Franchising usa T he ma g a z ine for franchisees
VOL 02, ISSUE 07, may 2014
$5.95 www.franchisingusamagazine.com
Nestlé Toll House Café
recipe for success automotive
MA I N FEATURE
franchising
location
location
location raising capital
other people’s money
LATEST NEWS
FINANCIAL ADVICE FROM THE BANKS
TOP LAWYERS’ ADVICE
JOIN THE: #1 Fastest Growing Pizza Chain in the World! #1 Fastest Growing U.S. Pizza Chain! #1 Largest Carry-Out Pizza Chain in America! #1 Best Value in America, 6 consecutive years! 1
2
3
For more information, visit LittleCaesars.com for Franchise Opportunities in your area. Or call 800-553-5776 to talk with a Franchise Licensing Advisor 1 Based on net number of stores added, 2008-2012. 2 Nation’s Restaurant News, June 24, 2013. 3 *“Highest Rated Chain - Value For The Money” based on a nationwide survey of quick service restaurant consumers conducted by Sandelman & Associates, 2007-2012 ©2013 LCE, Inc. 42569
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Franchising usa T he ma g a z ine for franchisees
FRANCHISING USA VOLUME 2, ISSUE 7 may 2014 president: Colin Bradbury. colin@cgbpublishing.com
Editorial Department: editor@cgbpublishing.com
Publisher: Vikki Bradbury. vikki@cgbpublishing.com
Advertising Sales:
from the
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COVER IMAGE: Nestlé Toll House Café
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Welcome to the May issue of Franchising USA the Magazine for potential Franchisees, offering some great franchise opportunities, news, and expert advice from the world of franchising.
George Knauf of Franchoice explains
On the Cover we have Nestlé Toll House
Our ever popular VETS SUPPLEMENT
wonderful coffee, so, for a franchisee
with Jim Moore a veteran franchisee
Café offering delicious desserts and
who craves the sweet taste of success; this
preconceptions and how they can steal your dreams and Sure Payroll talks
understanding payroll. We have some
great profiles on franchisees who have
taken the road to franchising plus a few
other topics to help you through the maze of franchising.
has RimTyme on the cover and we speak who has been in business all his life.
www.franchisingusamagazine.com
could be the right franchise opportunity.
Proud member of the IFA:
Maybe your interests lie in the automotive
franchisees who have taken the road
the entrepreneur this can offer a lucrative
Advantaclean and Maid Simple to name
industry? We all rely on our cars and for
to entrepreneurship, such as Signal 88,
franchise opportunity. Rob Swystun has
a few.
put together some interesting information
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
We also feature some great profiles on
on Automotive Franchising in our regular in depth feature.
Looking for advice from the experts?
Check out the article from Jason Power of Shelton and Power who shares some
great advice when it comes to Location, Location, Location and your territorial
rights as a franchisee, after all location is the key to success for any business.
Don’t forget to check out our website
over the next couple of months, there are FREE tickets to the IFE Expo in New
York City, a great venue with top brands, comprehensive conferences including 70 FREE Seminars. Happy reading Vikki Bradbury Publisher
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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33
may 2014
On the Cover 33 Feature Article
10 Cover Story
Nestlé Toll House Café
60 Other People’s Money Raising Capital
24
Jason Power, Shelton Power
In Every Issue 06 Franchising News Announcements from the Industry 33 Feature Article Automotive Franchising 41 Veterans Supplement On the cover - RimTyme
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David Banfield, Interface Financial Group
46
14 Location, Location, Location
Automotive Franchising
38
14
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Contents
18 Don’t Let Payroll Give You A Headache Steve Kania, Sure Payroll, Inc
f ra nchising usa
14 Location, Location, Location Jason Power, Shelton & Power
18
Expert Advice
24 Centralized vs Local Social Media Approach Adam Heitzman, HigherVisibility 38 3 Ways To Thrive Andre Kay, Sociallybuzz 54 How Preconceptions Aim to Steal Your Dreams George Knauf, FranChoice
58 US Citizenship through Investment Julie Lusthaus & Mackenzie Dimitri, Einbinder & Dunn
60
56 The Location You Lease Dale Willerton & Jeff Grandfield, The Lease Coach
Franchisee in Action 26 Amada Senior Care
Franchisor in Depth
Have Your Say 30 Chem Dry
Franchise Profiles 12 Red Mango
54
20 Pizza Studio
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what’s new! expansion plans for dunkin’ donuts DUNKIN’ DONUTS PLANS THREE NEW RESTAURANTS IN COLORADO SPRINGS, COLORADO WITH EXISTING FRANCHISEES JASON DUFFY AND BERT HAYENGA Jason Duffy and Bert Hayenga currently own and operate 52 restaurants in Arizona, Nevada, Colorado and California. In November 2013, Duffy and Hayenga opened a restaurant in Barstow at the historic Barstow station, which was the second non-traditional Dunkin’ Donuts location to open in the state of California.
Dunkin’ Donuts, America’s all-day, everyday stop for coffee and baked goods, announced today the signing of a multi-unit store development agreement with existing franchisees Jason Duffy and Bert Hayenga to develop three new restaurants in Colorado Springs, Colorado. The first restaurant is planned to open in 2014 and the remainder by 2017.
“As long-time franchisees with the brand, we have firsthand experience that Dunkin’ Donuts attracts and impacts people of all ages. Our team is excited to bring Dunkin’ Donuts to Colorado Springs and play an important role in the daily lives of people who live, work and visit here,” said Duffy. “We have a passion and loyalty for the brand and look forward to opening many more restaurants in the years to come.” Since the 1950s, Dunkin’ Donuts has been a daily ritual for millions of people and has offered guests delicious food, beverages, and friendly service at a great value. To learn more about Dunkin’ Donuts, visit www.DunkinDonuts.com
CruiseOne® to Focus on Growth at 2014 National Conference CruiseOne®, which is part of leading cruise retailer World Travel Holdings, has announced that its 2014 National Conference will take place aboard the Regal Princess and feature President and CEO of Carnival Corporation and PLC Arnold Donald as the annual event’s keynote speaker. Departing from Fort Lauderdale on November 9 and sailing to the Eastern Caribbean, this year’s conference theme is GROWTH, an acronym for “Gaining Relationships & Opportunities through WTH.” “I can’t think of a better way to kick off the month of November than speaking
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with the travel agents of CruiseOne aboard the stunning Regal Princess,” said Arnold Donald, president and CEO of Carnival Corporation and PLC. “I am looking forward to our time and conversation together.” Donald’s keynote address will discuss Carnival Corporation’s continued support of travel professionals, as well as provide updates on his company and overall industry trends and developments. Vice President of Sales Performance for CruiseOne Drew Daly noted, “We are very honored and excited to have Arnold Donald join us and speak to our agents at our National Conference. He is a strong
supporter of travel professionals and is passionate about growing the cruise industry. Our 2014 theme ‘GROWTH’ will form the foundation of what we will accomplish throughout the year and at Conference.” People with a passion for travel who want to learn more about business opportunities with CruiseOne should visit www.CruiseOneFranchise.com
Village Inn Begins 2014 with 12 New Franchise Agreements “We’ve experienced increased enthusiasm for the Village Inn brand among guests resulting in strong sales growth which has captured the attention of talented and proven franchisees,” said Monty Whitehurst, VP of franchising at Village Inn. “Now that all company-owned, and 80% of franchise Village Inn locations have been reimaged, we are turning our attention to new restaurant growth. With 17 consecutive quarters of year-over-year sales increases, Village Inn’s success has re-energized existing franchise partners and attracted new operators who want to join us during this time of positive momentum.”
Village Inn, the family-dining brand known for serving quality breakfast all day and The Best Pie in America®, is revving up its franchising efforts in 2014 beginning with the announcement that six different Village Inn franchise partners have committed to opening 12 new restaurants. Three of these have already opened this year in Fargo, ND, Tampa, FL and El Paso, TX.
All of the new restaurants will take advantage of Village Inn’s updated look which includes a freshened logo and contemporary, brighter decor that builds on the familiar and comfortable atmosphere guests have come to expect from our family-dining restaurants. The first Village Inn restaurant opened in 1958, followed by the first franchise restaurant in 1961. Village Inn’s continued growth and success has demonstrated that its unique brand of family restaurant will never go out of style. For more information on franchising visit: http://www.villageinn.com/franchises/.
Woman-Owned AmeriSpec franchise Breaking barriers As the daughter of a real estate broker, Cheryl Myers learned the business at an early age. Now, she says her ability to build strong relationships with real estate agents in Delaware and the Maryland Eastern Shore has allowed her to rise to the top levels of the home inspection business at a national level.
the agents, doing a good job with the inspections, and good customer service,” she said.
Myers and her business partner, Lisa Roddis, own the AmeriSpec® franchise location based in Milford, Del. and were honored at that company’s national conference in Austin, Texas in February, in recognition of their operation’s revenue growth in 2013.
“It was an honor to present these hardworking and innovative owners with well-deserved recognition in front of their peers,” said Thiessen. We are proud of their accomplishments and look forward to the knowledge and successes they will share with the home inspection industry, home inspectors and customers.”
Myers said the key to their growth has been focusing on the fundamentals. “It’s all about building relationships with
Kathy Thiessen, vice president and general manager of AmeriSpec, praised Myers and Roddis for succeeding in what has traditionally been a male-dominated profession.
For more information, visit www.amerispec.com.
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what’s new! New Franchise Program for Wallace Property Management Group Lexington, S.C.-based Wallace Property Management Group (WPMG) is introducing a groundbreaking new franchise program across the Southeast United States, beginning with an initial launch in South Carolina, Georgia, Florida, Alabama, Tennessee and Kentucky and expanding into a national franchise growth strategy shortly thereafter. Plans are in place to have at least 85 franchises operating within the next five years with the right franchise investors. In 2006, franchise owner and founder Scott Wallace developed his initial
property management model, and in 2013 he launched the franchise company Wallace Property Management Group. Wallace’s business relieves property owners from the stress that comes with managing a single property or multiple properties. From that foundation, his company’s influence has grown beyond the traditional property management system. WPMG’s top priority is to support new franchise owners, which allows the company to provide high quality service to property-owning clients and their tenants. WPMG assists franchise owners with marketing and advertising of available rental properties, application processing,
maintenance requests, rent payments, rent collections, property owner reports, tax forms and more. For more information on franchising, visit www.wallacepmgfranchise.com or call 1-888-295-5314
Burger 21 Targets Phoenix, Arizona for Franchise Expansion Award-Winning Fast-Casual Chain to Exhibit at Franchise & Business Opportunities Expo, May 3-4 Burger 21®, a new better burger franchise founded by the owners of The Melting Pot® Restaurants, Inc., has announced it plans to expand in the Phoenix market with future franchise development. The company currently has two Arizona locations in development in Scottsdale and Chandler, both expected to open later this year. To date, Burger 21 has 12 open locations and 18 franchised restaurants in development across the country. “Burger 21 is dedicated to providing
Franchising USA
guests with a unique better burger experience,” said Dan Stone, vice president of franchise development for Front Burner Brands, management company for Burger 21. “We’ve seen a strong interest in our brand in Arizona and we’re looking for additional franchisees to help us bring Burger 21’s chef-inspired burger creations and hand-crafted signature shakes to even more locations throughout the Greater Phoenix area.” To further fuel Burger 21’s expansion in the area, the company will be exhibiting at The National Franchise and
Business Opportunities Expo May 3-4 at the Phoenix Convention Center. Local entrepreneurs are invited to meet with the brand’s franchise development team at booth #207 to learn more about growth opportunities. Additionally, Burger 21 will host a live webinar on April 17 at 2 p.m. EST to drive national expansion. To register, or to learn more about franchising opportunities with Burger 21, please visit www.burger21franchise.com/events.aspx
Freddy’s Creates NCAA Tournament Spin-Off Promotion In the spirit of the NCAA Men’s Basketball tournament, Freddy’s Frozen Custard & Steakburgers launched its promotional March Toppings Madness competition last month. Fans of the quick-casual restaurant franchise voted on four brackets of frozen custard toppings, steakburger condiments and dipping sauces. After six rounds and a championship battle, hot caramel was voted the national champion menu item topping. “In an age where March Madness fans are very tuned in to bracket updates, we aimed to engage our fan base in much the same way,” commented COO Scott Redler. “Through our opt-in text messaging program, we sent Freddy’s fans the link to our tournament spin-off bracket and encouraged them to vote for their favorite Freddy’s topping. It was an amusing twist on a well-publicized time of year and we received a high-level of participation.”
of family and hospitality in an innovative and technologically light-speed-moving world. Freddy’s needs to say in touch with ‘likes’, ‘follows’, and the rest, while at the same time, create an in-store safe haven from the bustling world.
