Canadian Franchise Magazine
issue 2#4 - 2015
freshii
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
powered by millennials
franchising and change the va lue
of being prepared
SUPPLIER FORUM
LATEST NEWS
FINANCIAL ADVICE FROM THE BANKS
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TOP LAWYERS’ ADVICE
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CANADIAN FRANCHISING VOLUME 2, ISSUE 4 December 2015 president: Colin Bradbury. colin@cgbpublishing.com
publisher: Vikki Bradbury. vikki@cgbpublishing.com
Editorial Department: editor@cgbpublishing.com
Assistant Editor: Diana Cikes. editor@cgbpublishing.com
National Accounts Manager Advertising Kimberly Kutnick. kimberlyk@cgbpublishing.com
PRODUCTION: production@cgbpublishing.com
DESIGN: Jejak Graphics. jejak@bigpond.com
COVER IMAGE: freshii
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
from the
Publisher Welcome to the Winter issue of Canadian Franchise Magazine. On the Cover we feature Freshii and hear from the founder and CEO Matthhew Corrin, who has worked hard to build a fast-growing brand that is powered by the Millennial generation of healthy and affordable convenience. Our main feature this issue is Food Franchising, where one of our regular Experts Lori Karpman takes a look at Dining Over the Decades and how the food industry has evolved through the years. Are you thinking of adding catering services to your restaurant business? Learn the 5 Questions to Ask before moving ahead as explained by one of our industry Experts, Alan Dickson. We also feature plenty more useful Expert Advice and tips from our other Experts, like Wayne Maillet on Franchising and Change, and Edward (Ned) Levitt who explains How to Tell Good Franchisors from the Bad.
Debbie Webster from Tony&Guy discusses What you should know when looking at a franchise, and Joseph Pisani from BMO shows you the Value of Being Prepared for the worst should disaster strike your business. Be sure to get cozy with a warm cup of tea and catch up on the latest in industry News on pages 6-9. And don’t forget to check out the most recent A-Z directory listings at the back of the magazine. Happy reading! Vikki Bradbury Publisher
“If we had no winter, the spring would not be so pleasant: if we did not sometimes taste of adversity, prosperity would not be so welcome.” - Anne Bradstreet
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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december - February 2015/16 On the Cover 10 Cover Story:
18 The Value of Being Prepared
Freshii Powered by the Next Generation
Joseph Pisani
20 Franchising and Change
20
Wayne Maillet
18
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ca nadia n f ra nchise maga zine
Contents
In Every Issue 06 Canadian Franchising News
Industry news from across the country
24 Feature Article 42 A-Z Franchising and Services Directory
Focus 16 GameTruck
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Canadian Franchise Magazine
12 What You Should Know When Looking at a Franchise
Debbie Webster
22
Expert Advice
14 Factors to Consider when Purchasing a Franchise
Jordan Druxerman
18 The Value of Being Prepared
Joseph Pisani
20 Franchising and Change
Wayne Maillet
22 How Can You Tell the Good Franchisors From the Bad? Edward (Ned) Levitt
30 5 Questions to Ask When Considering Adding Catering to Your Restaurant’s Services
Alan Dickson
36
36 Rebranding, Really: How to Take Your New Brand From Concept to Execution
Al Cave
38 The Broad Approach
David Banfield
40 Understanding and Negotiating Rental Rates for Franchise Tenants, Jeff Grandfield and Dale Willerton
40
Food Franchising Feature 24 Dining Over the Decade: How Far Have We Come?
Lori Karpman
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what’s new! markets include Calgary, Montreal, Toronto and Vancouver, among others. “More than 20 years and a million bar antics later, we’re finally coming to Canada,” said founder Liliana “Lil” Lovell. “We look forward to taking Canada by storm one boot-stomping, drink pouring bar at a time.”
Coyote Ugly Targets Canada for Expansion Coyote Ugly – the rowdy, westernthemed bar widely known for its beautiful female bartenders and dancers who have made pouring drinks an art form – is exporting its version of honky-tonk to Canada.
With 20 locations already open and operating in four countries – including the United States, Germany, Russia and Ukraine – company plans call for debuting in Canada with as many as 15 bars over the next several years. Targeted
Widely recognized as the most famous bar on the planet, Coyote Ugly thrives on booze, bar dancing and girl power. Each night sexy, sassy, tough-talking “Coyotes” go well beyond serving drinks; they ascend the bar to entertain the crowd with choreographed dance routines that celebrate the wild side of American culture. As for the drinks, the rule is hard-nosed: no “frou frou” shaken or stirred concoctions, and nothing that requires a blender or more than two ingredients to make. “The energy inside our bars is amazing. From the moment you walk in the door it is a sensory overload of great music, entertainment and fun. There isn’t anything like it. Period,” Lovell said. For more information, visit www.coyoteuglysaloon/franchising.
Franchise Massage Brand Expands Into Canada city in metro Vancouver, will be owned by Kevin and Maggie Younghusband. “We’ve been looking for a great partner to launch our franchise in Canada, and Kevin and his wife, Maggie, are going to be great,” says Kutac.
Elements Massage™ (Elements) is opening its first international studio in Langley, British Columbia, Canada. While the international location is a first for the brand, Elements has expanded across the continental United States and has 216 studios in 36 states. The Elements location in Langley, a
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“Elements has experienced continued steady growth for several years now and expanding into Canada is a natural and logical move for our brand,” said John Kutac, Chief Operating Officer of WellBiz Brands, Inc. (the parent company of the Elements franchisor entity). “Elements has solidified itself as a premier massage therapy provider in the U.S. and we look forward to bringing our top-rated service to Canada.” The Canadian studio represents just one of many benchmarks the massage franchise has hit in a successful 2015. Elements has surpassed 200 total studios, 75,000 total Elements Wellness Program™ members and instituted
a brand presence that includes the Elements Promise™. This guarantee is a commitment, not a gimmick, and says if Elements does not meet or exceed a client’s expectations, the next massage is complimentary. The franchise owner, Kevin Younghusband, believes in the brand’s mission and is excited to be the first to bring The Elements Way® of providing customized therapeutic massage to the Canadian market. The first Canadian Elements location is scheduled to open in November in Willowbrook Park at 6233 200 St., in Langley, British Columbia. The Younghusbands are building a strong team prior to opening and currently have several positions available. For information about the studio’s available jobs go to www.ElementsMassage.ca and continue to the studio homepage.
Canadian Franchise Magazine
Paramount Fine Foods franchise expansion continues
Pandora opened its doors at CF Toronto Eaton Centre for an alluring night of celebration Pandora was graciously welcomed to the Toronto Eaton Centre with its grand opening on October 14 celebrating the mark of the 70th Canadian franchise. The exclusive event featured celebrity stylist Janette Ewen and was an absolute hit with guests who mixed and mingled amongst the lavish décor and nibbled on a variety of delectable hors d’oeuvres. The evening’s event was inspired by Pandora’s signature “Art of You” theme, which inspires women to accentuate and express their original personalities through their jewelry. The theme was further explored through three personas’ which showcased ways women can style pieces to match their individuality and aesthetic. The Artist persona, wearing Helder Diego, was draped in layers of leather wrap bracelets and bangles. To match, there were canapés of fresh garden veggies and aioli served in paint cans and raw juice cocktails served in a vintage crystal glass. The Working Woman persona, wearing Rachel Sin, featured Pandora’s classic jewellery, including the staple charm bracelet. She served bagels with smoked salmon and iced coffee. The final persona, the Holiday Party, was dripping in sparkling jewels. In accompaniment, champagne was served from a flowing fountain and a canapé of chicken Ballantine, resembling a holiday dinner.
Once again North America’s fastest growing Middle Eastern Restaurant is thinking outside the box of traditional restaurant planning by partnering with two distinct food service innovators to maximize its reach. Mississauga, Ontario based Paramount Fine Foods is opening in specialized locations such as universities, hospitals and corporate institutions, joining forces with Compass Group and YIG. The latest locations are in Montreal’s famed McGIll University and Ontario’s Mohawk College, joining other existing outlets at The University of Toronto’s Mississauga campus, as well as the Lakeshore campus of Humber College. The partnership continues to seek other locations as part of its major expansion plan. In 2015, Paramount president and CEO Mohamad Fakih has been expanding his corporate vision of his popular restaurant chain, now 20 strong and offering a high quality Middle Eastern food experience across Canada, the U.S. as well as back to the birthplace of the famous Shawarhma sandwich, the Middle East.
Pandora’s grand opening definitely made a statement, showcasing the amazing quality and variety they have to offer to every woman.
Paramount employs over 850 staff in its 20 restaurants, halal gourmet butcher shop, production commissary, and its food truck. Paramount recently launched a spin-off halal sandwich shop called Fresh East opening two locations so far, in Toronto and Mississauga.
www.pandora.net/en
www.paramountfinefoods.com
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what’s new! BeaverTails Announces U.S. and International Growth Strategy Midas Seeking to Expand in Quebec City Brand with the ‘Golden Hand’ identifying opportunities in Canada Midas, one of the world’s largest automotive services providers, has announced plans to increase its presence in Quebec and is currently looking for franchisees to expand the brand in Quebec City. The organization has plans to add multiple locations over the next two years in Quebec City, Drummondville, and Trois-Rivières.
BeaverTails, makers of unique and delicious BeaverTails® pastries, have announced its US and international growth strategy at the International Association of Amusement Parks and Attractions (IAAPA) trade show in Orlando, Florida. Based on an old family recipe, BeaverTails pastries are a Canadian icon – a unique and delicious treat. Served hot and topped with numerous choices, including cinnamon & sugar, chocolate hazelnut spread, Reese’s® Pieces and peanut butter, BeaverTails pastries satisfy indulgences of all tastes. BeaverTails also offers a menu of favorite snack foods, including BeaverBites, BeaverDogs, poutines, and moozoo® smoothies, frozen yogurts and gelatos. “BeaverTails has become a beloved icon and proven business model across Canada,” says Pino Di Ioia, CEO, BeaverTails. “Now that our home market has matured, we have turned our development efforts to the US and
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abroad. Our strategy is clear – we wish to place stores within leading tourist and leisure destinations. Our research and experience tell us that this is one of the best ways to accelerate brand awareness. This approach has already been proven at Lagoon Amusement Park, Morey’s Piers, Cedar Point and locations in Japan, South Korea and Dubai.” “We believe that we have a very compelling offering for food service operators, for several reasons. First, our operations are comparatively simple and our food costs are relatively low. Second, our product is unique and does not cannibalize sales of other dessert offerings. Third, BeaverTails pastries are topped with a variety of choices, which allows us to better engage the customer by providing an animated experience. We are actively looking to meet passionate people with amusement park expertise and a desire to help fulfill this vision,” adds Mr. Di Ioia. www.beavertails.com.
For more than 45 years, Midas has served the Quebec community through 18 locations in Montreal. With more than 2,100 franchised, licensed and companyowned Midas shops in 13 countries, including nearly 1,200 in the United States and Canada. A continued focus for the organization is the opportunities to better serve consumers in Canada. The Midas office in Canada is led by Glenn Root, Vice President of Canada Operations, and is focused on marketing, supply chain and fleet services for Canadian franchisees. “We’re excited to expand our footprint in Quebec City and are focused on selecting the right partner or partners to build upon the 45-plus year legacy of this brand,” said Root. “As part of the TBC family, Midas franchise owners provide the best in local auto service and tires backed by the buying power, supply chain, and marketing of an international chain.” Midas is currently offering financial incentives to make it easier for new franchisees and independents to convert their businesses in 2015. Additional information is also available at www.midasfranchise.com.
Canadian Franchise Magazine
elebrates rand ranchise
only do I know their techniques well, I’ve also seen the success over the competition. It’s a team I’m enthusiastic to stay with.” The new salon marks T&G’s continued entrepreneurial vision the company is fostering across Canada.
