Franchising usa T he ma g a z ine for franchisees
VOL 02, ISSUE 09, july 2014
$5.95 www.franchisingusamagazine.com
The Future is Bright for DirectBuy Franchisees
M a i n F e at u r e
Sports & Fitness franchises
What’s Next?...
S ta r t i n g t h e R a c e to Franchise Success LATEST NEWS
FINANCIAL ADVICE FROM THE BANKS
TOP LAWYERS’ ADVICE
gym + spa
A once in a lifetime opportunity – two industries under one roof! Total Woman Gym + Spa is a unique, full service gym & spa brand that focuses on women’s lifestyle and wellness! • Key US & International markets available • Proven in the industry for almost 50 years • Expert training and support Learn more about our membership-based model and what makes us different from any other gym or spa out there.
Contact Beth Franklin at 805-379-0550 or visit totalwomanfranchising.com Franchises sold through Prospectus only. Not registered in all states. © 2013 Total Woman Franchising Inc.
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Franchising usa T he ma g a z ine for franchisees
FRANCHISING USA VOLUME 2, ISSUE 9, july 2014 president: Colin Bradbury. colin@cgbpublishing.com
Publisher: Vikki Bradbury. vikki@cgbpublishing.com
Editorial Department: editor@cgbpublishing.com
Editorial team: Rob Swystun Stephen Kelly Gina Gill Lori Ann Comeau
Advertising Sales: advertising@cgbpublishing.com
Production: Samantha Klimecki. usaproduction@cgbpublishing.com
DESIGN: Jejak Graphics. jejak@bigpond.com
COVER IMAGE: DirectBuy Mike Bornhorst, CEO
CGB PUBLISHING 676 Wain Rd. Sidney, BC V8L 5M5 CANADA Sales: 778 426 2446 Editorial: 778 426 2446 www.franchisingusamagazine.com Proud member of the IFA:
SUPPLIER FORUM International Franchise Association 1501 K Street, N.W., Suite 350 Washington, D.C. 20005 Phone: (202) 628-8000 Fax: (202) 628-0812 www.franchise.org
from the
Publisher “If you can believe it, the mind can achieve it.” - Ronnie Lott If you are thinking about buying a franchise then I hope this issue of Franchising USA will help you in your journey of discovery. Franchising USA recently attended the IFE Franchise Expo in NYC. It was great to talk with many of our readers, potential franchisees and franchisors about franchising and to see so many great franchise systems under one roof. Franchising USA would also like to welcome all of our new readers who signed up for the free annual subscription at the show. On the cover of this issue we have DirectBuy who have been around for over 40 years. Take a look at what they had to say when Franchising USA interviewed Mike Bornhorst in our featured Cover Story. We have a wealth of knowledge from experts in the industry. Berny Dohrmann shares his experiences in what makes and breaks a business in today’s market. Bryce Ebeling asks you to define success and your end game strategy when buying
a franchise and also poses the question is franchising right for you? Regular contributor George Knauff talks to us about what’s next… starting the race to franchise success. Julie Lusthaus and Mckenzie Dimitri discuss what you need to know before buying a franchise. The ever popular Veterans Supplement has Home Franchise Concepts on the cover. We look at how HFC launched the Million Dollar Franchise Event, a commitment to give away $1 Million in discounts to U.S. Veterans interested in owning their own business. Expert advice comes from Jim Mingy of Veterans Business Services who discusses “Are you ready to make the deal?” We also have news and information from VetFran, and finally Executive Director of the Veterans Business Resource Center, Darcella Craven answers the question, “What business should I start?” Lastly we have our regular Franchise Feature - Sports and Fitness Franchising. Enjoy the read and don’t forget to keep sending me your questions which I enjoy reading and answering. Good luck and 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.
Franchising USA
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JULY 2014
On the Cover 10 Cover Story
Directbuy, Mike Bornhorst CEO
22 What’s Next?... Starting the Race to Franchise Success
George Knauff, FranChoice
33 Feature Article
Sports and Fitness Franchises
In Every Issue 06 Franchising News Announcements from the Industry 33 Feature Article Sports and Fitness Franchises 47 Veterans Supplement Home Franchise Concepts
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Contents
Focus 20 Interface Financial Group 74
Fresh Healthy Vending
Have Your Say 44 N-Hance Wood Renewal
76
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Expert Advice 12 3 Ways Franchisees Can Use Twitter to Create Awareness Andre Kay, Sociallybuzz
40
18 Getting to The Next Phase Michelle Joseph, PeopleFoundry 22 What’s Next?... Starting The Race to Franchise Success George Knauf, FranChoice
28 Top 5 Franchise SEO Myths to Avoid
Adam Heitzman, HigherVisibility
38 8 Must-Know Tips to Grow Your Business
Berny Dohrmann, Space International
40 Business In A Box. Is Franchising Right For You?
Bryce Ebeling, LoyaltyGenerator
66 Where Time Is Money
Gary F. Joyal, Joyal Capital Management LLC
72 What You Need to Know Before Buying a Franchise Julie Lusthaus & Mackenzie Dimitri, Einbinder & Dunn
76 9 Ruthless Ways to Save
Scott Brandt, SurePayroll Inc.
Franchisee in Action
38
30 Aaron’s Inc.
Franchisor in Depth 24 Schlotzsky’s
Franchise Profiles 16 Massage Envy
Snapshot 70 Rockin’ Jump
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what’s new!
Earl of Sandwich
Earl of Sandwich opened its 28th restaurant on June 3, 2014 in St. Petersburg, FL launching an entirely new platform for franchises, in collaboration with Tampa-based design and architecture firm API+. The prototype restaurant, designed for franchise growth, implements a system that includes marketing, construction, finance, management and operations all in one to further strengthen each store’s profitability. Beyond the basic structure of the new location, Earl of Sandwich worked with all of the design and supplier partners to value engineer the build out so that the prototype can be built, outfitted and opened in the typical suburban market for around $300,000. This creates a very attractive, flexible vehicle for franchises with a high ROI value that would work in both suburban and urban environments. Now that the new prototype and brand work has been completed, Earl of Sandwich plans aggressive growth of both companyowned and franchise stores. The company recently signed a multistore development deal with the Palma Group to develop Qatar, has multi-store development deals for more casino locations and will continue to developing airports and transportation locations
with existing franchise partners. A franchisee has also been
signed to develop in the Phoenix market and there are several area development deals in the works. For more information visit
www.earlofsandwichusa.com
Northwood University is First to Offer Bachelor’s Degree in Franchising Management Beginning in fall of 2013, Northwood University, with campuses in Michigan and Florida, became the first and only accredited university in United States to offer a bachelor’s degree in Franchising Management.
and bridging the learning gap for both franchisees and franchisors.
The program offers a unique curriculum that combines courses pertaining to franchising as well as entrepreneurship, management, accounting and marketing.
“Oftentimes, entrepreneurs enter or grow up in the franchise industry without really understanding the business model and the array of tools needed to run a successful franchise,” Fleischer said. “A program like this one will make people better prepared and also more marketable for franchisors.”
Longe currently has a son attending Northwood University. Longe says a franchise management program like this one will make a big difference for franchisors, like himself, who can now pull talent from a pool of graduates who are better prepared and ready to hit the ground running.
With more than 33 years of franchising experience, Michigan franchisor Greg
For more information, please visit http://www.northwood.edu
Recognizing the unique challenges in franchising, industry leaders partnered with Northwood University to develop the program, which is preparing the next generation of business owners
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Mark Fleischer, partner and leader of the franchise practice at national CPA and business advisory firm Plante Moran, says a program like this is long overdue.
Yoga Fits Perfectly into Wellness Portfolio Lift Brands, parent company to Snap Fitness and the world’s largest fitness franchise organization, has added yoga to its portfolio of wellness companies. Capitalizing on an exploding industry trend, YogaFit Studios hit the scene in late April. The franchise concept was founded with a simple goal: make it easy for every lifestyle to enjoy the best of what yoga has to offer. Each studio will feature a wide selection of premier classes and seasoned instructors available on a set schedule. Digital classes will be offered during unique times, a differentiator from any other yoga brand. The first YogaFit studio opened in Excelsior, Minn., in mid-May. Lift Brands Founder and CEO, Peter Taunton has big plans for his latest franchising endeavor. “Our goal is open 1,000 domestic studios over the next five years,” Taunton said. “Everyone has the opportunity to own a meaningful slice of the yoga business.” What sets YogaFit Studios apart from competitors is its philanthropic focus. The company has pledged an unprecedented charitable contribution on behalf of every membership to help the local and global community. Partnering with YogaFit Studios is easy thanks to turnkey processes, financing options, and worldclass support. For more information, visit www.yogafitstudios.com
BLACK BEAR DINER EXPANDS FOOTPRINT INTO SOUTHERN CALIFORNIA Black Bear Diner, a fast growth, award-winning family dining concept, announced today the opening of its 63rd restaurant, located in Buena Park, California. The opening of the Buena Park location marks the third Black Bear Diner restaurant in the greater Los Angeles area and marks a strategic expansion into Southern California. The Buena Park location opens June 9th and is located at 7005 Knott Avenue.
recently ranked by Technomic, a leading research and consulting firm servicing the food and foodservice industry, as the 33rd fastest growing chain, and 9th fastest among full-service restaurants. The brand is spread across eight western states and is projected to have 100 units nationally by 2018. For additional information, please visit: www.blackbeardiner.com
“We are thrilled to add another Southern California location to our franchise family,” said Bruce Dean, co-founder of Black Bear Diner. “Even with limited restaurants in Southern California, we have experienced tremendous success. This opportunity made sense for our brand and for our strategic growth plans.” Recognized for serving bear-sized portions of comfort food classics in a bearthemed restaurant, the anti-chain, chain is quickly establishing itself as a dominant leader in the family dining segment. It was
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what’s new! Edible Arrangements Enters the Fast Lane Partnering With Cessna and Chip Ganassi Racing Brand signage was featured on the No. 1 Cessna Chevrolet SS at Pocono Raceway Edible Arrangements, the originator of the fresh fruit bouquet and global category leader, launched its first-time collaboration with Chip Ganassi Racing and Cessna at the Pocono 400 in Long Pond, PA. The company logo was featured on a rear panel of the No. 1 Cessna Chevrolet SS driven by NASCAR All-Star champ Jamie McMurray. McMurray placed 10th overall in the race. “Chip Ganassi Racing Teams and Cessna offered Edible Arrangements a very ‘sweet deal,’” according to Edible Arrangements Chief Marketing Officer Jeff Lobb. “The race was also a fitting way to kick off our Father’s Day celebration by presenting No. 1 driver, Jamie McMurray with our first ever ‘All Star Dad’ award.” McMurray is a model father of two, an accomplished athlete and a caring philanthropist who celebrates wins like the UAWGM Quality 500, Daytona 500 and Brickyard 400 with his son Carter and daughter Hazel in victory lane and is devoted to his
Jamie McMurray Foundation which provides support for autism research, education, and support for afflicted individuals and families. “I’m a big fan of Edible Arrangements!” said McMurray, “Having the brand on our car was a really exciting way for Cessna to leverage our partnership by enabling customers to be part of the team.” For more information, visit www.ediblearrangements.com
Sweet Beginnings Nestlé® Toll House® Café by Chip Queues Up Record Openings Through 2014 When Ruth Graves Wakefield began serving her Toll House cookies out of her Massachusetts restaurant, she probably didn’t expect them to become America’s favorite sweet treat. Seventy-five years later, these simple yet mouthwatering confections are still winning the hearts of millions. And as fans celebrate the chocolate morsel’s diamond anniversary in August, Nestlé® Toll House® Café by Chip is experiencing another year of record growth across North America and overseas. The chain of premier dessert and bakery
Franchising USA
cafés built around the world’s most powerful food brand began 2014 with 122 cafés in markets throughout the United States, Canada and the Middle East, and is on pace to add more than 40 new cafés by year’s end. “As we celebrate the 75th birthday of the Toll House morsel this year, its influence and impact will resonate across the globe,” said Ziad Dalal, founder and president of Nestlé Toll House Café. “We are growing strategically in partnership with many outstanding franchise operators, who form the backbone of our continuing success.”
The chain also rolled out an enhanced kiosk café concept this year, featuring free Wi-Fi, digital menu boards and an upgraded design, all within 200’ – 400’ square feet. The new kiosk option provides operators with more opportunities in prime real estate locations. For more information visit: www.nestlecafefranchise.com
Red Mango Celebrates 300th Location
and juice bar will be the perfect place for the community to hang out and enjoy nutritious ‘grab and go’ food choices that we have carefully crafted and tasted to make sure we only give our customers the best. I am very excited to celebrate our 300th location with guests in Oak Park.”
Red Mango®, one of the fastest growing yogurt and smoothie chains in America, recently celebrated its 300th location and the company’s new store design with the opening of Red Mango Yogurt Café & Juice Bar in Oak Park, Ill.
Lifelong Oak Park residents James and Anneke Taglia are franchise owners of the 300th location thanks to their children, who became early Red Mango fans and regularly sought out the delicious yogurt and smoothies whenever they were craving a healthy and tasty treat. Impressed with the menu, the Taglias decided to invest in the business and were one of the first to bring the expanded Red Mango concept to their hometown.
“It’s a new era for the Red Mango brand and we are very excited to share it with our loyal fans in the Chicago area,” said Dan Kim, Founder of Red Mango. “This new café
For more information visit: www.redmangousa.com
Debut of Red Mango Yogurt Café & Juice Bar in Oak Park, Ill.
Polaroid Fotobar Franchise Opportunities Now Available Last month, Polaroid Fotobar announced its experiential retail concept is now available for franchising nationally. Polaroid Fotobar is a first-of-its-kind store that allows customers to “liberate” their photos by instantly printing their favorite pictures from their smartphones, Facebook, Instagram and other digital platforms, while transforming them into innovative and displayable works of art. Serial entrepreneurs and brothers Warren and Ted Struhl founded the company and, in working with Polaroid, they infused the
start-up with the product recognition of this iconic, 75-year old brand. Launched in 2012, the company opened its flagship location at The LINQ in Las Vegas earlier this year and operates four stores in South Florida. Each location offers customers the ability to instantly print pictures with the Polaroid classic border logo in five different sizes. In addition, customers can display their photos in an extensive selection of custom frames photo products crafted from materials including canvas, acrylic, metal, glass and bamboo.
The company is seeking single and multi-unit operators with a commitment to exceptional customer service and the resources to open their first unit within nine months. Initial investments will range from $135,000 to $439,000, depending on which Polaroid Fotobar concept selected, a traditional 1,400 square foot store or the micro-retail experience. To learn more about franchise opportunities, visit www.ownapolaroidfotobar.com.
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cov er sto ry
Direct B u y
The Future is Bright for DirectBuy Franchisees
Improvement Retailers in the area of kitchen and bath cabinets. DirectBuy was founded with the goal of uniting the buying power of consumers throughout North America as members of the club, thereby giving them strength that they simply didn’t have as individuals. Today, with this buying power, hundreds of thousands of members buy directly from hundreds of top manufacturers and their authorized suppliers all under one roof and avoid the hidden retail markup costs they have to pay in retail stores or online.
For over 40 years, DirectBuy has established itself as the premiere franchise buying club for consumers to purchase products for their home. In times of both economic prosperity and recession, DirectBuy has continued to grow by helping families buy the smartest and most efficient way possible, bypassing the traditional retail channel and markup, and buying direct. Everything is centered around the Club location, including design, delivery, and installation services, members can complete their home projects
Franchising USA
easily and affordably all in one place. A robust online store is also available for members to purchase products 24/7. Whether remodeling a kitchen or simply making everyday purchases, DirectBuy provides members with access to manufacturers’ level pricing. This exciting and unique buying model, available only to members, creates an outstanding business opportunity for DirectBuy franchisees, as evidenced by Entrepreneur magazine consistently ranking DirectBuy among the best in its category. DirectBuy also traditionally ranks close behind leading retailers like Home Depot and Lowes in the area of Home Improvement and was recently ranked 4th in the Top 100 Home
With new leadership at the helm, DirectBuy is now transitioning to an even more customer-centric business. The company’s changing values and evolving vision is being led by new Chief Executive Officer Mike Bornhorst, who comes to DirectBuy with an extensive background in customer service oriented businesses. Mr. Bornhorst had previously held leadership positions with leading consumer companies such as ADT and Culligan. “While DirectBuy has been around for more than 4 decades, it is a time of significant change for the company,” said Bornhorst. “There are many exciting changes underway that will reshape the way consumers interact with and benefit from DirectBuy.” To carry out the new vision, DirectBuy recruited five new members of the senior management team. The result is a leadership team focused on providing service, selection, and value that will improve members’ lifestyles under a renewed mission based on the shared beliefs of honesty and integrity.
“Resort stays, high-end hotels, last-minute travel deals. We’ve even had members say they’re overwhelmed at how many things we have to offer,” said Mike Bornhorst about the extensive scope of DirectBuy’s Travel Program offerings. “They couldn’t decide which trip to take.”