“Freddy’s is bringing the 50s to life 60 years later,” commented Freddy’s president Bill Simon. “We try to recreate those feelings
Website: www.freddysusa.com
For more information:
BENETRENDS ANNOUNCES support for SPORT CLIPS HAIRCUTS Sport Clips Haircuts Secures $10 Million in Initial Funding to Drive Expansion across U.S.
Benetrends, the trusted leader in franchise funding, announced today Sport Clips Haircuts has secured funding through its new $100 million franchise financing program, which launched in January. As the nation’s largest franchise dedicated to men’s and boys’ hair care, Sport Clips Haircuts will receive $10 million in funding to drive its expansion across the U.S. “In less than two months, Benetrends has
already provided more than $20 million to franchisors and their franchisees to grow their businesses in markets across the U.S.,” said Rocco Fiorentino, president & CEO, Benetrends, Inc. “Access to adequate capital plays a key role in ensuring not only short-term growth, but also long-term success for franchise-owned businesses. Benetrends’ $100 million fund was created to help International Franchise Association franchisor members provide qualified candidates with direct access to capital for new store development. Sport Clips Haircuts is the second franchisor selected by Benetrends to participate in the new fund. In January, Hand & Stone, a rapidly
growing spa franchise, received $10 million in initial capital to assist with its franchise growth. “Sport Clips has been recognized for being one of the fastest-growing franchises in the industry and we have aggressive plans to continue that momentum throughout 2014,” said Gordon Logan, founder and CEO of Sport Clips Haircuts. “Benetrends’ development fund will help us meet our goal of opening 180 additional locations with both new and existing franchisees nationwide.” For more info: http://www.benetrends. com/ or http://www.sportclips.com/
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N estlé Toll H ouse Café
Nestlé Toll House Café
A Recipe for Success You don’t need statistics to know that Americans love their coffee. Just go to your local coffee shop and the line alone will tell you that. Add delectable treats to the mix from one of the country’s most recognizable names in desserts and you’ve got a great recipe for a successful franchise business. We recently sat down and talked to the CEO of Nestlé Toll House Café by Chip Ziad Dalal about the success of the business and how others can get in on the action. Dalal describes Nestlé Toll House Café as a part bakery and part coffee shop based on America’s favorite chocolate chip cookies from Toll House. Many cafés also feature ice cream, specialty coffees, pastries and crepes. The cafés have been in operation since 2000 when the first one opened and the chain now boasts 125 in operation, 30 more under construction and another 30 in various stages of development in North America and the Middle East, which the company started penetrating in 2010. It aims to continue expanding in both North America and the Middle East in the near future. The cafés have proven popular due to the public’s love of coffee and cookies coupled with the warm atmosphere and the stellar reputation of Nestlé Toll House, Dalal explains. “People want quality and people want something fresh,” the CEO says. “Everything we have is baked on premise so you have the aroma, the freshness and the quality.”
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Getting Started Dalal had a vision to open a chain of bakery cafés using the best brand name he could get and he had Nestlé Toll House in mind right from the start. Fortunately, Nestlé agreed to license the brand to Dalal’s team and threw the entire weight of the brand behind the endeavor. The company has had Shawnon Bellah on board for the past six years as senior vice-president of global operations and Ted Milburn as vice-president of franchise development. Dalal says both of them have helped take the franchise to the next level. “We approached Nestlé, we licensed the brand from them and we did a lot of research and development with the first café, and then we enhanced it for the second café, and so on, until we perfected it,” Dalal notes. He adds that while the company is dedicated to growing, it is adopting a slow and steady growth model so that it associates itself with only the very best franchise partners. For Dalal, the very best franchise partners are ones who believe in the brand and who are able to deliver the level of service and satisfaction to customers that the Nestlé Toll House brand is known for. “Franchise partners should want to wow the customer and be service oriented,” he says.
“Training people about the logistics of running a cafe and bakery is relatively easy,” the CEO points out, “but they have to bring the right attitude and enthusiasm to the table.”
The Franchising Process Nestlé Toll House Café receives a lot of interest from potential franchisees who know and like the brand. They’ll make an inquiry and fill out an application, generally starting at the cafe’s website (nestlecafefranchise.com). Then starts a three-phase pre-qualification process that includes a phone interview to determine if the candidate passes basic financial qualifications and seems engaged with the brand. If the potential franchisee passes this phone interview, step two is to have a senior member of the company contact them and have them fill out a questionnaire. They later send them a franchising business partner (FBP) summary and another questionnaire to make sure they’ve reviewed the FBP and understand it. The potential franchise partner is then invited to participate in a phone call with senior members of the company so they can get a feel for if the person is the right fit for the company. If the senior members of the company get a good feeling from this process, the
potential franchise partner is invited to its headquarters in Dallas for a full discovery day. During this discovery day, they will get a chance to talk to all the people in the various departments who will be helping them get set up, tour a few different Nestlé Toll House Cafés near the headquarters to see various ways of setting one up and sample the products they’ll be selling. “We also interview them and we have different departments and different senior members from our company interview them to make sure it’s a discovery day both ways,” Dalal says, “them discovering us and us discovering them.” After the discovery day, the potential franchise partner goes home — with some cookies in hand — and considers if they still want to be a franchisee. The senior members of the company also meet as a committee to discuss the potential franchisee.
“The cafés have proven popular due to the public’s love of coffee and cookies coupled with the general atmosphere and the stellar reputation.”
Not all discovery days end with potential franchisees being awarded a franchise. Sometimes one party will find that it’s not a good fit and will exit the process, but it’s always done gracefully so all parties part amicably.
pre and post-opening support, marketing and public relations. While the franchise is getting up and running, the company offers daily support which tapers off to as-needed support when the new franchise partner gets the hang of running the café. The company also conducts regular visits to ensure everything is running as smoothly as possible and between visits communicates with the franchisee regularly.
For those who are the right fit, the process moves onto awarding them the franchise and all the paperwork that entails.
“It’s constant support,” Dalal says. “We never stop supporting and serving our franchise partners.”
For more information: Website: www.nestlecafe.com
Nestlé Toll House Café Recognition RESTAURANT BUSINESS MAGAZINE HONORS 2009 The Future 50 - Fastest-Growing Emerging Chains in America ENTREPRENEUR MAGAZINE 2009 & 2010
The real estate department works with the new franchise partner to scout a great location and then the company works with them to secure that location. From the real estate department, the new franchisee is handed to the construction and development department, which helps the new franchisee with designing and constructing the new café, if necessary.
“And the company learns just as much from its franchisee partners,” he notes. “They are regularly coming up with new ideas for the company to try.” Currently, the company still awards singleunit franchises, but is focusing efforts on finding franchise partners who are interested in and capable of opening and running multiple cafes.
2009 - Ranked 232
The new franchise partner can expect a lot of support from Nestlé Toll House Cafe, including training at the headquarters,
For a franchisee partner who craves the sweet taste of success, Nestlé Toll House Cafés may just be a delicious choice.
Fast 55 - Fastest Growing Franchise
Franchise 500 - Ranked #1 in their category two consecutive years FRANCHISE MAGAZINE 2008 - Ranked 213 2007 - Ranked 273 FRANCHISE TIMES 2006 in America
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ex per t advice
Jason Power, Senior Attorney, Shelton & Power
Location
Location
Location
What are your territorial rights when buying a fr anchise? Everybody knows that when starting a business, whether it be a lemonade stand or a large retail chain, the key to success is location, location, location. Location does not however mean just your physical storefront, but can also mean your territory. When you buy a franchise, you want to make sure that your location will be profitable for as
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long as you plan to run the business. In order to do so, you need to take into consideration multiple factors, one of which is your rights in the territory. Franchise territories are based on various factors. Some franchisors in the pet industry base their territories on statistics for how many dogs or cats the average household owns, while other franchise industries base territories on population, mileage, streets, zip codes, school districts and a variety of other methods. When looking at the territory for your franchise, you hope that the franchisor has given thought
to your profitability and has given you enough room to grow. On the flip side, the franchisor has worked to give you enough territory to be profitable, but also giving enough room to possibly sell another territory next to you. This is the conflict that goes on in franchising when it comes to territories. When looking at a franchise territory, you have two options: an exclusive territory or a non-exclusive territory. An exclusive territory is where you have set boundaries based upon the factors listed above. This can be a great thing because you have set parameters that you can
“When looking at a franchise territory, you have two options: an exclusive territory or a nonexclusive territory.�
operate within and that other franchisees have to stay out of. The drawback to this can be when your exclusive territory is based upon a factor which tends to change such as population or zip codes. Yes, if you have not experienced it, zip codes do change as areas develop. Many franchisees think that exclusive territories create better relationships between franchisees because each franchisee is more open to referring a customer to their neighbor which can benefit the entire franchise system by avoiding aggressive territorial behavior by one franchisee over another.
If you are awarded a non-exclusive territory, you can be at risk of competition from your fellow franchisees. This competition may not be malicious, but when franchisees have non-exclusive territories, then many times their customer service areas may overlap. Many franchisees, in the case of non-exclusive territories, request that a franchisor limit the number of franchises sold within a certain area so that oversaturation is avoided. Restricting the franchisor’s right to sell franchises can be just as hurtful to the franchise system as oversaturating the area because with too few franchisees in an area, the brand name recognition can
sometimes be lacking which will hurt profits for you as well. So you have the territory that you want. What about your right to grow into other territories? Some franchisors will offer what is called a right of first refusal. If the franchisor grants you a right of first refusal, or if you negotiate for one, then you will be given the opportunity to establish a franchise in the specific territory relating to the right of first refusal before any other franchisee. If a franchisor gives a right of first refusal, many times there are strings attached including that you must be in full
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ex per t advice
Jason Power, Senior Attorney, Shelton & Power
compliance with your current franchise agreement or that you must sign a franchise agreement for the new territory within a certain amount of time. Either way, a right of first refusal can be a good way to expand your business without having to do so from the start. In some instances, you may talk with the franchisor about the territory before you have read the Franchise Disclosure Document. When talking with a franchisor about the territory, you should take the time to ask questions about how the franchisor defines the territory and how will the territory be selected. Additional questions should include such topics as what surrounding territories are available, do you have a right of first refusal and if so what are the restrictions on your exercise of it? A word of caution. When you read the franchise agreement, be prepared for the franchisor to reserve the right to sell through what is called alternative channels of distribution within your territory. These rights are rarely, if ever, negotiable and give the franchisor the ability to sell the products or services associated with the business through methods other than franchised stores. These other methods can include selling over the internet, on
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college campuses, or airports, or even in grocery or drug stores. Protecting your territorial rights is only possible before you sign the franchise agreement. During your negotiations with the franchisor, if any, you need to address your concerns over the territory offered to you. If you have consulted with any real estate brokers or research companies regarding the franchise territory, the time to bring that research to the franchisor’s attention is now along with the negotiation skills of your experienced franchise attorney. Once you have agreed on a territory with the franchisor, the most important thing to remember is to have it written in to the franchise agreement or into an addendum to the franchise agreement. By doing so you protect yourself in the event the franchisor attempts to change your territory later on. If you are not sure what territory structure you have or how to analyze or negotiate your territorial rights, you should seek the advice of an experienced franchise attorney who can help. Jason Power is a senior attorney with Shelton & Power franchise law firm.
