Franchising usa T he ma g a z ine for franchisees
Issue 5 - mar 2013
Snap Fitness:
It’s just t h at e a s y ! G r o w Yo u r
Facebook Community W h at y o u s h o u l d know about w o r k i n g c a p i ta l l o a n s
$5.95 www.franchisingusamagazine.com LATEST NEWS
Social Media Benefits for Franchises
FINANCIAL ADVICE FROM THE BANKS
TOP LAWYERS’ ADVICE
0VS SFDFTTJPO QSPPG GSBODIJTF PQQPSUVOJUZ JT VOMJLF BOZ PUIFS NPEFM The GUAVA® Building Block Healthcare System™ JT DVTUPN NBEF UP BDDPNNPEBUF ZPV ZPVS SFTPVSDFT BOE ZPVS DPNNVOJUZ BMMPXJOH ZPV UP CVJME B TVDDFTTGVM OPO NFEJDBM NFEJDBM BOE TUBʺOH IP IFBMUIDBSF CVTJOFTT BOE ZPVS SFWFOVF JO GPVS FBTZ TUFQT t Step One o 8F IFMQ ZPV CVJME B IPNF t Step Three o 8F USBOTJUJPO ZPV JOUP B CBTFE OPO NFEJDBM QFSTPOBM DBSF CVTJOFTT TUBʺOH NPEFM BMMPXJOH GPS BEEJUJPOBM UP TUBSU HFOFSBUJOH SFWFOVF XJUI NJOJNBM SFWFOVF TUSFBNT UISPVHI OPO NFEJDBM TUBSUVQ GVOET BOE NFEJDBM IFBMUIDBSF BOE TUBʺOH t Step Two o 0ODF ZPV CVJME SFWFOVF XF TUSBUFHJDBMMZ QMBO UIF USBOTJUJPO JOUP BO PʺDF CBTFE IPNF IFBMUIDBSF HFSJBUSJD QFEJBUSJD NPEFM
t Step Four o 8F QSPWJEF UIF GVMM BSSBZ PG JO IPNF TFSWJDFT UISPVHI B NFEJDBM IFBMUIDBSF NPEFM VUJMJ[JOH UIF TBNF PʺDF TQBDF BOE UIF TBNF TUBʹ
0VS NPEFM JT TP FʺDJFOU UIBU GSBODIJTF PXOFST BSF BCMF UP USBOTJUJPO GSPN 4UFQ 0OF UP 4UFQ 'PVS JO UP NPOUIT For more information on franchise opportunities go to www.franchiseseniorhomecare.com or call 1-888-GUA-VA24.
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Franchising usa T he ma g a z ine for franchisees
FRANCHISING USA VOLUME 1, ISSUE 5 MARCH 2013 publisher: Colin Bradbury. colinbradbury@shaw.ca
EDITOR: Christie Hall. christie_hall@shaw.ca
ASSISTANT EDITOR: Sydney Eurchuk. sydney.eurchuk@shaw.ca
SALES DIRECTOR: Vikki Bradbury. vikki.bradbury@shaw.ca
SENIOR SALES EXECUTIVE: Jenn Dean. jenndean@shaw.ca
DESIGN: Jejak Graphics. jejak@bigpond.com
COVER IMAGE: Peter Taunton Snap Fitness
CGB PUBLISHING 676 Wain Rd. Sidney, BC V8L 5M5 CANADA 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
from the
Editor Following the Franchise “System”
struggling with a particular aspect of
Franchisees that we speak with almost always talk about “the system” – using the system, following the system, being supported by the system. If you’re new to franchising, you’re probably wondering, what system are we all talking about, and why is it so important?
already thriving.
The system is at the heart of what franchising is all about. One of the best things about franchising is that the franchise company you choose to work with has already done the hardest work for you. They have come up with a proven business model, aka: “the system,” and have shaped it over time, to make it not only easy to follow, but also successful. Each franchise system is slightly different, depending on the needs of the specific concept, but will often include items such as hiring and training of employees, basic book keeping tools, marketing, inventory systems, and sales tracking. The beauty of having a system to follow is that it gives you, the franchisee, somewhere to go if you find yourself
your business, or if you are looking for ways to improve on a business that is
Franchising is a community, and that
community starts within each franchise concept. Franchisees learn from each other, share in each others’ successes,
and grow together. Franchisors value the feedback of their franchisees, because it gives them the tools they need to
build and improve the system, to ensure everyone’s future success.