“As the company is evolving so is its stance on transparency with the hundreds of brands that provide DirectBuy’s selection of more than one million products.” “I feel strongly about focusing on members when designing services and enhancing benefits by constantly asking, ‘What do our members want?’ That’s the essence of the new DirectBuy,” said Bornhorst about the company’s new customer-centric approach.
make everything DirectBuy does possible and are at the heart of the company’s brand promise. The company offsets its costs and derives revenue through a membership dues structure that delivers an extraordinary return on its members’ investments.
“At our core, we are a franchise organization made up of passionate owners and operators who are dedicated to inspiring our members,” said Bornhorst. “And we’re all diving over our desks on a daily basis to help them.”
As the company is evolving so is its stance on transparency with the hundreds of brands that provide DirectBuy’s selection of more than one million products. In the past, DirectBuy’s vendors expected a certain amount of confidentiality regarding the prices they offer and DirectBuy lived up to those expectations. As times have changed and consumers are more empowered with information to make smarter buying decisions, so has the way DirectBuy conducts business. Along with more transparency in communicating DirectBuy’s products and selection, the company has been able to work get even better values, pricing and programs for members.
So how does DirectBuy expect franchisees to make money without profiting from merchandise sales? Simple. DirectBuy has one key component that drives everything, and that is its members; they
Making membership even more appealing is the company’s latest offering – DirectBuy Travel – which extends savings to members on cruises, luxury resorts, hotel and city stays, and much more.
Delivering on the company’s strong value proposition are dedicated franchisees who, along with a team of corporate Member advocates, help members achieve significant savings across a wide variety of products and merchandise for their home and lifestyle. Not even store sales’ prices, warehouse clubs, or Internet e-tailers can typically deliver the type of savings that DirectBuy offers its members.
Improving customer service and customer engagement has also been a primary focus to ensure that members are fully benefitting from membership in enhancing their homes and lifestyle. Local franchisees and their members are now supported by a Member Care Advocacy Team designed to help members with all their questions, concerns, and merchandise selection, extending outside of normal operating hours. That’s just one of the many ways franchisees receive ongoing support. Along with DirectBuy’s quality training programs and ongoing marketing and sales support, franchisees have an opportunity for significant financial reward, and a business where developing new skills and business acumen is standard operating procedure. Even the company’s new tagline – “Together, we can do amazing things.” – is a nod to the potential that franchisees and DirectBuy’s corporate team have for future success. “With so many changes underway— from the launch of DirectBuy Travel to our commitment to customer service excellence—we want to share the DirectBuy story and value proposition far and wide,” Bornhorst continued. “The future is bright here, thanks to a changing culture that is 100% focused on customers and we believe our best days are ahead of us.” This is a great time to take a look at becoming a DirectBuy franchisee. Many desirable markets are available – both in new and existing areas throughout the United States and Canada. Interested parties are encouraged to invest some time exploring DirectBuy’s franchising website. For more information, visit www.franchise.directbuy.com
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ex per t advice
Andre Kay, CEO & Chief Marketing Officer, Sociallybuzz
3 Ways Fr anchisees can use T witter to Cre ate Awareness
Dedicating time and effort to grow your twitter presence for awareness, loyalty and sales can be a little challenging. Finding the time, right words and developing a successful campaign is easier said than done. Here are three quick tips and strategies that you can use to boost your business’ visibility on Twitter.
Pictures: Including pictures in your Tweets will help your business to stand out. Use pictures to tell the story about your business. This could include specials, behind the scenes photos, or pictures that customers took of their meal. Uploading pictures to Twitter is quick and easy. To post a photo in a Tweet: 1. From the web or an iOS device, click or tap the compose new Tweet button. From an Android device, tap on What’s happening?
Andre Kay
Franchising USA
Franchising USA
ex per t advice
Andre Kay, CEO & Chief Marketing Officer, Sociallybuzz
2. From the web, click Add photo. From a device, tap the camera icon to take a photo, or choose a photo from your gallery.
“Including pictures in your Tweets will help your business to stand out.”
3. Once a photo is selected, you will see a thumbnail image (or file name) appear as an attachment. You can select up to four images to tweet at once. Editing a photo - If you are tweeting from the Twitter for iOS or Twitter for Android app, you can enhance, apply a filter, and crop an image once you select it. Tagging people with a photo - Tap Who’s in this photo? to tag people. Type in a full name or an @ username and then tap Done. 4. Type your message and tap Tweet to post your message and photo(s). Your Tweet’s character count will update to include the pic.twitter.com URL for your photo(s).
Hashtags: (Definition: The # symbol, called a hashtag, is used to mark keywords or topics in a Tweet. It was created organically by Twitter users as a way to categorize messages.) Use relevant hashtags to improve the visibility of your tweets. Do not over use or use too many hashtags. It’s best to use hashtags explicitly when they’re going to add value, rather than on every word in an update. 1. Use the hashtag symbol # before a relevant keyword or phrase (no spaces) in your Tweet to categorize those Tweets and help them show more easily in Twitter Search.
Campaigns: Use a combination of Promoted Accounts to acquire new followers as well as Promoted Tweets to increase awareness and drive engagement.
take time, dedication and consistency to make a positive and successful impact.
Andre Kay is CEO and chief marketing officer of Sociallybuzz, which exists to help franchise owners grow their
1. Be creative - Think about how you can appeal to people’s emotions so they’ll feel inspired to share your content.
business using social media. By helping
2. Clicking on a hashtagged word in any message shows you all other Tweets marked with that keyword.
2. Experiment - Test different messaging and targeting to see what works for your business.
and increase revenue. We protect
3. Hashtags can occur anywhere in the Tweet – at the beginning, middle, or end.
3. Engage your audience - Interact with people in a way that is timely, responsive and friendly.
channels and online reputation 24/7.
Taking advantage of the tips above will
on Twitter and “like” its Facebook page.
4. Hashtagged words that become very popular are often Trending Topics.
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them reach relevant customers, build customer loyalty, mange reputation relationship with their customer, create effective campaigns, manage their social Read the company’s blog (http:// sociallybuzz.wordpress.com/), follow it
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M assag e Env y Spa
Massage Envy Creates Success Envy Imagine you are called away from your home base of New York to attend a grueling three-day tradeshow in Arkansas. You spend hours generating contacts and cultivating business opportunities, all while standing on a thinly carpet veiled concrete floor and now your back is aching. If you were at home, you would go to your local massage therapist to receive your regular treatment for that chronic pain, but you are thousands of miles from home. Well, what if you could go to a nationwide therapeutic massage and spa that has a record of your problem areas and treatment regime just as if you were in downtown Manhattan? This is the world that Massage Envy Spa has created. The membership-based spa, which was recently recognized as the number one Best Franchise in its category by Forbes, is a billion-dollar brand with close to 1,000 locations in 49 states. As a pioneer in its industry, the company, “quite literally has set the standard to which other therapeutic massage businesses adhere,” said Joe Luongo, Massage Envy Spa’s Chief Operating Officer (COO). The
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newly minted COO of the brand, relying on his experience with major brands such as Pizza Hut, Starbucks and FedEx Office, is working hard to ensure the scalability of their business model supports their explosive growth. Massage Envy Spa’s franchisees are committed to offering their members and guests the best in customer service provided by the highest quality talent they can find. “We cater to a growing customer base looking to incorporate therapeutic massage and auxiliary spa services into their daily routine,” says Luongo. With monthly memberships ranging from $59.99 to $69.99 per month based on the region, it is an affordable luxury that over 1.5 million of their devoted members are enjoying. Forging strategic partnerships with the leading massage therapy and esthetician schools in the country and creating a great environment allows Massage Envy Spa to maintain one of the highest retention levels in the industry. “We recognize the importance of providing highly trained individuals and with over 70 million massages and 3 million facial treatments performed to date, the market is benefiting from our acute focus on quality care,” says Luongo. To help drive awareness and trial of the
Massage Envy Spa brand experience, the company deploys marketing, advertising and PR programs at the national, regional and local level. These efforts are coordinated through an integrated calendar that aligns messaging, events and promotions across the network, while also giving regions and franchisees the opportunity to promote their businesses in unique ways that align with market needs and support organizations in their community. Approximately 80 percent of Massage Envy Spa franchisees own multiple locations. “It is a testament to the careful consideration that goes into selecting the right individuals to own a location. Prospective franchise owners must realize Massage Envy Spa strives to make a difference in our member’s lives,” claims Joe. “It is this connective culture that has led in part to Massage Envy Spa’ eclipsing its nearest competitor by six times.” With many exciting developments in recent years, such as a mobile app and an exclusive partnership with global skincare leader Murad®, Massage Envy Spa’s laserfocused mission to enrich the lives of their customers will undoubtedly propel further growth in the near future. www.massageenvy.com www.massageenvyfranchise.com
ex per t advice
Michelle Joseph, Founder and CEO, PeopleFoundry Inc
Getting to the Next Phase: 3 Interview Steps for Employers when Hiring Structuring the interview process to find the perfect fit
Michelle Joseph
Franchising USA
As the fundamental process by which companies maintain continuous inner growth, hiring successfully is imperative for all businesses. However, to some, acquiring new talent for any opening may seem like a painstaking process.
“To be taken seriously, a candidate needs to be confident in their first face-to-face impression all the way through shaking your hand before they head for the door.” By focusing on certain subtleties throughout the interviewing process, employers can be more confident that their efforts will truly be rewarded. “Throughout the course of an interview, whether it be days or weeks, certain tendencies will arise in each candidate,” says Michelle Joseph, talent acquisition expert and CEO of PeopleFoundry. “By becoming mindful of these characteristics and determining their potential benefit or detriment to your industry, you can mitigate the need to frequently replace employees.” Michelle talks through each major interviewing phase and some of the key issues that may arise within them.
Phase One: Email Inquiry Look out for form emails. In today’s job market, it is not uncommon for hopeful applicants to copy and paste general cover letters with an email regarding the open position. There are however, certain aspects to look for to ensure the inquiry is genuine and backed by bona fide interest. A comprehension of the company’s core values and the requirements of the open position should be easily seen by the employer. However, this is very standard and can be found through a simple Internet search. Take interest in a candidate that takes an email inquiry to the next level by directly relating the company and the position back to his or her personal goals, experiences and passion in life. A candidate who is able to portray this level of effort for an opening email, deserves your due diligence in return. Once interest has been displayed on your end, see how and when the candidate responds. Persistence shows eagerness for the job and the timely response should radiate the same professionalism as the first email from the candidate.
Phase Two: Phone Generally the next step in weeding down the candidate pool is to have a phone interview. To grow a business with the right people, professionalism should be expected throughout the process. Assuming a time has been set for the call, tardiness or answering the call in a bad place to talk are major causes for concern. Once the call is underway, listening for various verbal cues is going to be the strongest indicator of a candidate’s worth. Do not be deterred by the candidate sounding a little nervous. That can actually be viewed as a positive because it shows they are very interested in the job, as long as he or she is able to maintain composure throughout the call. Since there are no visual cues over the phone, listening to the comfort with which the interviewee discusses his or her own experiences and potential contributions to the role will serve as the best indicator. The display of valuing someone’s time does not begin and end with being punctual to a scheduled phone call. Rather, after the phone call has been completed, a follow up email should be the expectation. Follow up emails are a driver of all other matters of business and the interviewing process is not the exception to that rule. A well-written and specifically appreciative follow up email within 24 hours of the phone interview is not too much to ask of someone who is attempting to join your team.
Phase Three: In Person No matter the interview process, bringing a candidate in for an in-person interview is the final and most important step. Being able to attach non-verbal cues and body language to the evaluation formula is crucial for all employers. Having communicated with the potential candidate via email and phone, you should have an understanding of their personal
goals. Keep in mind what responses they delivered in the first two phases. During an in-person interview, ensure that the candidate is not just repeating the prior responses and has come prepared with a more in depth understanding of the company and the position they seek. The deeper into the process you dive, the greater his or her aptitude for the role should be. This stage of the process is last for a reason, it serves as an opportunity to peel back any final layers of the onion that only looking someone in the eye can accomplish. It all starts and ends with the handshake. To be taken seriously, a candidate needs to be confident in their first face-to-face impression all the way through shaking your hand before they head for the door. This is the most obvious spot where nerves can be seen and while again it is not a red flag for a candidate to appear nervous, the ability to push through those nerves and exude confidence is the mark of a good hire.
About Michelle Joseph: Michelle is the Founder and CEO of PeopleFoundry Inc. She is an expert in Human Resources and talent acquisition. Michelle works with Chicago growth companies to build top-tier teams by forming partnerships to find the best people the businesses seek. Michelle has a strong voice in the local tech space, regularly speaking at engagements and presentations at 1871. Learn more about Michelle in an interview with Bootstrapping America on youtube.
About PeopleFoundry: PeopleFoundry’s recruitment process is unparalleled. Their dedication to understanding clients’ unique needs allows PeopleFoundry to actively work with the best candidates to help build a winning team. From sales to technology to everything in between, PeopleFoundry carefully matches talented professionals to the priorities and core values of each client. PeopleFoundry is not your typical suit and tie. For more information: Website www.peoplefoundry.com
Franchising USA
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focus
I n t erface Finan cial G roup
Life before Franchising… As a franchisor of a longestablished financial service system we are often asked, ‘do I need a financial background to become a franchisee?’ It is a logical question and comes up many times. Our answer is always the same - NO. We like to build our team with individuals that bring a variety of backgrounds and experiences to our model. While we never turn away people with a financial background, we do not specifically seek them out. Building a system with individuals that bring variety to the mix is a great asset when dealing with small business clients as we do. From our team,
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we can always find someone that has specific knowledge of a problem or set of circumstances that are prevalent with our clients. That ability to respond with accurate and timely knowledge is a great asset. If a financial background is not all that important, where then do our franchisees come from? We would like to share with you some ‘life before franchising’ backgrounds. Jim came to us after a 25-year career in the telecommunications industry. He wasn’t really intending to move into the world of franchise ownership, however, the demise of his employer helped to speed his transition. In his former life, he worked in a fast-changing industry, moving from 3G to 4G service, the whole shift to cellular networks and the like. Jim was involved in day-to-day problem solving activities surrounding large telecommunications network systems.
What helped him make the transition was the fact that many of our clients were also in the telecommunications industry, so he was able to take our service and talk their language. Joe, on the other hand, had a career that started by being drafted into the military during the Vietnam War period, and serving as a military policeman. On his discharge, he entered the world of insurance. He spent some 30 years turning around distressed insurance companies, and getting them back on their feet. He had zero background in our particular financial service. He did, however, possess the ability to solve problems - an asset that has proved more than useful in his present franchise role. Working with small business clients to accelerate their cash flow is the nature of our business, and Joe quickly learned to use his problem-solving skills, as cash management is a daily problem for all of our small business clients.
“We like to build our team with individuals that bring a variety of backgrounds and experiences to our model.”
… Mary did, however, come from a financial service background, but at a level well above our small business platform. Mary spent many years in the institutional bond markets servicing municipalities and the upper echelon of multi-national companies. This was indeed a far cry from our average client, where their cash needs might be around $30,000 as opposed to thirty million dollars. For Mary the transition worked because her focus was very much on owning and running her own business. The fact that it was a business that offered a much needed helping hand to entrepreneurs was a bonus. Our team also embraces franchisees that in a former life were educators, served in the military, owned retail establishments,
physicists, etc. Having a financial or non-financial background is not an issue as we can build on top of a solid business background the elements of our specific service. We are The Interface Financial Group, a 42-year old company engaged in invoice discounting. We work with small businesses that are expanding rapidly and, therefore, need extra working capital to fuel their growth. With today’s banking environment, that extra working capital is often very hard to find. This is where the expertise of The Interface Financial Group comes into play. We are able to accelerate their cash flow through the purchase of specific receivables to generate that ‘extra’ cash
needed for growth, without creating a loan situation.
Interface franchisees work in a direct oneon-one relationship with these clients, and
bring their prior business skills to the table to solve cash flow problems and apply the
Interface approach to creating growth and jobs.
As a franchisor, we continue to grow; and
as we seek out new franchisees, we always look for individuals that can bring a solid business background to our table - that
‘been there - done that’ approach is a key ingredient in our team.
For more information: Website: www.interfacefinancial.com
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ex per t advice
George Knauf, Senior Franchise Business Advisor, FranChoice
What’s Next?…
Starting the Race to Franchise Success You survived approving your franchise agreement, or more importantly the anxiety that played copilot in that process.
you would have spent quality time with your prospective franchisor partner as well as talking to some of their existing franchisees. So, for the moment, where the anxiety over doing a proper investigation is concerned, let’s assume you did one and move on to what happens next.
That anxiety you feel prior to the contract signing is seen by many as your mind doing one last check and asking you if you did your homework and are ready for what happens next. The hard part is that you may not totally understand what actually happens next, so let’s get some of that on the table and move unknowns closer to the known category.