Jason Power
Jason has been helping entrepreneurs review and negotiate franchise purchases since 2009 and is a regular speaker at the International Franchise Expo, West Coast Franchise Expo, Franchise Expo South and various other franchise expos where he gives tips on how to analyze and negotiate a franchise purchase. Jason can be reached toll free at 866-993-7262 or by email at Jason@SheltonPower.com
“When looking at the territory for your franchise, you hope that the franchisor has given thought to your profitability and has given you enough room to grow.�
ex per t advice
Steve Kania, Vice President of Product Management, SurePayroll, Inc.
Don’t Let Payroll Give You a Headache Payroll is a low reward proposition. When paid correctly and on time, your employees don’t go out of their way to pat you on the back and thank you for their hard earned paycheck. However, if your team doesn’t get paid, the amount is incorrect or the check is late, you will certainly hear about it! Payroll mistakes can bear serious consequences that could affect employee morale and your franchise’s reputation. It could also negatively impact on your reputation within your community as well as with your parent franchise.
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Simply put, you cannot afford to get it wrong. At the same time, you shouldn’t have to spend an excessive amount of time worrying about it. It’s a necessary function, obviously, but not core to your business and your expertise.
Relieving Payroll Headaches As a franchise owner, wouldn’t you rather spend your valuable time on strategy and overseeing day-to-day operations, rather than necessary but tedious administrative functions like payroll? Overseeing new payroll clerks, processing the payroll, cutting paychecks, calculating withholdings and preparing W-2s and 1099s at year-end all demand valuable time — especially if you are not familiar with intricate payroll regulations. The time you can save by hiring a payroll service will be much better spent meeting the needs of your clients, as well as finding new ones. Payroll for franchisees can also be quite complicated, especially if you have franchises in more than one location. From employee turnover, part-time and full-time employees, bonuses and figuring out how much to pay yourself, you have a lot of moving parts. And the fact is, payroll has a big impact on the bottom line of your business. Whether you’re doing it yourself or overseeing one of your staff, it is stressful and time-consuming and just another thing on your already full plate. So whether you have one franchise with a few employees, several franchises in neighboring towns or 150 across 15 states, instead of taking a few aspirin for your payroll headache and putting it off until tomorrow, you can handle payroll in minutes and automatically pay and file your federal, state and local payroll taxes.
Here are some of the benefits for franchisees to consider: Save Time and Money Research indicates that a small business (or franchise) with 10 employees can spend
“Wouldn’t you rather spend your valuable time on strategy and overseeing day-to-day operations, rather than necessary but tedious administrative functions like payroll?” nearly $3,000 each year on labor costs for payroll. Working with a provider who already has the expert knowledge saves a lot of time – and money.
Focus on Your Business It takes a lot of time, effort and resources to process payroll by hand. Automating payroll allows you to step away from having to micromanage the process so you can focus on strategy and the daily operations of your business.
Avoid Government Tax Fines According to the IRS, 40 percent of small businesses pay an annual average penalty of nearly $850. Most of these fines are due to late payments and inaccurate filings. A good payroll service can assist a small business by remitting timely and accurate payments and tax filings.
Direct Deposit Option Most employees prefer direct deposit, but it can be difficult to offer if you aren’t using a payroll service. It’s a win-win for all involved. Employees don’t have to take another trip to the bank, and the employer eliminates time-consuming and error-prone paper handling and the need to reconcile individual payroll checks on a monthly basis.
with a good reputation and proven track record. Most importantly for you, make sure they specialize in payroll for franchises and are able to handle multiple franchises in several locations. You don’t want to sign up for a service and then find out later that they can’t support you. The decision between outsourcing payroll and doing payroll in-house is one that franchises face every day. Franchise owners should consider the time and money savings in outsourcing to a payroll service.
About the author Steve Kania is the Vice President of Product Management for SurePayroll, a leading provider of online payroll services for small businesses nationwide. Steve and his team focus on designing and launching new product lines and payroll features that make HR management simple and more convenient for small business owners. He and his team are the driving force behind SurePayroll’s continual innovation in online payroll processing. For more information visit Website: www.surepayroll.com.
Utilize Today’s Advanced Technology Many providers offer the ability to file your payroll online. You can make it easy on yourself by using an online payroll provider. You can file anywhere and at any time, you just enter the employee hours on your Smartphone or mobile device, approve and send. As with all vendor and partner decisions, before you hire a provider, be sure to do your homework and choose a company
Steve Kania
Franchising USA
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f ra nchisor in depth
Piz za S tu dio
Creating A Master
Innovation Brings a Competitive Edge Two ambitious businessmen met in 2012 and formed a partnership, which now boasts a 500 percent increase in its growth in a 24-month period, catering to a diverse and competitive pizza industry. By the end of the year the growth will increase by 100 percent. Samit Varma approached Ron Biskin through a mutual friend on a business concept. “I was sceptical about the market need for another pizza establishment. However, with due diligence in our market research and business development, we are offering a special and unique restaurant concept,” says Ron Biskin, Co-founder of Pizza Studio. They are not looking back but running forward. They launched their first store in January 2013 across from the University of
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Southern California and today, they have six stores operating in Los Angeles, San Diego, Phoenix and Minneapolis. There are six additional stores opening in Kansas City, San Francisco, New York City and Alaska, with a total of 30 new stores to be opened by the end of the year. “We developed our business concept from day one as a franchise,” says Samit Varma, Cofounder of Pizza Studio.
assembly line with an array of sauces, vegetables and meat toppings. The most popular pizzas are the $7.99 unlimited toppings 11inch thin crust and $7.99 pre-set pizza. Pizza masterpieces can have Italian herbs or brushed garlic as a finishing touch and if customers are feeling adventurous they could add arugula, basil, balsamic glaze or tangy BBQ.
Success comes to mind but rather, it is a business which is revolutionizing franchise development in the marketplace.
“We have learned to give customers what they want – when they want it – and fast. We specialize in one product and avoid extraneous items. We do one thing and do it well. We have the highest sales per square foot across the market,” says Varma.
They are building the foundation of their business at rapid speed. “We have the franchisee infrastructure in the areas of operations, legal protection, marketing and training. We have done our homework,” adds Varma. “We are looking for multi-unit operators who have experience in growing the brand,” says Biskin. He adds, “Previous experience in the restaurant setting would be an asset.” Pizza Studio provides pizza fast with a friendly and casual dining atmosphere in which customers can build their own thin crust pizza. The crust is a unique blend with bountiful flavor – cooked to perfection – quickly. Customers can choose their own crust through an
“We believe the pizza market is large with $45 billion in annual sales and in order to capture the market share we need to develop quickly and utilize the local real estate knowledge,” says Varma. Business growth is moving at rapid speed, which means franchise opportunities to capture new markets across the USA is there for the taking – with the experience, network, and resources at a franchisees’ disposal. “The cornerstones of their success are: saleability, simplicity, quality and consistency,” adds Biskin. It’s a road map, giving direction on the business model,
rpiece
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f ra nchisor in depth
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f ra nchisor in depth
Piz za S tu dio
“Our pizza is not pre-made and left under heat lamps. We offer a superior pizza - fresh in six minutes.” floor layout, furniture design, superior product development, commitment to service, training and development, and above all, the proven success of an operation with easy execution. Pizza Studio’s commitment to participate, share and support the community in which they do business is a great marketing best practice. It can only help elevate brand recognition and reputation in the market, which is good news for interested franchisees wanting to join a fast pace revolutionary team of business professionals. “Success is based on resolving any inconsistencies in our business operations and launch the plan well,” adds Varma. Customers can create their own thin crust pizza with an unlimited selection of toppings to tantalize one’s palate or embrace their creativity – be it on a pizza shell, or on one of Pizza Studio’s walls of fame. Local growers are used to supply fresh vegetable toppings when possible. Their hospitality is warm. The staff are friendly and helpful. They embrace diversity and support military veterans as part of their recruitment and retention. They invest in their communities. They use 100 percent recycled products if possible in their daily operations. They are committed to feeding hungry families in their areas or communities by donating unused products in their store operations to local food banks. That’s not all. For every $20 spent by a customer Pizza Studio will donate a meal to ‘Feeding America’, which feeds America’s hungry and fights to end hunger.
artists is noteworthy, which can only help build brand, reputation and image in the marketplace. They even have a pizza menu for starving artists; however their support of creativity doesn’t end there. They have an Art Studio wall designated in each of their stores to promote local artist free of charge. “It helps support local art and promotes artists’ creativity in the community. In one store $4,000 of art was sold. It is our way to give back to the community,” says Varma.
They have the four cornerstones to build a success business, however they also have the elements of responsibility and compassion in their business operations. Helping those in need, or supporting local
Their competition offers a different restaurant experience. “Our pizza is not pre-made and left under heat lamps. We offer a superior pizza - fresh in six minutes,” says Varma. Time and quality
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of their pizza gives them the competitive edge. Pizza Studio is about healthy alternatives, creation and supporting a business which is entrenched in responsibility to serve and support the community in which it does business. “Research and development has allowed us to have an oven operation which ensures food preparation is two - three minutes on a thin crust and bakes in six minutes,” adds Biskin. “We enjoy some of the highest customer review scores out there for our pizza,” says Varma, “and that is a point of significant pride for us.” For more information: Website: www.pizzastudio.com
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Franchising USA
ex per t advice
Adam Heitzman, Co-founder & Managing Partner at HigherVisibility
Centralized vs. Lo Social Media Appr
Which Is Best for Your Franchise S “It’s always a good idea to know where your traffic is coming from or why customers are heading into your shop.” approach to a social media strategy best, or should I create more of a local approach for each location?
A Few Things to Consider about Social Media Adam Heitzman
Creating a social media strategy for any business is important, but it can be a little bit tricky if you own a franchise. You know that you want to reach your
audience right away and use your networks to offer promotions and announcements, but when you’re working with several different locations your audiences aren’t always the same. This means that the content you choose to share, who you choose to connect with, etc. might vary greatly. The question that usually hits franchise owners, then, is easy: Is a centralized
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Before determining what type of strategy you should work toward when it comes to social media, it helps to know some of the things that go into managing social media. There are quite a few different layers to consider: • You have to decide which social accounts would benefit you most. The more social accounts you can create and actually manage (which means you’re being active on the account), the better. However, some companies benefit more from certain accounts. For example, photo-based networks like Pinterest and Instagram are great if you own a photography company. Know which accounts your audience uses most to determine which accounts you really want to sink your teeth into. • You have to decide who will manage each account.