The new salon features the signature style the TONI&GUY brand is known for: a bold design with un inished looring, exposed painted brick and sleek white counters. The in-house team features award winning stylists and make-up artists trained under the renowned T&G methodology.
TONI&GUY celebrated the grand opening of its first Canadian franchise in Toronto’s upscale Yorkville neighbourhood this September. After a recent restructuring, T&G emerged with a promising growth strategy, offering franchises in both their salon and academy models. Already with locations in 42 countries worldwide,
T&G’s expansion into the heart of Toronto was a natural next step. Canada’s first location is owned and operated by power couple, Clarissa and Rob Pupo. For them, it was a clear decision when the opportunity to open under the TONI&GUY brand arose. “I started my career with the TONI&GUY family,” co-owner Clarissa said. “Not
Co-owner, Rob Pupo had his irst exposure to TONI&GUY when assisting at a London hair show. “They had an energy that stood above the rest.” He said. This distinction Rob noticed was built by the Mascolo brothers, with over 50 years of experience in the hairdressing industry. To this day they continue to set the standard for fashion-forward styling. “It’s exciting for both of us to take part in this growing legacy.” www.toniguy.com/
MR MIKES SteakhouseCasual Heightens the Guest Experience with New Board Games Program September 7, the restaurant introduced board games, including Jenga, Battleship, chess, and Scrabble. The urbanLODGE section at every MR MIKES SteakhouseCasual now carries eight very different board games, to encourage guests to relax, socialize and have fun, while enjoying a meal or drink. Introducing the nostalgic pastime was a way for MR MIKES SteakhouseCasual to heighten the guest experience, giving guests a sense of fun and nostalgia that they are unlikely to get when they dine out elsewhere. All they have to do is select a game from the games table, and start playing.
Restaurant brands are now turning to methods beyond the immediate great food, atmosphere and service to attract guests and maximize the guest experience. MR MIKES SteakhouseCasual, a steakhouse franchise with 25 locations across Western Canada, is a case in point. On
The MR MIKES SteakhouseCasual in Dauphin, Manitoba has already experienced a very positive response to their board games program. Since the location opened in June, the store has welcomed diverse groups who come to enjoy the activity on a regular basis, including teenagers laughing and joking over a game of Jenga, and a couple who comes in for a weekly game of chess. www.mrmikes.ca
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cover stroy
Freshii: P owered
by the N e x t G eneration of H ealthy C onvenience and E ntrepreneurial D rive convenient, affordable and delicious. He was determined to ‘Starbuck’ the health-casual dining category, and that’s just what he did when he franchised the business in 2008 and opened the first 100 Freshii locations faster than Starbucks, Subway, Jimmy John’s and McDonald’s. Freshii went on to win the Top Franchise of the Year in Canada in 2013 and today, the brand continues to attract high quality franchise partners worldwide.
On trend The brand’s fast and continued growth can be attributed to its intersection with three key business trends: 1. Health and wellness
From dressing runway models to dressing salad, Freshii’s founder came full circle when he built a brand that embodies the spirit of his Millennial generation. Working in New York City for Oscar de la Renta, Freshii founder and CEO Matthew Corrin transitioned from a career in high-end fashion to “healthcasual” dining when he saw a need in the market for healthier and more convenient grab-and-go lunch options. Although he had never worked a day in
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a restaurant, Corrin knew the secret to success in the industry didn’t require a degree in rocket science, just a lot of hard work. Borrowing enough capital from his parents to get his first store off the ground, the 23-year-old rolled up his sleeves and opened his first Freshii location in 2005, in the financial district of Toronto. But the road to success was not without its bumps, and after a “disastrous” first day and a bad restaurant review, Corrin did what any smart entrepreneur would do: he rolled up his sleeves again and opened up a second store. For the next few years, Corrin worked hard to build a restaurant brand that would help people live healthier and longer lives by making healthy food
Ten years ago, healthy food was defined as brown rice and spinach – today it’s Superfoods like quinoa, kale and edamame. The concept of healthy is continuously changing and to stay on top, food businesses need to keep up. Freshii keeps its focus on tracking and staying ahead of trends and the changing concept of ‘health’. The brand continuously evolves and adapts its menu to stay current and bring its customers the latest in healthy food trends at an affordable price. 2. Convenience In today’s busy grab-and-go culture, convenience often means grabbing a quick burger and fries. But Freshii aims to provide convenient, fresh and nutritious meals and snacks to fuel and energize people on the go. “The two biggest barriers to eating healthy are convenience and affordability,” explained Corrin. “Freshii aims to make eating healthy
Canadian Franchise Magazine
“Freshii aims to make eating healthy both affordable and convenient by focusing on offering fresh, customizable menu options.” – Matthew Corrin, Freshii founder and CEO
General Managers. Partners are also provided with ongoing support from members of the Training and Operations Team. “My team has created a franchise system for Freshii that can be easily scaled and replicated across the nation,” said Corrin. “All areas of the Freshii business model are addressed – including site selection, supply chain, cost control, build-out timing, marketing and buzz creation to ensure that each market across the country can be easily opened, rapidly grown, and successfully and profitably operated.”
On Target Freshii recently partnered with retail giant Target Corporation to bring Freshii to 9 Target locations as part of a ‘café test’ for the retailer. Eight of those locations are in the Chicagoland area, and one is in Minneapolis.
both affordable and convenient by focusing on offering fresh, customizable menu options.” 3. Millennials While many fast-casual restaurants have been struggling to meet the needs of the millennial customer, Freshii is powered by the generation: the business was founded by a millennial, half of its customer base is made up of this generation, and 65% of Freshii franchisees are millennials.
longer lives by making healthy food affordable and convenient. This also extends to its franchise partners, who personify health, wellness and believe in the brand’s vision. And while restaurant experience is an asset, entrepreneurial spirit trumps experience in the Freshii system, which is one reason millennials tend to thrive in the business. But Corrin also pointed out that successful Freshii partners bring a wide range of experience to the table.
“The millennial generation is the fastest growing segment of our population,” said Corrin. “Millennials have an entrepreneurial spirit and are being encouraged to start their own business…They’ve also grown up in a health-conscious culture and believe in our mission.”
“It’s amazing because our franchisees come from a wide spectrum of backgrounds and experience, from Ex-NBA players and Olympic gold medalists, Harvard MBAs and a Food Network star, to new immigrants or people who have sold other restaurants franchises and joined the Freshii system.”
Aligning a ‘killer’ culture with the right partners
Supporting its franchise partners
One of Corrin’s guiding principles for the business is to “Build a company with a killer culture, not a culture that kills your company.” This means that all Freshii systems and processes are in alignment with the brand’s mission to help people all over the world live healthier and
Corrin owned and ran the first 9 Freshii restaurants and worked hard to optimize the business before offering it to others in 2008. As part of Freshii’s franchise program, franchise partners receive corporate training for the Owner/ Operator and Director of Operations/
The partnership furthers Freshii’s mission of making healthy food convenient to the masses, and Corrin said the organization is excited to align with Target’s increased focus on wellness and bring better-for-you options to Target guests.
Looking forward The brand currently opens 2 new restaurants every week, with locations operating around the world and across various locations – from cosmopolitan cities, malls, college campuses, suburban neighbourhoods, fitness clubs, airports and small towns. And the brand has no plans to slow down. Corrin explained that the business is positioned to operate 200 units in over 80 cities and 15 countries by the end of 2015, with plans to cross 400 units worldwide by the end of 2016. “Our goal is to expand throughout the country by teaming with passionate partners who share in our mission to establish Freshii as the most convenient destination for healthy meals and snacks, served quickly while maintaining the highest quality of service and style.” Interested franchise partners can apply to become a proud Freshii owner by visiting www.freshii.com By Diana Cikes, Franchising USA
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ex per t advice
Debbie Webster | President | TONI&GUY
What you shou
lookin a franc There is no doubt that the franchise market is one of the fastest growing sectors in business today and for the right entrepreneurs it can be a lucrative and highly profitable business model.
all models are created equal and not all opportunities are as good as they may appear on the surface. The key is finding a business model that fits with your passion. Complete your due diligence by speaking with existing franchisees to get a thorough understanding of how the model works. Determine if the model will fit into your work ethic, lifestyle and long term growth plans.
The key to success is finding and partnering with the right franchise model. There are so many models to choose from you want to take the time to make the right match. Remember, not
Make sure you take the time up front to fully understand the model. Decide if you are looking for a passive or an active investment. Determine how much time you are able to commit to get your new
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Steps to take when considering a franchise
business venture up and running and make sure this fits with the expectations of the prospective franchisor. Be realistic in your expectations, determine when you will begin to see a return on investment and plan accordingly to make sure you won’t fall into a cash shortfall. Too often people select a business that is going to take much more time than they are able to commit and wonder why they fail. Take the time to interview current franchisees and ask them if they would reinvest in the brand knowing what they know now.
What to expect as a franchisee? There are many variables provided by
Canadian Franchise Magazine
“If you select the right franchise model and you really love what you do you will never work another day in your life!” thinking they can cherry pick the system and use their own ideas instead. There is a reason the franchisor is successful and that was what attracted you to the brand in the first place. Stick with the system and you too can be successful.
Top Five Tips When Becoming a Franchisee
uld know when
ng at chise franchisors in today’s business climate. At a minimum you should expect to receive assistance and help in all factors relating to opening and operating that particular model. For example: location and site selection, build out and construction criteria, marketing and operations training and ongoing support and strategic growth planning.
Why Franchise? The reason that you invest in a franchise system is to take advantage of a proven system and therefore removing the need to recreate the wheel. Successful franchisees fully and consistently implement everything that the franchisor has shared with. Successful franchisees don’t allow their ego to get in the way by
1. Find your passion If you select the right franchise model and you really love what you do you will never work another day in your life! As a franchisee you are now an owner which in turn means you are an entrepreneur. To be a successful entrepreneur have you to love what you do.
2. Commit to the commitment Understand the relationship you are entering into. A franchise is like a marriage, you are entering into a long time commitment, generally franchise agreements are between 5,7 and 10 years. That’s a long time to be in a difficult relationship!
thing you, then you should have done your own thing!! A franchise system is there to be followed. The franchisor provides the blueprint but it’s up to the franchisee to take it and run with it.
5. Network The most successful franchisees network within their system. They pick the brains of other franchisees within their brand and take advantage of their wealth of knowledge. What works in one market may not work in another but by tapping into the experience of others you can save yourself a lot of time, energy and money in research. Use their experience to minimize your startup mistakes. Born and raised in the United Kingdom, Debbie has over thirty years experience in the hairdressing industry. After relocating to the United States in 1991 Debbie began her career with TONI&GUY hairdressing. In her role as President she is currently based out of Marina del Rey, CA and is responsible for overseeing the salon and academy divisions along with franchise growth in North, South and Central America. Franchising since 2008, TONI&GUY USA currently has over 65 units in North America and recently launched their first franchise salon in Toronto, Canada. www.toniguy.com
3. Lifestyle Understand the change in lifestyle required to make this new venture successful. Remember this is an investment both emotionally and financially. Make sure that you have what it takes to withstand the challenges you may face. Understand that it may take two to three years before you may see a profit and make sure you have what it takes to support that both emotionally and financially.