The day you sign a franchise agreement you will begin focusing on building your foundation in that business. The first step is often the hand off of your file from the development department to the training and support teams, who you likely met at Discovery Day. This stage feels to many like that first day of school or at a new job, exciting but with unknowns. The difference is that you will not be going to the store for a backpack or a Trapper Keeper, you will be laying all of the groundwork for opening. Tasks now include scheduling training, business entity setup, licensing, beginning the
Let’s assume you built a detailed model of what would make for your perfect match before you started your franchise search. Let’s also assume that you did a detailed proper franchise investigation like my candidates do. In that investigation
Franchising USA
recruiting process and site selection. Training and site selection are your first opportunities to invest well for your future, don’t short change either of them as they will have long lasting benefits. I always tell my candidates that we know they bring great expertise and experience to the partnership, but that there will be an adjustment period as they move from the job where they benefitted from their core expertise to their franchise where they have things to learn before they will be a comparable expert again. Fortunately they sought a proven system, expert partner and a peer group that can support them as they build this new acumen. Training services will be something that you may use most prior to opening, but also at times after opening. Once up and running, many franchisors will let you send key team members in for more formal training than they could get in your
“Too many business owners focus in the cost for the first few months, not the long term revenue.� to focus on getting the best you can at a fair price. Your initial staff will create the first impression your market has of your business. Most readers here know to look for capable, friendly outgoing team members that are going to be teachable and reliable. Staffing will be an ongoing project, it will begin before you open and be part of what you do as long as you own the business. Use the resources provided by the franchisor to help select and train your team.
business alone, it may be well worth your investment in building your team’s skill set. When picking a site, especially for retail or restaurant, you will likely see a range of options in your market. Some will seem attractive due to lower cost but keep in mind in commercial real estate lower cost often means that site may not have the same appeal that a higher cost site does. This may be due to lower traffic on roads close to the property, low traffic into the property, low visibility, old site that needs renovation, or other factors. You should not automatically pick the highest priced site, but should do a full analysis of the available options to determine what level of investment produces the greatest returns over the life of your franchise agreement. Too many business owners focus in the cost for the first few months, not the long term revenue. Where site selection is critical the franchisor will often have an in-house or contracted team to assist with site identification and lease negotiation. Staffing is another category that you want
Now, with the foundation built it is time for your Grand Opening. Lean on the franchisor and their team to prepare for your first day in business. There will be a check list of items to work through that will benefit your growth, chief among them may be marketing or sales. An old mentor of mine used to say: Revenue solves all problems. Hitting the ground running will be key to maintaining your excitement in the early days. The cost of marketing and client acquisition can sometimes look high after you have been writing checks in your pre-revenue phase but it is absolutely necessary. Slowing your commitment to growing your business now will only frustrate you down the road. Be sure that you factored a strong marketing/sales effort into your grand opening and beyond. Prior to revenue those funds will come from your investment pool and they are as important as securing the right site and staff. Once your business is up and running you will want to keep committing your post expense dollars to customer acquisition whether through marketing or sales. The more you re-invest towards growth in the early days the bigger the long term impact is for your business, profitability and the value of the asset you are building. Every business has its own path to profitability so
George Knauf
from your grand opening the race was on. Here is the payoff: Get that first business built strong fast, make wise ongoing investments in growth and you get to repeat the whole process. This is where you get to take advantage of the compound effects of speed of growth, profitability and reinvestment coupled with your personal efforts to build a portfolio. Each time you open a new location you grow your profits, increase the size of that portfolio asset base and are in control of creating the lifestyle you desire. Profits are always better than paychecks! 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
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FranchisO R I N DEP T H
Schlot zsk y ’s
SchlotzSky’s
Continues Rapid Growth “The demand for Schlotzsky’s brand is driven by consumer demand for healthy alternatives in the fast, casual restaurant sector.”
Founded in 1971 in Austin, TX as a small sandwich shop, Schlotzsky’s has grown into a large restaurant chain spanning 36 states and two countries. Now in its 43rd year, the restaurant continues to grow its chain through franchising, which started in the late 1970s throughout small Texas towns. Schlotzsky’s turned out to be such a popular restaurant that throughout the 1980s it grew through sheer demand. “At the time, [franchising] wasn’t a huge initiative. It was more like a pull demand where people would call and ask for the franchise, but nobody was trying to go out and grow it aggressively,” Schlotzsky’s president Kelly Roddy said. Into the late 80s, the company began to evolve into the deli-style restaurant Schlotzsky’s fans are familiar with today. The company aggressively pursued franchising and did so for about 10 years. After that, growth slowed until FOCUS Brands purchased the company in 2006 and put in place its current growth process, focusing on development through franchising. Currently, Schlotzsky’s has around 200 franchise partners, many of whom are multi-unit owners.
Franchising USA
they seem to be a fit for the opportunity,” the Schlotzsky’s president said. Schlotzsky’s is spread throughout the southern states and across the Midwest. In 2014, the brand plans to develop locations in areas of the country where it has less of a presence including the Pacific Northwest and Great Plains. Currently, Roddy noted, the main focus for growth is in the south, the west and along the east coast. The only place in the US where it doesn’t have a presence yet is in the northeast. Typically, franchise partners for Schlotzsky’s will be well capitalized and already successful business owners. They are usually looking to broaden their business portfolio by getting into restaurants or adding new restaurants to diversify their portfolio. Roddy added, franchise part-ners will often open four to 10 Schlotzsky’s at a time. In small markets that will only sustain one or two Schlotzsky’s locations, the company will go with a single owner-operator model.
Making Schlotzsky’s an even more enticing investment for potential franchisees is its co-branding
opportunities with sister companies
Cinnabon® and Carvel® Ice Cream.
All Schlotzsky’s locations open with a
Cinnabon bakery, Roddy said, and, if the franchisee requests it, a Carvel.
“We are currently testing other brands
for co-branding opportunities to consider rolling out in fu-ture franchise stores if
To make its mark in the northeast, Roddy said, the company would need a sizeable deal to take distribution into account. Aside from the northeast, though, the company is open to putting a Schlotzsky’s anywhere else in the US that doesn’t yet have one. Outside of the United States, Schlotzsky’s has locations in Turkey and Azerbaijan, and has an establishment under construction in Moscow, Russia. The brand is also working on agreements in
Franchising USA
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franchiso r in dept h
Schlot zsk y ’s
“Franchise partners will often open four to 10 Schlotzsky’s at a time.” The most common way to learn more Dubai and in Saudi Arabia. “Focus Brands already has a really strong presence overseas with Cinnabon and Auntie Anne’s and those same franchise partners are looking for more healthy, but casual restaurant brands to complement the snack brands they have today,” he said. Demand for the Schlotzsky’s brand is driven by consumer demand for healthy alternatives in the fast casual restaurant sector. People are looking for food that is fresh and free from preserva-tives. The bread is baked Fresh-from-Scratch® every day, same with the pizza dough. “Our bread only has a two day shelf life because it has no preservatives,” Roddy pointed out. It’s that dedication to freshness that sets Schlotzsky’s apart from its competitors. While other quick service restaurants may be technically baking bread, the dough will be made ahead of time, frozen and have preservatives in it. Schlotzsky’s is the
Franchising USA
only restaurant of its type that is actually making the bread right from scratch every single day in the restaurants. ”The freshness combined with variety sets us apart from competitors,” Roddy said. “Schlotzsky’s combines the best of both restaurant worlds by allowing people to sit down in a nice atmosphere, but also be an economical choice for families dining out.” The brand repre-sents a great opportunity for someone to make a good living running one, he added. With a field team that is constantly out at the restaurants upholding brand standards and training and developing franchise partners, Schlotzsky’s has a number of systems in place to offer support to franchisees. The company has Schlotzsky’s University, which is two days of restaurant and classroom training in its various markets. It also holds regional meetings for franchisees and has robust online tools available for them.
about franchising opportunities with
Schlotzsky’s is through the company’s website. The company will reach out
to interested parties for a prelimi-nary
conversation to gauge their fit with the company, followed by a face-to-face meeting.
Potential franchisees will come to
Schlotzsky’s headquarters in Austin,
Texas, to meet with the team and see if
they would be a good fit for each other. Depending on what type of franchise
model a potential franchisee wants, there are several to choose from that require
varying de-grees of capitalization, Roddy said.
With the current franchising plan in place and sights set on development in overseas markets, Schlotzsky’s is sure to continue its rapid growth.
For more Information: Web: www.schlotzskysfranchising.com
I began my journey with Sherpa Kids wanting to do something worthwhile in my community. I’m not a salesperson but I love talking to Principals and Governing Council members about Sherpa Kids.
Sherpa work andand engage with with all stakeholders to ensure SherpaKids Kidswill will work engage all stakeholders to continuous learning that meets children’s needs. We pride ensure continuous learning that meets children’s needs. We ourselves on creating a nurturing and caring environment for pride ourselves on creating a nurturing and caring environment the care of your school-aged children. We do this through a for the care of your school-aged children. We do this through a structured and well-balanced program in before, after school and structured well-balanced program in before, after school vacation careand services. and vacation care services. Become Become aa Sherpa SherpaKids KidsCountry CountryMaster MasterFranchisee Franchiseeand andmake makeanan investment on two levels. investment on two levels. Your Your new life life will will be be rewarding rewarding financially financiallyand andpersonally personallyasasyou you help communities and franchisees achieve their business help school school communities and franchisees achieve their and lifestyle goals. business and lifestyle goals. Each member Sherpa Franchise System Each member ofofthethe Sherpa KidsKids Franchise System has anhas an important role to play. important role to play. The success success every individual Franchise strengthens the The of of every individual Franchise strengthens the Sherpa Kids brand. A growing Franchise System means greater Sherpa Kids brand. A growing Franchise System means greater marketingand andadvertising advertising power, awareness, marketing power, moremore brand brand awareness, higher higher market penetration, new and improved systems, and market penetration, new and improved systems, and more team more team members to share knowledge, ideas and strategies. members to share knowledge, ideas and strategies.Already Already operating in 4– countries – Australia, operating in 4 countries Australia, New Zealand, New SouthZealand, Africa, South Africa, England and soon to be Ireland. England and coming soon to Ireland and Canada.
Enquire about international business opportunities with Sherpa Kids Phone Vicki Prout on +61 439 803 078 or email vicki@sherpa-kids.com www.sherpa-kids.com
ex per t advice
Adam Heitzman, Co-founder & Managing Partner at HigherVisibility
Top 5 Franchise SEO Myths to Avoid
We’ve said it before and we’ll say it again: Franchise SEO is tricky. A lot of the strategies you will want to employ will overlap with the SEO methods that traditional companies and startups use, but there is an extra layer to consider when it comes to a franchise. There are quite a few things you need to have figured out before you can even begin to create an SEO approach: • How many websites are you going to have? Will you have one for each local branch, or one website for all branches? If you have one website, how will you cater your content to specific audiences?
Franchising USA
Will you have different pages for each branch? • Will you have a centralized or local approach when it comes to the management of online marketing tasks such as social media and SEO? • How much time and how many resources do you have to devote to SEO? How will you spread out these resources? The answers can sometimes be pretty standard, but having all of these franchise considerations out of the way before thinking about SEO is absolutely necessary. I recommend checking out an article I wrote recently (http://www. franchisingusamagazine.com/expertadvice/top-7-questions-need-ask-seofranchise) that details questions you need to ask, specifically if you own a franchise,
as well as the answers and options for each. Once you have a solid website in place, you have to navigate the many SEO myths that come with franchise ownership. Fortunately, all you need is a little bit of information about some of the most popular myths and you should be good to go—it just takes a little bit of time and effort.
Franchise SEO Myths to Avoid Falling For When Creating Your SEO Strategy 1. You only need one location page for the corporate headquarters This is the absolute biggest myth out there. Fortunately this myth is slowly starting
“Once you have a solid website in place, you have to navigate the many SEO myths that come with franchise ownership.” Directories have a negative reputation amongst most SEOs, but franchise directories are actually slightly different and are considered some of the more trustworthy directories out there. They help people sort out different franchise opportunities, make it easy for consumers to compare and learn about different franchise options, and are great places to connect. Although there are some spammy directories out there that you need to keep an eye out for, the majority of directories offer a lot of benefits and are not going to get you in trouble with Google.
3. Franchise SEO is all about rankings This is a myth no matter what type of SEO you’re discussing. Franchise SEO isn’t just about getting the rankings so that people find your website—it’s about offering relevant content to users and building visibility for your brand.
to diminish, but if you’re still hearing this around the block then it’s important to realize that following this myth could get you in big trouble. If you want to have one website for all of your franchise locations this is OK, but you need to have separate location pages for Google, Bing, Yahoo, Yelp, and any other location based search you can find. Local search is all about finding those local companies, so if you don’t have location pages for all of your locations then your locations will not show up when someone types in a relevant query that isn’t near your corporate headquarters. You can learn more about local search and franchises on our website noted at the end of this article.
2. Franchise directories will get you in trouble with the Google bots
4. A local approach will never work when it comes to SEO management It’s true that SEO is much better managed at the national level because it’s easier in terms of organization and cost. This is also the recommended route because many franchise managers don’t know much about SEO, which can cause problems in the future. You also have the confusion of ranking for similar keywords across locations if you have too many separate parties working with SEO. However, just because this is the recommended route doesn’t mean that managing SEO at the local level is never an option. For a few select types of franchises, this is actually the better approach to take. For example, if you are a franchise with only two or three locations and your managers already have a lot of responsibility, it makes sense to have
Adam Heitzman
them also manage SEO (especially if you have separate websites). It all completely depends on your needs.
5. If you’re looking to buy a franchise, the national branch will take care of the SEO for you, so you have nothing to worry about For some this might be a negative and fall under the “there is no freedom in franchise ownership” myth, but however you feel about it, this is something to keep in mind. It is recommended that those at the national level manage SEO for all branches, but that doesn’t mean that local managers have no say in the matter. SEO is all about optimizing your website not only for Google, but also for your visitors. You want to offer relevant content and information, and sometimes local managers are going to be the ones with the real insight into what customers want. As a local manager, you know what deals are going on in your store, you know what your customers are asking for and how they found your website in the first place, and all of this information can be incredibly important to use when making SEO decisions. 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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franchisee in act io n
A aro n’s I nc.
Aaron’s Inc. is a powerhou With over 2,000 company owned and over 800 franchised locations peppering the US and Canada, it dominates the lucrative residential furniture, electronics and appliances lease-to-own market. Franchising USA
It’s founder, Charles R. Loudermilk started the company in 1955. A pioneer in the furniture rental industry he served at the helm for over 57 years, retiring in 2012 as CEO, Chairman of the Board. At his retirement he had grown the then publicly traded company from one location to 1,190 company owned and operated locations, and 717 franchised locations. Aaron’s Inc. is parsed into two separate operating divisions. The first is sales and lease ownership. As the largest and fastest growing division of the company
it provides credit-constrained customers; those that have limited or no access to traditional credit sources, such as bank financing, installment credit or credit cards. This diverse range of customers of just over 50 percent of US households which could include white-collar and bluecollar workers, young couples, families and retirees. Customers can choose from a variety of home furnishings, appliances and electronics from two retail banners; Aaron’s and HomeSmart. Aaron’s Inc.’s retail roster did include a third retail brand called, RIMCO, which employed the same
the banners carry the majority of the same products and provide a similar customer experience, HomeSmart is built on a weekly lease to own payment structure as opposed to Aaron’s monthly version. Woodhaven Furniture Industries is the manufacturing arm of the enterprise and produces the bulk of the furniture leased and sold by Aaron’s Inc. The division has five furniture manufacturing plants and nine bedding manufacturing facilities, that supply the majority of its upholstered furniture and bedding. Woodhaven also provides replacement covers of all styles and fabrics of its upholstered furniture for use in reconditioning lease return furniture. This model of vertical integration allows the company to control the cost, quality and consumer experience of the product all while creating a generous profit margin and distinguishing itself from competitors.
use! lease-to-own model as the sister brands but substituted sofas and TVs for wheels, tires and vehicle accessories. The division grossed over $20M annually and was sold to the Atlanta based Rent-A-Wheel/RentA-Tire in January of 2014. HomeSmart serves customers primarily through weekly payment lease agreements with products similar to those leased through its Aaron’s Sales & Lease Ownership stores. The HomeSmart store layout is a combination showroom with an average of 5,000 square feet. Although
It is these reasons, coupled with the scalability through unit economics and positive cash flow, that drew Spencer Smith to the Aaron’s chain. The Colorado native owns a staggering 44 locations, making him the third largest Aaron’s franchisee in the world. “I am aiming to have over 100 locations by the time I retire,” says Spencer. While this goal may seem far-fetched, it is achievable when you look at Spencer’s track record. He had tried several franchise systems in the past but none had the level of market availability, positive cash flow and unit economics to provide rapid scalability. When he first started, his goal was simple. “I wanted growth of one or two locations a year.” However, growth has been explosive, averaging more than four opens per year. Modestly, Spencer has attributed the good fortune to the management of teams and the almighty unit economics of the system; first year start-up investment of approximately $750,000, cash flow positive in second year, 30 percent storelevel ROI in year five. The first stores
took off very fast, thanks to these wellestablished processes and procedures of the system. Spencer’s beginning as an Aaron’s franchise owner happened quite serendipitously. “It was a Saturday and I was at home with my children, ages two and three at the time. The television was on in the background and the Talladega NASCAR race was on.” Amongst the roaring of stock car racing, he kept hearing these commercials for Aaron’s. What he heard had intrigued him, so once the kids were in bed he started to research the company. “By Monday morning I was calling corporate headquarters for more information. Soon after, I flew to Atlanta for face-to-face discussions about ownership. Admittedly, I was skeptical of the bad reputation of the rent-toown industry. However, the corporate management quickly demystified some of the falsehoods and I felt confident in their pooled experience.” Entrepreneurial spirit is a Smith family trait. His parents owned and operated a tire store. After a brief stint in college he moved home to work in the store, gaining the lion’s share of his business acumen. When his parents later divorced and sold the business he realized that he had to cut the apron strings and make it on his own. He knew he didn’t want to be married to a single store forever. “I also knew I didn’t want to be in a position were I had two or three locations and not enough capital to grow. Once you get past the hurdle of two or three stores, you can put in middle management and focus on strategic decisions. Put them in place and get out of the way.” The decision to become an Aaron’s franchise owner is made long before a prospective owner signs the initial documents and attends ‘Discovery Day’, where they are invited to visit corporate headquarter for extensive presentations covering the lease-to-ownership business model, site selection, customer demographics, product and enhanced inventory financing. “When I first signed as a franchise owner,
Franchising USA
en Kelly
“I am aiming to have over 100 locations by the time I retire.”