As you look at different franchise
concepts, one of the key items to note is the system or systems that each
franchise has in place. In this month’s
issue of Franchising USA, we look at the Health and Beauty franchise industry, with a particular focus on those in
the industry who have claimed a spot in Entrepreneur’s Franchise 500. In
addition to our feature article, be sure to read the Expert Advice shared by
industry leaders, as well as our feature
articles and profiles of various franchises. Christie Hall Editor
www.franchise.org
The information and contents in this publication are believed by the publisher to be true, correct and accurate but no independent investigation has been undertaken. Accordingly the publisher does not represent or warrant that the information and contents are true, correct or accurate and recommends that each reader seek appropriate professional advice, guidance and direction before acting or relying on all information contained herein. Opinions expressed in the articles contained in this publication are not necessarily those of the publisher. The publication is sold subject to the terms and conditions that it shall not be copied in whole or part, resold, hired out, without the express permission of the publisher.
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On the Cover
Snap Fitness: It’s Just That Easy
12
The Importance of Facebook Ads and Paid Strategies to Grow Your Facebook Community
Businesses
Dan Kim, Red Mango
63 Opportunity Money: A New Way to Look At
Working Capital
Robyn Gault, Direct Capital
Kelly Maguire, AviaTech
23
68
44
march 2013
28 How Social Media Benefits Franchises
10 Cover Story
28
f ra nchising usa
Contents
Franchise Focus 58 Dogtopia
Franchisee in Action 40 BoConcept 47 ProTect
Franchisor in Depth 20 Guava Health Care Franchising USA
Expert Advice
28
12 The Importance of Facebook Ads and Paid Strategies to Grow Your Facebook Community Kelly Maguire, AviaTech 16 Overcapitalization is the Key for a Successful New Business Diane Rosenkrantz, Tenet Financial Group 26 How Social Media Benefits Franchises Businesses Dan Kim, Red Mango 44 Identifying the Leader, Understanding the Group, and Implementing Change Darren Wallis, G.J. Gardner Homes
60
54 Male Family Caregivers – Untapped Consumer Base for Home Care Leann Reynolds, HomeWatch Caregivers 60 Understanding Retirement Risks for Franchisees John Geenen, Waterfront Financial Group 63 Opportunity Money: A New Way to Look at Working Capital Robyn Gault, Direct Capital Corporation 66 “Sensing”: Using Experience as a Tool Jack Eberenz, Franchise Integration 68 How Franchise Tenants Can Negotiate a Lease Renewal Rent Reduction Dale Willerton, The Lease Coach
In Every Issue 06 Franchising News Announcements from the industry 23 Feature Article Health and Beauty 31 Women in Franchising Melanie Bergeron, Two Men and a Truck 34 International Franchising Richard Simtob
Profiled Franchises
50 Veterans in Franchising Keith Mathias
WIN Home Inspection........ 14
72 Have Your Say Jacob Mytelka, Food Truck Franchise Group, Gourmet Streets
CPR Cell Phone Repair......38
74
About Franchising – from the IFA Franchise Industry Job Creation
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f ra nchising usa
what’s new! East Coast Wings & Grill Welcomes a New Division East Coast Wings & Grill announces the appointment of Freddy Dupuy as Director of its newly created Unit Economics/Quality Assurance division. The division will focus exclusively on unit level economics and assist new and existing franchisees in delivering stronger revenue and EBITDA growth. “Our brand has always operated with an outside-in philosophy and management approach that places the interests of franchisees ahead of the organization’s endeavors,” said Sam Ballas, CEO of East Coast Wings & Grill. “While this style of franchising and franchisee support has resulted in slower unit growth, the trade-off has been sector leading unit style economics, including EBITDA.” With more than 20 years of operations experience – including tenures with Roy Rogers, Marriott and Rohde & Liesenfeld – Dupuy is accomplished in developing
effective processes and directing complex logistics for multi-million dollar projects. He has a successful track record of system accountability processing, as well as knowledge of managing P&L, identifying redundancies and maximizing resources to streamline operations, among other qualities. “Although puzzled when Sam first approached me with his vision for this new division, I soon realized he and the brand were setting a new standard for franchise models,” Dupuy said. “This new division is walking the talk, investing in what makes the brand great – its franchisees. I couldn’t be more excited about the opportunity.” Dupuy’s appointment comes on the heels of a monumental year for East Coast Wings & Grill. Contact: www.eastcoastwings.com
Premier Mobility & Health Products Exceeds Growth Projections Premier Mobility Franchise Group Inc. has surpassed expectations and grown to 17 territories in its first year.
we`ve experienced in such a short period
are thrilled with the convenience and
to this growth is the unique in-home
personalized service from our well trained
in the comfort of their own home. Our
Company President, Jim Karagiannis, says, “We are delighted by the growth
of time. One of many factors contributing
and experienced franchisees. Customers
ease of purchasing healthcare products
model has been well received by franchise investors looking for a solid investment
in a growing market. Premier Mobility
Franchise Group Inc. and Franchisees are
looking forward to the unlimited potential growth for 2013.”