4. Follow the blueprint The most successful franchisees fully and consistently implement the franchise system. Don’t try to reinvent the system. Remember if you wanted to do your own
Debbie Webster
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ex per t advice
Jordan Druxerman | Franchise & Licensing Lawyer | Garfinkle Biderman LLP
Factors to Consider when
Purchasing a Franchise Purchasing a franchise can be a good option for entrepreneurs who are eager to start their own business but don’t want to incur the risk of developing a business concept from scratch. However, any business venture can be risky, including a franchised business. The following are some pieces of advice to consider if you are contemplating purchasing a franchise. The first and most obvious question is “will I make money?” This question, however, is amongst the hardest to answer. To begin the consideration, a potential franchisee should determine the length of term of their franchise agreement. Franchise agreements commonly provide something to the effect of “the term of the franchise agreement will run for ten years, or until the expiry/termination of the lease, whichever is earlier”. The franchise agreement and lease should both be reviewed in detail to determine the length of their terms, including if there are any
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“Most franchisors will be able to provide a detailed outline of the anticipated costs to be incurred in establishing a franchised business.” events which permit the franchisor or landlord to terminate their respective agreements early. Once the term of the franchise agreement has come to an end, and absent any rights of renewal or extension, the franchisee will no longer have a functioning business or be left with assets of any marketable value. The vast majority of the initial expenses incurred in connection with the establishment of a franchised business are for leasehold improvements, equipment and fixtures, all of which usually become the property of the landlord at the end of the lease term. All a franchisee is generally left with at the end of the term are the franchisee’s movable assets (i.e. the ‘chattels’) in the premises. These, however, will not be new and will be of little value. Given the above, a franchisee must be as certain as possible that they can earn sufficient operating profits during the term of the franchise agreement to offset the initial construction and development costs. Most franchisors will be able to provide a detailed outline of the anticipated
costs to be incurred in establishing a franchised business. For franchises in Provinces that have franchise laws (e.g. Ontario’s Arthur Wishart Act or Alberta’s Franchises Act), franchisors will be required by law to provide such initial cost estimates. These will be provided through a Franchise Disclosure Document (an “FDD”). The difficult part of the equation is the estimation of revenues. In Provinces with franchise laws, franchisors may be largely prohibited from providing guidance on what quantum of revenues franchisee can expect to earn, even where the franchisor has expertise that the franchisee may find valuable. In all cases, while a franchisee’s revenues are tied to the franchise system’s goodwill and marketplace reception, to a larger extent, the franchisee’s revenues will be tied to the franchisee’s own ability to comply with the franchisor’s system and properly run their franchised business (e.g. provide a high level of customer service). Revenues will also be tied to the location of the franchised premises. According to Shawn Saraga, Broker of Record with
Canadian Franchise Magazine
SRS Canada, “a coffee shop with a drivethru in Toronto on the southbound side of a street heading towards the downtown core will have sales that are 30% to 50% higher than a comparable location on the northbound side of a street given the time of day that people stop for coffee”. As such, strong consideration should be given to where a franchisee develops its business.
franchisee’s inquiry is to ensure, as best as possible, that the franchisee will generate sufficient profits during the term of the franchise agreement, consideration should, nonetheless, be given to protecting the franchisee in the event that the business is not a financial success.
Potential franchisees, to best gauge the location’s likelihood of financial success, should conduct their own due diligence. The franchisor’s existing franchisees should be contacted and asked about their profitability. Additionally, where the location has already been carrying on business and is being purchased as a going concern, a minimum of two years’ financial statements should be required from the vendor franchisee. Two years’ sales history should also be requested from the franchisor. Note that the sales figures provided by the outgoing franchisee and by the franchisor may not match. Lastly, a business or financial advisor should be retained to prepare a detailed business plan.
The franchisee should likely enter into the franchise agreement and lease, and obtain financing, as a corporation, not personally. The corporation should be a ‘sole-purpose’ corporation that does not carry on any other business or own any unrelated assets. Similarly, the franchisee should strongly negotiate out of having to provide personal guarantees to the franchisor and the landlord. Where absolutely required, a time and/ or dollar limit can be built into the guarantees. With regards to financing, the franchisee should consider applying for a Small Business Loan (an “SBL”). An SBL is a specific type of loan offered by financial institutions which is backstopped by Industry Canada. The financial institutions, as such, will only require a personal guarantee of 25% of the financing provided.
While the focus of any potential
While franchising generally involves less
Jordan Druxerman
risk than developing a business concept from scratch, potential franchisees are nonetheless strongly recommended to conduct their own research and diligence into any franchise opportunity. Lawyers, financial advisors, accountants and real estate brokers can also offer invaluable advice and perspectives. Jordan Druxerman is a franchise and licensing lawyer at Garfinkle Biderman LLP in Toronto. Jordan can be reached at 416.869.7628 or jdruxerman@garfinkle.com
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focus
G a m eTr u c k
The driving force behind America’s premiere mobile entertainment franchise
GameTruck!
Founder and CEO Scott Novis, and President David Bauer are on mission to set a new standard for an already unique franchise business. GameTruck is a mobile entertainment franchise focused on delivering a one of a kind experience for customers. GameTruck rigs are rolling gaming mega centers with enough TVs and gaming consoles to host an event of up to 20
“My advice to aspiring entrepreneurs is to find what moves you – and make it a career. You’ll never lose sight of what’s important and you’ll ultimately be happier and more successful.” Page 16
Canadian Franchise Magazine no matter where they are. GameTruck does not have a “delivery window”, we show up when and where you scheduled your party on time, every time.” – David Bauer, President Scott and David also spend a great deal of time on the road finding new innovations for GameTruck or building stronger relationships with franchise owners. Just last month the GameTruck team was in Los Angeles for the E3 video game conference. At E3, the biggest companies and game makers show off the latest and greatest in technology and new games. Being front and center at these invents, experiencing everything first hand helps GameTruck stay on top of the industry and make sure they have the latest and greatest of equipment for their franchisees.
participants. The concept is centered on the idea of bringing people together through social video game play. “You play with the people you love most and want to spend time with, family and friends, not strangers or by yourself. We feel that this experience creates lasting memories. Video games are just the tools we use to craft this experience. Here at GameTruck we call it Delivering Excitement.” – Scott Novis, Founder and CEO Simply put, GameTruck is the largest in the mobile gaming franchise world. Scott and David are the driving force in competing against themselves and improving what is already widely considered the premium experience in this industry. They have both focused on helping and developing franchisees in new markets, but also have taken a hard look at the health of the current franchisees and how to improve the opportunity on both sides. New franchise owners are benefiting from a large reduction in cost to manufacture the best in class GameTruck trailer, making the quick start up even more reasonable. They’ve also developed smarter and more efficient franchise recruitment strategies to make sure GameTruck is partnering with the perfect franchisees for this concept.
“This is a people business. More than the games and fun, the person to person interaction of a GameTruck party is what sets us apart from the rest. That is why finding the right people that share our vision, our enthusiasm, and our passion for serving others is vitally important to the ongoing success of GameTruck” – David Bauer, President
“You don’t have to be a ‘gamer’ to be a franchise owner of GameTruck. Many of our franchisees just like working with people and rely heavily on us to make sure we keep up with the industry and have the best innovations for every GameTruck party. E3 is a wonderful event for companies to showcase what’s coming out next. Being in attendance not only helps GameTruck get that information early but gives us the opportunity to experience it in person.” – Scott Novis, Founder and CEO
Current GameTruck franchise owners right now are involved with a gamechanging partnership with Nintendo America for a marketing program called Summer of Splatoon. Aligning itself with one of the most iconic brands in video games, GameTruck has benefited from the increased awareness of helping to launch Nintendo’s new multiplayer game Splatoon. Additionally, GameTruck has set up new programs with Batteries Plus and ADP to give their franchise owners better deals and more tools to help them run lean. Scott and David have also launched a new SEO optimized website GameTruck.com, coupled with a revamped national sales team, to help current franchise owners book more parties. And once a party is booked, everything is managed through an easy to use online booking system.
The team also logs some serious frequent flyer miles doing in market visits with franchise owners. Most franchise systems choose a designee for this taxing task of going to each individual unit. GameTruck franchise owners get unprecedented access to the two individuals most responsible for the future direction of the company. Even when not in market, Scott and David are always just a call away to step in and help drive success for their owners.
“GameTruck franchise owners can work from anywhere, not tethered to an office, so having a centralized booking system helps franchise owners keep on schedule
To find the closest GameTruck franchise near you, visit www.GameTruck.com and book a party today.
GameTruck today has 70+ franchises in 35 states, and has experienced 6 consecutive years of growth. Most would already call that a success, but to Scott Novis and David Bauer of GameTruck, “We are just getting started.” To learn more about the GameTruck franchise opportunity visit GameTruckfranchising.com.
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ex per t advice
Joseph Pisani | Director of National Franchising Services | Bank of Montreal
The Value of being prepare
You don’t expect your home to burn down. However, you buy insurance to be prepared for the worst. Similarly, you do not expect uncontrollable events to disrupt the operations of your business. But if they do, a Business Continuity Plan (BCP) can be the insurance you need to stay afloat during potentially dire circumstances. Insurance professionals know all too well
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the impact that uncontrollable events can have on people and businesses. While fortunately, most of us are only touched by these events from time to time – floods in particular come to recent memory – proper insurance coverage and preparedness are the best way to minimize negative impacts. If business you are in is caught off guard by an unexpected event, operating at close to normal may be difficult if not impossible. Now, the goal is not to panic but to be prepared. The development of a BCP is a simple and an important exercise that would pay massive
dividends. Ultimately, a BCP may place your employees in a position to carry on effectively in that: • priority services and operations will have been established • employees will have been trained to handle the jobs of co-workers • policies for flexible hours and alternative compensation will have been established • a list of alternate suppliers or awareness of their operational directives under a BCP will be available
Canadian Franchise Magazine
ed
“Now, the goal is not to panic but to be prepared. The development of a BCP is a simple and an important exercise that would pay massive dividends.”
1
Identify potential threats:
A BCP starts by recognizing the potential threats that could impact the business.
threats arise it is critical that the BCP is
2
by a catastrophic event now understand
Assess the risks:
This involves scaling the probability of a threat and the impact that the threat could have on the business.
3
what they need to do to be prepared to
weather other uncontrollable events with greater comfort. There is security in
being prepared, but a cost as well. The
When an unexpected event occurs, employees must know which business functions are crucial and which can wait.
does take time, effort and money. But as
Probably the most in depth analysis in constructing a BCP, this can range from determining how long different functional areas can operate in the business before being materially impacted, to assessing the potential impact of decreased sales.
5
Create an action strategy:
There are numerous government resources and private sector experts available to assist businesses in developing an effective BCP. While utilizing experts for any area that you are not fully proficient is good advice, seven simple steps can be taken by any business to develop a BCP:
Many people that have been affected
same holds true for the business you are
4
• employees will understand the business BCP and will be ready to take appropriate action
updated accordingly.
Set business priorities:
Analyze the impact of the business disruption:
• countless other contingencies that apply specifically to the business you are in, will have been considered and planned for
employees change or new potential
in. Being prepared for various threats
anyone who endured time without power or heat or shelter or sales will attest the
cost of not being prepared is far greater
than the cost of being prepared. So take
the time and ensure the business you are in has an effective BCP in place.
Joseph Pisani is Director of National Franchising Services for BMO Bank of Montreal. He can be reached at (416) 927-6025 or via e-mail at joseph.pisani@bmo.com.
Develop a clear outline of the steps that need to be taken to maintain your services/ functions in the event that a potential threat becomes reality. This should be constructed for the key functional areas of the business: people, operations, facilities and information.
6
Implement the action strategy:
Keep employees briefed on the action strategy and ensure they are trained to meet the increased demands that could be placed on them.
7
Maintain the BCP: As the business expands or changes,
Joseph Pisani
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ex per t advice
Wayne Maillet | Canadian Franchise Management Consultant and Published Author
Franchising and Change “A well-conceived franchise system can provide excellent benefits to the franchisee. One of those benefits is a focus on evolving and changing with the times.” manuals. A strong franchisor will maintain control over the use in order to protect the integrity of the brand.