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franchisee in act io n
A aro n’s I nc.
I began to work in a couple of existing stores, learning the business through a variety of positions and observing the general day to day. Afterwards you are matched to a field consultant that is assigned to your geographical area. They work with you closely on best practices and how to avoid missteps. In regards to site selection, you get a commercial real estate agent. They spend time driving the market watching out for a combination of key metrics such as retail synergies, market competition and vehicle traffic, eventually settling on the best intersection in any given market. I have opened so many locations now that I side step some of the formalities but I still follow the same basic process,” comments Spencer. The business consultant continues to work with you once a quarter and is always available for questions. Networking and knowledge sharing also happens at the annual National Managers Convention were there are awards and training opportunities. Training is handled through a variety of online and in-the-field applications. The proprietary training manual, referred to as ‘the pathway’, is a
Franchising USA
“Once you get past the hurdle of two or three stores, you can put in middle management and focus on strategic decisions. Put them in place and get out of the way.” 400-page document. There are 30 to 40 online modules with some live classes with existing owners. “I receive calls every three to four months from prospective franchisees, interested in opening an Aaron’s location. I ask them all the same basic questions. The first of which is always, ‘are you going to be a day to day operator?’, because if you’re not, then you must invest time into finding the right person to do that job.” Aaron’s is very different to a traditional retail experience. In a traditional transaction a customer purchases a good or service with complete payment due on receipt of that item. Aaron’s has a customer paying for an item for 12, 18 or 24 months with the average monthly payment registering at $130.00 per customer. In the traditional model you are guaranteed payment. In contrast, at any point in the lifecycle of an Aaron’s customer there could be a financial hiccup that could derail payment. To all future
franchisees, two of the most important traits are problem solving and risk management. In the interest of getting full payment and customer retention, you have to learn to work with customers in the long term. When asked for his secret to success Spencer replied, “It’s no secret. 50 years ago, no one could dunk the basketball, now you can’t make the high school squad if you can’t hang time. What changed? Players aren’t taller today than they were then, the nets aren’t lower. The only difference is that they have consistently set ambitious goals and arrived to the dunk. I try and do the same thing in my career, I set what seems like an unattainable goal and try and dunk it!” It is this goal setting and lock step continuous learning that will undoubtedly see him at the 100 store mark very soon. For more information: Website: www.aaronsfranchise.com
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e r u feat
SPO RTS A N D FI T N ESS fe at ur e
Featu re
Sports and Fitnes With the obesity epidemic splashed all over the news, it may seem a little counterintuitive to say that sport and fitness franchises are good to get into right now. A fast food restaurant might seem like a better bet. But, don’t discount the fact that a lot of people care deeply about being fit and active. And that means you can cash in on people’s desire to be healthy. The sport and fitness sector is a popular one among franchisees. That’s probably because it’s so diverse. It includes: equipment supply, sportswear retail, sports bars, weight-loss clinics, personal coaching and gyms. So, if you’re more into the retail side of things, you can open an athletic shoe store, but if you want to help people lose weight, you can opt for a weight-loss clinic. You can even own a sports franchise. Yes, you! The United States Basketball League, for example, offers entrepreneurs the opportunity to own a basketball team.
Fitness Demand for fitness trainers and instructors is a particularly fast growing segment, estimated to rise by 24 percent from 2010 to 2020, according to franchisesales.com, which is faster than the national average for all occupations. It’s actually the aforementioned obesity epidemic that is driving the success of the
“Fitness isn’t the only big money maker when it comes to keeping people active and healthy. Sports-related franchises also play a big role in making staying healthy fun.”
Franchising USA
ss Franchising fitness franchising industry by prompting people to want to get fit and lose weight. Thanks to shows like The Biggest Loser and the praise that people get for their weight loss achievements when they go public with them, people are starting to have that desire to get fit and get active. A whopping 70 percent of Americans are considered to be overweight, according to numbers from the Centers for Disease Control and Prevention. Out of those people, about 36 percent of adults and 17 percent of children and adolescents (2-19 years old) are considered to be obese. Franchises that cater to the weight loss market are often fitness facilities (sometimes with a special niche) or diet centers. Revenue estimates for the gym, health and fitness club market are estimated to be about $26 billion annually, according to IBISWorld. Revenue for the entire weight-loss market is estimated to be over $65 billion annually with weight loss services accounting for about $2.5 billion. The 50 largest fitness centers account for about 30 percent of revenue, according to
Plunkett Research, and only a few dozen companies operate more than 10 centers. Since women make up the lion’s share of fitness club memberships, it’s no surprise that there are several fitness franchises that cater exclusively to women. Fitness centers, health clubs, and weight loss centers, which make up the fitness franchising industry, account for revenues of over $70 billion annually in the US, says data from the International Health, Racquet & Sports Club Association. Fitness centers and health clubs generating over approximately $20 billion each, with the diet industry estimated to generate over $30 billion per year.
Competition Competition in the sports and fitness franchising industry is fierce, with franchisees competing not only with each other, but with non-profit entities like the YMCA and community centers. There are also online fitness trainers and workouts people can do in their own homes, independent trainers not affiliated with companies, and people who do their own
fitness program who don’t use a gym. This is why a franchise is especially helpful in this market. You get to utilize the brand’s reputation and marketing power. Imagine having the power of the UFC brand name behind your marketing efforts. The name alone will draw people in, in addition to what you do to advertise. Plus, franchisees can use the franchise’s economy of scale to help purchase equipment, which smaller, independent places can’t do.
Niches We’ve already talked about fitness centers specifically geared toward women, but you can find other niches to fill. One huge niche market is geriatric fitness. Baby boomers are aging, yet people are living healthier for longer, meaning the boomers aren’t going to sit around wasting away; they’re going to stay active. Researchers are projecting the number of seniors in the U.S. to increase each year through at least 2050, growing from approximately 37 million to 87 million people. That’s a huge market to tap into. On the other end of the spectrum, though, is the youth market, which is also growing. Cutbacks to school physical education programs have left parents searching for places they can enrol their children to get them that much needed physical activity they used to get at school. Fitness centers for children are the answer. “Youth memberships have become one of the fastest growth areas for the fitness club industry,” says senior analyst Taylor Hamilton of research firm IBISWorld. The American Council on Exercise (ACE) predicts that the national obsession with obesity, particularly among children, will lead to an increase in the number of gyms offering youth classes.
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SPO RTS A N D FI T N ESS fe at ur e
Featu re
“With so many different franchising opportunities to choose from, if you’re entrepreneurial minded, you will be able to find a franchise model and niche to match your interests.” You can also open a fitness franchise that specializes in one or a few types of classes or types of training regimens. Personal training, step/bench aerobics, cardio kickboxing, yoga, strength training, aerobics classes, spinning classes, boxing and MMA-based workouts are a sampling of the types of classes and activities that you can potentially offer depending on where your interests lie.
Technically Speaking Opening a franchise almost always means hiring people. But, thanks to advances in technology, fitness franchises are having to hire fewer people. Gyms and fitness clubs can now stay open 24 hours without having to hire night staff, thanks to people being able to check themselves in with a numerical code and a scan of their finger print. Other gyms are bypassing the need to hire trainers because the equipment is so advanced that people can pretty much do their own workouts without the supervision of a fitness trainer. These advances in technology mean cost savings for franchisees.
The Peripherals So far, we’ve just talked about the actual fitness centers and gyms themselves, but there is a whole list of accessories and peripheral items to fitness that are ripe for franchising opportunities. Equipment, supplements and protein powder, clothing, weight reduction products and shoes all have franchises that you can start and make profitable. The Sports and Fitness Industry Association estimates that the fitness equipment industry generates $150 billion in domestic revenue.
Franchising USA
Sports Fitness isn’t the only big money maker when it comes to keeping people active and healthy. Sports-related franchises also play a big role in making staying healthy fun. Much like how the fitness industry is diversified, the sports industry can entail any of a number of different franchise types. Retail outlets are an obvious franchise opportunity, but the sports industry is so varied, it also includes traveling drug testing franchises, artificial turf franchises, sports-themed hair salons, sports training facilities, recreation centers, sports leagues and many more opportunities. Similar to fitness, most sports require equipment. The Sports & Fitness Industry Association says in its 2014 Manufacturers’ Sales by Category Report that the sports and fitness industry grew 2.8 percent in 2013, representing $81.4 billion in wholesale sales in the United States. That is an increase of almost $10 billion from 2009 when the industry reached $71 billion wholesale. “Our industry has grown steadily since the Great Recession of 2009,” said VJ Mayor, SFIA’s Director of Communications and Research. “SFIA members continue to focus on the latest technology to drive both equipment and apparel development which is appealing to consumers. The emergence of sport style increasingly incorporated into consumers’ everyday fashion choices also bodes well for our members on the apparel side. Proof of this is best seen in the growth of the fleece/sweat and basketball footwear categories.” Fleece/sweatshirts grew 11 percent to $1.63 billion wholesale, which was up $162 million from $1.47 billion in 2012. Basketball sneakers were also a big growth driver in 2013, up 15 percent ($134
million) from 2012, surpassing the $1 billion mark in wholesale sales for the first time. And don’t forget sports fans! If people aren’t participating in sports, then they’re watching sports, cheering on their favorite athletes and buying sports apparel to watch the games in. Sports fans’ enthusiasm for supporting their favorite teams is good for anyone interested in opening a retail store that specializes in sports team apparel or opening up a sports-themed restaurant and/or bar. Thanks to the seasonal nature of sports, there is always a season beginning just as another league’s season is ending, meaning there are big games happening year-round to keep people’s interest peaked. With so many different franchising opportunities to choose from, if you’re entrepreneurial minded, you will be able to find a franchise model and niche to match your interests in the sports and fitness franchise market. Do your research and find out what your area doesn’t have and you’re already well on your way to opening a successful sports and fitness franchise.
About the author: 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.
Rob Swystun
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DON’T MISS OUR NEXT ISSUE!
Mobile Franchises 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 Mobile franchises in the August 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
Berny Dohrmann, Chairman and Founder of CEO Space International
8 Must-Know Tips to Grow Your Business
CEO Space International Founder Shares Insights From Years Spent Working with Entrepreneurs As the chairman of one of the world’s largest business support organizations, I’ve encountered countless prospective entrepreneurs trying to put their ideas into action by launching a business. My experiences have given me a unique insight into what makes and breaks a business in today’s market. Here are eight essential tips for shaping a good idea into a great business:
1. You can’t build a business like a hobby project Berny Dohrmann
Franchising USA
Entrepreneurship should never be a casual endeavor. Building a thriving business in today’s market means devoting yourself fully to the mission you intend to accomplish via the company.
can quickly grow larger than your ability to deal with them. Move your business forward one step at a time, and more importantly, know where you’re going before you try to get there.
7. Nothing will grow you more than growing your dreams
3. Advertising is naked without PR
can’t achieve what you’ve set out to do.
Flashy ads are no substitute for a wellthought out communications strategy. In the age of information, every business needs a sensible way to spread its ideas and brand to clients and consumers ready to buy. An idea is useless without a suitable voice to present it to the world. Build your advertisement strategy around the people best suited to get you to the next step of your objective.
4. Never say NO to growth In today’s market, you can’t afford to miss the opportunities that can get you from one step to the next. While defining a plan for growth and future investment is necessary to guide your business decisions, nothing should ever be set in stone.
5. The difference between wealth and income is how many people you benefit
Setting your business aside for any length of time can lead it down a slippery slope you may not be able to crawl back up from. Keep yourself organized; set clear goals you can accomplish, and dedicate yourself to making sure your ideas come to fruition.
2. Wrong sequence ends in business failure One of the biggest hurdles to business growth is the lack of a detailed planning system. No matter how big your idea is, expecting overnight success can cloud you to the practical considerations that
While it’s important to consider all of your decisions through a filter of practicality, you should never be convinced you
Businesses never fail because a dream
is wrong; they fail because they choose
the wrong path to achieve it. Remember that the more work you put into getting
somewhere only makes the achievement more meaningful in the end.
8. Competition slows everything down If your definition of progress includes
hurting other companies along the way,
you’re not on the fastest lane to success. Although the market environment may appear inherently competitive at first
glance, a collaborative perspective on business can make everyone’s ideas a reality faster than they could through
isolation and bitter fights for market share. Look at your competitors as potential partners and find a way forward for everyone involved.
All the growth in the world means little if you do nothing to benefit those who helped you get there. Your team and periphery support network need to be included in the rewards in direct correlation with the effort they put into the business’s success. While numbers need to be your first concern when it comes to sustaining yourself and your ideas in the market, make sure you measure your success by more than just a bottom line.
About Berny Dohrmann
6. As you grow IT, IT will grow you
the largest global resort-outfitting firm
Don’t get tunnel vision when it comes to everyday business. In today’s business world, every connection you make can be a game-changing opportunity. Never walk away from the chance to shake hands with a potential partner no matter their value to you and your business at the moment. Grow your network every chance you get.
Berny Dohrmann is chairman and founder of CEO Space International, one of the world’s largest support organizations for business owners. The inventor of
Super Teaching, a Title I technology that accelerates retention for public schools, he is frequently a guest speaker on that
topic to various nations, VIP conferences and television programs. As a member
of the Dohrmann family, which operated as Dohrmann Hotel Supply for several generations, he grew up with several
business mentors, including Napoleon Hill, Earl Nightingale, Walt Disney, Warner Earnhardt, Bucky Fuller, Dr. Edward Deming and Jack Kennedy. For more information: Web: www.ceospaceinternational.com
Franchising USA
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ex per t advice
Bryce Ebeling, Founder and CEO of LoyaltyGenerator
Business in a box
Is Franchising Right for You?
So, you’ve decided you want to buy a franchise? Congratulations! You have just made the easiest choice of many complex decisions required in selecting the right franchising partner. Choose wisely – you could be married to your franchising partner for the next 10-20 years, assuming you keep your franchise for the duration of at least one franchise term. Before reading further, think about your definition of success and your end game or exit strategy as they relate to your franchise plans. Then, refer to your answers after reading the article. Define: 1) Success; 2) Your end game or exit strategy.
Franchising USA
Is Franchising Right for You? While group participation varies among franchise systems, most franchisees fit within my 30/30/30 rule: • Group A: 30% follow the franchise model and work very closely with corporate; • Group B: 30% mostly adhere to the franchise model and have a good working relationship with corporate; • Group C: 30% believe they know more about their franchise than corporate and run the business on their own; • Group D: 10% are proven leaders in the franchise system. They are entrepreneurial, have mastered the franchise model, positioned themselves to improve their business and are likely behind the growing number of sustainable competitive advantages adopted franchise wide. Decide where you stand because being a good franchisee candidate requires a unique blend of entrepreneurial spirit and the understanding that while you may be smart and talented, you still have a lot to learn; especially relative to this franchise system’s policies, procedures and processes. Don’t get me wrong, I have seen my fair share of franchisors who know less about their business than prospective franchisees; however, the choice to become a franchisee means you should be able to sift through the pretenders and choose the right franchise partner. That said, if you are NOT a member of Group A or B, please put this article down and don’t consider buying a franchise. Seriously, put the article down and reject calls from your franchise development contacts immediately! Let me explain…
“Decide where you stand because being a good franchisee candidate requires a unique blend of entrepreneurial spirit and the understanding that while you may be smart and talented, you still have a lot to learn.” The Leaders Vs. The Naysayers There are always adversarial aspects of the relationship between Group D – the top 10 percent – and the franchisor. Group D continually challenges the status quo at corporate but HOW they do this is what sets them apart from others. While corporate staff members may get frustrated with this group because they are constantly pushing the bounds of the franchise, these franchisees aren’t yelling at corporate staff because the franchisee (or their staff) screwed something up or made a bad business decision. These franchisees own and share their successes and more importantly they own, learn from and share their failures. Members of Group C, in my opinion, never should have bought a franchise. All too often, before the ink is dry on the franchise agreement, Group C franchisees are dictating to corporate how they will run their business and what they are going to change about the operating system in which they have just heavily invested. Group C franchisees tend to think they already know which processes are broken before they test them. If you know more than the franchisor, why would you buy a franchise from them in the first place? Surly, you have better ways to invest your $30K-$200K+ than on a franchisee fee? DO NOT INVEST IN A FRANCHISE! Rather, buy a business where you are the entrepreneur. The real entrepreneurs, in franchising, are:
the franchise system before concluding that innovation was the NEXT step, not the first step.
