important for alternative financing industries to flourish. Our banks reward large corporations with extremely low borrowing costs while small businesses are left behind, with no options at all. We are here to create new options for the people that have been getting left out.” DAVID GENS is the Founder, President

Additional inventory allows a retailer to increase sales during their high season. The key variables that must be carefully analyzed are the gross margin on the inventory and the pace at which the inventory can be turned over.

& CEO of Merchant Advance Capital LP. Merchant Advance Capital provides alternative working capital financing solutions to Canadian small businesses. Prior to founding Merchant Advance Capital in 2010, Gens was an investment analyst with CAI Capital Management Co., a New York based private equity firm focused on mid-market transactions in Canada and the US. Coming from a family of entrepreneurs, Gens was exposed to business and entrepreneurship from a young age. “My brother, father, and my uncle are all entrepreneurs,” says Gens. “I knew I wanted to strike out on my own.” When the opportunity came about to start a business that actually helped other entrepreneurs grow their businesses, Gens could not have been more pleased. “It was the perfect opportunity!” Gens holds a BComm (Finance) degree from the University of British Columbia where he graduated with honours as a Leslie Wong Fellow. For more information: Phone: 866-240-3694 ext 801

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franchisor in depth

ci gusta!

WE LIKE IT!

On April 2011 in Milan Italy the first cigusta cafe was opened followed by the opening of the first International location in Singapore later the same year.

ince those early openings ci gusta! has indeed become a global brand with cigusta cafes now opened in Italy, Thailand, Dubai, Hong Kong, Singapore, Poland, Kuwait, South Africa, Mumbai, Turkey, Aruba and Lebanon. Its global expansion plan is rapidly evolving in line with demand and expectations. In 2013 it’s expected that ci gusta! Inc. will land in over 15 other countries including Canada, The U.S., the Caribbean and South America.

Their goal is simple “to make ci gusta! the concept on everyone’s lips.”

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This ambitious goal is the fruit of many years’ experience in the in the authentic Italian food sector and the passion for innovation and research. Passion and experience guarantee to our franchisees a range of products able to satisfy the growing demand for these products. ci gusta! has combined their considerable manufacturing, marketing and operational resources and developed the Italian food experience concept that’s not just yogurt but one that includes proprietary ci coffee! ci frozen yogurt! ci dessert! ci gelato! ci soup! and ci pizza! menu items.

ci gusta! America has taken this great Italian food experience and developed a four platform innovative franchise formula based on: A complete turnkey solution Franchisee training Ongoing franchisee support Proprietary ci gusta! Product ci gusta! means “we like it” and its brand is all about indulging in the true Italian way of life. Delicious food, spending time with friends, being as they say “in the moment” in a friendly, and modern ambience.

Canadian Franchising

At ci gusta! customers are able to enjoy the very best that Italian food culture has to offer, from premium frozen yogurt to Italian artisan gelato, traditional Italian gelato tenero to specialty coffee, delicious pizza, savory Italian soups - all prepared fresh with uncompromising quality.

They aren’t just yogurt ci gusta! Canada opened its first retail location in Canada this past March with astounding success. “We knew Pickering, Ontario was the right market place to bring ci gusta! Canada and its Italian delicacies but honestly I was blown away

With one tremendous opening under our belt in Canada we are just getting started. We blend rich culture with high-quality products which distinguishes us from our competition and keeps our customers loyal.

by the response,” says Jim Gormley President & CEO The Franchise X-Perts (TFX). People were lined up around the block at our opening. You can’t predict that level of success.” “Our entry into Canada has been truly exciting,” says Luca Viscardi, President of ci gusta! Inc. “Our collaboration with TFX couldn’t be any more seamless. With one tremendous opening under our belt in Canada we are just getting started. We blend rich culture with high-quality products which distinguishes us from our competition and keeps our customers loyal.” The second ci gusta! cafe is set to open in May in Toronto’s trendy Bloor West

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franchisor in depth

ci gusta!

Con Panna, Latte, Cappuccino, and the ultimate Caffetone, an exclusive unique flavor - imagine Espresso with cream of mascarpone, the first of its kind!

Who Is the Customer? Location dependant, customers have been identified as: • Young adults, families with children, teenagers: backed by research, young people are huge frozen yogurt and gelato consumers and seem to be the driving force behind parents decision to bring the family out for a sweet treat. • Health conscious adults: current health trends dictate that frozen yogurt, smoothies and gelato are chosen as an alternative for breakfast on the go, a quick lunch and healthy snack alternative. • Tourists: frozen yogurt, gelato and other cold desserts are the #1 sweet treat people indulge in while on a vacation or staycation.