Wayne Maillet
Consistency is important to develop the brand and allow the customer to have a consistent experience between franchised locations. A common clause in most franchise agreements states something to the effect that the franchisee must “operate the Franchised Business strictly in accordance with the standards and operating procedures prescribed by the Franchisor from time to time.” As a franchisee you are granted a license to operate the franchisor’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
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You are buying a proven business model. Through consistency strong brands are created. The customer comes to learn to expect a certain level of customer service, cleanliness, product offerings, etc. The customer has clear expectations and knows that no matter which location they go to, the offerings will be the same. But then there are the realities of real life. The world is evolving and changing. Brands have to evolve with it. The standards and operating procedures are becoming more and more flexible. In the book, McDonald’s Behind the Arches, by John Love, he describes a brand evolving over the decades. The early McDonald’s of the 50’s were drive-ins with a limited menu of burgers, fries and a milkshake. Today the drive-in has been replaced with the drive-thru. The McDonald’s menu has evolved to include a much larger selection of choice for the customer and has been extended into offering breakfast. The Filet-O-Fish and Egg McMuffin were created from the creativity of franchisees. The marketing has shifted to an older demographic. The Ronald McDonald clown is no longer found front and center. The children playgrounds have almost disappeared,
replaced with more comfortable seating, TV screens and fireplaces. Worldwide, the menu has evolved to cater to different cultures and consumer tastes. In France you can order a glass of wine with your Big Mac, in Germany, a beer. In India McDonald’s does not serve hamburgers but instead chicken and veggie burgers. While each brand evolves, so does the competition. New competitors are constantly coming into the market. Technology is causing constant change. In franchise agreements terms of communication were once Telex, replaced with fax and now email. A 39 year old brand, Shefield Group, started in Canada as a tobacconist, its core product being tobacco and smoking accessories. Over time changing demographics and anti-smoking campaigns caused an evolution of the franchise brand to a convenience store model, Shefield Express. It continued to offer smoking products but expanded its offering to include typical convenience store items. Laws in Canada continue to change around smoking. To date, these changes have worked to the advantage of convenience stores. Across Canada many provinces prohibit grocery stores and pharmacies from selling cigarettes, resulting in many of convenience stores seeing an increase in tobacco sales.
Canadian Franchise Magazine
Convenience stores across Canada have re-merchandised the store to put a bigger focus on smoking accessories and take advantage of this trend. It appears that “what goes around comes around.” Byron Hildebrand, Director of Operations for the Shefield Group comments on change. “Less than 10 years ago we would see Shefield Express stores across Canada have entire walls displaying newspapers and magazines. With the popularity of the internet, we watched these sales decline and as a result we reallocated the space to other new products. Through our POS system we constantly monitor sales in each of the product categories across Canada and make the necessary changes to capitalize on trends. I am confident that changes will continue.” Successful franchisors are constantly monitoring trends to ensure that the franchisee is focused on what is current for the times. In reviewing franchise opportunities, be sure to look for those which are adapting to the marketplace and the needs of the consumer. Strong franchisors will allow controlled variations of the system and permit the brand to evolve and develop. It is one of the benefits of franchising, where the combined experiences of the franchisees can suggest improvements to the overall system that will benefit the brand as a whole. The degree of innovation permitted will vary from franchise to franchise with new emerging systems allowing the most creativity. Research the franchise you are looking at to confirm what is permitted and within what framework. Ask questions to assist you in making an informed decision. What changes to the brand have recently been made or are coming? How did they make these decisions? Were franchisees involved? What will be the potential costs to these changes? A well-conceived franchise system can provide excellent benefits to the franchisee. One of those benefits is a focus on evolving and changing with the times. Wayne Maillet is a leading Canadian franchise management consultant and published author with over 25 years of practical experience in all aspects
“In reviewing franchise opportunities, be sure to look for those which are adapting to the marketplace and the needs of the consumer. Strong franchisors will allow controlled variations of the system and permit the brand to evolve and develop.”
of franchise operations. He mixes practical experience with an academic understanding, having earned his Bachelor of Business Management Degree from Ryerson University and was recognized for outstanding academic achievement in management and enterprise development. Most
recently Wayne Maillet has become a published author. His book, Franchising Demystified, provides guidance to prospective or existing franchisees on how to acquire, operate and be successful with a franchise. For more information, visit www.franchisespecialists.com
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ex per t advice
Edward (Ned) Levitt | Partner | Dickinson Wright LLP
How Can You Tell
the Good Franchisors from the Bad? The success of a franchise system and the contentment of the franchisees in the system are very much a product of the character, strengths and weaknesses of the franchisor. A franchisor, to be successful, has to become an expert in the business of franchising, as well as the business being franchised.
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Fortunately, we are living in a time when information is only a few keystrokes away. Prospective franchisees today habitually do background checks on prospective franchise systems and the franchisor on the Internet. Without a doubt, the legislative requirement in many provinces (Alberta, Manitoba (by October 1, 2012), Ontario, Prince Edward Island and New Brunswick) to provide a pre-sale disclosure document to prospective franchisees adds greatly to their ability to investigate a possible franchise purchase. Other sources of information include those who deal with the franchisor, such as suppliers and landlords. The current franchisees in the system are some of the
best sources of information. However, a less obvious, but equally valuable source of information about the franchisor is the franchise agreement itself. In fact, in many ways, it may be one of the most important sources of information, provided one knows what to look for. A franchise agreement, which can run to 50 pages and more, is a “Franchisor’s document�, which is to say that its principle intent is to protect the interests of the franchisor and the system. While there are important elements for franchisees in the franchise agreement, like the term, renewal rights, the territory, exclusivity, etc., the bulk of the franchise agreement deals with what franchisees must do, cannot do or how they will
suffer if they breach the agreement. It also actually creates the franchise relationship and defines almost all of the rights and obligations of each party. Unquestionably, a franchise agreement is a lopsided document, which is to be expected, as the franchisor needs to protect the important elements of the system for all concerned, including other franchisees in the system. Having said that, there are industry norms and standards to measure such “lopsidedness”. To the extent and how a franchise agreement deviates from these norms and standards, can speak volumes about a franchisor, its intentions and what it will be like being a franchisee of such a franchisor. A poorly worded and disorganized franchise agreement means the franchisor has not made the commitment of time and money to learn the basics of franchising and hire a legal advisor who has expertise in franchising. As promising as the business being franchised may be and as knowledgeable as the franchisor may be in that business, for franchisees to be successful and for the system to flourish, the franchisor must become expert in franchising as well and surround themselves with the right professionals. It may also indicate that the franchisor is distracted by other business matters, such as the operation of its own corporate stores in the same system. While defaults by the franchisee and their consequences will and should be dealt with in the franchise agreement, lack of adequate notice to cure the defaults and consequences that are too severe, speak to a franchisor who is too tough minded and/or insecure. The best franchisors are ones that handle such matters firmly but fairly. Too many provisions that call for excessive payments from franchisees for such things as support services, renewal fees, transfer fees, training fees, approval fees, etc. point to a franchisor who may be more interested in its bottomline than the franchisees. Similarly, provisions that transfer all of the benefits of volume purchases of inventory and supplies by franchisees to the franchisor are indicative of a franchisor who may be simply greedy. A savvy franchisor
“If the franchisor does not have faith in the system, what does that say about its commitment to the success and welfare of its franchisees?” knows full well that the franchisees have to succeed for the franchisor to succeed. In healthy franchise systems, the resale of franchises by franchisees, to capitalize on success or because of life changes, is seen as a normal part of the growth and functioning of the system. Provisions in a franchise agreement which make such resales difficult, such as the approval of the franchisor not only being required but also being in the sole discretion of the franchisor, may indicate that the franchisor is overly controlling. Consistency in a franchise system is important and necessary. So, one would expect that franchisees would not be permitted to easily deviate from the system standards. On the other hand, extensive provisions in a franchise agreement, particularly a new system, requiring the franchisee to implement substantial changes to how the business is operated at the whim of the franchisor may be indicative of a franchisor who lacks confidence in what they have created. One of the most dangerous types of franchisors, is the one that is learning about the business along with its franchisees. Where franchisors have multiple corporations owning or controlling various aspects of the system, there is a concern that the franchisor is too insecure and is putting too much emphasis on protecting its assets from the possible failure of the system. This occurs when the system trademarks, premises leases, patents, etc. are owned by separate but related corporations. If the franchisor does not have faith in the system, what does that say about its commitment to the success and welfare of its franchisees? There are many, many other areas of franchise agreements which help paint a picture of the thinking and attitudes of the franchisors who created them. To bring that picture into focus, prospective franchisees need to have the franchise agreement reviewed by lawyers who
Edward (Ned) Levitt
really know franchising. The effort and expense will be well worth it and will allow the prospective franchisee to gain insight into the franchisor that is hard to come by otherwise. Edward (Ned) Levitt is a Certified Franchise Executive, a partner at Dickinson Wright LLP, Toronto, Canada, and provides legal services to Canadian and international clients on all aspects of Canadian franchise law. He was General Counsel to the Canadian Franchise Association (20002007) and is a member of the American Bar Association Forum on Franchising, the International Bar Association and the International Committee of the International Franchise Association. As a member of the Ontario Franchise Sector Working Team, Ned was instrumental in the creation of Ontario’s franchise legislation and has had significant input in the franchise legislative process throughout Canada. Among his many publications is the leading text, Canadian Franchise Legislation (2001, LexisNexis/ Butterworths). Ned can be reached at 416.646.3842 or nlevitt@dickinsonwright.com.
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food f ra nchising feature
Lo r i K a r p m a n, Lo r i K a r p m a n a n d C o m p a ny
Dining Over the Decade: How Far We Have Come?
The restaurant industry has undergone tremendous changes over the past decade, mostly due to the same factors affecting other industries such as technology, increasing consumer awareness, changing lifestyles and economic conditions. However, it would be hard to find an industry that has seen an equivalent transformation in the last 10 – 20 years.
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The biggest change has been in consumption; eat in and take out service has increased exponentially with diners eating out 3-4 times per week, formerly reserved for the wealthy and those with expense accounts. Eating out is no longer reserved for special occasions but have become a necessity borne from increasingly busy lifestyles, 2 income households and a general lack of time. More educated guests have forced restaurants to respond to consumer’s food needs and essentially re-evaluate their food offerings, their mode of service and payment. Adding to this trend is the steady growth of the pre-prepared meals sector and the rate of consumption soars. This shows no sign of slowing down any day soon.
“Restaurants now provide low fat, low carb choices on their menus as well as vegetarian and “organic ones.”
There have been so many changes that I cannot address them all or in detail. So let’s take a look at the major areas that have seen the biggest changes and how they have impacted the food service industry.
1
THE FOOD:
The food offerings have changed dramatically primarily as a result of consumers becoming more educated about what they eat and where it comes from, changes in lifestyle, the breakdown of cultural rules over food choices and the acceptance of women in the workplace.
The Educated Consumer and Change in Lifestyle: Decades ago meals were prepared daily by the woman of the house with using fresh ingredients. Today’s trend of knowing the source of their food is increasingly important due to the use of pesticides and animal diseases that were not monitored long ago. Today’s consumer is educated and concerned about what goes in their bodies. In fact, with technology, mad cow’s disease can be traced all the way back to the single ill cow. Organic, natural, whole grain are the buzz words generating sales and the category of “processed foods” have been demonized, (and now so has “meat”, the entire category it seems), and this also feeds the natural foods trend. Restaurants
now provide low fat, low carb choices on their menus as well as vegetarian and “organic ones”. Restaurants must now provide the consumer with detailed nutritional information on their menu items including ingredients from highest to lowest concentration, calories from fat, carbohydrates, and more. This applies to all food service except for sit down dining where the information must be available. Some cities are going so far as to ban products that in their opinion are not good for us; try getting a Jumbo sized soft drink in New York City. We have really come full circle back to eating what is good for us, though the items consumed have changed. Given the change in lifestyle to the fast and furious, and the inclusion of working women in the marketplace, not everyone has the time to cook fresh made meals. The category of “pre-prepared meals” has been created as a response to that need. In most cases the foods are uncooked or flash frozen meaning that you are actually cooking the meal and not reheating one. Hence the name
“pre-prepared”, meaning assembled fresh food ready to bake. Supermarkets now have an entire section devoted to “preprepared” meals right at the front of the store, many restaurants have freezers to take home your favorite meals and one franchise is solely dedicated to it. Last but not least, there is a service that will deliver all the ingredients and the recipe to cook one fresh and awesome meal. It is delivered to the customer in a box. In this case, it is not really pre-prepared but it is as close to making an entire meal with your bare hands as you can get!