Choosing the Right Franchise Partner Now that you have identified yourself as a member of Group A or B (preferably A), it is time to narrow down your prospective franchise systems and begin your due diligence. Remember, you are, for all intents and purposes, going to marry this franchisor. You are choosing your franchise partner just as much as they are “choosing” you. Take this opportunity to learn as much as you can about them. The following questions will help you identify the right franchise partner, not the right franchise business. I suggest you ask these questions of at least four separate franchisor staff members (VP Operations, VP Marketing, Business Management Consultant and general franchise support staff member). You should juxtapose these interviews with follow-on franchisee interviews.
Questions for a Prospective Franchisor:
1) At the corporate office, and;
1) What makes your department staff uniquely qualified to support me and my staff’s operational needs? Describe how your department’s support is superior to Company X and Company Y (name two competitors you are analyzing).
2) VERY seasoned, respected and top performing franchisees who mastered
2) If I were to ask a franchisee of Group A and Group C, how would they
Franchising USA
ex per t advice
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ex per t advice
Bryce Ebeling, Founder and CEO of LoyaltyGenerator
“Choose wisely – you could be married to your franchising partner for the next 10-20 years.” in that 90 seconds that I want to pass on to you, as a prospective franchisee. Take this opportunity to learn the “patterns” of the franchisor. Corporate staff will come and go, but what is their culture? Do they recognize and value franchisee input, or do they simply pay lip service like my franchisor often did? Try to dig deep enough to discover the outcomes rather than the symptoms of disagreements. It will go a long way toward understanding the culture of your franchise partner. Bryce Ebeling
individually and uniquely describe your business ethics, support (operations, marketing, service, manufacturing, etc…) and organizational culture, what would they say? 3) How many corporate staff members do you believe fail to pull their own weight? (NOTE: Before asking this question, know how many corporate staff members exist so you can determine the percentage of “dead weight” they believe exists.) 4) How many corporate staff members have worked in this franchise at the operational level? How many were prior owners? If they were owners, were they successful as you earlier defined success? 5) Describe three professional failures since working here and what you have learned from them. It is also very important to interview existing franchisees. Several months after I sold my franchise, I was at a three-person dinner meeting with the COO. During that meeting he indicated that while we often saw things differently, he recognized I always had good intentions. I learned a lot
Franchising USA
Questions for Existing Franchisees: 1) Define success relative to your franchise business. Have you achieved success? What is the timeframe to reach success? 2) What is your exit strategy? How has it changed? 3) How many corporate staff members do you believe fail to pull their own weight? Is one department more egregious than another? 4) Describe conversations you have with your franchise mentor. How does your mentor measure your progress? 5) Can you describe three failures of the franchisor and how they dealt with them? Can you describe how those failures affected your business and the recovery process? These questions are not intended to be an end-all-be-all for your franchisor partner search. However, if you are satisfied with the outcome of franchise staff and franchisee conversations, are willing to learn from others and follow a proven system of success, then I congratulate you on your pending acquisition.
For additional interview questions and to learn more about franchise support, please visit Bryce’s blog at: www.loygen.com/blog.
About Bryce Ebeling Bryce Ebeling is the founder and CEO of LoyaltyGenerator, an automated crossmedia marketing platform that offers franchisors and franchisees a single point of access to an email solution, direct mail printing, text message provider and customer data analysis. With more than 15 years of experience working in and around franchising, Bryce worked in support roles at two mature franchise systems, owned and operated a successful franchise ranked in the top 20 percent of more than 300 units and has consulted with hundreds of independent franchise and nonfranchised owners on marketing and operational related challenges.
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FRESH HEALTHY VENDING IS A LEADING HEALTHY VENDING FRANCHISOR PIONEERING THE CONCEPT OF VENDING MACHINES STOCKED WITH TRIED-AND-TESTED FRESH, TASTY, HEALTHY SNACK OPTIONS
Over 230 franchisees appointed ¸ Over 2,500 healthy vending machines installed Entrepreneur’s Franchise 500 Ranked ¸ Minimum start up cost $110,000
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H av e Your Say
N-H ance Woo d R en e wal
N-Hance Wood Renewal
Moves Full Speed With Growth in 2014
Ben Davis
Home improvement spending is slated to remain strong in 2014. The Leading Indicator of Remodeling Activity (LIRA) expects that double digit gains in spending will continue through the first half of the year. Franchising USA
“While many smaller home improvement concepts have dissolved since the recession, we have grown tremendously.” The growth of the industry has led to a rebirth for home improvement franchises like N-Hance Wood Renewal, which is the trusted partner of Home Depot for refinishing of hardwood floors and kitchen cabinets. I became President of N-Hance Wood Renewal in 2008. With the crash of the real estate market, it was not the best time to take over a home improvement business; however, people cared about their homes more than ever. They understood that they were most likely going to stay in them longer, so they searched for solutions to
maintain their home. It was important to me we didn’t think of ourselves as a victim of the recession, and that we stayed focused on changing consumer demands with regard to home improvement projects. Throughout the recession, we have launched strategic initiatives to strengthen our brand and achieve growth goals. In 2009, we launched a marketing partnership with The Home Depot in which our franchises have a physical presence in nearly 1,400 of the retail chain’s stores nationwide. The partnership
has helped open doors to new lead sources and opportunities. As 80 percent of customers who are walking into a Home Depot are looking to do a remodeling project, it provides our franchise owners with the opportunity to educate customers about the amount of money and time they can save by renewing their kitchen cabinets or hardwood floors. Furthermore, last year we saw the launch of our proprietary LightspeedÂŽ InstantCure Wood Refinishing, which instantly dries and cures refinished wood surfaces. The innovative, affordable cabinet and floor renewal service renews wood cabinets and floors at a fraction of the cost of replacing or refacing, without the inconvenience, dust and noxious fumes associated with traditional refinishing methods. Plus with LightspeedÂŽ, customers can use their floors and cabinets as soon as we leave. As a result of our initiatives, we have experienced exciting results. While many smaller home improvement concepts have dissolved since the recession, we have
grown tremendously and have experienced growth each year since the recession. In 2009, N-Hance had 149 units, in 2010, 177 units. Furthermore, we closed out 2013 with phenomenal growth by adding approximately 90 new franchises. Currently, we have just over 300 units nationwide and have projected to have over 400 by the end of the year. To help continue executing our growth strategies, we have added to our support staff in several key areas, including franchise development, administration, operation, marketing, curriculum and call center support.
floors and kitchen cabinets. N-Hance is backed by Harris Research, Inc., the same company that grew Chem-Dry into the world’s largest carpet cleaning company. A proprietary chemical abrasion and refinishing technique requires no sanding and can cost 1/5 of the cost of re-facing or replacing cabinets.
About Ben Davis
Prior to joining the N-Hance Wood Renewal team, Davis was the VP of Development for Chem-Dry. In addition, he has been a Regional Director for a very large commercial services franchisor, a VP of Strategic Business Development for a Utahbased technology services company and managed independent and direct distributors around the globe in the educational technology space. Davis has more than 15 years of experience in the franchise industry.
Ben Davis is the President of N-Hance Wood Renewal, the trusted partner of Home Depot for refinishing of hardwood
For more information on franchise opportunities, visit www.nhancefranchise.com.
As the year continues, we are committed to our growth plan of adding 135 new franchises in 2014. We foresee continued growth in the United States and Canada, as well expanding our network internationally.
Franchising USA
H av e Your Say
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KED TO ER
10+YEARS SAME STORE SALES INCREASE TOP 5 FASTEST GROWING
LOW COST initial investment &
Over
SIMPLE operations & attractive
CONCEPTS IN THE U.S.
Focused high-quality menu
635 RESTAURANTS
STRONG AUV OF $974,000 *
635+ STORES
LOW OPERATING costs
unit economics
Focused, high-quality menu of made-to-order classic and boneless wings
85 PROJECTED NEW locations TO open in 2014
COOKED TO ORDER
FLEXIBLE footprint to
accommodate any venue
EASY executed, craveable
CLASSIC BONE-IN AND BONELESS WINGS
menu for all day parts
CUSTOM-FIT Square footage ranges from 550 to 3,000
70% of store sales are carryout
IMMEDIATE FRANCHISES AVAILABLE!
WINGSTOP.COM | 972.686.6500 *Figure reflects the average annual net sales for all Wingstop Restaurants (23 corporate and 458 franchise) in the system that were open during the entire period from January 1, 2012 through December 29, 2012, as published in Item 19 of our April 2013 Franchise Disclosure Document. Of the 458 franchised restaurants, 185 (40%) had higher net sales during the reported period. The financial performance representation contained in Item 19 of our April 2013 Franchise Disclosure Document also includes average annual net sales information (1) separately for all franchised Wingstop Restaurants, and (2) separately for all company-owned Wingstop Restaurants, in operation in the United States during the referenced period. A new franchisee’s results may differ from the represented performance. There is no assurance that you will do as well and you must accept that risk. © 2014 Wingstop Restaurants Inc.
Franchising USA
JULY 2014
Veterans in Franchising www.franchisingusamagazine.com
Home Franchise Concepts
Million Dollar Franchise Event
What Business should I Start ?
Are You Qualified
to do the Deal?
Franchising USA
feature
Page 47
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 ju LY 2 0 1 4 Our Veterans in Franchising special supplement has become a regular feature of Franchising USA. To share your story in the next issue, please contact Vikki Bradbury, Publisher Phone: 778 426 2446 Email: vikki@cgbpublishing.com
Contents 50 Cover Story: Home Franchise Concepts Million Dollar
Franchise Event
Profiles 52 Marco’s Pizza 56 CruiseOne 58 Maui Wowi
Expert Advice
54 Answering the “What Business Should I Start” Question Darcella K. Craven 60 Are You Qualified to do the Deal? Jim Mingey 62 VetFran News Moving Forward Strategically
64 Precision Auto Care
Franchising USA
V e t erans in Franchising
COVER STO RY
Million Dollar Franchise Event No one is more deserving of attaining the American Dream than the fearless men and women who have served our country in the U.S. Military.
Budget Blinds® and Tailored Living®, Home Franchise Concepts (HFC) is thrilled to welcome ten new U.S. Veteran franchisees to their team. This discount provides deserving individuals the ability to translate the discipline, teamwork and experience gained from their military service into owning and growing their own business.
Because of their experience, commitment to team efforts, and work ethic, countless companies work hard to recruit and hire our heroes, but one company in particular is going the extra mile to make Veteran’s dreams of owning their own franchise business a reality. Through a new incentive program dedicated to providing $1 Million in discounts towards the purchase of one of its franchise companies,
On Veteran’s Day 2013, HFC launched the Million Dollar Franchise Event, a commitment to give away $1 Million in discounts to U.S. Veterans interested in owning their own business. The program’s goal is to honor those that have worked hard protecting our country’s freedom and help them secure a promising financial future for themselves and their families. With over 50 U.S. Veteran franchisees
in their ever-growing team of franchise business owners, HFC’s Co-Founder and Chief Executive Officer Chad Hallock, truly values the skills military veterans gain while on active duty. Hallock states, “The training, discipline and teamwork instilled in members of the U.S. Armed Forces prepares every Veteran for a successful role as a franchise business owner. Our goal in creating the Million Dollar Franchise Event is to honor the men and women who have sacrificed so much for our country and provide significant financial incentives to make their transition into the civilian workforce smooth and successful for both them and their families.” “Business ownership makes me appreciate the service I gave to this country because now I can translate my leadership experience into a valuable opportunity for myself,” said Rick Grimes, one of the newest Budget Blinds franchise business owners as a result of the Million Dollar Franchise Event. After suffering a recent layoff and wondering how his military career could translate into the next chapter of his life, Grimes researched how his IRA might help him start his own business. Budget Blinds’ franchise model provided the
Rob Jones and wife Christina Chick, (both of the U.S. Air Force), Budget Blinds of the Oceanfront ,VA. Franchising USA
kind of corporate support and financial opportunities that made Grimes confident in his ability to finance college for his children and be comfortable in retirement. Grimes is now leveraging the skills he gained through his seven year Army career in personnel management and operations to create a successful business focused on a “mission” of superior customer service. Along the same lines, 34-year-old U.S. Army Veteran, Maurice Coombs, also came to Budget Blinds through the Million Dollar Franchise Event. During his military career as a generator mechanic and logistics coordinator, Coombs was able to study Business Management between combat deployments to Iraq, Saudi Arabia, and Afghanistan. With the desire to take control of his own career through business ownership, Coombs sought the support structure of a franchise system as he transitioned into the civilian workforce. Now serving Davie, FL, with his new Budget Blinds franchise, Coombs is using the leadership experience he gained through service to build his own business. With the vision of running his franchise as a family business, U.S. Air Force Veteran Michael Dunn is another recent addition to the HFC family as a result of the company’s $1 Million commitment to support U.S. Veteran entrepreneurs. A 10-year military career afforded Dunn the opportunity to obtain a Masters Degree, spending the next 18 years in sales management in the computer hardware industry. “Home improvement has always been a passion of mine, so I jumped at the opportunity to make a career out of improving the lives of other families through a window treatment franchise,” said Dunn. Now serving Killeen, TX, and Temple, TX, Dunn’s Budget Blinds business will be supported by his wife and two sons who will be assisting with administration and marketing. With a history and passion for assisting U.S. Veterans and being recognized by Military Times and Franchise Business Review for achievements in supporting
Joel Thode (U.S. Navy Reserves) and his wife Bailey Thode, New Budget Blinds® Veteran Franchisees.
Ryan Wilde, Budget Blinds of East Raleigh, NC – (U.S. Army). Veterans and Veteran-related causes, HFC’s Million Dollar Franchise Event continues the tradition by granting military Veterans of all backgrounds significant discounts off the purchase of a Budget Blinds or Tailored Living franchise. The ultimate goal of the Million Dollar Franchise Event is to award at least 30 Budget Blinds and/or Tailored Living franchises to deserving veterans totaling $1,000,000 in financial discounts. In addition to the financial assistance, HFC also offers numerous support and mentoring groups, such as the Vets4Vets program that connects existing HFC veteran franchisees with new, incoming veteran franchisees in order to produce a mentoring relationship. Home Franchise Concepts is proud to offer two very different business models under one roof. Tailored Living provides wholehome organization solutions offering franchisees an exciting hands-on business, ideal for design-minded Veterans. Budget Blinds provides homeowners with
window treatments and room accessories, from drapes and plantation shutters, to pillows and rugs. Requiring no inventory storage, Budget Blinds appeals to Veterans seeking a low overhead business model with the option of operating as a homebased business. Veterans can begin learning more about this unique opportunity and explore the application process by visiting www.BB4Vets.com or www.TL4Vets.
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V e t erans in Franchising
M a rco’s Piz za
Marco’s Pizza Sets Goal to Raise $50,000 for veterans From Memorial Day, through Flag Day, June 14, Marco’s Pizza, celebrated 500 Strong, by honoring veterans and military families nationwide. During the three week period Marco’s stores accepted $1 donations to benefit USA Cares Jobs Assistance Program, a national nonprofit that provides financial and advocacy assistance to post-9/11 U.S. military families. The veteran unemployment rate is around double the general population, and donations will directly benefit veterans seeking employment. The 500th location held its grand opening celebration on Flag Day, June 14 at Hoggard High across from the new store located at 2305 S. College Road in Wilmington, NC. The milestone location is owned by area representative and military veteran, Joe Walker. Walker spent four years in active duty serving as an Infantry Platoon Leader in Iraq. After leaving the military in 2008, Walker saw franchise ownership as an appealing option given the similarities between the military and franchising. This milestone location adds to Walker’s resume of owning and operating 11 locations with plans to open an additional three Marco’s Pizza stores this year. “This is really an exciting time in our brand’s history, expanding across the country, entering new markets and opening our 500th location, with plans
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to open a total of 200 new stores this year,” said Bryon Stephens, Marco’s Pizza President and COO. “We share this milestone and our successes with our dedicated franchise partners and their hardworking teams - and of course with our loyal customers.” With hundreds of veteran employees and franchisees in the system, Marco’s Pizza sees veterans as a great fit both as employees and franchise owners. Many of the attributes gained from military service such as leadership, attention to detail, working as a team, and following a structured plan directly translate to operating a successful franchise business. For this reason, and in celebration of the milestone 500th opening, Marco’s Pizza is determined to help 500 veterans find employment. As members of the International Franchise Association’s (IFA) VetFran program, Marco’s Pizza is dedicated to help provide ownership and job opportunities to returning veterans. In conjunction with
the White House and the U.S. Chamber of Commerce, VetFran helped more than 151,000 veterans, military spouses and wounded warriors enter the franchise industry by the end of 2013, with nearly 5,200 as franchise owners. Marco’s Pizza’s recipe for growth has been a combination of a robust authentic product, a strong community image, and a mission to delight customers. As the only national franchise chain founded by a native Italian, Marco’s Pizza has carved out a niche in the industry as experts in authentic Italian pizza, known for its fresh never-frozen dough made daily on site, a proprietary cheese blend that is fresh never frozen and a secret pizza sauce recipe. With 500 locations strong and more than 1,500 new franchise deals signed in 2013, the company is on track to quadruple its store count in the coming 5-7 years. For more information visit: www.marcosfranchising.com or to donate visit: www.marcos.com/500STRONG
Are you ready to take control of your own destiny, fulfill that dream and have a better quality of life with financial security? Consider owning a franchise. A franchise allows you to be in business for yourself but not by yourself, with a proven business system that gives you endless support and branding.