Village. “Bloor West Village was the next natural choice,” says Gormley. “It’s walking neighbourhood is in line with our Italian charm and there is nothing else like it in the area serving the extent and quality of our offerings.” And ci gusta! isn’t stopping there. New locations are set to open throughout the York Region and the GTA later this year. Its broader expansion plan will see ci gusta! cafes across Canada and the USA, the Caribbean and Latin America.

What is ci gusta! Inc.? ci gusta! Premium Frozen Yogurt - Soft Italian Gelato & Café, offers a complete menu from breakfast to dinner, sweet to savory delicious creamy gelato tenero’s, fantastic self-serve premium frozen

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yogurts with an array of flavours and toppings to choose from; sweet strawberry, cool watermelon, mouth-watering mango, madagascar vanilla, luscious milk chocolate, scrumptious cheesecake and sea salted caramel topped with your choice of delicious nutritious fresh fruits and berries full of anti-oxidants, to sweet candy treats sure to satisfy your sweet toothjust to mention a few! The extensive offerings continue with fresh crepes and waffles topped with your choice of fresh fruits, a full range of sweet fruit sauces to choose from finished with freshly whipped cream or fresh yogurt - a truly unique flavor to tantalize your taste buds. Complementing the brilliant selection of ci gusta! desserts, the aroma of freshly brewed Italian roasted blends of coffee awaits. ci gusta! café offers premium, dark and decaf coffees, a full collection of unique Espresso flavours, Macchiato,

Interested in opening a ci gusta! Canada in your city or neighbourhood? “Our website http://www.thefranchiseexperts.com/ is a good place to start if you are considering opening your own franchise,” says Gormley. “We invite anyone thinking of entering the franchise business to participate in the webinar on our site. It’s a remarkable tool we offer free of charge. Then set up a consultation so we can access your goals and flush out a plan for you. We are your savvy business partner with you ever step of the way as you achieve success. It’s really that simple.” For more information: Phone: 905-688-3093 Email: jim@cigustacanada.com jim@thefranchiseexperts.com www.cigustacanada.com www.facebook.com/CiGustaCanada @CiGustaCanada

Phone: (616)844-2272

Email: myeresource@comcast.net

www.theesource.com/VMeyer

expert advice

Dawn Taylor, Franchisee, Bad Ass Jacks

Lessons Learned Along the Way

he following are a few things that I wish I had known before that first purchase. Hope that these help you with the purchase of your first or second or tenth franchise! After all, we can always handle more than we think we can; this points may just lighten the load.

Build a team around yourself that you actually enjoy!

I am not sure that anyone can ever be fully prepared to own a business. Let’s be honest: we think it will all be fun and games and then we purchase a business and the next day lay in bed thinking, ‘what the H-E-double hockey sticks did I just do?’ Yet we do it anyways. We sign the contracts, buy the businesses and start the process of being our own boss.

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Have you ever gone to a meeting and walked out feeling like you had just wasted a whole lot of time for nothing? Build the proper team and this will happen a lot less. Find people to work with you in your business that you get along with. Find people with the same core values and values. This seems minor but trust me. I showed up to a meeting a few years ago and everyone in the room looked me up and down and informed me that they were here to meet my boss. Not me. I laughed, and thanked them for their time. Did I hire them? No. Did I enjoy the, ‘I’m sorry’ email that they sent the next day? Why, yes, I did. Build a corporate culture around you that you actually want to be part of. If someone grates your nerves in the first meeting I am guessing that they will grate your nerves always. Don’t settle. (and, find people with a sense of humor)

$@*! Runs Up Hill

If words of affirmation are what you need in a job, find a different job. When you are the boss, you will be washed with the constant positive affirmations you might want. You will hear the complaints, the drama, and the negative. Some days it is a lot to deal with. Other days, you realize that that is just part of the job. For some reason, assuming the position of boss, you get to tackle a great deal of other individuals’ struggles. Build a thick skin. And let it all run off of you like water on a ducks back. At the end of the

day it is all information. Listen to what the complainer is saying and ignore the emotional aspect. There is always room for growth in a business and usually what they are saying has some validity. Feeling too emotional? Walk away for a few minutes, put on your big girl pants and try again. There is always something of value in what you are hearing. Face the tough stuff head-on and these ‘tests’ won’t repeat themselves.