The Expanding Menu: Remember when your local pizza joint only sold pizza and pasta? Today’s food establishments often stray from their niche and serve a variety of foods unrelated to their core products trying to please everyone. Pizza places serve hamburgers and souvlaki places serve deli sandwiches. Many restaurants expand their menu to attract a broader clientele or those who do not want the “signature” item that day. This causes mass confusion in the marketplace
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food f ra nchising feature
Canadian Franchise Magazine
food f ra nchising feature
Lo r i K a r p m a n, Lo r i K a r p m a n a n d C o m p a ny
“The biggest driver of increased sales has been the growing use of the “drive thru” where hundreds of customers can be served quickly without ever getting out of the car.”
applicable to their business and apply them accordingly to its niche product. Sometimes none of them fit, and that is ok too, as long as the business is the best it can be in its niche.
Shape and Form: Originally restaurants were brick and mortar locations; many had take out stations, some had delivery. With the advent of technology the topic of guest service has been overhauled. Foodservice providers now have multiple avenues to reach and serve their customer. When enclosed malls became the norm, food court units which allowed people to buy restaurants at a lower price range and work more standardized hours, became very attractive investments. The biggest driver of increased sales has been the growing use of the “drive thru” where hundreds of customers can be served quickly without ever getting out of the car. And it’s not just for coffee anymore; you can get any food, even a fresh baked hot pizza in 5 minutes! More than that, a drive thru creates a second and substantial revenue stream for the business that can be the same as if not greater than the revenue generated inside with significantly reduced costs and higher margins. Even delivery has changed; customers can now pay at the door using a credit or even a debit card.
and competition just becomes stiffer. For many businesses this strategy fails because instead of focusing on their niche and doing it well, they eventually go out of business. Jim Collins in one of the bestselling business books of all time, “Good to Great”, (Why Some Companies Make the Leap and others...Don’t”) said that: “Businesses that are good are not
focused on their primary product and seek to expand into other niches to
increase sales/market share. However,
those that go on to be ‘great’ companies understand what their primary niche is
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and do it better than anyone else.” Do you remember when McD’s introduced pizza? It was an unmitigated operational and financial disaster that cost the franchisees a small fortune. McD’s primary product is burgers- and they later expanded into all different kinds of burger or fillings in a bun or wrap. These are all consistent with its niche product and what customers expect to see on the menu. Customers would never go there for pizza; they go to the pizza specialist. So while there may be many food or service trends, the owner of a great business knows how to take those trends, pick out which are
Last but not least the newest yet oldest form of food delivery is the mobile food truck. While these trucks have been around for years, they have primarily been owned by independents selling the same things, hot dogs and pretzels. Lately, more sophisticated and exotic foods are now being served via these mobile units and in fact, franchises are being created around them giving the consumer a high degree of comfort eating at one. Unlike street vendors, these units are clean and attractive, run by friendly staff, usually the owner and some friends and they generally serve awesome food. Moreover they are “mobile” so they can be moved to accommodate attractions or events. In effect, they can go where the money is. These mobile units are not only for newcomers, existing restaurants can create them and use them for events, sponsorships and any other place they would be allowed to sell food. It is a fabulous way to introduce your food,
(with a mini menu) generate brand awareness and drive sales to the full locations.
2
TECHNOLOGY
The foodservice industry has been impacted by the advances in technology in too many ways to count; it has been massive and far reaching. Information on all guest services to automatic inventory control to getting specific demographics on your target market can be obtained from the variety of point of sale (POS) systems created for the industry. Some technological advances will improve the experience, yet some come with new challenges to. Its how each restaurant handles these advances, and the challenges that will determine its success.
Speed and Efficiency for the Consumer: Speed and efficiency apply to every aspect of the dining experience from reservations to closing the bill. Guests expect things to be done quickly, efficiently and right the first time. There is no shortage of applications and tech options available to provide the absolute best service to customers. However, the consumer does not always respond by providing the same speed or efficiency to the restaurant and in fact, creates a challenge that reduces sales and profits. Here is a great example: An upscale, long established and popular New York City restaurant posted this study anonymously on social media about its business. The study, done in 2014 shows that based on 45 customers:
“26 out of 45 customers spend an average of 3 minutes taking photos of the food, taking photos of each other with the food or as they are eating the food.�
2004: Customers spend approximately 8 minutes after being seated before inviting the waiter over and placing their order. Food begins to arrive in 6 minutes. 2014: Before even opening the menu guests interact with their cell phones. 7/45 summoned the waiter and took 5 minutes of their time. The majority needed assistance getting into the restaurants Wi-Fi and wanted the waiter to do it for them. It takes on average 21 minutes until they order. 2004: Out of 45 customers 2 sent items back to be reheated. Waiters watch over their tables to respond to their needs immediately. Customers are done eating, check delivered, and within 5 minutes they leave. 2014: Food starts getting delivered within 6 minutes... 26 out of 45 customers spend an average of 3 minutes taking photos of the food, taking photos of each other with the food or as they are eating the food. It takes on average another 4 minutes as they must review and sometimes retake the photo. 9 out of 45 customers sent their food back to reheat... 27 out of 45 customers asked their waiter to take a group photo. 14 of those requested the waiter retake the photo as they were not pleased with the first photo. ...Given in most cases the customers are constantly busy on their phones it took an average of 20 minutes more from when they were done eating until they requested a check. Furthermore once the check was delivered it took 15 minutes longer than 10 years ago for them to pay and leave.
Length of stay: 2004: Average time from start to finish: 1:05 2014: Average time from start to finish: 1:55 This additional 50 minutes results in a real loss to the restaurant owner who now loses at least one (if not more) turn per table (per day) resulting in losses that can be in the tens of thousands of dollars if not more. The waiter also loses the tip money that is the largest part of their income. So while the customer wants everything quickly and efficiently- they do not return the favor and in fact, often create losses for the business owner.
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food f ra nchising feature
Canadian Franchise Magazine
food f ra nchising feature
Lo r i K a r p m a n, Lo r i K a r p m a n a n d C o m p a ny
used later for marketing and email drip campaigns. Later on this list can be used to create additional and passive revenue streams, hence the latest expression, “the money is in the List”.
Online or Table Ordering/ Payment:
Some restaurants are considering not offering Wi-Fi but then are concerned about losing customers over it. It’s a fine line.
Websites and Social Media: The impact of social media has been a double edged sword that must be continually managed. By “social media” I refer to Facebook, LinkedIn, Pinterest, Twitter, Instagram and all others in one category. Every business must now have a website, where it was never heard of 20 years ago, or 10 years ago for the tech savvy only, today it is essential. A website is a company’s number 1 selling tool. Over 97% of purchasers visit a business’s website before making a purchase decision. This is the first chance to interact with a prospective guest so it must be enticing enough to attract diners to try the restaurant. While what makes a website great is not the subject of this article, I refer you to 2 free online platforms wix and/or squarespace that have free customizable website templates. There are still way too many establishments that do not realize the importance of having a website, and unfortunately it is costing them dearly. Everyone is a critic! Gone are the days of the disguised professional critics who would dine anonymously and then write a review that could make or break the restaurant. Today every consumer is a reviewer and so a bad professional review is no longer the kiss of death. Sites like
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Yelp, Trip Advisor, and even the restos social media pages are very popular rating sites. The everyday consumer will opine on everything; the food, décor, service, uniforms, cleanliness, atmosphere and the list goes on. So while social reviews allow anyone to comment, an owner must take the comments to heart and respond to the needs of their customers. However, according to an article at DailyDealMedia, Yelp can also be a challenge or even worse for a restaurant’s business: “43 percent of restaurant owners polled said that Yelp, the restaurant review site was a problem because it basically gives customers carte blanche to say whatever they want about a restaurant and a lot of the reviews can be very damaging. With Foursquare, customers can leave their thoughts on a restaurant – good or bad – when they check-in. In fact, they can simply be in the area of the restaurant and do that. If a patron has an experience they want to share on Facebook or Twitter, good or bad, they can influence hundred’s of potential guests with just one update.” The introduction and acceptance of websites and online media has been great for the industry as it is way more cost effective than most other media and allows a business to direct promotions to their specific target market. Furthermore, it creates a database of emails to be
Restaurants have tried out table ordering by providing guests with an Ipad. This eliminates the need for a server and theoretically should cut down on labour cost. It also avoids errors that servers make in placing orders. Order chits print in the kitchen where the food is prepared for the waiter to serve. There is an education process that must take place first as the older generation is not as computer savvy. So each new customer will need the assistance of a waiter for their first visit, eating up valuable service time, so no time has been gained really. Much more accepted is electronic mobile payment at the table and this eliminates one task of going to a central cash to process the payment. This does speed up the checkout process and is a valuable tool. Remember having to stand in line at the cash waiting to pay?? However, switching a device for a human isn’t always necessarily the best option. When people dine out they are often looking for a human experience and to be catered to. For the owner the personal interaction is essential to build a relationship with the guest in order to generate loyalty, a machine cannot do that. This is especially true for high end, fine dining establishments. However in take-out or at the counter service, less personal interaction is required so anything automated will reduce the service time. Ideally, this liberates a “cash” person and allows them to respond to internet (another new form or ordering) and phone orders. This increase in speed and efficiency in this setting will drive top line sales and profits. The deciding factor about how much technology to use at the consumer level is based on how much personal connection the restaurant needs to have with its customers.
Operations: Never before has a restaurant operator had the detailed information it needs to assess and run its business knowledgeably. Point of sale systems are
extremely sophisticated and track explicit parameters such as food cost, labour cost, scheduling, inventory management, purchasing and more. There are 2 levels streams of meaningful information; the first being about your customer and (2) drilled down parameters such as: the average cheque, what sells the most/ least, sales per hour, per day, and even the results of a coupon offer. This 2nd level of information is used primarily for targeted marketing campaigns and promotions. If there are multiple units most POS systems allow for the ability to manage all terminals from one central computer. The more sophisticated the system the more information you can learn; some produce over 200 reports. Those who know how to use the reports are already profiting from the financial benefits that even just a little knowledge can provide. Over the past decade the restaurant industry has been completely transformed and in my opinion for the better. Most of the advances have been driven by technology and applications created especially for the foodservice industry. Overall business is faster,
“The deciding factor about how much technology to use at the consumer level is based on how much personal connection the restaurant needs to have with its customers.� more efficient and more profitable as a result of sophisticated point of sale systems. Today’s owners have the ability to understand their individual businesses like never before. However, advancements are not without their challenges which take the form of longer table service times, instant and often misguided online reviews and the costs of creating and managing a website and social media strategy. One thing is for sure, technology is advancing every day, so the real challenge may not be in using it, but rather, in just keeping up! Article by Lori Karpman lori@lorikarpman.com
Lori Karpman
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food f ra nchising feature
Canadian Franchise Magazine
ex per t advice
Alan Dickson | Co-founder & CEO | PigOut Catering
5 Questions to Ask
When Considering Adding Catering to your Restaurant’s Services “Catering can be a lucrative way to supplement your restaurant’s profits, increase brand awareness and explore a different component to your business.”
Alan Dickson
1
What kind of catering best fits our concept?
Catering comes in all shapes and sizes – from the most casual workplace lunch to fine-dining affairs. Take a good look at your concept and decide which style of catering is best for your restaurant – full-service? Drop-off and pick-up? Boxed lunch? Buffet? Before making an executive decision, think about what your restaurant does best – this is what your customers will want in catering: the convenience of food they love in a new format. Fast casual restaurants often find success in catering because their menu is varied and flexible, which is an important component of catering.
2
Can my menu be adapted for catering?