This is of course, the biggest reason that you have to determine what type of strategy you want for your franchise. If you have local accounts for social networks, someone local will probably manage that. This could cause you to run into consistency or organization issues, but more on that later. • You have to decide how you’re going to gather and analyze the data that comes from social media promotion. One of the greatest things about social media is the data you can collect from users. Many of the social media networks have built in analytics (Facebook for example), so you’ll need to have a plan set in place about how you’re going to use that data. You will also have to decide who will set up the page, but this is usually just a one-time thing that falls into the hands of whoever is managing the account. Many social networks have special pages for companies. With Facebook for example, there are several different types of Facebook pages for brands. You’ll need someone to determine which page is best and then set it up.
ocal roach:
Success? Option #1:
When a Centralized Social Media Approach Makes the Most Sense Once you know some of the responsibilities that go into social marketing and management, you have to decide if a centralized social media approach is right for you. This essentially means that you will have one social account for each platform—Google+, LinkedIn, Twitter, etc.—for your entire franchise. If this is the approach you choose, it generally means that someone at the national level will mange all of the accounts and/or hire one SEO/social media agency to manage the accounts. This helps ensure things are consistent. Below are a few instances where this might be your best option as a franchise owner: • If your customers aren’t really using social media. It’s always a good idea to know where your traffic is coming from or why customers are heading into your shop. Consider putting a little survey on one of your landing pages (after someone has converted, perhaps) or in your store that asks people how they heard about you. Also take a look at the number of people visiting your social media accounts. If
your customers don’t seem to be getting their information from social media too often, it’s probably best to just have a unified strategy in place. It’s just easier that way. • If you have one dominant audience or location. Of course this is the most obvious sign that a centralized approach is right for you. If you own franchises but they are all in the same area and can offer the same coupons and content, there really is no reason to have more than one social media account for each franchise. If all of your franchises are in rural areas and target the same age group, you’re dealing with a pretty similar audience across the board so there is no need to make things complicated by splitting up your social accounts by location. • If your business works with a lot of confidential information. This isn’t overly common, but if you deal with sensitive information at all you need to be careful who is managing your social media accounts. If you have an account for each branch then you have a lot of people out there representing your brand. If something slips it’s hard to recover because social media works so quickly, so I often recommend to anyone who could get into legal trouble to keep all social efforts in one place.
Option #2: When Each Local Branch Should Control Social Media for the Most Success Having a local approach means that each individual branch of your franchise would have its own social media accounts. Therefore, your franchise would have one Facebook page for your location in Illinois,
one Facebook page for your location in California, etc. This approach isn’t quite as common as the first, but it can be the most successful for some companies that have some of the following characteristics: • You don’t have a lot of locations. If you have hundreds of locations, this is obviously not an approach that would work for you. Even splitting up your locations half and half could get confusing, so this method really only works if you just have a handful (5-7) different locations. • There are significant differences in audience between each location. The whole reason you would want to have different accounts for each location is if you think you need very different content. If your locations cater to different audiences or offer different products, what you’re going to promote on your social accounts is going to be different. Remember that you always want to put out the most relevant content possible, so having two different accounts is oftentimes the only answer for these types of companies. Extra Tip: Whichever strategy you decide to use should also coincide with your SEO efforts. SEO and social media often go hand-in-hand, so you want to make sure they are on the same page. You can visit our last article to learn more about managing SEO and content at the national vs. the local level. Adam Heitzman is the Co-Founder and Managing Partner at HigherVisibility, a nationally recognized SEO firm that offers a full range of internet marketing services. For more information: Website: www.highervisibility.com
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A mada Senior Ca re
Amada
was the right choice was speaking with Chad who had grown up in Santa Clarita. He said yes. It turns out I had been Chad’s youth minister in the 90’s - but we hadn’t seen each other in years. It was a crazy coincidence. So with that, I booked my trip to Southern California the next day.” Ken took that random connection as a sign, confirming his already positive view of Amada. Ken said that random high school connection was a sign and it confirmed his already existent belief in Amada.
Ken Jenson
A personal coincidence brought Ken Jenson and Amada Senior Care together. After owning businesses for 25 years, Ken started looking at franchises in senior care. Rather than working for a care facility, he decided to own one. “I had been rather disappointed in some of the opportunities I had looked into and a friend of mine told me about Amada in Southern California. So I gave them a call and got on the phone with one of the founders, Chad Fotheringham. The name sounded familiar so I asked if I
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Amada Senior Care is a California-based senior care franchise that provides nonmedical home care and assisted living placement services. The company was founded in 2007 by college friends, Tafa Jefferson and Chad Fotheringham. Amada had its first franchise offering in 2012 and by June of the next year, there were over ten franchises throughout the US. After his visit to California, Ken was sure he wanted to start an Amada franchise in Colorado Springs. Ken became Amada’s second franchise partner. To get started, a request for more information is made and then a Q and A to confirm that Amada is the right choice. After a meeting with Chad and Tafa, a market is chosen and reviewed. A business plan is then put in place. Ken then went to California for a training session. Amada Senior Care has an initial five-day training course at their corporate support center in Laguna Woods, California. An experienced Amada coach then spends
time directly in the chosen territory to start the business and recruitment. “It’s been explosive ever since. We now care for over 100 seniors and we employ more than 110 caregivers. It’s been a fabulous experience,” said Ken. There is constant on- going training available to all franchisees. Both founders Chad and Tafa are very much involved and there is also a readily available support team. There is an annual meeting with all franchisees, local market meetings and monthly and annual conference calls. When Ken graduated university, he became involved in the stock market. “I really liked it and I did really well,” recalls Ken. Then he was asked to join a lighting company. After investing sometime in that field, he used his experience to start his own lighting company with his brother. He was coaching a little league game when he was approached and asked to talk to someone about doing the electrical for Fort Carlson. Although Ken’s background was in lighting, he figured he could try out electrical and later took a contract. “I loved working with the Military. After about year they noticed I was the only contractor on time and was asked to do the plumbing,” he said. Ken’s background in a variety of fields has made him realize he mostly wants to help others. His experience with the military was a catalyst for reviewing care franchises. Amada has allowed him a more hands- on experience and he likes being directly involved.
“There are 10,000 Americans turning 65 every day. By 2030, seniors will make up 19 per cent of the American population.” “On Christmas Eve a care giver called me. A client had a situation. I went down to the nursing facility and walked around with him for four hours. That’s who I am,” recalls Ken. Although, he may volunteer his free time, Ken said this has been the best work-life balance he has experienced. “I can schedule time to do whatever I need to do. I don’t miss things but I’m not afraid to work either.” Ken believes success lies in hiring the proper people for the right job, and has a history of finding the right talent for the job at hand. “I had this method in Fort Carson. We said ‘from now on, if you can get all your work done in thirty hours, I will pay you for forty,” explained Ken. He said his crew stopped taking so many breaks, started working harder and created results. “People were running to their trucks to grab things and running back, having less smokes, chatting less because they got to go home and be with their families sooner.” He hired people who would find happiness in their field and through that, a better work ethic. Amada Senior Care provides recruitment training and incentives and rewards to keep their employees satisfied and motivated. Ken said results come from action. He is willing to be in the field, rather than remaining in the office. “I am willing to put in 12 to 14 hours a day, and today I did do ops all day but I don’t usually sit at a desk,” he explains. “I know people who don’t have results because they sit and wait. You have to get out there.” In March 2014 at Amada’s annual conference, Ken was bestowed the award
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f ra nchisee in action
A mada Senior Ca re
“Amada Senior Care is a California-based senior care franchise that provides non-medical home care and assisted living placement services.”
of “Top performance based on Time,” and he was inducted into Amada’s “Million Dollar Club”. He said that while there is a competitive environment amongst the franchisees, they are always willing to help each other. “Ken is exactly the kind of franchise partner we’re looking for at Amanda” said Marcos Moura, Amada’s Chief Development Officer, “as busy as he is with work and family, he always makes time to tutor our newer franchise partners.” He said that is the benefit of franchising with Amada Senior Care, the ability to do both operations and sales. Ken advises prospective franchise partners to make sure they are passionate about helping seniors thrive before making the leap into senior care. “It is different than
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any other sales I have ever done because it is self Perpetuating and it comes from great, high referrals. So you have to be great with the client,” said Ken, stating that success comes from helping families explore all of their care options. The company provides assistance in handling long-term care insurance claims and Veteran’s Aid and Attendance Benefits. Amada Senior Care recognizes that every client has different needs and discusses different options for each client, while also looking at program and nontraditional payment options. The senior housing and assisted living services are free. Amada recognizes a growing demand in senior care. There are 10,000 Americans turning 65 every day. By 2030,
seniors will make up 19 per cent of the American population. Baby boomers have contributed to this serge- seeking care for their parents and themselves. The increase in age expectancy has also added to the demand of senior care because people are seeking assistant for an increased amount of time. It’s obvious that this industry is never ending and continuously growing- it is guaranteed. When Ken is not making sales or helping clients, he can be found with his family. He has been married to his wife, Lynda, for over 35 years and together they have ten children. He has been coaching basketball for over 30 years. For more information: Website: www.amadaseniorcare.com
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have your say
Da n Ta ra ntin, CEO, Chem-D r y
Strategic Growth from Chem-Dry
Over the past 24 months, we have made some strategic investments geared toward strengthening the Chem-Dry brand, helping our owners grow their businesses locally and expanding our network in the U.S. and Canada and around the world. Since being founded in 1977, the brand has undergone a few updates but nothing significant in the last decade or so. We kicked off our plan to update and contemporize the brand by investing in an extensive national consumer research study to gain a clearer picture of consumers’ perceptions and behavior in the carpet and upholstery cleaning category, as well as better understand their views of Chem-Dry’s unique hot carbonating cleaning process. The results provided some clear insights into what consumers care most about for our category and specifically with respect
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to our brand, and we have incorporated those learnings into the brand refresh we launched earlier this year. Our focus is on educating consumers that Chem-Dry’s green-certified solution and proprietary process deliver a deeper, safer, healthier cleaning experience. We have either updated or are in the process of updating all of the key elements in our marketing mix, which includes a brand new website we launched this past December, new uniform options, new van graphics that are being rolled out now, and a wide array of new local marketing templates and tools that can help our owners compete more effectively and win more jobs locally.
as well as added to our international development team that is helping expand our footprint and our global market leadership by developing master license partners in more counties.
At the same time, we have added to our support staff in several key areas to help execute some of our growth strategies. These additions were in areas including marketing, training and business coaching, commercial account sales and international development. The marketing staff has been integral to our brand refresh and our stronger online presence. New business coaches and training staff have allowed us to bolster our training regimen, including the large number of regional classes we offer across the country, and provide more sophisticated coaching programs that have helped participating owners post sizable revenue gains in their business. We have also bolstered our national account sales team to help deliver more commercial jobs to our network,
The exciting thing is that we have already begun to see some of the pay-off from these initiatives. Our franchise sales more than doubled in 2013 with 117 percent growth compared to the previous year, soaring from 49 new franchises sold in 2012 to 101 this past year. One important note related to our accelerated growth is that over 50 percent of the new franchises sold in 2013 came from existing franchise owners expanding their operations, which is a good reflection of the positive impact some of these recent changes are having. Some recent consumer trends have been in our favor as well – including increased consumer spending on home services, a growing preference for national brands within the home services sector, and the rising popularity of environmentally
In addition, we saw an opportunity to improve the tools we were offering our owners to manage their daily operation more efficiently and with better data. As a result, we invested a significant amount of time and financial resources over the past year to develop and launch a new business management software system that makes it easier for our franchisees to manage and track their daily operation and better market to their customer database.