You Will Never be Good Enough Or be Able to Do Enough to Please Everyone Be proud of what you have done. No one looking in from the outside will be able to see all the work that you have done or the road you walked to get where you are standing. As long as people are involved, you will never be able to make everyone happy. Try your hardest and at the end of the day, if you have given 100 percent, that is all you can give. Be proud and celebrate yourself for that!

Don’t Listen to Other People

This point is best said by Mother Teresa, “People are often unreasonable and selfcentered. Forgive them anyway. If you are kind, people may accuse you of ulterior motives. Be kind anyway. If you are honest, people may cheat you. Be honest anyway. If you find happiness, people may be jealous. Be happy anyway. The good you do today may be forgotten tomorrow. Do good anyway. Give the world the best you have and it may never be enough. Give your best anyway. For you see, in the end, it is between you and God. It was never between you and them anyway.” There are always people who don’t like happy people. There are always people who don’t like successful people. There are always people who may try to bring you down or express reasons why you should not own a restaurant/business. It is like pregnancy stories. Why

Canadian Franchising

do people share only the negative? Risk more than others think is safe. Care more than others think is wise. Dream more than others think is practical. Expect more than others think is possible. Listen to the people that have your best interest at heart. Take all others advice with a really large grain of salt. Work hard to surround yourself with the people who are light in this world and will bring you up.

Don’t Let Good Stand in The Way of Great

In the rush of life and running a business, you will be tempted to settle for the “good” answer. Do yourself a favor: hold out for great! Hire the great lawyer, hire the great marketing company, buy the great computer! Spend the extra money hiring the right staff and the right consultants. We live in a world of instant access (think microwave KD because making the box just takes so dang long!) and need to slow down sometimes and wait.

Learn to Stand Your Ground

Everyone out there will want something from you. They will all have something

There is always something of value in what you are hearing. Face the tough stuff head-on and these ‘tests’ won’t repeat themselves. to sell you. Stand your ground. Stick to your vision and mission statement. Make all decisions from your core values. I had a marketing company want me to pay them a ridiculous amount of money for a marketing plan. I was okay with that. I was not okay with them not wanting to give me a description of any sort of what I was paying for. I have vendors tell me often that I could save money by just switching to their “amazing product!” I want fresh food as much as possible. Cheese that has no dairy: not interested.

Meat that ‘might’ be meat: not really my thing. I have learned to stand my ground. Don’t let anyone convince you to change your ideals. 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 www.badassjacks.com

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feature

expert advice

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

LOVE ‘EM AND LEAVE ‘EM

Why Customers Don’t Come Back You did your marketing so well, you offered them great value for money, greeted them in a courteous manner, ensured that they were well looked after throughout their stay and remembered to thank them for coming while you said goodbye. You took care of all their needs so why are they ignoring you? You did everything right, right?

o what did you do wrong? You made the grave error of taking that great customer experience for granted. You thought that because they had a good time that your job was over. Wrong. It’s like going on a date. If you enjoyed yourself, did you call again? Did you let them know how much they meant to you or did you just assume they knew. Marketing is very much the same. It’s about communication and meeting and managing expectations. There’s a difference between satisfaction and loyalty with customers. Service builds loyalty. To walk into a business and be welcomed by name is a luxury for customers. To develop loyalty make sure you never treat a frequent customer like a first timer and try always to make that new customer feel relaxed and at home like a long time customer. You and your customer need to be on the same page and many businesses “assume” that they are satisfying their customers, but they fall short: there is a “quality gap”. The customer expects one thing and the service provider thinks that they provided what was expected but in actual fact missed the mark. So what’s the difference between a satisfied and a loyal customer? It’s a fine