Depending on the style of catering you’re planning on offering, your menu
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might be a perfect fit or it might need some adjustments. In my experience, I suggest keeping the menu simple – I see far too many concepts try to start out with a huge menu, only to realize that they don’t have the equipment, staff or time to actually serve these items at their best. Think about what your guests want – food they love, served at optimal freshness and temperature. When you’re catering, you don’t often have the luxury of time, so all of your menu items should be able to be served at the proper temperature after travel time. Choose items that can be reheated easily without compromising the quality of the food. Another consideration to make is to think in terms of bulk and price flexibilty – you’ll want to offer different packaging options so customers can choose how much they want to order and, more so, how much they want to spend. PigOut offers a design-your-own-menu option so guests can choose their own food based on their own personal tastes. For example, we have a list of proteins (pork, beef, chicken, seafood and vegetarian), hot side dishes, cold salads and sides, composite salads, side dishes, drinks
and desserts – we also offer a host of vegetarian, gluten-free and dairy-free options for guests who may have dietary restrictions.
3
Will increased equipment costs be worth it?
There’s no question about it – if you’re looking into catering, you’re going to need to be willing to spend some money to turn that dream into a reality. The first consideration is the vehicle – if your concept doesn’t come fully equipped with a mobile catering unit like PigOut, you’re going to want to invest in the right vehicle. This is essential in catering, because the vehicle must comply with the state’s mechanical refrigeration requirements and be able to keep the food safely hot or cold. It’s also necessary that the vehicle be easily accessible for moving around in and standing up to create an efficient execution. Additionally, consider your equipment capacity. If your restaurant is maxed out and full all the time, catering might not be a great choice because your existing resources, such as storage and refrigeration, might not be able to handle
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ex per t advice
Alan Dickson | Co-founder & CEO | PigOut Catering
“Fast casual restaurants often find success in catering because their menu is varied and flexible, which is an important component of catering.” the extra food and space that catering requires.
4
Is my staff equipped for catering?
Think about who is going to actually get this catered food where it needs to go. If it’s a drop-off delivery catering system, you’ll need a dedicated driver. If you’re looking into full-service catering, you’re going to need an actual staff – plus uniforms, transportation and more – to execute the event. Can you afford to hire people for this purpose, or do you have existing staff members whose time can be allocated toward catering? Are they friendly and personable, while still being capable of serving a full meal outside of the safety of your brick-and-mortar location?
5
How will we market ourselves?
Growing a catering business requires the same consistent marketing efforts as running your existing restaurant. You’re going to need to conceptualize menus, brochures and in-store signage to promote this new offering. Think about online marketing too – you’ll need to add on to your website and social media pages, and perhaps raise awareness through social media, mobile apps and email marketing campaigns. You’ll also need to look into building and maintaining a database of current and prospective catering customers, and communicate with them on a regular basis to keep yourself top of mind, suggesting reasons to cater and showing off new menu items or promotions. A good rule of thumb is to dedicate a small amount of time each day to focus on catering sales and marketing. Considering the potential profit, as catering orders can be several hundred
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to several thousand dollars’ worth of income, this small time allocation is worth it tenfold.
based white-linen catering concept
Catering can be a lucrative way to supplement your restaurant’s profits, increase brand awareness and explore a different component to your business. With the right considerations, you’ll be sure to find success.
the overall experience. He founded the
Alan Dickson is the co-founder and CEO of PigOut Catering, a Canadian-
that features a roaster as the focal point and gives a “WOW” factor with company in 2007 with his wife, Anne, after successful business ownership in the hospitality industry in the United Kingdom. For more information about PigOut Catering, visit www.pigout.catering
FRANCHISING OPPORTUNITY
Own a Garage Door Depot® Business The Garage Door Depot® is Canada’s only “national” residential and commercial garage door company and is a leader in the industry. As a Garage Door Depot franchisee you will learn from the best and be the most up-to-date, best trained and best supported garage door business in the country. We are here to help you along the path to business success. What You Can Expect as a Franchisee Our franchisees feel like they are part of a “family”. Each gets to work in their own market and as an independent franchise but receive the kind benefits enjoyed if they were a “big company”. Some of what you get: e National Brand Recognition e Comprehensive Training Programs e Protected Territories e Technical, Business & Operations Coaching & Support e Website, Email, Digital Media and other Marketing Tools & Programs e National/Regional Vendors & Pricing e Extensive Start-up Package to get your started in your market e Annual National Conference e Industry Association Membership We like to think of it as “being in business for yourself just not by yourself” Interested? For more information, please call or visit us at: www.GarageDoorDepot.ca/franchisingopportunity/ Call Toll Free: 1-844-840-3667 Or Email us at franchise@garagedoordepot.ca
www.garagedoordepot.ca
question time
Linda Lefbvre and Ken Suddaby | Salon Suite
Q&A
“It is truly endeavour professio
with
L inda L efebvre Our team at Canadian Franchise Magazine had a chance to sit down with Linda Lefebvre, Canadian master franchisor and franchisee for MY SALON Suite. As a fellow woman in franchising, we were excited to learn more about Linda’s journey to MY SALON Suite and her advice to women looking to open their own franchises. Our questions are in bold. We hope you enjoy reading.
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What is your professional background? Before becoming a master franchisor with MY SALON Suite, I spent my career in the federal public service, the last 10 years of which were in executive positions. I held the position of director of intergovernmental affairs for five years in in the department of agriculture. Subsequently, I moved from a career in policy to one that specialized in programs where I managed implementation and oversight.
When did you begin franchising? I became master franchisor for the entire Canadian market in the fall of 2013. We
opened the first Canadian MY SALON Suite location in Ottawa in early 2015.
What attracted you to the MY SALON Suite franchise opportunity? When my husband and I decided to look into business ownership options, we looked at a number of concepts in Ottawa. Throughout our search, none of the businesses we saw resonated with us or provided what we were looking for financially. We both knew we wanted to invest in a semi-absentee business. Additionally, because I enjoy working alongside others, I wanted to find a business that let me focus on people development. By this, I mean I wanted
Canadian Franchise Magazine
for just burning your candle at both ends? From there, it is very important to ask yourself if the particular franchise will allow you to use your strengths. A franchise system gives you the tools to succeed, but make sure that you have the transferable skills needed to execute the model. When in doubt, trust your instincts -- this will steer you in the right direction.
Where can we keep up with MY SALON Suite - Ottawa on social media?
a rewarding and worthwhile to make it possible for salon onals to go into business for themselves.” to work closely with people, but not necessarily manage them. When the MY SALON Suite franchise opportunity was presented to us, we noticed that it required a semiabsentee owner who works well with others. Additionally, the franchise’s mission is to help empower salon industry professionals through business ownership. Given the obstacles that salon professionals are facing to open their own business, such as lack of business experience and/or financial means, we are all about helping them prepare to become successful entrepreneurs themselves. It is truly a rewarding and worthwhile endeavour to make it possible for salon professionals to go into business for themselves.
What are the biggest challenges facing women in franchising? That is certainly a great question. Work-life balance has presented a great
challenge for me in the past. Throughout my career, I have found that it is particularly difficult to be everywhere at once. I wanted to give both my family and my career everything that I have, and that’s not an easy feat. I have seen women decide to forego/avoid executive-level career opportunities because they were afraid it would be difficult to achieve an optimal balance between their careers and their families. Even though a woman is buying a proven franchised business, most non-absentee models require a tremendous time investment in the first two or three years to get the business open and profitable.
What is your advice for women looking into franchising? First and foremost, I would recommend making sure that you will have an appropriate work-life balance. Are you able to commit yourself to building a business or are you setting yourself up
Website: http://www.mysalonsuite.com/ottawa. html Facebook: https://www.facebook.com/ MYSALONSuiteOttawa/ Twitter: https://twitter.com/mysalonsuiteott Pinterest: https://pinterest.com/mysalonsuite
About Linda Lefebvre: Linda Lefebvre is a master franchisor and franchisee of MY SALON Suite, part of Suite Management Franchising based in New Orleans. Founded in 2012, Suite Management Franchising’s brands, which also include Salon Plaza, offer more than 60 salon suite locations in the United States and Canada. More than a thousand salon owners have joined the movement and own their own salon in one of Suite Management Franchise’s suites across North America.
“A franchise system gives you the tools to succeed, but make sure that you have the transferable skills needed to execute the model.”
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ex per t advice
Al Cave | Partner | RAMMP Hospitality Brands
Rebranding, really: How to take your new brand from concept to execution So you’ve branded your company. You have a vision, you’ve articulated the key elements that your brand represents, you’ve created your logo and other brand materials. Now you have to implement the brand elements in your franchise. It’s one thing to have a brand, and it’s quite another to bring that brand to
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life. My partners and I at RAMMP Hospitality Brands bought and rebranded the heritage Canadian steakhouse brand MR MIKES. Blending the beloved elements of the brand with new elements that brought it into the present and will enabled it to expand into the future. When we came up with “steakhouse casual” branding, we wanted to create the un-steakhouse steakhouse. MR MIKES breaks the traditional rules of dark lighting, tablecloths and fancy plates. It’s a, casual come-as-you-are environment. Once we had developed that conceptual branding vision, we got down to the nuts and bolts and rolled out the brand. Here’s how we did it.
Create your space Inside and out, our new MR MIKES SteakhouseCasual locations exude the new “steakhouse casual” brand identity. They have a feel of approachability, family, and community alignment. Every restaurant, has branding that connects it to the community it is in, shows the brand heritage, and uses other touchpoints to create a casual atmosphere. The physical design of your building — interior and exterior — has to tie into your brand. Proper flow is important, too. Your guests should experience your brand seamlessly from the moment they roll into the parking lot to when they sit at the table. Everything they touch and see should align with your brand message.
Canadian Franchise Magazine
“Whatever brand attributes you want to embody, connect to the community in ways that make sense for your brand.” Study up When you educate your staff about the brand, they can carry that knowledge into everything they do in your business. Team knowledge and buy-in is incredibly important. We provide extensive online training about the brand and process for our products in the kitchen. We train all levels of staff: servers, back of house, host or hostess, managers, shift supervisors, franchisees. Everyone needs to go through an online training program, with different modules they need to pass to progress. We also train franchisees in an eight-week training program. We can monitor who has completed their online training modules and provide additional materials when required. This way all our staff are trained to deliver consistent information and service. They’re also trained to become trainers themselves.
Design your menu with purpose The next major touchpoint guests experience is the menu. The menu itself needs to look and feel like your brand, as do all the items on it and their descriptions. At MR MIKES SteakhouseCasual, our menus put an irreverent twist to the traditional formal menu you’d find at a steakhouse.
Make back-of-the-house magic There’s an elaborate system that goes on behind the scenes in our purchasing, prep and cooking. We’ve designed every detail of delivery to make sure our customers get a consistent, great product that looks and tastes great, and reflects the MR MIKES SteakhouseCasual brand. From the back of the house, the idea is to have consistent product across the chain. The first element we look to in order to accomplish that is our ingredients. We
have a very focused ingredient deck with quality ingredients from our trusted suppliers. A consistent product is very important. Every business is going to have a different way of creating this, but we do it using systems to sequence our food preparation. For instance, if you order a medium steak with fries, the steak is going to take 15 minutes to cook, so our system lets the back of the house know when to cook the French fries so that they are done at the same time as the steak. This way, the customer gets hot steak and hot fries, both perfectly cooked.
Brand the product itself Beyond excellent ingredients and great flavour, we really wanted our food to visually embody the MR MIKES SteakhouseCasual brand as much as possible, so the guest experiences the brand in the flavours, aromas and visuals when their meal arrives at the table. For instance, we serve certain dishes in signature dishes rather than on plates. You might get your beer in our customized stein rather than a beer glass. Those touchpoints give you a differentiation from the guests perspective.