“Over 50 percent of the new franchises sold in 2013 came from existing franchise owners expanding their operations.� friendly businesses – which have created greater opportunities for franchisees and contributed to our growth. The company also saw dividends from our efforts to attract larger, multi-unit franchise owners along with our geo-targeted marketing programs, which were designed to expand our presence in unserved or underdeveloped areas. These programs have helped us attract savvy entrepreneurs to our brand, highlighting the opportunity to join the number one franchise brand in the carpet cleaning category and grow their own business by following our winning business model. These recent initiatives are all part of the plan we had in 2011 when I came on board as President and CEO of Harris Research, Inc. (HRI), the parent company to Chem-Dry as well as its sister brand, the N-Hance Wood Renewal franchise. Based on my past experiences running other franchised businesses, I saw the vast potential Chem-Dry had and continues to have to expand upon its industry-leading technology, its number one market position and a network of passionate franchisees committed to providing exceptional customer service. Our goal with these investments is to increase the value of each franchise, and thereby expand our market leadership position and strengthen the foundation of the Chem-Dry brand and network as a whole. After a solid first quarter of 2014, we remain committed to this plan and to making further progress on the initiatives we have undertaken. We foresee not only continued strong growth in the U.S. and Canada, but also accelerated growth overseas. We added two new countries in 2013 and an additional two just in the first quarter of this year, and I anticipate adding several more international master franchise partners in the coming year that will further extend our global reach.
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have your say
Da n Ta ra ntin, CEO, Chem-D r y
“Dan Tarantin is the CEO of Chem-Dry, the world’s largest carpet and upholstery cleaning service with over 3,500 units in 35 countries.” mold and bacteria. Chem-Dry’s process also does not leave behind any dirtattracting residue that can require more frequent professional cleanings.
About Chem-Dry
Our team’s focus and commitment to progress on all of these fronts – from our brand refresh to our higher level training programs and increased adoption of our new business management software – will help our owners grow the profitability and value of their franchises and will help put the Chem-Dry brand in an even stronger position for the future.
About Dan Tarantin Dan Tarantin is the CEO of Chem-Dry, the world’s largest carpet and upholstery cleaning service with over 3,500 units in 35 countries. Celebrating 35 years in
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business, Chem-Dry prides itself on its green-certified products and exclusive hot carbonating extraction process. Harnessing the power of carbonation, Chem-Dry’s cleaning method uses millions of carbonation bubbles that penetrate deep into the carpet fibers and safely release dirt from the base of the carpet so they can be easily extracted. The result is a deep, long-lasting and healthier carpet cleaning. By using 80 percent less water than typical steam cleaning, Chem-Dry’s process allows carpets to dry faster – in hours, rather than days – and won’t wet through to the base of carpets, like steam cleaning, that can become a breeding ground for
Founded in 1977, Chem-Dry is the world’s leading carpet and upholstery cleaning service, with a network of over 3,500 units in 44 countries serving over 10,000 homes a day worldwide. Its green-certified solution and proprietary hot carbonating extraction cleaning process provide a deeper clean, allow surfaces to dry faster, and leave homes healthier. Chem-Dry has been ranked the number one carpet cleaning franchise by Entrepreneur magazine for 26 consecutive years and has also been featured in the magazine’s Top Home-Based Franchises list among the top 10 concepts for 19 consecutive years. For more information on franchise opportunities, visit www.chemdryfranchise.com, or to schedule a cleaning, visit www.chemdry.com. Chem-Dry is owned by Harris Research, Inc., which is also the founder and owner of the fast-growing N-Hance Wood Renewal franchise.
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AU TO M OT I V E feature
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Driving to suc
with an Automotive Fr America is a car culture. From the earliest models to the fins of the ‘50s to today’s hybrid highway haulers, we’ve always been amorous for our automobiles. Some people consider them their babies, while others take the more mundane view that they’re merely a means of transportation. But, whatever the relationship, the fact is that millions of Americans rely on their vehicles and that means maintenance, which can mean a lucrative franchising opportunity for the entrepreneurial minded. The Automotive Aftermarket Industry Association (AAIA), says the industry “encompasses all products and services purchased for light, medium and heavy duty vehicles after the original sale including replacement parts, accessories, lubricants, appearance products, tires, collision repairs as well as the tools and equipment necessary to make the repair.” Mechanical repair makes up approximately 50 percent of the industry’s revenue; collision repair, makes up 30 percent of its revenue; car washing, makes up 10 percent and oil change and lube, also make up 10 percent. Window tinting, any other type of car maintenance or customizing or car rentals and sales are also important players in the automotive franchising industry.
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Investments Vehicle maintenance is a great market to get into now because it’s needed now more than ever. The AAIA says people are keeping their cars longer and driving them further than they did in the past. In fact, the average car currently on the road is about 10 years old, a result of improved manufacturing practices. “In 2011, the average car owner was keeping their car about 10.8 years. The reason being is cars are being made much, much better than they had in the past, as well as the cost of new cars has increased quite significantly,” Chip Baranowski of Honest-1 Auto Care said in a Franchise Direct article. “So our consumers that we’re dealing with on a daily basis in our facilities are people who are treating their cars as more of an investment.” This mentality of keeping our cars longer also has to do with the last recession changing our thinking as a society. We’re now more prone to fix something if it’s broken rather than dispose of it. Results from the 2012 Aftermarket Consumer
Outlook Study, which was done by market research company NPD, show that nine percent of people purchase the least expensive aftermarket products for vehicle maintenance, while 40 percent of the people surveyed said they purchased what they believed to be the highest quality products regardless of the price of those products. Quality was also the highest rated attribute that consumers said they looked for in regards to aftermarket automotive products. What consumers seem to be saying is that they are treating their vehicles more as investments now than something they plan to replace in a few years and they are willing to put the money into those investments to keep them running.
Trusted Professionals Maintenance is being entrusted to professionals because cars are continually becoming more technologically advanced, meaning it’s not as easy nowadays as in the past to perform maintenance at home. It’s not even enough to be known
ccess
ranchise
as a mechanic nowadays, as vehicles have become rolling computers. Now, most operations are done by a technician, belying the high tech direction of the industry.
seems to be plenty of room for everyone to get in on those sales numbers, as the fragmented nature of the market means the 50 largest companies generate less than 10 percent of the total revenue.
Byers, CEO of CARSTAR Auto Body Repair Experts, says. “The economics of insurance-paid repairs can put significant margin pressure on an independent owner.”
“There are fewer and fewer consumers that have the ‘do-it-myself, do-it-yourself’ mentality,” says Ralph Yarusso of Grease Monkey, an oil change franchise. “It’s really a ‘do-it-for-me’-type mentality. They really are dependent on finding good, quality care facilities and maintenance providers to take care of their vehicles.”
The Franchise Business Economic Outlook for 2013, prepared for the International Franchise Association (IFA), says automotive franchise businesses grew by almost two percent in economic output over 2012, plus it also grew just under one percent in total establishments over that same time period.
By using a franchise model, Byers adds, owners can retain some independence while delivering centralized billing and repair management to the insurance partners, releasing them from that particular burden.
Industry Growth Numbers from the International Franchise Association reveal that roughly 30,000 automotive franchises are established each year in the US and that number has been rising steadily since 2010 after having taken a slight dip due to the recession. In 2012, the AAIA pegged sales in the automotive aftermarket segment at $307.7 billion with over four million people employed in the area. That was a 3.5 percent uptick from 2011 sales. There
The reason that franchising numbers show growth is not only because of the brand recognition that franchises bring to the table, but also the ability of franchisors to more easily keep up with technological advancements within the automotive industry. The ability of franchises to more easily access these new and ever-changing resources is an advantage for them over their independent counterparts. “[Independent shop owners] don’t have the scale or resources to meet the standards of many of the major insurers,” David
Business Format vs. Product Franchising The automotive aftermarket industry typically sees two different types of franchising available: business format franchising and product franchising. With business format franchising, the franchisor licences their brand to the franchisee. This usually comes with a particular format for doing business and because of this, the franchisee can expect extensive support from the franchisor. On the other hand, a product franchise model sees the franchisor granting
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AU TO M OT I V E feature
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“Vehicle maintenance is a great market to get into now because it’s needed now more than ever.” permission to franchisees to sell a product using their logo, trademark and trade name with typically limited operational support. The fee structure between these two different types of franchises is usually different. Some franchisors require a franchise fee, plus royalty fees while others will waive the royalty fees, but will require the franchisee to purchase proprietary products to use in the franchise. Others will not require franchise or royalty fees, but will require franchisees to make minimal inventory purchases.
Getting Started To open a franchise in the automotive industry, you don’t need direct experience in the specific business that you want to get into. For example, if you are looking to open a tire and lube shop, it’s not necessary for you to have had hands-on experience performing oil changes or tire rotations. You can always hire people to do that. Your business sense and motivation are more important to franchisors. A passion for cars helps, of course, but franchisors want to see that you have the initiative to succeed.
Territory In the highly competitive automotive franchising industry, you can’t expect exclusive territory rights like you can in other franchise industries. It does happen with certain franchise systems, but it is a rarity. Often, franchise agreements will grant franchisees the right to operate their business at a certain location, but with no exclusive territorial rights. If an exclusive territory right is granted, the size of that territory will depend on the size of the neighborhood, both natural and manmade boundaries (a major road, for example) and the number of potential customers in
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the area. Mobile businesses like product franchises or distributorships will usually feature a defined territory.
Cost It’s difficult to put a dollar figure on the initial startup costs of an automotive franchise, as there are so many different types of businesses and even individual franchisors will sometimes have a variety of franchise models that require different levels of investment based on the physical size of the building or the size of the territory the franchise is to cover.
system and reaping the benefits that come with the franchisor’s ongoing branding efforts. Royalty fees vary greatly between franchises. Make sure you understand the fee structure before signing any agreements. Each franchisor will have its own system of vetting potential franchisees. The respective franchisor websites are a good place to start with the process of inquiring about a franchise.
• training expenses,
If there’s one thing that’s guaranteed about opening a franchise in the automotive industry, it’s that there will always be vehicles on the road (until we get our flying cars) and those vehicles will always need maintenance, meaning you’ll never run out of potential customers.
• equipment,
About the author
You can expect to deal with the following costs when opening a franchise: • franchise fee,
• inventory, • leasehold improvements, • professional and licence fees. The franchisor may take care of or help with some of these fees. But you will need to cover the minimum investment amount to be considered for a franchise. This can range from around $50,000 for a franchise that performs a single aspect of maintenance like auto glass to as much as $500,000 for a franchise that performs multiple aspects of maintenance and carries high brand name recognition. Along with startup costs, there are also ongoing fees. An average franchise agreement will last for about 12 years and during that time, there will be royalty fees and marketing costs. These are what the franchisee pays for the privilege of staying in the franchisor’s business
A former journalist, Rob Swystun, has been writing professionally since 2006 and now concentrates on freelance writing. He lives in Winnipeg and is currently an Athabasca University student studying for a BA in Communications.
Page 37
DON’T MISS OUR NEXT ISSUE!
Pets Retail
and Services
Want to learn more about trends and growth industries in franchising? Need help making the big decisions? Every edition we feature advice from the experts to help you on your franchising journey.