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V e t erans in Franchising
Darcella. K. Craven, Executive Director, Veterans Business Resource Center
Answering the
“What Business Should I Start” Question How much money do you want to make? What kind of impact do you want to make in the world? For that reason I push back and ask you to hit the pause button to evaluate priorities before trying to find a quick answer about what small business to begin. When we were in the service, we never just ran into a situation without scanning the environment. In fact, sometimes we over planned but that is a discussion for another day. There are a few steps you should take before deciding which business to start. Darcella. K. Craven
You guessed it. The most common question posed to me by transitioning military and Veterans when they visit our center is “what business should I start?” I must admit that I have come up with some pretty snarky responses over the last eight years. My favorite is “tape cassette recorders, retro is in”. In all seriousness, the real response is “it depends”. What makes you happy? What do you want to accomplish being a small business owner?
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Step 1: Assess Your Reasons for Entering Small Business: When you are considering what business opportunity you are going to invest your hard earned dollars in. What opportunity you are going to bleed, sweat and cry over. What business you are going to potentially give up missing important milestones in your family’s life to do. You had better make sure it is something that you love. Something that makes you happy. Something that is going to achieve your ultimate goal whatever that may be. Ask yourself these questions: • What is my end goal in starting this business? You should know what the desired outcome is for you personally. Perhaps you want to make a specific
dollar amount or when your children have made it through college or you want to give back to a community. Knowing what the end looks like will help you determine which business opportunities might be right for you. • What would I do for free if money were no object? Make a list of all the ideas you have in your mind. Review that list and whittle it down to three ideas that really make you smile. This is important because there are days when you might just be working for free and a smile is all you have. • Ask if what you are creating is a job for yourself? Creating a job for yourself is counterproductive to your happiness as an entrepreneur. We are Veterans. There are hundreds of initiatives designed to help us find employment. If you simply need a job to pay bills, there are many to be had. I am not arguing these are jobs you want to do or that will make you happy. This is exactly my point. If you are going to do something that is not fun, you do not like, and does not make you joyful, then let someone else worry about making payroll or keeping the lights on.
Step 2: Look At Your Surrounding Community for This Answer: I am never surprised by how many people believe that they need
to reinvent the wheel in order to create a small business. The community in which you live is telling you what they need. Start with your immediate environment then look to the region and then nationally. Listen to your friends when they say “I wish someone would invent something to help me to….” fill in the blank. Have you noticed in the greeting card isle there are more 90th or 100th birthday cards? With the rising age of our population there are tremendous opportunities. Adult day care, computer education classes and mobilization concerns are a few that come to mind. Take a few days, no more than a few weeks, to scan your environment for opportunities. Read periodicals, watch or listen to news programs and pay attention to your surroundings. Your market is calling you.
Step 3: Decide on Ground-Up or Franchise: Once you have completed these exercises you can then begin to ask if you want to start one of these opportunities on your own or if there is a franchise system that already exists in which you can invest. If the answer is a franchise, then our business consultant Damon Chaffin, who has over 20 years of experience in developing strong franchises offers up this advice. “When looking at a franchise, you should be evaluating three things: 1) the brand, 2) the operating system, and 3) the ongoing support.” We rarely see few franchises that excel in all three areas. To determine which is right for you, Damon suggests the following actions: • Speak to Existing Franchise Owners. Contact as many existing owners as you can in order to determine if they are satisfied with the franchise, how they do financially, and if they would make the same decision. Look at how the brand is perceived in their marketplace; ask what tools are available to ensure success, and whether or not the organization is responsive to their concerns. A negative franchise owner is not a deal killer in and of itself, but if
“What would I do for free if money were no object? Make a list of all the ideas you have in your mind. Review that list and whittle it down to three ideas that really make you smile.”
many are unhappy and/or doing poorly, this should be a concern. • Obtain and Read the Franchise Disclosure Document (FDD). This is an arduous task however the FDD is a legal document that explains the franchise – what each party is responsible for in the enterprise. This is a critical document that explains the franchise in legal terms. Pay particular attention to costs to open, fees, litigation, how territory is determined, and the earnings claim.
Step 4: Stay Off the Island of Me: Too many entrepreneurs isolate themselves during this process. They believe they need to have the exact answer before reaching out to get help. Remember, above all else you do not need to do this alone. There are strong organizations all around you to assist. If you need support with thinking through these exercises, determining if small business is right for you and what direction(s) you might choose, please do not hesitate to reach out. Organizations like those who create this periodical and the Veterans Business Resource Center,
are truly here to assist. We stand ready to assist. If you do not want to do any of these things then my suggestion is “No really! Tape cassette recorders, retro is in.” For more information: Website: www.vetbiz.com Darcella K Craven has over 20 years of experience in corporate, government, non profit and military organizations. She is currently the Executive Director of the Veterans Business Resource Center, a nonprofit organization dedicated to assisting Honorably Discharged Veterans, National Guard and Reservist and Active Duty personnel and their families with transitioning back into civilian life with starting and expanding businesses. An Army Veteran, she holds a Masters of Arts in Management from Webster University and is currently pursuing her Doctors of Management focusing on impact of military experience on small business decision making. Darcella has been featured in numerous articles for her transition from the military and the welfare system to an accomplished business woman and is actively involved in many civic organizations.
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V e t erans in Franchising
Cr uise O ne
In Celebration of Military Appreciation Month,
CruiseOne® Rewards Military Veterans with Free Franchises
Third annual “Operation Vetrepreneur: Become Your Own General” franchise giveaway contest for military veterans began May 19. CruiseOne®, the nation’s leading homebased and military-friendly travel franchise as part of World Travel Holdings, celebrated Military Appreciation Month this May with the launch of its third annual Operation Vetrepreneur: Become Your Own General contest, which began on Monday, May 19, 2014 and continues until Friday, August 8, 2014. Five
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deserving U.S. veterans will each receive a CruiseOne home-based travel franchise, a total value of $63,500. “We not only thank our veterans for performing the highest call of duty by serving our country, but we also invite them to put their military skills to use in the civilian workforce by owning a travel franchise and making vacation dreams come true,” said Debbie Fiorino, senior vice president of CruiseOne. The CruiseOne franchise contest is open to former members of any of the five branches of the U.S. military (Army, Air Force, Navy, Marine Corps and Coast Guard) who are retired, off active duty and/or honorably discharged prior to
the contest start date. To participate, candidates must complete an online entry form by Friday, August 8. The form and all contest details can be found at www.OperationVetrepreneur.com or on CruiseOne’s Facebook page, www. Facebook.com/CruiseOneFranchise. There will be three rounds of judging as part of this contest. First, candidates will participate in a phone interview with a CruiseOne franchise development specialist. Semi-finalists will be required to submit a franchise application, business plan and resume, all of which will be scored by the CruiseOne executive team. Final candidates will be invited to participate in follow-up phone interviews before winners are selected.
in the travel franchise industry while
still granting them time to also relax and vacation anywhere in the world.
Consistently recognized by leading
industry publications as a military-friendly franchise, CruiseOne’s accolades include a number one ranking by Forbes in its
“Top 10 Military Friendly Franchise,” inclusion on USA Today’s “50 Top
Franchises for Military Veterans” and
recognition as a “Top Veteran-Friendly Franchise” by Entrepreneur and U.S.
Veterans magazines. For the past four
years, CruiseOne was named to G.I. Jobs
magazine’s Military Friendly Franchises® Five grand prize winners will be announced in August 2014. Valued at $12,700, each grand prize includes a free CruiseOne franchise with a waived $9,800 initial start-up fee and monthly service fees. The new recruits will report for active duty in October, when they participate in weeklong franchise training at CruiseOne’s state-of-the-art world headquarters in Fort Lauderdale. Winners will be reimbursed up to $500 for their travel and provided with complimentary accommodations during the training program. Once their training is completed, winners will be armed with all the tools and knowledge that they need to start up their own CruiseOne franchise. “Studies show that veterans are among the most successful business owners in the franchising industry and that approximately 250,000 transition out of the military each year,” said Tim Courtney, vice president of franchise development and ambassador of veteran affairs for CruiseOne. “We recognize this fact and proudly recruit military veterans to join our network when they return home. In fact, veterans appreciate our extensive training program and the flexible work-life balance owning a home-based business provides, enabling them to simultaneously be successful and maximize their family time. Operation Vetrepreneur is just one way CruiseOne supports military veterans.”
“Winning Operation Vetrepreneur and owning a CruiseOne franchise has been a tremendous experience. Through the Army I had the opportunity to travel the world and live overseas, and now through my travel franchise I get to help others experience the gift of travel by planning their vacations. In addition, I love how CruiseOne gives me the tools I need to succeed and I have the opportunity to spend more time with my wife, as well as work alongside her.” – Grant Springer,
2013 Operation Vetrepreneur winner and CruiseOne franchise owner.
A member of VetFran, CruiseOne offers many military veteran incentive programs including a 20 percent discount off the franchise fee and additional discounts for hiring former members of the U.S. military or active-duty military spouses as associates. The company aims to have 25 percent of its travel franchise system consist of veterans and their spouses by December 2014. CruiseOne’s Vetrepreneur program will aid military veterans in finding work that will separate them from their past lives while still using the disciplinary skills they have acquired. This opportunity will enable military veterans to rise to success
lists, which represents the top 10 percent
of the nation’s franchises that are doing the most to support military veterans.
Military veterans with a passion for travel
and entrepreneurism who are interested in working as a CruiseOne franchise owner, please visit www.OperationVetrepreneur. com or call 888-249-8235.
About CruiseOne® Celebrating 22 years in business, the
home-based travel franchise CruiseOne® is ranked in the top one percent of all
franchises worldwide and is a member of the International Franchise Association. As part of World Travel Holdings, the
world’s largest cruise retailer, CruiseOne franchisees are able to offer their
customers the lowest possible pricing on
vacations with its 100 percent “Best Price and Satisfaction Guarantee.” CruiseOne has received partner of the year, a topranking status, by all the major cruise
lines including Norwegian Cruise Line®,
Royal Caribbean International®, Celebrity Cruises® and Carnival® Cruise Line.
For more information on CruiseOne, visit www.CruiseOneFranchise.com, like CruiseOne on Facebook at www.facebook.comCruiseOneFranchise, and follow us on Twitter at @CruiseOneBiz
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V e t erans in Franchising
M aui Wow i
Maui Wowi
Comes to Carlsbad, California Los Angeles Fire Fighter and Marine Veteran adds Maui Wowi business owner to his portfolio with his wife and family by his side. Robert and Lorraine Hinojosa and their three children are excited to join the Maui Wowi ‘ohana as the newest franchisees. “Maui Wowi is what we have been looking for in a company and we look forward to making this into a fun and exciting time in our family’s lives.” Maui Wowi Hawaiian, a well-known brand in Southern California that specializes in Hawaiian coffees and freshly blended fruit smoothies, is adding more fun to the area with a new franchisee in Carlsbad, California. The company has granted a franchise agreement to Marine veteran and Los Angeles fire fighter, Robert Hinojosa, and his wife Lorraine. Together with their three children, the Hinojosa family make up a powerhouse team. The couple is hardworking, goal oriented, and ready for their next adventure. As they set out to find the perfect business to invest in, they knew that it had to be flexible to fit in with their busy schedules. Robert will continue to work in the community as a fire fighter but his schedule will allow time to run the business on his days off. “Being able to run our own business and set our own schedule is great,” said Robert. “We find it very appealing to know that what we put into making Maui Wowi successful is what we will get in return.” A company that accommodated their desire for flexibility was high on their list of criteria but Maui Wowi also fulfilled their top priority; allowing them to make it
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a family business with their three children. “We came across Maui Wowi and instantly fell in love,” said Lorraine. “Maui Wowi is what we have been looking for in a company and we look forward to making this into a fun and exciting time in our family’s lives.” Lorraine, who has previous experience in running a business, plans to put her knowledge to great use as they get started. They plan to bring the brand to their community with a mobile event unit known as the Ka’anapali Cart. The busy Southern California area has no shortage of events, creating lots of opportunities for the Hinojosa’s right out of the gate. After a week-long training program held in Colorado where the international franchise company is based, the Hinojosa’s will have every tool at their disposal to set them up for success. The hands-on sessions are designed to give new franchisees real life experience and knowledge on how to build their business by using a system proven for over three decades. Robert and
Lorraine are well on their way to adding a little more of the Aloha Spirit to sunny California. For more information: Website: www.mauiwowifranchise.com For more information on Maui Wowi franchise opportunities, please visit http://www.veteransbusinessservices.us/ product-item/maui-wowi-hawaiian/
About Maui Wowi Hawaiian Coffees & Smoothies Since 1982, Maui Wowi Hawaiian has embraced the Hawaiian culture and has been serving paradise in a cup since the day it began, over 30 years ago. From event carts, mall kiosks and stand-alone retail locations Maui Wowi Hawaiian offers premium, all-natural, gluten-free, fresh fruit smoothies, as well as gourmet Hawaiian coffees and espresso beverages. With over 450 operating units in seven countries, Maui Wowi Hawaiian has truly gone “Global” by adding an online store, shop.mauiwowi.com.
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V e t erans in Franchising
Jim Mingey, Veterans Business Services
Are you really qualified to do the deal? With all the franchise advertisements out on the market today, it gets a little confusing to confirm if you are really qualified for a franchise opportunity. Learning about the structure of a franchise
offering and about the terminology before pursuing a franchise is very important. Most advertisements do not constitute an actual offering. Until you review the Franchise Disclosure Document (FDD) you really don’t know the exact details of any franchise opportunity. Understanding what liquid capital equates too, and calculating your total Net Worth and how it applies to being considered for a franchise opportunity, is very important and can save you a lot of time in your
franchise discovery process. All franchise organizations want potential candidates to have stability, both financially and – professionally. Having liquid capital or savings to help you ramp up with a business is essential. Ask yourself “What am I going to do if in the first six months of my business I do not turn a profit, what funds will I use to survive? A common statement I hear about funding a franchise opportunity is “If I have enough capital to cover the franchise fee, will this be enough to get approved for a franchise”. Starting any business requires you to complete a feasibility study to see if the franchise is a good investment and to understand if you wish to proceed with a franchise opportunity you always need to devise a business plan. Starting a franchise requires a franchise fee, considerable investment capital and on top of that initial fee, there are usually marketing and royalty fees and other costs. Even if you are lucky enough to have all the capital to cover the total investment of the franchise opportunity, this may not be the funding route you wish to take. Capitalizing your franchise opportunity is the most important decision in the franchise decision process. Will I use my own savings? Will I use my 401K fund? Will I take out a loan and which one, what terms? Can I use a partner or get an outside investor? Being realistic about this financial process is essential to look at before you even approach a franchise. VBS has
provide the same franchise offering to every prospective candidate, including the incentives they offer Veterans and those incentives still have to be consistent in their FDD offering. Please visit www.veteransbusinessservices.us to learn more about our services.
formed relationships with many franchise organizations and we are always prepared to inform all the Veterans we work with if they are qualified for any opportunity and teach them how to become a better qualified franchise candidate. We educate Veterans about the loan process and use resources to assist them in finding out if they are qualified for a loan to meet the capital requirements of a franchise. Our goal is to be as realistic as possible so the Veteran can clearly understand the risk reward process of owning your own franchise opportunity. VBS identifies incentives offered by franchise organizations and offers incentives itself to assist Veterans with getting started with a franchise opportunity, but these incentives do not cover total capital required to start a business. You must either have capital, have assets which make you eligible for a loan and have a good credit background to qualify for a loan. Every franchise has different financial requirements to start a franchise and some have low franchise fees and low capital investment requirements, but almost all of the
franchises require an investment on your part and you have to be able to define how you will cover this investment. Outside of the occasional Veteran franchise give-a-way promotion, most franchises require you to at least cover the franchise fee, and secondly be able to have capital to cover the operating costs of the business. Some of those costs are phased in over time with the franchise implementation plan but all the costs are due at some time so funding needs to be in place first before you are awarded a franchise. This is why it is important to have resources such as business mentors, finance specialists, legal support, and franchise experts to assist you with the franchise process. VBS assists Veterans every day with making their business goals feasible and realistic. As franchise brokers we assist every Veteran who comes through the process with current realistic information about the investment, we identify incentives, and we evaluate each Veteran to see if they financially qualify for any opportunity. Nothing can be misleading about a franchise opportunity because franchise organizations have to
VBS’ Founder and Managing Director, Jim Mingey, is a decorated Vietnam Veteran raised from a proud military background. An entrepreneur for more than 35 years, Jim can relate on a personal level to the needs of the Veteran small businessperson, and possesses the practical knowledge to implement his experience in today’s market. Jim participated in the EBV Program at Purdue University, is a mentor at American Corporate Partners, developed the first approved franchise training program for the Vocational Rehabilitation and Employment(VR&E) Program at Veterans Administration, and was instrumental in forming the first equity fund in the United States exclusively for Veteran owned small businesses and franchises: The Veterans Opportunity Fund. Jim intends to keep on ‘advocating’ for Veterans in franchising. For further information visit: www.veteransbusinessservices.us
Jim Mingey
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Vetera n N ews
that’s the first step.