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line but a crucial one. It’s the difference between casual dating and a long-term commitment. Satisfied customers, although happy at the moment are vulnerable customers. They have no complaints about your business or service but they are not blown away either. They didn’t have an experience that left a lasting impact that will keep them thinking of you or talking to about you to their friends and family. They will leave you for a better price, a better location or a better offer. They are not committed to you. They like you but they don’t love you. Loyal customers on the other hand have said, “I do”. Their expectations have been met and probably exceeded. They are happy and comfortable with their relationship with you and aren’t looking to leave. Don’t take them for granted. Treat them like your most valuable asset because they are! Loyal customers contribute the most to your reputation and to your bottom line. They cost less to market to because you’ve already won their business and generally they spend more than others because they frequent your business more often and feel comfortable supporting you and your efforts. It is crucial to determine what your

customers “actually” expect from you, then make sure you not only meet, but exceed their expectations. This will build customer loyalty and convert satisfied customers to loyal customers. View customer service and building loyal customers as an investment. It is the ultimate profit centre. It doesn’t spoil, it never goes out of fashion, it takes up no space on your shelves and it has no expiry date. It’s all about the “little things” that add up to great customer service and ensuring an ongoing commitment. Just like in a personal relationship, it’s the times that you are given flowers for no reason, or out of the blue you’re sent a text that says, “I’m thinking of you” that solidifies one’s feelings. It’s the unexpected gestures that stand out, that are memorable and that endear you to that person. The same principles apply to your business: • It’s keeping promises you made in your marketing. • It’s letting loyal customers know first about a promotion, a new product launch or event. • It’s greeting a customer by his or her name.

Canadian Franchising

• It’s following up with them to make sure they were satisfied. • It’s giving customers something they didn’t expect occasionally; something they didn’t have to buy. • It’s about consistency, caring and never taking customers for granted. Promises of quality, performance, service and product count with customers. Don’t promise anything you can’t deliver. Customers remember promises. They matter. A failed promise is a lost customer. Credibility is king and without it, no matter how many customers come through your door, you will never retain them or convert them to loyal followers. In a marketplace bursting with competition, you can’t risk your customers’ trust in you. Your relationship with your customer will be maintained and solidified only as long as it’s of benefit to everyone involved. Just like the dating scene, there’s plenty of choice and opportunity but there’s risk, uncertainty and a lot of time and money wasters. Your business is always looking for new people to attract but to be successful and happy you need to hold on to those customers that find you attractive, that fit the “ideal” and that want to commit to a business relationship. Ensure that

It is crucial to determine what your customers “actually” expect from you, then make sure you not only meet, but exceed their expectations. This will build customer loyalty and convert satisfied customers to loyal customers.

their needs are met and exceeded. Stay in touch with them, ask for their input on how you can take better care of them and never, ever take them for granted. If you can make them feel loved, they won’t be leaving anytime soon. With over twenty years of advertising experience and a proven track record, PATTI provides As You Like It’s 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: www.asyoulikeitmarketing.com

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f ra nchisee in action

Jason Brass, Franchisee, Boston Pizza

BOSTON PIZZA THE RIGHT PLACE AT THE RIGHT TIME

B In 2005, Jason Brass was happily working for Menu Foods Ltd., a pet food company, as the Vice President of Human Resources in Mississauga.

rass attained his MBA from the University of Western Ontario, and this position led to his first placement with Menu Foods as a buyer. From there, Brass was promoted to numerous roles in finance. “Our company office had an outstanding, open offer to meet each Friday afternoon at Boston Pizza. Sometimes there were five of us, other times 25. I was almost always in attendance and became very familiar with the brand. At this time Boston Pizza was just beginning expansion around Ontario,” explained Brass. Brass, who lives in Toronto with his wife and children, took a weekend trip to Orangeville. As Brass and his wife were walking around, he noticed that at the shopping facility the two were exploring, a Boston Pizza was nowhere to be found. “I said to my wife, ‘a Boston Pizza would do so well here,’” said Brass. Upon his return home, Brass got on the phone with Boston Pizza’s corporate office, “One thing led to another, and the next thing I knew, I was entertaining the idea of becoming a Boston Pizza franchisee!”

Surprise Changes

In the beginning, Brass’s intention was to stay with Menu Foods Ltd. while building and opening his Boston Pizza restaurant in Orangeville. “Boston Pizza was comfortable with this so long as I had an Operating Partner,” explained Brass. So he went ahead and found an

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Operating Partner. “I would stay with my job, and this individual, also named Jason, would run and manage the store. During construction, when it was close to completion, my involvement became more and more. I became active in the training and hiring: all that,” said Brass. “I would be driving south to Mississauga each morning to Menu Foods and yet, I could feel my heart being pulled north to Orangeville.” After some long discussions with his entire family, Brass resolved to leave his job at Menu Foods and delve into his Boston Pizza business. “I dish-washed, worked the line, worked the grill: I did everything so that I could understand everything,” shared Brass. Brass recalls Boston Pizza being very involved in the entire beginning stages of development. The development team brought their expertise to the site selection process, having expertise behind their opinion. When building was ready to begin, all our drawings were approved by the corporate team and they helped evaluate the best choice for a builder. “As my location was being built, I went to the closest corporate training center to learn the Boston Pizza ways in their entirety,” said Brass. Boston Pizza provides an extensive seven-week training program for new franchisees and their restaurant management team.