Find out more about Pets Retail and Services in the June edition of Franchising USA. For interactive editorial and advertising solutions, please contact Vikki Bradbury vikki@cgbpublishing.com. 778 426 2446 Franchising USA
ex per t advice
Andre Kay, CEO and Chief Marketing Officer, Sociallybuzz
3 Ways to Thrive after Facebook’s Decline in Reach
After developing invested time, money, and resources to enhance the customer base or attract new potential consumers to a Facebook fan page, the most asked question is what to do next? However, there is no secret that Facebook has had a huge decline in its organic
Franchising USA
“You could have the best message in the world; however, without the right audience it means nothing.” reach. For example, 16 percent of fans (on average) were seeing businesses’ organic posts in about 2012. That same reach today, has fallen precipitously to only two percent to six percent, due to the numerous changes in the Facebook algorithm. Since August 2013, Facebook has released numerous changes to its “News Feed” algorithm which determines the content and posts displayed to users. In a sales deck sent out to partners last year, Facebook cited, “we expect organic distribution of an individual page’s posts to gradually decline over time as we continually work to make sure people have a meaningful experience on the site.” Along with the rise of new channels, multiple competitors with a similar target market and an increase in shared content, a significant audience fragmentation took place. Here are 3 quick ways to reach your fan base after Facebook’s decline in reach:
1) Develop a multi-network strategy Have you ever heard of the saying, “don’t put all your eggs in one basket?” Well, this is the perfect example to encourage businesses to embrace other channels in an effort to reach or engage with customers. Develop a presence on other channels such as Instagram, Twitter or Vine. But before signing up for random social channels, identify the channels that are relevant to your brand’s goals and objectives. Consequently, use those channels to expand the brand voice and presence.
2) Execute cross-network campaigns The ideal way to interact with customers and reach new consumers is by engaging
cross-network campaigns on various social channels. An example of this is to use a hashtag, which is the one common feature across most social channels that can be used to run a fully trackable campaign. Campaigns that encourage participation from multiple networks see more entries, engagement and interaction. Therefore, it makes it easy for an audience to participate because they can engage with the brand in ways that they prefer. Execute your next campaign using a cross-network strategy and watch the entries pile up.
3) Email Email is still the number one direct channel in terms of daily use and consumer preference for communication. Therefore, using it to its highest potential allows businesses to reach customers. To attract, retain, and grow a loyal customer base, use these 8 tips put together by campaigner: 1. Build a permission-based list 2. In exchange for contact information, offer customers something of value: a newsletter, a free meal, or more information about your products & services. 3. See what others are doing by taking a few minutes to sign up for email newsletters from competitors. Choose a few of your favorite hobbies or a topic of interest as well. 4. Before creating the correct message, develop a marketing strategy that addresses goals and objectives. 5. Use email marketing to accomplish what email does best: increase revenue, generate leads, strengthen customer relationships, increase website traffic, and build brand awareness. 6. Personalize the ‘From’ portion of your
Andre Kay
email and be clear who the email is from. 7. People respond best to messages written by one particular person at a company who they can get to know over time, which is part of building relationships. 8. Keep the message personal and casual by thinking like a customer and writing in a conversational tone. People want to see a little humanity behind the corporate mask. But remember, you could have the best message in the world; however, without the right audience it means nothing. In conclusion, the drop-off in organic reach through Facebook continues to be a very touchy subject for businesses. In addition to the three tips listed above, continue to create relevant and intriguing content for Facebook in order to emerge organically in customer newsfeeds. Andre Kay is CEO and chief marketing officer of Sociallybuzz, which exists to help franchise owners grow their business using social media. By helping them reach relevant customers, build customer loyalty, manage reputation and increase revenue. We protect relationship with their customer, create effective campaigns, manage their social channels and online reputation 24/7. Read the company’s blog (http:// sociallybuzz.wordpress.com/), follow it on Twitter and “like” its Facebook page.
Franchising USA
ex per t advice
Page 39
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MAY 2014
Veterans in Franchising www.franchisingusamagazine.com
RimTyme
An Industry Leader
franchise
fee waived Operation American Dream
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feature
Page 41
To work independently To your workown independently To set work schedule To work independently To set your own work you schedule To work at something enjoy To set your own work schedule To To work at something you enjoy control your own salary To To work at something you enjoy control your own salary To control your own salary
Want To Be Your Want To Be Your Want Be Your OwnToBoss… Own Boss… Own Boss…
“BUILDING AMERICA WITH AMERICAN HEROES”
www.VeteranFranchiseAdvisers.com www.VeteranFranchiseAdvisers.com www.VeteranFranchiseAdvisers.com “BUILDING AMERICA WITH AMERICAN HEROES”
© ASUKA Inc. 2014
Veterans make great franchise Veterans make greattraining franchise owners! Your military has Veterans make great franchise owners! Your military training has taught you many things that transfer owners! Your military training has taught youthe many things that transfer well into world of franchising. taught youthe many things that transfer well into world of franchising. well into the world of franchising.
Take Control Of Take Control Of Take Of YourControl Future… Your Future… Your Future…
A Business Of Your Own! A Business Of Your A Business Of Your Own! Own!
Take Advantage of Our Take Advantage of Our Take Advantage of Our Free Expert Help Free Help Free Expert Expert Help Today! Today! Today!
Make Your Next Career… Make Your Next Make Your Next Career… Career…
Now its time to build a future for you and your family.
You served your country proudly. You served your country proudly. You served your country Now its time to build a future for you andproudly. your family. Now its time to build a future for you and your family.
V eterans in F ranchisin g S upplement may 2 0 1 4 Our Veterans in Franchising special supplement has become a regular feature of Franchising USA. To share your story in the June issue, please contact Vikki Bradbury, Publisher Phone: 778 426 2446 Email: vikki@cgbpublishing.com
Contents 44 Cover Story: RimTyme: Veteran Franchisee Paves the Way
in Leading Franchise Brand
46 Profile
Famous Brands International
50 Profile
Signal 88
52 Profile Maid Simple
48 Profile
Advantaclean
Franchising USA
V eterans i n Franch isi ng
COV ER STO RY
Veteran Franchisee Paves the Way in Leading Franchise Brand Not many business owners can say they’ve been involved in the start of an entire industry from the ground up. Fewer still can take credit for being a forerunner in two. Jim Moore, of JDM Management, Inc. and a franchisee of RimTyme Custom Wheels and Tires, is one of those people. He started in the rent-to-own business in 1991 in the training department for ColorTyme Rent-to-Own, working for Willie Talley, founder of ColorTyme, who, along with his brother Ernie, are widely regarded as the forefathers of the rent-toown industry. In his time working for ColorTyme in the training and operations departments, Moore not only gained the knowledge that would serve as the foundation for his success in the industry, but he also started his path to becoming a pioneer in the industry himself. When he began, he told Willie Talley that he would serve in his role for two years, and if after that time he couldn’t raise the capital to open his own franchise, he would move on to something else. In August of 1993 he made good on his promise, purchasing his first ColorTyme location in Raleigh, N.C. By December of that year, he had increased the monthly revenue four times what it was when he began, and by the following year he surpassed the $1 million annual revenue mark in that first store. Moore attributes much of this early success to the best practices he picked up from the ColorTyme
Franchising USA
franchisees with whom he interacted as their franchise consultant, learning as he worked side-by-side with them to open and operate their stores. The growth of his business continued over the next few years. In all, Moore opened 10 additional ColorTyme locations, which were consistently at the top of the rankings among locations in annual revenue. Then, in the early 2000s, he saw an increasing demand for rental wheels and tires among his customer base. After nearly a decade learning and working with industry pioneers, it was now his turn to be at the forefront of a new movement in rent-toown. In 2002, with the help of his franchisor, he began offering rental wheels and tires as an additional product to customers in three of his ColorTyme stores, alongside his inventory of appliances, electronics and furniture. A two-year struggle to find footing for this branch of his business led him, in 2004, to make the decision to separate his business and found RimTyme Custom Wheels and Tires. “There were a tremendous amount of requests from our customers for wheels and tires,” said Moore. “We hired industry professionals to sell our tires and we invested in equipment for immediate installation… Our competitors cannot offer immediate or same day installation service. We have the competitive advantage.” While it was a risk to depart from his widely successful ColorTyme locations and venture into an unknown and untested market, Moore was unfazed by the challenges ahead. As a decorated veteran of the United States Army who served his country in Vietnam as a Combat
Helicopter Pilot, he was used to risk. During his time in the military, Moore logged over 3,400 flight hours in combat missions. He was shot down three times during the Vietnam War and earned a number of honors, including the Silver Star, Bronze Star and Distinguished Flying Cross. Today, 13 years and 27 stores later, RimTyme, a subsidiary of Rent-A-Center Franchising International, Inc., features thousands of custom wheels and tires with same-day installation across a growing number of states. Named the Number 1 Automotive Wheels and Tires Franchise by Entrepreneur Magazine in 2013, RimTyme is one of the fastest-growing franchises available in the marketplace. “With thirty-five years of experience and $3 billion in annual revenue, RentA-Center, Inc. allows for operational support and finances to build massive inventories to meet both the product and time demands of their customers,” says Michael Landry, Vice President of Franchise Development for Rent-A-Center Franchising International, Inc. A 4,000-unit inventory offers a variety of wheel brands, including rim sizes and materials ranging from chrome to black rims and alloy to aluminum wheels. With a high percentage of revenue coming from cash sales, inventory replenishment is necessary to keep up. Luckily for Moore, RimTyme’s parent company, Rent-ACenter, offers guaranteed financing to cover inventory purchases. “Rent-A-Center’s guaranteed financing helped us build our product selection”, says Moore. “We would not have been successful without Rent-A-Center’s financing guarantee.”
The average investment for a franchise is $500,000 with a mature store generating on average $1.7 million in annual revenue. Landry adds, “We’re so confident in the business model and skills of our franchisees we’re willing to co-guarantee the business loans ourselves.” This support, in addition to his expertise and innovative business model, has helped make Moore RimTyme’s largest franchisee, with eight locations throughout the southeast United States. His stores are among the highest-performing out of Rent-A-Center’s portfolio of over 4,500 locations. With over $3 billion in annual revenue, Rent-A-Center is the largest rent-to-own company in the world. Both the Rent-ACenter brand and the RimTyme brand are designed to appeal to a wide variety of customers by allowing them to obtain merchandise that they might otherwise be unable to obtain due to insufficient cash resources or a lack of access to credit. Growth is at the forefront for this industry, particularly for RimTyme. Existing franchisees currently have secured development rights for 10 new stores in the next 18 months, and open opportunities exist throughout the southern United States. For more information: www.racfranchising.com www.rentacenter.com
“Today, 13 years and 27 stores later, RimTyme features thousands of custom wheels and tires with same-day installation.”
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v e t era ns i n fra nch isi ng
Page 45
V eterans i n Franch isi ng
Fa mous B ra nds I nter national
franchise fee waived
for the first 50 qualif ying military veterans As a way of expressing gratitude and recruiting exceptional franchisees at the same time, Famous Brands International, the parent company of TCBY Yogurt and Mrs. Fields Cookies, has announced it will waive the franchise fee for the first 50 qualifying military veterans who join the brand.