Moving Forward Strategically The best strategic initiative is to look at the veteran community as an extremely strong and loyal customer base. When a program is built that can withstand nearly a quarter century of political turmoil, several recessions and economic cycles, and countless changes in leadership, you know it has a culture and life of its own. The International Franchise Association’s VetFran program has done just that since its establishment in 1991.
5,200 new veteran franchises have opened since 2011 as part of Operation Enduring Opportunity.
After having served on this committee for nearly seven years, the past two as chairman, it’s easy to see why VetFran has not simply survived, it’s thrived. Today, the program includes more than 640 IFA franchisor members. Nearly
The most common question I get is: “I want to help and bring VetFran into my system, what should I do?” We certainly want to have every eligible franchise system fly the VetFran banner, but it goes well beyond simply enrolling, though
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As we work to update and establish a sounder strategic plan, I wanted to share some of the ways we’ve found to help your brand move forward with VetFran in a more strategic fashion.
As in any strategic planning session, you must first understand the goal and what you want to see as a result of your investment in time and treasure to achieve your objectives. For new and long-standing participants in VetFran, I suggest these steps to help you identify ways to help veterans, as well as getting your brand aligned strategically with a phenomenal program: 1. Identify current veteran owners, managers, employees and spouses within your system. 2. Measure the performance of these owners to your non-veteran community. 3. Look at ways your brand can help support veteran customers or causes. 4. Build the system to engage and keep an open dialog with veterans and their spouses. 5. Establish long-range goals for system growth and potential business expansion to veteran’s groups. Let’s look at these key steps in more detail along with a few suggestions for optimizing both the input and the output of this great initiative.
Identifying Your Current Veteran Community Within your system’s ranks sounds simple, but most brands we talk to have no idea how many veteran owners they have, nor do they have any metrics on how many have joined under the VetFran umbrella, how much in grants or franchise fee discounts have been given, nor how many spouses or veterans work for their owners. This is a key first step because knowing this community within your brand’s ranks will help you understand how well you are aligned with recruitment and growth among your veterans. We hear that
“We certainly want to have every eligible franchise system fly the VetFran banner.” anywhere from 5 percent to 20 percent or more of some brands’ ownership is comprised of veterans with 10 percent being a very common target for many. Given that veterans in the United States are approximately 7 percent of the overall population, this range of ownership is a solid figure. If your brand aligns well with veterans, you have the system in place to introduce and educate them about your brand, including strong unit economics, then the sky is the limit.
from brands that honor our veterans. This means a lot to the veteran community and they are extremely loyal to those who take care of them. If you have locations on or near military bases or around veteran communities, you already know this. But do you know you can go after more business in this channel?
What We Measure, We Move
• Military.com
We’ve all heard this axiom, and with many brands I talk with, they have no idea how well their veterans are doing compared to their average unit volume. In a report in 2013 by Franchise Business Review, the average unit volume among all veterans reporting was similar to those of any civilian-owned unit; however, the vast majority of veterans owned single units relative to the industry, therefore, deeper examination of the data is warranted.
• Veteransadvantage.com
Take the opportunity as you prepare your franchise disclosure document and gather information on average unit sales, gross profit or even net profits of your veteran community, as well as their hiring practices. Again, in this FBR report, veterans are much more likely to hire other veterans (30 percent more likely) and to support veteran’s programs. This is not to say veterans will certainly out-perform non-veterans, but while most entrepreneurs are known for being competitive, that’s very much the case with franchise owners. Veterans are also extremely competitive and want to do better than their benchmark in most cases.
Align Your Brand With Veterans There are many ways to help. We’ve seen and heard many stories from brands that offer a discount to veterans. I’ve personally benefitted from the occasional hotel discount, complimentary meal on Veterans Day or an ongoing discount
There are some great sites to potentially integrate your brand into, like these (among others): • Mylitter.com
There are also some fantastic causemarketing aspects you can support that involve all of your owners and allow them to express their patriotism. For example, Sport Clips supports the VFW each year with donations made by customers, as well as their stores. Many systems have seasonal or timesensitive promotions on Memorial Day or Veterans Day that their owners can get behind, but be careful of getting caught in the clutter and consider other days where your brand can potentially stand out. For example, November 10 is the Marine Corps Birthday and means a great deal to Marines (of which I am one). If you own a dry cleaning, baby-sitting or home services (maid, window washing and so on) franchise, you could offer an incentive leading up to or after this great day. This would inspire the Marine community to utilize your business and not get lost in the clutter of the “big” veteran holidays. A regular dialogue and discussion with your veteran community including spouses and employees not only helps you keep a finger on what their issues or individual challenges may be (health care, tax credits, financial incentives and others), but it will also help you understand how to better support and communicate to them. With TSS Photography for example, we conduct a breakfast meeting during our convention and occasional conference calls. We try
Joe Linenmayer
to mentor new veterans with existing veterans and support causes they feel are important to them or their territory.
Don’t End Your Support of VetFran with the Initial Franchise Fee Discount Engage your vendors or suppliers, make sure you have some interaction with veterans on your social media presence and most importantly, create a conduit for discussing issues as they arise. For example, honoring local veterans as they come home from deployment (think of the National Guard or Reserve units that could also use help while on deployment) can be very beneficial to men and women who balance a civilian and military career. These are very real opportunities to align your brand with a cause and customer base that will appreciate you and help you grow your business. Perhaps the best strategic initiative is to look at the veteran community as an extremely strong and loyal customer base. Whether it’s owners of your franchise, employees or spouses and children of veterans, having your senior leadership team engaged in this initiative and active with VetFran (www.vetfran.com) is the right thing to do, for our veterans, your brand and your bottom line. Joe Lindenmayer is president and chief operating officer of TSS Photography.He serves as IFA VetFran Committee chairman. Find him at fransocial.franchise.org.
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V e t erans in Franchising
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V e t erans in Franchising
Precision Au to Ca re
From Marine to F Chris Cartisano
What started as a small tune up garage in 1976 in Beaumont, Texas has evolved into an international brand with more than 250 U.S. locations and another 80 centers operating in seven countries.
Over the years, the Precision Tune Auto Care brand has been an appealing brand for our men and women transitioning out of the military and as noted, the PTAC
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system is home to many franchisees who are veterans. One of the most successful of those franchisees is Chris Cartisano, owner of Center 75-18 in Shelton, Connecticut. Military service has been a tradition in Chris’ family. Following in the footsteps of his father, uncle, cousin and grandfather, Chris served our country as a Marine from 1979 – 1985. When he first arrived at Paris Island as a young recruit, waking up every morning at 4 AM, he said that “Many mornings, I wondered what had I gotten myself into. But through perseverance, pride in my country and respect for the men and women who came before me, I survived.”
Profile When Chris went into the Marines, he was not thinking about owning his own business when he got out. However, going through Basic Training and serving in the Marines, taught him that he could do much more than he ever realized or even considered. The confidence he gained while serving prepared him to do anything! As Chris said, “After leaving the Marine Corp, I didn’t immediately jump into running my own business. I first entered drafting school while I was serving out my reserve duty. Later, I went back to school and pursued my engineering degree. However, it became clear to me that jobs like the ones I would be pursuing
Franchisee as an Engineer were being outsourced. I remember thinking to myself - if I’m not going to be outsourced, what industry should I get involved in?”
The short answer was “Cars.” Chris always had an interest in cars and figured that Americans would be driving cars for as long as he would be working and would need to have those cars maintained and repaired. Chris decided that if he was going to start his own business, exploring franchising would be a good start. He felt that anyone starting a new business should seek a proven and established franchise with the tools to help someone get a business up and running and help minimize costly mistakes. This decision to get into the automotive aftermarket led him to Precision Tune Auto Care. Chris was only looking for franchises that had a strong historical track record and were not new to market brands. Precision Tune Auto Care had been in business since the late 70’s and seemed like the right fit. “While the reduced franchise fee for Veterans played a role in getting me to explore Precision Tune Auto Care, I quickly found out that with Precision as my franchise partner, I was going to be in business for myself but not by myself. I knew that I would have a team, the franchise, behind me to help support me or answer any of my questions when they come up. That type of team work is priceless to a small business in America today. “ When asked what the best part of owning his own business as a franchisee was, Chris replied, “Being my own boss and knowing that I’m responsible for how successful my company is going to be each and every day.” Chris knew that running his own business would not be easy. Even today, after nearly a decade in business, it is still challenging to make
“Chris decided that if he was going to start his own business, exploring franchising would be a good start.”
the time to study the numbers and make sure that cost of goods, payroll and other expenses are being managed so that he can meet his financial goals. Chris says “It’s my business. If I don’t look after it, who will?” Chris told us you must persevere to succeed in business. “When things were bad in 2009 and 2010 I wanted to sell. I called the corporate office and asked them to buy me out, as I saw shops closing all round me. People were not spending money. The economy had really turned south. For a brief moment, I had forgotten how to persevere like they trained us to do in the military. It was not until I read an article in one of the PTAC communications written by the CEO about his boxing experience that rekindled the inspiration to persevere once again, you know the “never say die attitude.” Chris knew he was in the proper industry and that he had the right ingredients for success and the right team behind him. He contacted the Precision Tune Auto Care corporate office for help. With assistance
from corporate, within a short time the business was back on track and once again a leader for automotive maintenance and repair in Shelton, Connecticut. Not only that, Chris is a leader in the PTAC system. His store has been in the Top Ten for sales for the past six years and the future has never looked brighter. We asked Chris why he thought Precision Tune Auto Care has 26 percent Veteran ownership. Chris said “Commitment to helping veterans is ground zero. A commitment to help veterans coming out of the armed sources is the main attraction. Support them and help them succeed.” Precision Tune Auto Care is committed to helping all their franchisees not just Veterans. Chris Cartisano is a just one example. There are many others. Precision Tune Auto Care has not forgotten those who served. If you would like to find out more about the Precision Tune Auto Care system visit our website, www.PrecisionTune.com or call 703-777-9095 for more information.
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ex per t advice
Gary F. Joyal, founder of Joyal Capital Management LLC
Where Time is Money
Professional Relationships Matter “The best franchise owners have maximized their success by also having a team of professionals ready to act on their behalf as opportunities arise.” Defining the Relationships
Gary F. Joyal
Franchise group networks are powerful and effective associations for franchisee owners. They afford the franchisee a forum replete with best practice tools and operational expertise, but the franchisee’s business remains independent, preserving that crucial entrepreneurial spirit that can thrive in the franchise ownership setting. However, there are times and circumstances when the best interest of independent franchise owners are not, or cannot be, addressed through the franchise group setting. Franchise owners need to be very assertive and proactive when it comes to building their team for strategic planning, as well as unexpected scenarios that may occur.
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The Franchise Group – This group exists to help support your management and marketing areas to grow the franchise business. There is valuable knowledge and expertise at your fingertips as well as case studies for guiding your efforts. Look to your franchise group to assist you with training, customer lead generation, marketing, website development and moral support. The franchise group contains valuable members of your team, and you should maximize its ability to help you succeed, but relying solely on The Franchise Group for all areas of your business is a common mistake franchise owners make that can be a true detriment to your long term goals. The best franchise owners have maximized their success by also having a team of professionals ready to act on their behalf as opportunities arise. Legal Counsel – While the franchise group agreement probably has some legal time allocated for you as a franchisee, please know you still need your own representation to assist you with more sophisticated matters, as well as your agreement with the franchise group itself. In the event that your best interests either deviate or are unrelated to the interests of the franchise group, you need sound and non-conflicted advice. Thankfully there are a host of lawyers and firm’s that specialize in the franchised space and can
be valuable stewards of the rest of your professional team. Accounting Services – There are much more detailed accounting services needed when managing multiple franchise locations and/or agreements. Tax laws are constantly changing and a seasoned tax attorney along with a CPA familiar with franchise agreement structure is an integral part of your team. Real Estate Advisors – The franchise group will have realtors available for you to use when considering a new location or negotiating lease agreements. However, you will be working within their time parameters and prioritized with other franchisees. A dedicated team of real estate advisors working with your professional team will have you as a top priority. Lenders – In order to quickly manage deals, working capital is imperative. Franchise owners operating with a team concept have their lenders engaged on a regular basis to manage the portfolio needed to secure funding for transactions that need to move quickly. The most common resistance to building out a team with outside professionals is money. It is a valid concern and yes, utilizing this approach is more expensive than managing the transactions on your own. The concept is not as advantageous for a franchisee operating one or two
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ex per t advice
Gary F. Joyal, founder of Joyal Capital Management LLC
businesses in a location where they plan to stay indefinitely. Those who benefit the most from the arrangement are franchise owners who operate multiple franchises in multiple states, franchise owners who plan to grow to that level, or franchise owners who plan to conduct annual transactions of selling or acquiring franchise operations. In these cases, the team concept often provides a significant cost savings by being able to execute all of the moving pieces of the deals, being able to take advantage of growth opportunities that could not be consummated out of cash flow, and being able to maximize the legal tax benefits that can be derived by such transactions. The concept of the professional team approach is best expressed through the following case study: “Mr. Jones” was the owner of 13 Dunkin Donuts in Massachusetts. He planned to move to Florida for family and lifestyle purposes but wished to continue as a Dunkin franchisee in Florida. Prior to embarking on that major strategic shift, Mr. Jones secured the team at Joyal Capital Management, LLC (JCM) to augment his operation. Our firm quickly engaged its client data base and began surveying the franchise mix. We were able to secure two distinct store networks for purchase in the same Florida micro trade area, no easy feat. With replacement assets identified, the focus became one of timing as Mr. Jones needed to structure the sale and subsequent purchases under the 1031 exchange code rules in order to utilize a deferred tax approach in the transaction, a major point of value for Mr. Jones and his overall worth. The main issue became one of timing and execution risk as, once the sale of Mr. Jones’s Massachusetts assets was consummated, the 45-day clock was ticking to officially identify replacement assets and close within 180 days. With timing so critical, the deep and long held relationships from JCM’s professional team became paramount to complete the acquisition of the 36 new restaurants in a tight time frame. The firm utilized expert franchise attorneys to prepare the handling of lease assignments, banking files,
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franchisor approval process, and store transfer documents. The task involved 36 distinct lease assignments, more than $30 million of bank financing, two states, three franchisee groups, and all within the required time frames of a 1031 exchange. While Mr. Jones may have been capable of handling the process, the probability of doing so within the time frame was very unlikely. Mr. Jones’s decision to utilize JCM and its numerous financial services produced winners from all angles • The acquiring franchisee of Mr. Jones’s New England stores obtained a pristine network to further grow his already substantial and impressive operation. • The selling franchisees in Florida obtained fair values on their networks and achieved enviable investment returns for their stakeholders. • Mr. Jones was able to roll his New England profits into a new Dunkin investment in a growing market, and now has capital and territory rights in order to facilitate the growth that he was eagerly seeking. • The Franchisor solidified franchise operations in two states and linked an aggressively developing franchisee with a target area for development. (Editor’s note: The transaction noted above earned Joyal Capital Management, LLC and its client a 2014 Dealmaker of the Year Award from the Franchise Times. JCM refers to their professional team concept as a Private Family Office.)
About the Author: Gary F. Joyal is the founder of Joyal Capital Management LLC and has been a trusted advisor to clients and a leader in the financial advisory marketplace for nearly 30 years. JCM was founded on the principles of estate planning, retirement planning and business services, but under Gary’s leadership has grown to become a leader in debt and equity placement as well as Mergers & Acquisitions in the Quick Service Restaurant (QSR) space. For more information: Website: www.joycapmgt.com
Critical timing components of Section 1031 of the Internal Revenue Code Like-Kind Exchange The Identification Period: This is the crucial period during which the party selling a property must identify other replacement properties that he proposes or wishes to buy. It is not uncommon to select more than one property. This period is scheduled as exactly 45 days from the day of selling the relinquished property. This 45 days timeline must be followed under any and all circumstances and is not extendable in any way, even if the 45th day falls on a Saturday, Sunday or legal US holiday. The Exchange Period: This is the period within which a person who has sold the relinquished property must receive the replacement property. It is referred to as the Exchange Period under 1031 exchange (IRS) rule. This period ends at exactly 180 days after the date on which the person transfers the property relinquished or the due date for the person’s tax return for that taxable year in which the transfer of the relinquished property has occurred, whichever situation is earlier. Now according to the 1031 exchange (IRS) rule, the 180 day timeline has to be adhered to under all circumstances and is not extendable in any situation, even if the 180th day falls on a Saturday, Sunday or legal (US) holiday.