Distinctly brand the different areas or products you offer At MR MIKES SteakhouseCasual, we don’t just have a bar. We have an Urban Lodge. It provides the ying to the yang of our steakhouse casual dining area. The design is distinct — a rustic lodge mixed with more urban chic. Our use of board games and music programs might make you wish the Urban Lodge were your own rec room, and our liquor, wine and beer program reflects the Urban Lodge’s mix of sophistication and relaxed
Al Cave
irreverence. It is not a sports bar, but a place where people can socialize and enjoy themselves.
Connect to the bigger picture Whatever brand attributes you want to embody, connect to the community in ways that make sense for your brand. We specifically went into communities that would connect with the MR MIKES SteakhouseCasual brand. One of our biggest attributes is our franchisees that embody the brand in their communities. They’re locals that actually live in the areas where our franchises are based, so they know everyone and they genuinely want to build those communities, supporting through many different sponsorships and events. Our community involvement is something we’re really proud of.
Market Yourself Ensure your messaging both internally and externally aligns with and reinforces your brand position. Understand who your target market is and don’t try to be everything to everybody, differentiate your brand. Know where you can intersect with your customer in all forms of media. Al Cave is a partner in RAMMP Hospitality Brands owner of Mr Mikes Steakhouse Casual, Al has extensive experience working with start-ups and leading restaurant brands in the franchise industry. http://www.mrmikes.ca/
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ex per t advice
David Banfield | President | The Interface Financial Group
The Broad Approach
Franchising has long since come of age. It is now a very accepted method for individuals to transition quickly, and usually painlessly, from employment into self-employment and entrepreneurship. Most people, when they start a franchise search to locate their ‘ultimate business opportunity’, gravitate towards things
Page 38
they know and enjoy. Those interested in the world of automobiles might gravitate towards an auto-maintenance or detailing franchise, while those interested in food would have no problem locating a food franchise tailored to their individual taste. People that search for a franchise rarely move out of their comfort zone, they follow what they know and in some instances they even follow their hobby into a franchise model. In their mind that makes sense - if they are already engaged in a hobby that is also a franchise, then transitioning from one to the other would seem like a very natural and easy fit. Rarely, however, does it work. What you
may do as a hobby is by definition just that, ‘a hobby’. Now the thought process is that you are running that same hobby but on a business footing. When a hobby becomes a business, it certainly ceases to be a part-time hobby approach and takes on a new life form. If you ramp up your hobby to become a business, there might be some justification in the process - as you still own the process and all you have done is probably taken on more responsibilities and liabilities, and expanded from part time to full time. You are, however, still doing what you want in a fashion that suits you. There is a very noticeable difference, however, when you are awarded a franchise that parallels your hobby.
Canadian Franchise Magazine
“When you start your franchise search it is good to do so with a very open mind. There are now literally thousands of businesses that run on a franchise format basis.” linked to fast food or automotive service have long gone. Even the old adage of what makes a good franchise – location, location, location - no longer rings true. Franchising has moved out of the retail, bricks and mortar arena and can now be found in limitless different formats, virtual offices, home based offices, no employees, virtual employees, and so it goes. Opportunities range from high tech products and services to landscaping and lawn care, from elderly in-home care to financial services. And there is even a bank franchise available in some countries. With such an array of opportunities, it pays to take a broad look and not just gravitate to a well-known name or brand.
While it is certainly your business, you will be running the operation in accordance with the franchisor’s manual and code of conduct. You will probably have fixed hours if the business is of a retail nature, and you might find yourself as an employer for the first time. As a franchisee, you will certainly be subject to a form of reporting to your franchisor on a regular basis. Taking a hobby and acquiring a similar franchise is not always a smooth or even advisable transition process. When you start your franchise search it is good to do so with a very open mind. There are now literally thousands of businesses that run on a franchise format basis. The days of franchising being
In searching out the ideal opportunity, start with a list of your requirements. What do you want out of your business? Naturally, everyone says ‘make money’ and that’s a given, but sometimes there are tradeoffs to income in the form of time. Think about franchises that offer you the ability to work either full or part time. Ask yourself, does a franchise offer you the chance to transition maybe from employment into entrepreneurship, keeping the pay-cheque while launching a new business? Look at territory rights - often people get a pre-set desire to own a specific franchise only to find out that there is no location available in their vicinity. Now if they are set on a specific franchise, it may be a case of physically relocating to acquire an available territory. As you look at the territory issue, think also about the future and what happens if you decide to re-locate - can your franchise operation relocate with you, or do you lose it on moving? There are franchises that are portable, that can be moved from one location to another or even from one country to another. Take the broad approach when it comes
David Banfield
to premises. Many franchises require leased premises with a considerable build-out cost. Others, and this may be a growing number, are based on a minimum overhead approach because they are home-based. However, before you rush to secure a home-based franchise, make sure that you are comfortable working from a home office. Is it free of distractions and, more importantly, are you self-disciplined enough to make a home-based environment work? The broader view encompasses a plethora of features that you need to review and, as such, franchising is not something to pursue in a hurry or without due diligence and a solid business plan. Once you have executed the plan and found the right opportunity, then franchising will invariably represent a very rewarding business model. David Banfield is President of The Interface Financial Group, a position that he has held for over 20 years. He has been instrumental in starting Interface as a franchise opportunity and building it to its current international status. Prior to his involvement with Interface, he worked extensively in the banking, credit and factoring financial service areas. For more information visit www.interfacefinancial.com
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ex per t advice
Jeff Grandfield and Dale Willerton | The Lease Coach
Understanding and Negotiating
Rental Rates Fo Franchise Tenan As we explain in our new book, Negotiating Commercial Leases & Renewals For Dummies, every tenant wants to pay the least amount of rent possible.
Every landlord, however, wants to get the most rent possible. In negotiating your rental rate, it’s important to realize that not all tenants pay the same rent per square foot – that is negotiable, based on many factors. It’s equally important to understand that the landlord’s asking rental rate is based on what they need to collect to satisfy their mortgage and financial commitments – not necessarily on what the tenant can afford to pay.
If you are a new or established franchisee (who may be facing an upcoming lease renewal and a rental increase), here are a few things you need to know about rent on commercial or retail space.
Understanding the Importance of the Rent Figure It should come as no surprise that rent can be one of your top major business
“In negotiating your rental rate, it’s important to realize that not all tenants pay the same rent per square foot – that is negotiable, based on many factors.”
Page 40
Canadian Franchise Magazine
egotiating
or nts expenses, if not the largest. Your rent is not only important as a big part of your day-to-day expenses – second only possible to salaries and the cost of goods – but also a major factor if, and when, you sell your franchise business. Many franchisees have come to The Lease Coach over the years complaining that they are unable to sell their business because prospective buyers think the rent is too high and are essentially scared off by the overhead. Never underestimate the importance of leasing a commercial property at the right rental price. Rent can make or break your business. If you are struggling to pay the rent it’s not necessarily an indication that your rent per square foot is too high – it could be a sign that your sales are too low.
Exploring How Landlords Set Rental Rates Smart landlords don’t just pull a rental figure from the air. A typical commercial developer sets their rental rates based on a simple formula whereby the rental revenue from the tenants covers the mortgage and provides the landlord with a decent capitalization rate (or return on investment). Mathematically, this is an easy calculation for the landlord which involves two factors - face rate versus net effective rental rate. The face rate is the dollar amount of rent you pay and the amount that appears on the lease agreement. The net effective rental rate is the amount left after deductions for
real estate commission, inducements and incentive packages, the landlord’s work they do on the space and so on. With a $24.00/square foot rental face rate, the net effective rent the landlord is left with can easily be reduced to $17.00/square foot after these deductions.
Revealing Why All Tenants Don’t Pay the Same Rent in the Same Property Although knowing what other businesses in the building you lease space in are paying is a good idea, expecting their rent per square foot to be the same as yours isn’t always realistic. There are legitimate reasons why various tenants pay differing rates in the same property. These include the size of space the tenant requires, the length of lease term the tenant has agreed to stay, the strength of a tenant (is the tenant a “Mom and Pop” convenience store or a national franchise?), landlord inducements, timing (the first and last tenants into a newlydeveloped property may pay different rates), industry and physical location within the location of the commercial retail unit. We had a recent situation with a very savvy tenant who we were putting into a Walmart Supercentre property with four out-buildings spread out around the building. The rental rates on each of those out-buildings were different – the one by the road had the best exposure while the one furthest from the road had
the least exposure. Our tenant wisely chose the building closer to the road – even though she would pay a higher rental rate.
What the Rental Rate May Not Include Most leases are triple net leases. This means that all costs related to managing the property are passed through to the tenants. These Operating Costs or Common Area Maintenance (CAM) and property tax charges are typically stated as separate or additional rent, which the tenant must pay. In some cases, the Operating Costs are equivalent to, or even more, that the tenant’s base rent. For a copy of our free CD, Leasing Do’s & Don’ts for Franchise Tenants, please e-mail your request to DaleWillerton@ TheLeaseCoach.com. Dale Willerton and Jeff Grandfield - The Lease Coach are Commercial Lease Consultants who work exclusively for tenants. Dale and Jeff are professional speakers and coauthors of Negotiating Commercial Leases & Renewals For Dummies (Wiley, 2013). Got a leasing question? Need help with your new lease or renewal? Call 1-800-738-9202, e-mail DaleWillerton@TheLeaseCoach.com or visit www.TheLeaseCoach.com.
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fr anchise & serv ices di r ecto ry
baskin robbins Named the top ice cream and frozen dessert franchise in the United States by Entrepreneur magazine’s 36th annual Franchise 500® ranking in 2014, Baskin-Robbins is the world’s largest chain of ice cream specialty shops. BaskinRobbins creates and markets innovative, premium hard scoop ice cream and soft serve, custom ice cream cakes and a full range of beverages, providing quality and value to consumers at more than 7,500 retail shops in nearly 50 countries.