Training to Succeed

“I was supplied with copious amounts of

Canadian Franchising

trainings surrounding the operations of a restaurant. Even if you come into this understanding how to run a business, a restaurant has so many moving parts and itâ&#x20AC;&#x2122;s a different ball game: everything from staff issues, to the flow in the kitchen. Having never been in the industry before, one has preconceptions of how restaurants work. From a guests perspective, you would never know the intricacies of the restaurant and its operation,â&#x20AC;? communicated Brass. In store training begins two weeks prior to opening with the arrival of four

a restaurant has so many moving parts and itâ&#x20AC;&#x2122;s a different ball game: everything from staff issues, to the flow in the kitchen. Having never been in the industry before, one has preconceptions of how restaurants work. From a guests perspective, you would never know the intricacies of the restaurant and its operation. Page 63

f ra nchisee in action

Jason Brass, Franchisee, Boston Pizza

corporate trainers who teach Boston Pizza’s successful systems to staff and management. These trainers stay on to provide support for two weeks postopening, at which point the restaurant is assigned a Field Services Manager for dedicated operational support. Boston Pizza’s regional marketing teams help new and existing franchisees drive guest traffic, raise awareness in the community and build repeat guests. Dedicated Regional Marketing Managers act as consultants to each Boston Pizza location to assist in implementation and understanding of national promotions and work on local store marketing action plans. At first, Brass admits life was hectic. “I was working late nights. Going from an office job, where you work nine to five, staying up until two in the morning was a huge adjustment for myself and for my family,” said Brass. As the business grew and strengthened, Brass was able to lighten his load, “As you get more confident with your team running the business you are better able to step back somewhat from the business. As time went on, I built the operations team and felt it’s strength so I could enjoy my days off.” Now that the business is close to ten years old, Brass also enjoys the freedom to build his working hours around his life. Brass has found that it pays off for him to pay his employees well: “That way you can attract quality individuals and if you pay them slightly more they will be more likely to stick around. That consistency really impacts your workload. I treat my staff like family and they do the same. I’ve had little turnover and that’s a key ingredient to my success.”

The Story Behind The Start

Boston Pizza started in Edmonton, Alberta in 1964. Boston Pizza is ‘two experiences under one roof’ – a familyfriendly casual dining restaurant with a separate sports bar. Boston Pizza restaurants offer a casual dining setting with over 100 menu items including gourmet pizzas made with signature hand pressed dough. Other features include mouthwatering pastas and a wide variety of appetizers, salads, entrees and desserts. Boston Pizza is perfect for families, teams and groups of all ages and the sports bar has big screen TVs to catch your favourite game. Most Boston Pizzas

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feature an outdoor patio for guests to sit back and soak up the sun. “I consider myself a progressive, constantly evolving individual and Boston Pizza is the same. They’re an innovative company always looking to improve the menu and take input from franchisees,” shared Brass. Boston Pizza’s business model is highly dependent on franchise profitability. Their core strength continues to be supporting the success of their franchisees. From marketing to operations, Boston Pizza franchisee can be confident in the support of their success. Boston Pizza supports franchisees across the country with regional offices in Richmond, British Columbia, Mississauga, Ontario and Laval Quebec. “The one thing I would say to anyone considering a Boston Pizza franchise is, ‘talk to other franchisees.’ I met with numerous franchisees before I decided and grilled them about their lifestyle, a typical day, and the Boston Pizza system at large. Rather than basing your decision

solely off the numbers or report, get out there and get a feel for the people who are living it.” The company has more locations, serving more guests annually than any other casual dining concept in the country. Over 40 million guests are served at over 340 locations in Canada each year. “I’ve heard of different franchise concepts over the years that don’t seem to have the flexibility we do with Boston Pizza. There are policies in place, systems to access and a national menu. But what I like about being with Boston Pizza is they give me the ability to make my restaurant my own. Every restaurant has a different feel because franchisees and owners, who are passionate, have the opportunity to run it with freedom. Franchisees get the feeling that they own the business and can make decisions that will affect their business,” Brass informed us. For More Information: www.bostonpizza.com

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