Premier Mobility & Health Products
offers a complete comprehensive training program, along with continuous head office support.
Contact: www.premiermobility.ca
Franchising USA
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Valpak® Partners with Yasabe.com to Enter the US Hispanic Marketplace Valpak Direct Marketing Systems, Inc., a leader in local print and digital coupons, today announced that it will partner with YaSabe.com to enter the expanding US Hispanic market. YaSabe, the leading provider of local
information for US Hispanics, will enable
users to find and discover Valpak coupons and special offers online and from their mobile phones.
“We are pleased to be able to reach out
to the Hispanic community and offer values and savings,” said Michael Vivio, President of Valpak/Cox Target Media. “Valpak is dedicated to helping families save money anywhere@anytime, and we’re happy to be able to do just that and now serve the Hispanic community in a meaningful way through online and mobile searches,” said Vivio. Users can now search for coupons in Spanish or English at YaSabe.com, Google, and Bing and on other partner platforms such as Univision.com, where Hispanics go online Local merchants and service providers offering discounts and specials through Valpak are highlighted and users can filter their search results to see only businesses
offering specials. The website is updated constantly with new offers, allowing users to find and discover valid special offers from local merchants in their communities. US Hispanics represent the fastest growing group of consumers in the country and the fastest growing group of internet users as well. “Coupons are a natural extension of YaSabe and our relationship with Valpak lets us offer valuable content to Hispanic consumers all over the country,” said Zubair Talib, CEO of YaSabe. “Our users are already actively searching for local deals and coupons.” Contact: www.yasabe.com
Pearle Vision Announces 2013 Expansion Leading Optical Company Launches Aggressive U.S. Growth Plans; Re-Licensing Opportunities Immediately Available. Pearle Vision, North America’s largest and most trusted licensed optical brand, announced today its 2013 expansion plans within the United States, which includes the re-licensing of 34 locations in 10 states. With more than 520 eye care centers in the United States, Pearle Vision is now seeking to grow its national footprint and has identified Florida, Ohio and Michigan as the first markets for its aggressive re-licensing effort. “For more than 50 years, Pearle Vision has been committed to providing genuine eye care to patients through our doctor-centric business model,” said Srinivas Kumar, senior vice president and general manager, Pearle Vision. “Currently, we are seeking dedicated optometrists to join our growing network of licensed operators and purchase company-owned centers with thriving operations and an existing patient base.” Pearle Vision has a significant legacy in the industry and has continued to outpace competitors by evolving to meet patients’ changing needs and providing quality products and services they desire. The company is committed to delivering the best optical
and retail experience possible, a principle created by Dr. Stanley Pearle in 1961. “Pearle Vision is proud to offer optometrists a proven network of support, which allows them to focus on what they are really passionate about – delivering quality eye care to their patients,” said Kumar. Contact: www.pearlevisionfranchise.com
Franchising USA
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what’s new! Edible Arrangements® Celebrates Continued Strong Growth in 2012 Leader in fresh fruit arrangements opens 1,000th location, debuts new products, expands corporate footprint, reaps more industry accolades The opening of its 1000th location, a ground-breaking new advertising campaign, new franchise agreements representing 105 stores and expansion of the corporate headquarters were just a few of the reasons that Edible Arrangements International enjoyed 2012; one of its sweetest years ever. “We reached significant milestones this past year, thanks to the dedication of our franchisees, vendors and especially our corporate staff and store employees,” said Tariq Farid, co-founder and CEO of Edible Arrangements International. “It’s due to all of their hard work and enthusiasm that we continue to grow and plan to open 125 new locations in 2013.” Among the company’s achievements in 2012, Edible Arrangements® celebrated: • Expansion of its new quick-serve option, Edible To Go®, which offers convenient, on-the-go dipped fresh fruit, fresh fruit salads, and fresh fruit smoothies along with fresh fruit arrangements.