Dickinson Wright Our franchise and distribution law lawyers are some of the most widely published and most respected practitioners in the world and have decades of experience representing a broad spectrum of businesses, from start-ups to multinational and multi-brand enterprises, in a vast range of industries. With access to Dickinson Wright’s full scope of capabilities, we support our clients in their every need, including: • Creating domestic and international franchise and distribution networks • Preparation of disclosure documents and materials • Drafting and negotiating franchise and distribution agreements, including unit, area, development, master and international agreements
driverseat Driverseat is a vehicle chauffeur service, offering professional driving services under 4 categories, Designated Driving, Assisted Transport, Airport Chauffeur, and Vehicle Chauffeur. Driverseat provides its clients with Coachmen (drivers) to either drive them somewhere in their own vehicle, or to relocate their vehicle for them. As a franchise, Driverseat is a low cost, low breakeven, high opportunity business model,
Fired – Up Pizza Fired – Up Pizza is a mobile fired pizzieria that offers fresh made thin crust wood fired pizzas, Calzones, fired pies and fired dogs that will guarantee to satisfy appetites for something different. Fired up Pizz Inc has developed and owns a unique propriety franchise system relating to the establishment, development and operations of a mobile restaurant trailer, specializing in the sale of wood fire pizza, Calzones, Fired dog and Fired pies that are prepared using the best ingredients
Franchise Gator Franchise Gator is the leading destination for those seeking to invest in a franchise or business opportunity. Serving the franchise community since 2002, Franchise Gator has consistently ranked as the #1 franchise Portal. With a directory of over 300 franchise opportunities to browse through, the website is a one-stop destination for those interested in getting free information about franchise
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Baskin-Robbins was founded in 1945 by two ice cream enthusiasts whose passion led to the creation of more than 1,200 ice cream flavors and a wide variety of delicious treats. In 2013, more than 13 million ice cream cakes were sold in Baskin-Robbins shops worldwide. Headquartered in Canton, Mass., BaskinRobbins is part of the Dunkin’ Brands Group, Inc. (Nasdaq: DNKN) family of companies. For further information, visit www.BaskinRobbins.com. To learn more about franchising opportunities, visit www.baskinrobbinsfranchising.com
• Drafting and negotiating licence and dealer agreements • Litigation and alternative dispute resolution • Marketing, advertising, promotions and contests • E-commerce • Regulatory compliance, with particular emphasis on franchise disclosure laws, product licensing and competition law • Protecting trademark and other intellectual property rights • Purchase and sale of individual units or complete systems • Leasing and real estate acquisition • Corporate and personal tax planning • Corporate and business law • Employment and labour law Phone: 416-646-3842
where franchisees work from home offices and focus primarily on the local sales and marketing campaigns. We offer an extensive 5 day training program, a mobile app to manage the on-call services, and significant ongoing support through our team of Franchise Conductors. Contact: Brian Bazely Phone: 855-374-8390 Email: info@driverseatcanada.com Website: www.driverseatcanada.com
available and cooked using a wood fired oven. The Franchisor will train new Franchisees uniformily to its high standards of quality and service. Seasonal business 7-12 months depending on area – Easy to learn system Turn- key operation within 48 hours of concession trailer delivery – Strong GPM – Estimated ROI 1.5 -2 Years. For more information Tel: 866 746 6999 or email rob@firedup-pizza.com www.firedup-pizza.com
opportunities so they can begin their exploratory process. The Franchise Gator directory is searchable by industry type, location, investment amount and by top franchises. In addition to its directory, the Franchise Gator site also features numerous resources to help franchisees get started with searching for and purchasing a franchise. It also releases its own Top 100 rankings of franchise opportunities. For more information phone: 678 748 3000 or email sales@franchisegator.com
Eat. Energize. That’s the Freshii mantra. Freshii is a health-casual restaurant concept that serves fresh food designed to energize people on the go. With a diverse and completely customizable menu of breakfast, soups, salads, wraps, bowls, burritos, frozen yogurt, juices and smoothies served in an eco-friendly environment, Freshii caters to every dietary preference and type of taste buds. Freshii will operate 200 units by the end of 2015
The Interface Financial Group – IFG 50/50 The Interface Financial Group – IFG 50/50 is an affordable home-based franchise that provides short-term working capital to small and medium-sized businesses by purchasing current, quality invoices at a discount, thus accelerating the client’s cash flow and growth. All transactions are syndicated 50/50 with the franchisee and the franchisor, and that means less working capital required to fund transaction: IFG does the bulk of the due diligence and the ‘paperwork’ for the transactions, and IFG 50/50 franchisees will concentrate their efforts on building the referral relationships – they do the ‘people work’.
in 80+ cities and 15 countries, opening 2 new restaurants every week. Guests can visit Freshii anywhere from Toronto, Miami, Chicago and Houston to Bogota, Dubai, Stockholm, and Dublin. Freshii restaurants are found in all types of locations from cosmopolitan cities, malls, college campuses, suburb neighborhoods, fitness clubs, airports and small towns. Find the nearest Freshii: http://www.freshii.com. Keep in touch with Freshii on Facebook: https:// www.facebook.com/freshii. Follow Freshii on Twitter and Instagram: @freshii.
• No staff to hire, fire, or manage • No storefront to own, lease, or maintain • No Inventory or stock to purchase • No extensive travel because IFG franchisees do business locally • Business-to-Business, professional environment with regular business hours of operation • Flexibility to relocate for part of the year or permanently and continue doing business Our franchisees are excellent communicators, relationship builders with decision-making and problem-solving skills, and much more sales & marketing oriented.IFG has been in the ‘invoice discounting’ business since 1972, and employs its franchise network around the world.
Key advantages of being an IFG 50/50 franchisee include:
www.interfacefinancial.com
Liberty tax service
Liberty Tax is a company to watch, not just in tax preparation franchise terms, but in the business world as a whole. Our corporate team, Area Developers, and franchisees are accessible and down-to-earth. We provide a supportive network and a culture that is progressive and fun.
Founded in 1997 by CEO John T. Hewitt, Liberty Tax Service is the fastest-growing tax preparation franchise in the industry and has prepared almost 18 million income tax returns in more than 4,400 offices and online. Liberty balances strong growth, best business practices, social responsibility, and a fulfilling life experience for our franchisees. We’re committed to creating a business system and environment that will be held up as the model for all other tax preparation franchises to emulate.
massage addict Massage Addict is the country’s largest and fastest growing provider of massage therapy services, with over 40 clinics across Canada. Massage Addict is a proven business concept serving a gap in the market by helping Canadians improve their health through affordable, convenient massage therapy without sacrificing quality or service. Clients love the quality of Massage Addict’s Registered Massage Therapists and our franchise partners love the business model. • Low investment and start-up costs • Recurring revenue and quick ROI
planet beach Planet Beach has taken the spa experience to a new place. Our automated spa is a unique and innovative approach to the traditional spa. Customers enjoy unlimited fully automated, spa services for a monthly membership fee. This is a recurring revenue business model for our franchisees. Once a luxury item, spa and wellness services are in high demand because they minimize health costs, reduce stress and help people live healthy, happy lives. Planet Beach to offers luxury spa services at affordable prices.
fr anchise & serv ices di r ecto ry
Freshii
You can join one of the top franchise opportunities in the world. Just fill out our request franchise information form to find out more about Liberty Tax. www.libertytaxfranchise.com/request-franchiseinformation.html
• Approximately 80% of treatments are paid by insurance • Opportunity for multi-clinic ownership • Straightforward clinic operations • 100% Canadian owned and operated Massage Addict is the right industry, the right business model, the right brand and most importantly it’s the right time. Call today. Phone: 1-855-852-6108 Email: info@massageaddict.ca Website: www.massageaddict.ca
The Planet Beach automated spa concept connects with members because it delivers what they want: • Convenient and affordable luxury services • A place to relax and recharge • Privacy, no need for an attendant • Innovative technology • Reciprocal membership-based offering For more information Website: www.planetbeachcanada.com or Email: kim.snidar@planetbeach.com
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fr anchise & serv ices di r ecto ry
Sangster’s Health Centres®
®
Sangster’s Health Centres® is ‘ The natural choice for health®’ and Canada’s #1 retail vitamin and nutrition franchise specializing in retail sales of vitamins, minerals and herbal products, sports nutrition, body care and wellness solutions to Canadians’ health and nutritional needs. Serving Canadians since 1971, Sangster’s has grown across the country with store locations coast to coast. Put the power of our 4 decades of experience to work for you and your success.
Sangster’s® proven success system includes extensive operational and nutritional training, ongoing support, site selection, lease negotiation, national advertising, exclusive national magazine and exclusive Sangster’s branded supplements trusted by Canadians coast to coast.
On May 4, 2009, Sangster’s Health Centres® was recognized as the 2009 Grand Prize Winner of the Canadian
Website: www.sangstersfranchise.com Email: franchise@sangsters.com
skedaddle
spread its footprint across Canada in the coming years. Skedaddle Humane Wildlife Control is a community based business that currently provides profitable and rewarding service in 22 locations throughout Ontario, Quebec and Nova Scotia. No prior experience is required to get out from behind your desk and become your own boss today.
Skedaddle Humane Wildlife Control has been Canada’s leader and pioneer in the area of urban wildlife control for over 25 years, helping home and business owners remove and exclude wildlife from their property in an effective and humane manner. As cities, towns and suburbs continue to expand the need for value-added wildlife management will continue to grow. Skedaddle’s proven three step approach includes humanely removing the wildlife, repairing the damage and securing the home against future intrusion. This ensures a customized and complete solution for customers at a premium price point. Skedaddle Humane Wildlife Control is the latest brand to join That Franchise Group who manage a portfolio of six home service franchises with over 400 locations across North America. With this strong backing, Skedaddle has aggressive growth plans to
The Garage Door Depot® The Garage Door Depot is Canada’s largest and only coast to coast garage door supply, service and installation company, headquartered in Port Coquitlam, British Columbia with franchises across Canada. ®
The Garage Door Depot is committed to providing Canadian Consumers, Business customers, Builders, Garage Door Dealers and its Garage Door Depot Franchise partners with a one-stop
Topper’s pizza Proven, tested, tried and true systems are among the biggest advantages to franchising versus starting your own business from scratch. With Topper’s Pizza, you’re benefiting from nearly 30 years of successful franchise systems. During that time we have invested and reinvested in all of our operations – from our P.O.S. systems, to training policies, to marketing, to research and development… and the list goes on.
Z-teca Z-teca (pronounced “zee-tek-ah”) is a Canadian fast-casual Gourmet Burrito concept operating since 2007. Ten (10) locations are currently operating and many more under development. We serve premium quality Mexican foods, such as twohanded Burritos, Burrito Bowls, Salads, Tacos and Quesadillas, all made fresh daily in our kitchens and prepared to order.
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Franchise Association’s prestigious “CFA Award of Excellence in Franchising”, and in April of 2015, Sangster’s® once again was recognized by the Canadian Franchise Association by winning the 2015 “Franchisees’ Choice” designation award at the Annual CFA Awards show. This marked the 5th consecutive year Sangster’s® has won this prestigious award.
Key Benefits Include - high demand - low competition - cash business - limited accounts receivable - few employees - minimal supplies and equipment required - rapidly profitable - home based business - low start up costs - excellent head office support - environmentally friendly and socially responsible services For more information about this exciting opportunity: Website: http://www.skedaddlefranchise.com/
destination to provide for all their residential and commercial overhead door and related product/ service needs. CFA Franchisees Choice 2014 CFA Franchisees Choice 2015 Contact: Dean Carman Phone: 604-526-1086 or 1-888-698-3667 Fax: 604-526-1087 Email: franchise@garagedoordepot.ca Website: www.garagedoordepot.ca
We’ve learned from our successes and we know what works and what doesn’t. What does it mean for you? It means you get to hit the ground running with years of knowledge and experience. It means you don’t have to worry about getting all of these systems in place—you get to do what you signed up to do: operate your business and achieve your personal goals. Let the delicious pizza, our Customer-Centric Culture and successful structure take care of the rest. www.toppersfranchise.ca
The Burrito category is experiencing significant growth and we are looking for Burrito Aficionados – quality franchise partners who share in our vision and are hungry for success. Area Developers and Master Franchises are also available for the provinces of Quebec, Alberta and British Columbia. If you have what it takes and want to get on board with a quality Burrito concept, give us as call: 416 636 3181 ext 222 or email gave@z-teca.com
Page 45 Canadian Franchise Magazine
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To learn about the A-Z directory or any other products, please contact Kimberly Kutnick: kimberlyk@cgbpublishing.com or 847-607-8407.
www.canadianfranchisemagazine.com 0AGE 62
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The Interface Financial Group The Interface Financial Group The Interface Financial Group
The interface financial group
An ‘inͲdemand’ Financial Service ‘inͲdemand’ Financial Service
Ͳdemand’ Financial Service
Low Capital StartͲup w Capital StartͲup
apital StartͲup
40+ yearͲold Organization yearͲold Organization
earͲold Organization
We work with you on every transaction work with you on every transaction
ork with you on every transaction
GREAT GREAT GREAT REASONS REASONS
HomeͲbased meͲbased
Ͳbased
You set the timetable (think Bankers’ hours) u set the timetable (think Bankers’ hours)
TO JOIN IFG REASONS TO JOIN IFG
et the timetable (think Bankers’ hours)
No cold calling/telemarketing/advertising cold calling/telemarketing/advertising
TO JOIN IFG
ld calling/telemarketing/advertising
EVEN MORE REASONS… EVEN MORE REASONS…
EVEN MORE REASONS…
R.O.I. Training Support Support Experience R.O.I. Training Experience
Training
Support
Experience
R.O.I.
1-800-387-0860, 1-800-387-0860, ext. 2ext. 2
ifg@interfacefinancial.com ifg@interfacefinancial.com 1-800-387-0860, ext 2 www.interfacefinancial.com www.interfacefinancial.com 2 1-800-387-0860, ext. ifg@interfACEFINANCIAL.COM
ifg@interfacefinancial.com WWW.INTERFACEFINANCIAL.COM
www.interfacefinancial.com