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SN A PSH OT
Rock in’ Jump
Fitness Focused Fun For The Entire Family with Rockin’ Jump®
Thinking about becoming your own boss? If a fun, fitness focused and family friendly business concept appeals to you, then read on… Imagine running a business that is fun for the entire family, a community destination offering fitness disguised as fun & unforgettable birthday parties, that gives franchisees the opportunity to have a real, positive impact in their local community. That business is Rockin’ Jump - The Ultimate Trampoline Park® Franchise. Rockin’ Jump was established in 2010 and opened its first location in Dublin, CA in 2011. There are now 5 parks nationwide with another 29 franchise locations in the works, including their first international park in Bangkok, Thailand. Rockin’ Jump parks range from 16,500 to 25,000 square feet typically, with 10,000 square feet of pure trampoline jumping space, and another 6,000 to 15,000 square feet of guest and entertainment space. Areas can be sectioned off for little ones just learning to jump, and parents with young kids can enjoy private jump time sessions together. There are also areas for dodge ball and basketball, giant foam pits for practicing that perfect flip, and of course plenty of room just for jumping. Safety is the primary objective for the
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Rockin’ Jump team. In fact, safety is such a priority for the company that they have developed and trademarked a safety program called JumpSafe®. This program provides training and information for staff and guests to ensure that every experience at Rockin’ Jump is Safe. Clean. Fun.® . A focus on hospitality is another of the keys to Rockin’ Jump’s success. Guests of Rockin’ Jump receive unexpectedly good service at every turn. Birthday party hosts are on hand and engaged to ensure celebrations are enjoyable for everyone kids and parents alike. Lounge areas are comfortable and relaxed and feature free Wi-Fi. And the food and beverage service is top notch. Rockin’ Jump ensures that each guest experience is complete & positive. Currently each Rockin’ Jump location contributes in the range of $75,000 per year towards community programs and organizations through its preferred marketing channels.
Once a new franchisee is established, the Rockin’ Jump team offers superior support and guidance as the new location is built, opened and for the life of its operation. Franchisees receive 13 – 14 days of indepth training at their corporate parks in California, and once completed, Rockin’ Jump has expressed confidence that you will be as ready as any of their corporate managers to run your own park. Typically, Rockin’ Jump franchisee prospects will have $500,000 in liquid cash assets, and a net worth of $1+ million. That’s a significant investment, but that investment can pay off with parks capable of reaching $2.0+ million in annual gross sales, and net profits of over $800,000, or 39 percent, annually.* [*Figures obtained from Rockin’ Jump’s Dublin, California location as published in Item 19 of its 2014 Franchise Disclosure Document (FDD). A new franchisee’s results may differ from the represented performance. There is no assurance that you will do as well, and you must accept that risk.]
For more information visit: www.rockinjump.com
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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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ex per t advice
Julie Lusthaus, Partner & Mackenzie Dimitri, Associate Attorney, Einbinder & Dunn
What You Need To Kn Before Buying a Fra Many of prospective franchisees have the same questions when they first consider purchasing a franchise. These include the following: What is franchising? Franchising is a method of expanding a business where the franchisor licenses its trademark and business system to a franchisee. In exchange, the franchisee pays a fee. Franchisees then conduct their business in accordance with the franchisor’s standards and specifications. Franchisors also typically provide franchisees with pre-opening training, post-opening training and overall support.
Julie Lusthaus
What are the advantages of franchising? When you purchase a franchise, you are buying a proven business system. Franchisees get to tap into the franchisor’s knowledge of how to best operate its business, which saves time and cuts down on mistakes. In addition, franchisees receive training, ongoing support and assistance. Some franchisors also create advertising programs which provide maximum exposure for its franchisees.
What types of franchises can be offered?
Mackenzie Dimitri
Franchising USA
Generally, franchises either operate in the retail sector or the service industries. Retail franchisors may offer, among other options, full retail store franchises, kiosk franchises, or store-in-a-store franchises that offer all product lines, one product line or a combination of the product lines. Service franchises can offer a full assortment of services, one specific service or a combination of services. The types
of franchises that may be offered are as unique as the particular business model developed by the franchisor.
What is a Franchise Disclosure Document (FDD)? Before a franchisor is legally permitted to sell a franchise, it must comply with certain rules promulgated by the Federal Trade Commission (FTC) and/or statutes enacted by the state the franchisor is selling from or the state the franchisor is selling into. The purpose of the rules and/ or statutes is to require the franchisor to provide the potential franchisee with information to make an informed decision about purchasing the franchise. The FTC Rule requires franchisors to provide potential franchisees with a Franchise Disclosure Document (FDD). When deciding whether or not to purchase a franchise, it is best to have advisors, such as an attorney with experience in franchises, review the FDD.
What kind of information is in an FDD? The FDD contains 23 separate items of information. It is similar to a stock prospectus in that its purpose is to provide sufficient accurate information for prospective franchisees to make an informed investment decision. Among other things, the franchisor must provide a company history; information about the types of products offered and the general condition of the marketplace; a description of the initial franchise fees and
now anchise all other fees paid during the course of the franchise relationship; a description of the assistance the franchisor will supply; and an explanation of the system standards for advertising development and placement, site selection and build out, and computer systems. The FDD will also detail the size and scope of the territory granted to the prospective franchisee and will discuss the rights retained by the franchisor. Franchisors may choose to disclose information relating to the financial performance of the franchise system or franchisees operating within the system.
What are the more common areas for dispute that arise during the franchisee-franchisor relationship? There are seven common issues that arise between franchisors and franchisees, which relate to termination of the franchisee and enforcement of the postterm obligations, statutory compliance issues, fraudulent practices, intellectual property matters, territorial encroachment and general contract disputes. Many termination cases are brought by the franchisee in response to an improper termination of the franchise. Disputes arising from the franchisor’s failure to comply with registration, disclosure, relationship laws or other federal and state regulations are also common. Franchisees may also bring claims alleging fraud and misrepresentation by the franchisor, including fraudulent statements made by the franchisor relating to potential earnings (referred to as ‘earnings claims’). Other disputes may center around the franchisor’s failure to comply with the franchise agreement by encroaching on
“When you purchase a franchise, you are buying a proven business system.” the franchisee’s territory, failing to provide support or failing to comply with other requirements imposed by the franchise agreement.
What things should I do before I purchase a franchise? All prospective franchisees should conduct due diligence before purchasing any franchise. Compare franchising opportunities within the industry to determine which franchise is best suited for the prospective franchisee and which franchise may be the most successful. Once you have chosen to purchase a particular franchise, speak with as many franchisees in that system as possible, including former franchisees. Reviewing the FDD and offering with franchise counsel and an account is also an invaluable part of the due diligence process.
Are franchise agreements negotiable? Franchisors will often say the franchise agreement is non-negotiable, but there
is no steadfast rule. In truth, some franchisors are willing to negotiate, and certain terms are typically more negotiable than others. Generally, whether or not the franchisor is willing to negotiate terms — and if so, which ones and to what degree — is a matter of leverage. Factors may include how long the franchisor has been in operation, the size and scope of the franchise system, how eager the franchisor is to sell a franchise, and the extent of the franchisee’s business experience or financial backing. Attorney Julie Lusthaus is a partner in the firm of Einbinder & Dunn, LLP. She focuses her practice in the area of 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.
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focus
Fresh H ealthy Vending
FRESH OPPORTUNITIES The future of workplace wellness lends a franchise opportunity of which to take a closer look For many, the topic of workplace wellness is more of a discussion to be had from an internal standpoint, between HR and the executive team, and is a dialogue happening more and more as employee wellness increasingly becomes a top priority for employers.
Several studies have demonstrated that high-performing organizations have engaged and motivated workers. Similar studies have also drawn a correlation between worker engagement and health. A healthy worker is more likely to be engaged and personally fulfilled. But how does this newfound appreciation for employees’ health, give potential franchisees the opportunity to get in on this growing trend; one that is not going to slow down any time soon? Enter Fresh Healthy Vending International, Inc. (OTC Markets: VEND), North America’s leading healthy vending franchisor, to the equation. As the pioneer of the healthy vending movement,
Fresh Healthy Vending continues to provide new and innovative options to its franchise network, offering current and new franchisees opportunities to excel with their businesses, like adding micro markets to their roster of healthy vending offerings. Fresh Micro Markets offer an expanded selection of healthy snack, drink and meal options, sourced from local, fresh food chefs and caterers, including fresh fruit, salads, sandwiches, wraps, cold-pressed juices and more. Ideal for companies with or without defined and implemented wellness programs, the unstaffed, fully automated store, stocked regularly with healthy snacks and complete meal options are customizable based on the company’s program and employee preferences. As of today, the company is making its Fresh Micro Market (http://www. freshmicromarket.com/) option available to all existing and future franchisees, via its Fresh Micro Market website adding to its healthy vending line of Combo and Touch machine options. “This is a high growth, exciting but untapped industry segment for us and our franchisees,” explained Nick Yates, VP of corporate operations for Fresh Healthy Vending. “Our market and product research and due diligence review of third-party industry options, including a possible acquisition, led us to develop and manufacture the new proprietary micro markets that we are proud to introduce today. With the close collaboration of
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“As the pioneer of the healthy vending movement, Fresh Healthy Vending continues to provide new and innovative options to its franchise network.”
purchase 10 to 30 units, Fresh Micro Markets cost $10,000 per machine, in addition to a $1,000 franchisee fee, per unit. A software maintenances fee and location procurement fee are built into the program as an optional add-on for franchisees. Workplace wellness programs are here to stay. The economic reasons for having a wellness program are compelling to employers, as are the broader societal reasons.
About Fresh Healthy Vending
Reliable Contractors, Inc. and VirtueBuild, both of San Diego, we fine tuned the hardware components and powerful software features of our Fresh Micro Markets to present what in our view can become the segment leader that generates rapid market penetration and revenue growth for our franchisees and us.” The self-checkout Fresh Micro Markets with cashless payment options (i.e. credit / debit card, prepaid market loyalty cards, Google e-wallet and e-commerce platforms) are most often installed in corporate locations, allowing for an in-house convenience store with no size restrictions on items sold and eliminating the possibility of products stuck in vending machines. In addition, Fresh Micro Markets allow for multiple product purchases in a single transaction. The look and function of the Fresh Micro Market is unique to the current industry offerings and is in line with the future of American workplaces who are shifting to a more contemporary office environment and making employee benefits a top priority. It’s the ‘iPhone Era’ where everything must have both the clean and modern look, but with the simple-to-use
features and high functionality to match. Free for the locations, franchisees that buy into the Micro Market sector of Fresh Healthy Vending gain access to experts in the company’s product development, location procurement, technical support, franchise coaching, and franchisee mentor departments. Fresh Micro Markets parallel a retail store by offering extensive transactional data processing, including day-part metrics, business analytics and merchandising strategies, as well as Internet connectivity for open-system, electronic payment processing and transaction tracking. “We expect that our Fresh Micro Markets will generate robust new interest that will drive revenue from franchise sales and growing royalties from product sales, will be a material contributor to the vending units we own directly and operate in Southern California,” said Yates. “The programs and structures we have created for franchisees to operate our Fresh Micro Markets take all the guesswork out of the equation, as we walk them through every step of the way and remain supportive throughout the lifetime of their business.” For new and existing franchisees who
Fresh Healthy Vending, based in San Diego, California, is North America’s leading healthy vending franchisor. Fresh Healthy Vending pioneered the concept of vending machines stocked with triedand-tested fresh, healthy snack options and capitalizes on a growing market of health conscious consumers. The Company has appointed more than 230 franchisees throughout the United States, Canada, Puerto Rico and the Bahamas and actively looks to partner with like-minded entrepreneurs whom share its vision. The Company offers three different vending options: (i) the Healthy Vending Combo snack and drink machine, (ii) the Healthy Vending Touch - a 46” 3D interactive touch screen vending machine, and (iii) the Fresh Micro Market. The Company has installed machines in more than 2,500 schools, universities, hospitals, community centers, military bases, airports, fitness facilities, YMCAs, libraries and many other locations. Fresh Healthy Vending’s stock is traded through the OTC Markets, Symbol: VEND . For more information on Fresh Healthy Vending, the Franchise Program, or to receive a free healthy vending machine in your school or business, visit www.freshvending.com or call toll free 888-902-7558.
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ex per t advice
Scott Brandt, Vice President of Marketing, SurePayroll Inc.
9 Ruthl If There’s a
Scott Brandt
With that in mind, consider these nine ruthless tactics (that don’t include laying people off) for saving money:
1
Start Moving Online
When Seattle raised its minimum wage to $15 per hour, it made national news because it’s the highest minimum wage in the country. However, from a franchise’s perspective, the bigger takeaway might have been that the Seattle law considers a franchise part of a larger company, even if that individual franchise employs only a few people. While companies with 500 or fewer workers will be given extra time to comply with the new minimum wage, an individual McDonald’s, for instance, that
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employs 25 people, will still be counted as part of the larger corporation. The International Franchise Association filed a lawsuit opposing the law, but if a minimum wage hike comes to your town, and you’re part of a larger chain of franchises, it very well might pay off to have a number of different ways to save money, aside from controlling employees’ salaries. Sometimes when you want to cut costs, you have to get tough. This is your business we’re talking about, after all. We understand that every franchise is different, and you may have some restrictions based on which franchise you own. At the same time, there may be more you can do to save money than you think.
Everything in today’s world can be stored and accessed online instantaneously – pay stubs, tax documents, internal memos, handbooks, you name it. As the owner of a small franchise, there’s just no need to spend extra cash on printing costs, unless you happen to know something like direct mail is effective. More and more, people are used to viewing things on their computers, phones, and tablets. Consider using an internal drive or Internet site Dropbox, Google Drive or Microsoft’s OneDrive - for shared documents. For payroll and tax documents, use an online payroll service that stores and maintains everything for you. Same goes for accounting online.
2
Trim Insurance Costs
This is obviously a significant cost for any small business. Whether it’s health insurance, workers’ comp, life, make sure you’re getting the best deal out there. Often a broker can help by presenting a number of different options you can compare and choose from.
3
Kick the Tires on the Business Model
Everyone loves a good promotion (buy two, get the third one free - that kind of thing), but it may not be right for your business or necessary because of where you’re located, the type of customer you have, or any number of other factors. If
less Ways to Save Minimum Wage Hike your franchisor allows you to, test it. Offer a promotion for a month and then the following month see if your customers are willing to pay more for the same amount. If they are, there’s no reason to give them a discount. Some products, people are willing to pay for at a premium (think Apple), others they demand a discount (J.C. Penney). Figure out where you fit in and don’t give anything away for less than what the market will pay.
4
Get Internet Savvy, Fast
Some people are still uncomfortable with the digital revolution, but if you’re not taking advantage of it, it’s a missed opportunity. You can allow people to more easily find you online with some basic research on search engine optimization (SEO). People need to be able to find you on Google when they’re searching for something that’s exactly like what you’re offering. Certainly some time spent learning about SEO tactics for your website is far cheaper than pouring money into advertising.
5
Be Smart About Advertising and Marketing
This is unfortunately an area that business owners sometimes dive into without understanding their objectives or what might help sales, and end up spending a lot of money with no return on investment. It may have seemed like a good idea to brand a thousand pens with the company logo, but what is that really doing for you? How much are you paying to advertise in the local newspaper or something bigger like a billboard? Could you reach the same
“There may be more you can do to save money than you think.” amount or even more people by going on Facebook and spending a couple hundred dollars? The nice thing about online advertising, be it on Google Adwords, Bing AdCenter, Facebook or Twitter is that you can pay per click (so you don’t pay unless someone is coming to your website, liking your page or sharing your stuff). If it’s not working, you can turn it off. It’s quick, it’s easy and it’s relatively cheap. There’s also a great deal of targeting you can do, so you’re specifically hitting people in Houston who like cheeseburgers, for example.
6
Don’t Be Afraid to Shop Around
Ask another owner of the franchise you’re in. If you’re paying more than them for goods and services used by your business, it’s time to go shopping. While you may be comfortable with your current vendors, you shouldn’t ignore better deals that might be out there. If you find them, it can also give you some leverage to negotiate with the current vendor.
7
Treat Your Employees Awesomely
This isn’t just some hokey, feel-good advice. It’s a reminder that paying your employers more doesn’t necessarily mean you’re going to lose money. The cost of high turnover can add up quickly
and happy employees often equal happy customers. Treat your employees great, pay them well and keep them, and you could actually save a great deal.
8
Do Your Research, And Then Some, on Expansion
If you were planning on expanding to a second or third franchise, be absolutely certain you have the revenue to support it. If the minimum wage goes up and puts a tighter squeeze on your finances, it might not be a good time. At the same time, if your industry is in a bit of a slowdown, it could be an opportunity worth seizing, so you’re ready to profit when things pick up. Just have your ducks in a row.
9
Negotiate With the Franchise Company
Approach your franchise about any fees you pay them on a regular basis. Maybe you can renegotiate your lease or borrow signage from an old franchise no longer operating. Any way they can give you a break could help mitigate extraneous costs. They might not budge, but it’s up to you to investigate. Scott Brandt is vice president of marketing at SurePayroll, Inc. For more small business and payroll tips, visit our blog at http://blog.surepayroll.com.
Franchising USA
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