The company is committed to giving away $1.75 million in free franchise fees through the program. According to the Small Business Association, about one quarter of the country’s 23.5 million veterans are interested in starting or buying their own business. Eager to help meet that demand, Famous Brands is doing their part by helping veterans accomplish the dream of small business ownership, helping to make
Franchising USA
“Famous Brands is doing their part by helping veterans accomplish the dream of small business ownership.” it more attainable and affordable postmilitary service. The program waives the franchise fee of $35,000 per unit. “Military veterans are reliable, tenacious and driven – all qualities that align perfectly with our company culture and result in long-term success,” said Chief Operating Officer David Bloom. “We have seen great success with our current veteran franchise partners, so we are happy to waive 50 franchise fees so these recognized individuals receive an opportunity to own their own business.” Additionally, TCBY and Mrs. Fields are both part of the International Franchise Association’s VetFran program, which offers ongoing incentives, training and mentoring to military veterans interested in a franchising career path. Together, TCBY and Mrs. Fields have more than 900 locations in 33 countries. Famous Brands is now focusing on developing the two legacy brands through dual-branded stores. In addition to an updated design, the new stores offer three different revenue streams for owners:
TCBY, Mrs. Fields and Mrs. Fields instore gifting station via MrsFields.com. Total initial investment for a dual-branded store ranges from $150,000-$450,000 depending on unit size. For more information on this program, visit http://franchise.tcby.com/.
Page 47
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V eterans i n Franch isi ng
Ad va ntaClea n
AdvantaClean
proud supporter of Military Veterans With proven processes and a highly structured business model, owning an AdvantaClean franchise is a great fit for individuals with military training. A large number of our most successful offices are owned and operated by military veterans.
“Owning an AdvantaClean franchise is a great fit for individuals with military training.”
Take for example, Barry Hintz, US Army Transportation Corps Officer 1986-1992, Gulf War veteran, one year as AdvantaClean franchise owner, Milwaukee, WI. His military background has helped him in the following ways: discipline to get the job done, organization and planning to prioritize his daily and strategic tasks, and leadership abilities to instruct and motivate his employees to do AdvantClean projects. Hiring vets has helped Barry’s franchise in many ways: Veterans are mission oriented, Veterans can make decisions when he is not around, Veterans can
succeed under adverse conditions, and put the mission above themselves when required.
thank you for your service to our great
Barry is seen here in the picture with fellow franchisees:
who are military veterans including
Justen Jubb, US Marine Corps Sergeant, 1998-2004, Iraq War veteran, one year with AdvantaClean franchise.
Franchising USA
country. Additionally, we do offer a
number of discounts to new franchisees participating in the IFA VetFran program offering a 10 percent discount, a value
of up to $10,000 off the initial franchise
fee to qualifying men and women of our
Mike Peterson, US Marin Corps reserves Lance Corporal, 2010-current, three months with AdvantaClean franchise.
armed forces.
We invite you to learn more about the AdvantaClean franchise program and
http://www.veteransbusinessservices.us/
For more information about the
AdvantaClean franchise opportunity, visit product-item/advantaclean/
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V E T ER A NS I N FR A NCH ISI NG
75 Page 49
V eterans i n Franch isi ng
Signal 88
Operation American Dream Giving Veterans the Chance to Be Their Own Boss Military veterans with entrepreneurial dreams are invited to compete for start-up money to open their own business. Signal 88 Security’s contest, Operation American Dream, is in its second year and will again provide veterans with an opportunity for success. According to the U.S. Small Business Administration, veterans own 2.4 million, or approximately one in 10, small businesses. It also notes that in the private sector, veterans are 45 percent more likely than those with no active-duty military
Franchising USA
“According to the U.S. Small Business Administration, veterans own 2.4 million, or approximately one in 10, small businesses.”
experience to be self-employed. Between April 1 and May 15, 2013, Army and Air Force veterans are invited to submit a video explaining why they want to open their own business. Submissions will be accepted online at www.signal88. com/OperationAmericanDream. The winning submission will be decided through a public vote on Signal 88 Security’s Facebook page on Thursday, May 22, 2014. The contestant with the most votes will receive $5,000 to start his or her own business, or $10,000 if he or she chooses to open a Signal 88 Security franchise. Signal 88 Security has been listed among the top 10 percent of militaryfriendly franchises by G.I. Jobs as well as recognized as a Top 100 Franchise for Veterans by Franchise Business Review.
For additional contest information, or to submit a video, visit www.signal88.com/ OperationAmericanDream. Marine and Navy veterans, stay tuned. Your chance will come in October 2014. http://www.veteransbusinessservices. us/operation-american-dream-frombattlefield-to-boss/
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V eterans i n Franch isi ng
M aid Simple
Veteran Celebrates
as Maid Simple Franchisee Medically retiring from the military in 2011, Tai Jeffries relocated to Fort Wayne, Indiana with her husband and five daughters and embarked on the next step in her career – franchising.
“I always knew I wanted to run my own business. I didn’t want to work for anyone else and I was determined to set a positive example for my daughters.”
Celebrating a year of success this month, Jeffries is the proud owner of a Maid Simple House Cleaning franchise. “After my career in the military ended I pursued franchising because it was a perfect fit for me,” says Jeffries. “I always knew I wanted to run my own business. I didn’t want to work for anyone else and I was determined to set a positive example for my daughters.” Jeffries thoroughly researched many different franchise concepts before making a decision. Due to the vast potential of the cleaning services industry, she decided on a maid service franchise. Jeffries contacted Maid Simple House Cleaning and the rest is history. “Maid Simple House Cleaning was the best fit for me and my family. The model is low cost, flexible, and offers a lot of training and support,” comments Jeffries. “They came out to train me in person and any questions I have had along the way, they are willing and ready to help. So far they have been incredibly supportive.” Currently Jeffries is both cleaning herself and managing a team of cleaners. Her long-term goal is to step away from the cleaning altogether and leave it to her team members.
Franchising USA
“I’m really involved with my customers,” she says. “I call and make home visits to ensure they are taken care of. Customer satisfaction is my concern for each and every visit.” Her advice to transitioning veterans looking to possibly own a franchise of their own? “Do your research. Make sure it is something you are ready to give 100 percent towards. Owning your own franchise means you are responsible for every aspect of your business. It has to be something you are passionate about,” she says.
Jeffries credits her nine-year military
career to giving her the confidence to own a franchise business.
“Attention to detail, dependability, and
dedication are just a few of the valuable skills and traits veterans bring to the
table,” says Jeffries. “I encourage other veterans who are looking for a career change to consider franchising.”
To learn more about Jeffries’ story
or the Maid Simple House Cleaning franchise opportunity, visit www. maidsimplefranchise.com.
Applause for the New Franchise Opportunity from IFG Applause for the New Franchise Opportunity from IFG New Franchise Opportunity from IFG New Franchise Opportunity from IFG Same great service - new format for franchisees Interface franchisees provide an invoice discounting and spot Interface franchisees factoringanservice provide invoiceto small business owners. discounting and spot factoring service to small business owners. Franchisees can now grow their Interface business rapidly with can the now grow Franchisees their Interface introduction ofbusiness the Capital Leverage Program. rapidly with the introduction of the Capital The Interface 50/50 Leverage Program. franchise opportunity The Interface 50/50growth a makes exponential reality! opportunity franchise makes exponential growth a reality!
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ex per t advice
George Knauf, Senior Franchise Business Advisor, FranChoice
How Preconceptions Aim to Steal Your Dreams So here you are, looking at franchise magazines, websites and other resources searching for your dream business. You are tackling this challenge on your own and have literally thousands of choices blurring your vision and you need a fast way to try to sort them. Maybe you are looking at restaurants, because you have a favorite burger or chicken place to go with family. Possibly a retail concept because you like their product line. Could be that you have targeted a service brand that offers a service similar to your favorite hobby. When we step into unfamiliar territory, we try to stitch the random bits and pieces of information we have accumulated going through life, into a worthwhile narrative to explain those things we don’t have a good working knowledge of. When we look at businesses, the most common bits of information we can call on are often those experiences we have had as consumers - brief snapshots in time from the customer side of the counter.
“Finding your perfect franchise may require a little luck or a lot of time and effort.” Franchising USA
Years ago I was fortunate enough to be given a tour behind the scenes at a wellknown major theme park. Contrary to the relaxing theme music, people in costumes serving ice cream and other treats as if they had not a care in the world, when I stepped behind the scenes, I saw busy workers hustling to get all the pieces in place - to make everything seem perfect in the guest experience. It was a great insight into the two very separate experiences offered between the “front of the house” and “back of the house”. When you dig into a franchise opportunity from the perspective of the business owner, you learn about what we call the “model”; that unique combination of skills and strengths required, likes and dislikes that factor in, work schedule, etc. The business owner in a restaurant, for example, may spend most of their time ordering food or product, hiring and managing staff, lining up critical services like an exhaust hood cleaning company or equipment repair. They are on regular patrol through the operation looking for opportunities to improve how that product or service is delivered to the customer. In the restaurant business I always considered my role to be that of Chief Dishwasher and Floor Cleaner. The fact that the reality of a business is different than the preconceptions you had does not mean it isn’t a fit, it simply means the sorting process that got you to your short list may have a flaw, so finding your perfect franchise may require a little luck or a lot of time and effort. Your goal is to find the very best business that fits your model and to have an ownership role you will enjoy (which may have less to do with the product than you initially think). A story I tell my candidates often as we are looking for their perfect franchise is of a sales executive in corporate America who was a scratch golfer (very good) and who wanted to pursue his passion. When he travelled on business he often took his clubs and played with clients. It was not unusual for him to play once a week when
working from the corporate office. He took clients to golf tournaments and lived a very golf oriented life. At some point he decided to pursue his passion and become a golf pro so he could spend every day focused on his passion. He envisioned a life where he was a social cruise director of sorts, mingling with guests and spending time out on the course playing golf. Here is what he learned: The golf pro is part of a team that creates the great experience he used to enjoy. They oversee the shop and spend time ordering, cleaning and arranging displays. He had to be sure that the golf carts were functioning well and the greens were perfect. When fund raisers and tournaments happened at his course he was organizing tables, signs and people. Most challenging, on those perfect sunny mornings when his buddies were passing through to play golf, he was teaching people how to swing golf clubs on the driving range. He did get to play on occasion, usually on cloudy or rainy days. One day he had an epiphany, he could not remember ever seeing the golf pro out on the course when he was a sales executive. He made it almost a year as a golf pro, then started looking for other options so that he could get back to playing golf on those beautiful days. His preconceptions of the role of golf pro almost cost him his passion and the reality of the role was not a good fit for him. So, how best to manage or even use preconceptions to find your perfect franchise? Recognize those preconceptions for what they are, they are a single piece in a complex puzzle. You will want to evaluate the customer experience in any business you consider owning. More importantly you will want to understand the owner’s role in detail. When evaluating franchises this will entail following the franchise investigation process, closely as the franchisor, not Google, has most of the information
George Knauf
you will need. Understand the business and how they describe their “perfect candidate”. Talk to their franchisees when appropriate to see if you can relate to their real world experiences. Introspectively you will need to know your model, whether you build it yourself or have unbiased professionals like us build it for you. When your model is a good match with the franchise model then you are in the right zone. The goal is to get past preconceptions of the marketing you may see and any other information that may lead you astray too find that information which will give you the clearest picture of what your life as the owner of the business would be. Your patience and persistence in following an organized process might just result in finding your perfect franchise. Mr. Knauf is a highly sought after trusted advisor to many companies; Public, Independent and Franchised of all sizes and in many markets. His 20 plus years of experience in both startup and mature business operations makes him uniquely qualified to advise individuals that have dreamed of going into business for themselves in order to gain more control, independence, time flexibility and to be able to earn in proportion to their real contribution. For more information: Website: www.georgeknauf.com
Franchising USA
ex per t advice
Page 55
ex per t advice
Dale Willerton and Jeff Grandfield - The Lease Coach
The Location You Lease is MORE Important than which Franchise You Buy, and Here’s Why The Lease Coach works with many franchisors and strongly supports the franchising industry, but this article is for franchisees. Virtually every franchise system has franchisees that are doing well or struggling. Franchises operate on a “cookie cutter” system where each franchise store should more-or-less look and operate the same. The one main variable is the location you choose to lease or occupy. Over 95 percent of all franchises lease their location. Therefore, the site you lease (and the lease terms) largely determines your level of success. It is critically important that you establish and manage your expectations of the franchisor regarding your business location and your lease terms. Here are some tips:
1
Headlease or Sublease
Will the franchisee lease his/ her space directly from the landlord or sublease it from the franchisor? We have written entire articles on this subject where we explain that one route is not necessarily better than the other; understanding the pros and cons as they apply to you and getting a fair shake is important.
Franchising USA
If you sublease, you would want to make sure you receive all inducements. Such inducements are benefits offered by a landlord to a prospective tenant in order to encourage that prospective tenant to sign a lease. If your franchisor enters into a headlease agreement with the landlord and receives monetary inducements and free rent following those negotiations, don’t assume those inducements are all being passed on to you.
2
Site Selection
When a franchisee signs a franchise agreement, they are locked in. If they don’t sign a lease within 60 – 90 days or open within 180 days, they can be penalized. Therefore, franchisees should be conscious of the repercussions if a proper site is not available. Our recommendation is to make the purchase of the franchise agreement conditional upon a suitable site being found.
3
Real Estate Training and Support
Many franchisors do not offer substantial training or support to the franchisee regarding site selection or commercial lease negotiating. However, many franchisors claim they will handle the real estate aspect of the deal. Remember, franchisors may not have the time, staff or resources to physically travel to different cities to view properties. If all
the franchisor does is turn you over to a local real estate agent (who is being paid a commission by the landlord) then who is really representing you, the franchise tenant? This scenario happens alot. We remember one franchisee that was unable to find a suitable location. Her franchisor offered her help at a cost of $3500, which she paid. She was then referred to a local real estate agent who began to show her properties. The franchisee noted that all these properties had the agent’s name as a contact on the “For Lease” sign and contacted The Lease Coach to ask why. We explained that the agent would receive a full commission from the landlord if she leased one of these properties.
4
Territory Rights
A franchisee will normally receive rights to operate from a specific territory or for a site-specific location (meaning a particular plaza or mall). Either way, you must try to establish your area and exclusive rights therein as part of the franchise agreement. Frequently, franchisees will complain to us that their franchisor put another store too close to their store or territory, thereby dividing the business the franchisee thought he/ she would get from a local trading area. Your competition may not only be from a competing franchise system but right from within the franchise system you joined.
5
Lack of Suitable Sites for Lease
A well-known franchisor was directed by the court to refund over a million dollars in franchise fees it had collected from new prospective franchisees because the franchisor had essentially oversold the territories and could not produce suitable sites in a timely manner. Meanwhile, many of those franchisees had quit their jobs and wasted up to a year trying to get into business.
6
Lack of Affordable Sites
This is something we hear about frequently. A franchisee’s motivation for specifically picking a certain franchise concept to join is because there are none of those stores in his immediate trading area. After signing the franchise agreement, franchisees will start to look into local leasing opportunities; however, learn that all of the great locations available for lease were more expensive than the rent proforma allowed for by the franchisor. You must remember that what you see is not always what you can afford when it comes to leasing space. As a potential franchisee, you must remember that whether you thrive or fail is largely dependent on the commercial or retail site you occupy and the lease terms you agree to. For a copy of our free CD, Leasing Do’s & Dont’s 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 co-authors 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.
“Your competition may not only be from a competing franchise system but right from within the franchise system you joined.” Franchising USA
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Julie Lusthaus, Partner & Mackenzie Dimitri, Associate Attorney, Einbinder & Dunn
Foreign Franchisees gain new business and
US citizenship
through investment Foreign franchisees stand to gain more than just profits when they invest in US franchises. A program called EB-5, overseen by the U.S. Department of Homeland Security’s U.S. Citizenship and Immigration Services (the USCIS), grants visas to foreign investors. The program is also noteworthy for franchisors as it may enable them to expand their brand to rural areas where investment would otherwise be impracticable. In a stagnant economy, the program could provide critical jobs to American workers – one of the requirements of the EB-5 program is that the foreign investor create 10 jobs for qualified U.S. workers in two years.
Franchising USA
EB-5 stands for Employment-Based Immigration: Fifth Preference. The program grants visas to investors willing to start businesses or invest in the United States. These workers are given fifth preference – behind, for example, certain religious workers, physicians, outstanding professors and researchers, among others. The program was initiated over two decades ago, but has undergone a bit of a resurgence in recent years as the USCIS has attempted to promote startup enterprises and spur job creation. According to the USCIS, the number of applications for permanent residency through the program rose from approximately 1200 in 2008, to over 6,300 in 2013. In order to qualify, applicants must meet certain criteria. Generally, an applicant must invest $1 million in a new U.S. commercial enterprise that creates 10 full-time jobs for qualified U.S. workers. The investment capital can include cash, equipment, cash equivalents and indebtedness secured by assets owned by the alien entrepreneur, provided that the entrepreneur is personally and primarily liable. The investment capital cannot be borrowed. The investment threshold is lowered to $500,000 if the applicant invests in a business located in a high unemployment area (defined as locations with unemployment of at least 150 percent of the national average) or rural area (defined as any area outside of the boundary of any city or town with a population of 20,000 or more). Franchisors may be able to use this process to recruit foreign investors to bring their brands to rural regions. To apply, applicants must file a Form I-526, Petition by Alien Entrepreneur. The I-526 requires that the applicant, among other things, invest in a new for-profit enterprise; be directly involved in the management of the business; and invest a certain amount of money. In addition, the applicant must, within two years, ensure that the business
“In a stagnant economy, the program could provide critical jobs to American workers.” generates at least 10 full-time positions for qualified American employees – family members of the applicant do not count toward this requirement, nor do undocumented workers. Applicants must also submit a comprehensive business plan which outlines the nature of the enterprise and the foreseeability of the required job creation, among other things. Jobs indirectly created from the investment, including construction lasting over two years, management and operation of the business are considered in the application process in certain circumstances, as is the potential for increasing visitor spending in the region of investment. Applicants who expect their investment to have such a ‘ripple effect’ to promote increased spending in their region – for example, those who invest in the development of a hotel or resort, may submit evidence proving that the business will cause increased visitor spending, which will reasonably generate an increase in employment. This evidence may be considered in conjunction with the rest of the application. Upon the approval of the EB-5 applicant’s application, the investor and his or her derivative family members, are granted conditional permanent residence for a two year period. Through the rise of EB-5 applications, franchisors are increasingly turning to immigrant investors to grow their brands. However, both franchisors and potential foreign investors should take care to fully investigate the process and requirements and consult with knowledgeable professionals including immigration and franchise attorneys. Attorney Julie Lusthaus is a partner in the firm of Einbinder & Dunn, LLP. She focuses her practice in the area of
Julie Lusthaus
Mackenzie Dimitri
franchise law, serving as counsel to both franchisors as well as franchisees. She can be reached by phone at 212-391-9500 or 914-705-5417 and via email at jcl@ ed-lawfirm.com. Mackenzie Dimitri is an associate attorney practicing franchise law and related litigation on behalf of franchisors and franchisees at Einbinder & Dunn, LLP in New York City. For more information: Website: www.ed-lawfirm.com
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Inter face Fina ncial G roup
OTHER PEOPLE’S MONEY (OPM) “What if you could use OPM to enhance your own capital and make that capital grow exponentially?”
Therefore when you marry a franchise format and the use of Other People’s Money, you create a vehicle that can give you that exponential growth that everyone is searching for. The Interface Financial Group has been in the financial service business, looking after the needs of their small business clients for over 40 years. They now operate in eight countries and their operations continue to expand year over year. With a large group of established franchisees in North America the franchise is poised to enter another dramatic growth period with their new IFG 50/50 offering.
If you know anything about OPM, it is probably that OPM is the way to go to make money.
What if you could use OPM to enhance
Nearly everyone uses OPM, credit cards,
a great business model to adopt inasmuch
bank loans, lease agreements and so on.
These are all examples of using OPM to acquire goods or services.
Franchising USA
your own capital and make that capital grow exponentially? Needless to say
there is now such an opportunity, and it’s packaged inside a franchise framework.
Franchising is generally acknowledged as as it is proven by the franchisor and their franchisees. You don’t have to re-invent the wheel - it’s all been done for you.
Company President, David Banfield notes that “franchisees really enjoy and excel at the people aspects of their franchise - they enjoy meeting clients and referral sources and building relationships. Over the years they have proved very good at that function. Very few however really like handling the paperwork.” Realizing that franchisees work best when they do what they like to do, Interface conceived of a franchise environment where that would be the norm. In their IFG 50/50 franchise they, the franchisor, do all of the paperwork surrounding a transaction while the franchisee concentrates on building relationships and networking to build their own business.
The Interface Financial Group is in the business of providing short-term working capital for their small business clients through an in-demand and proven Invoice Discounting program. Interface franchisees purchase specific invoices from their clients, invoices that are due for payment 30-40 days in the future. By buying them today they accelerate the cash flow for their clients which, in turn, also gives the client an extraordinary growth opportunity. Because franchisees are using their own capital to purchase these receivables franchisees need to be well-capitalized themselves. Interface again looked at their program to see how they could make the franchise opportunity more attractive and found two immediate solutions. The first was to extend the 50/50 approach. They had already created a 50/50 share of the due diligence aspects, with the franchisee handling the ‘people’ side of the business and the franchisor handling the ‘paper’ side of the operation. Extending that approach, they split the funding requirement in half that called for 50 percent from the franchisor and only 50 percent from the franchisee. This now opens the door to potential franchisees that had a lower capital base. The second enhancement was the introduction of the OPM or a capital leverage program. This program allows the franchisees to borrow funds from the franchisor to complete the transactions. In the present format franchisee and franchisor each fund 50 pecent of the requirement to purchase a batch of invoices. Interface now offers their franchisees an opportunity to access up to 65 percent of their capital needs through the leverage plan. This means that what was a 50 percent contribution from the franchisee is now only approximately an 18 percent contribution. However while the franchisee’s capital contribution decreases, another plus element for franchisees, their income potential remains the same. In other words they still own 50 percent of the total transaction through the IFG 50/50 framework.
With a franchisee using OPM and their income still remaining at 50 percent of the transaction, their return on their employed capital jumps up to a three digit return number. If a franchisee then chooses to reinvest their leveraged discount income, they then also have the power of compounding working for them - truly an opportunity to create exponential capital growth for themselves while at the same time allowing their client companies to also grow rapidly. As those small businesses grow they, in turn, create new jobs and the whole Interface
cycle of franchisee and franchisor working together also stimulates the economy at both the local and national level. Other People’s Money is certainly the way to go. The trick naturally, is knowing how to acquire access to such capital and then to have a mechanism they can use and grow that capital. The Interface Financial Group, with their 42 years of experience in this area, may have just created the ultimate vehicle to achieve such growth. For more information: Website: www.interfacefinancial.com
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