• The launch of the custom Fransupport® Mobile phone app, designed to provide franchisees with the means to monitor their stores direct from their iPhone, Android or other compatible smart phone. • The introduction of several new product lines, including the Fresh Fruit Cupcake Collection. Contact: www.eafranchise.com
Back to Rock Grows the Company to Expand Nationwide Music School Targets Franchise Development in New York City, Boston, Chicago and Atlanta Bach to Rock (B2R), America’s music school for students of all ages, announced today it added three new hires to its marketing and operations teams. The additions of Angela Sakell as Vice President of Marketing, Amy Hamilton as Vice President of Operations and Lu Wu as Senior Net Systems Architect are part of Bach to Rock’s plans to build the brand’s presence in major metropolitan areas across the U.S. “Angela, Amy and Lu bring a wealth of experience to Bach to Rock. As we focus our expansion efforts on franchise development in new markets like New
Franchising USA
York, Boston, Chicago and Atlanta, it’s critical we have a team in place to support our aggressive growth strategy,” said Brian Gross, president of Bach to Rock. In 2012, Inc. magazine named Bach to Rock as one of the fastest growing private companies in America for the second consecutive year and the Washington Business Journal named it the number one company to watch in 2012. Washington Family Magazine readers also voted it Best Music Instruction winner for 2012. Bach to Rock is currently seeking candidates to open franchise locations along the East Coast, from Boston to Florida, and plans to broaden its efforts into additional markets across the country. Contact: www.b2rmusic.com/franchise
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West Des Moines Wine Boutique Converts to WineStyles Tasting Station Local Entrepreneurs Become New Owners of Franchise System and Rebrand Concept. WineStyles of West Glen, located at 5515 Civic Mills Parkway in the West Glen Town Center, announced today the conversion of its business model into the newly re-branded WineStyles® Tasting Station® where customers can Taste, Learn and Enjoy® the best in fine wines, artisanal cheeses, chocolates, craft beers, teas and other gourmet items. Additionally, local residents and owners Bryan and Andrea McGinness purchased the entire existing WineStyles franchise system, moved its corporate headquarters to West Des Moines and have begun the Tasting Station restructuring of the original concept. Jeff McGinness, Bryan’s younger brother and attorney, has joined the business as a partner and will assist with the
development and roll out of the enhanced concept. “Both Andrea and I fell in love with the original concept nearly eight years ago when we opened our first store and we’re thrilled to have taken over the franchise in its entirety,” said Bryan McGinness, CEO of WineStyles Tasting Station. To fuel WineStyles Tasting Station’s growth, the company is seeking single and multi-unit operators with retail experience. WineStyles Tasting Stations will be developed through single-unit agreements and Area Development Agreements. Depending on the real estate site selected, franchisees can expect the total cost of investment for one store to be approximately $229,000 - $380,500. The initial franchise fee is $25,000. Contact: www.winefranchise.net
Corner Bakery Cafe Looks Ahead to Greater Growth in 2013 Fast casual neighborhood cafe chain opens 20 new restaurants, and signs franchise agreements for 125 new cafes in 2012, beating previous annual record by 150 percent.
Corner Bakery Cafe’s renewed emphasis on franchise growth paid off immensely in 2012 with the signing of 10 new Area
Development Agreements, more than doubling its best previous year. The new agreements added 125 cafes, raising the total to
288 cafes under development, as the company moves forward on its goal to double its US footprint by the end of 2015.
In addition, the fast casual concept, popular for its ingredientinspired menu, made fresh to order for breakfast, lunch and
dinner, opened 20 new restaurants in 2012, including its first in Florida, Northern California and South Texas.
Much of the growth can be attributed to a renewed focus on expansion through franchising. In addition to bringing in
Benjamin to spearhead franchise development, franchise veterans Nick Booras and Gregg Koffler were also added as directors of franchise sales.
Contact: www.cornerbakerycafe.com
Franchising USA
cover stroy
Snap Fitness
S nap F itness :
It’s just that easy! They are teachers, lawyers, business people, and franchisees from other brands. They are the franchisees of Snap Fitness, the world’s fastest growing franchisor of 24/7 express fitness centers. The key to Snap Fitness’ success has been their ability to fill an underserved market by providing top notch fitness facilities with 24/7 access, and a host of supportive options for their members. With 1400 locations worldwide, 1300 of them in the United States, Snap Fitness, founded in 2003 by CEO Peter Taunton, opens 15-20 new locations each month. The Chanhassen, Minnesota-based franchisor is dedicated to providing members with more value than any other health club, as well as providing franchisees with everything they need to be successful in their franchise locations. One of the keys to Snap Fitness’ success is the wide range of services provided. “Snap Fitness isn’t just a place for members to work out,” says Taunton. “It’s a place for them to get results. We provide the best value for your money, with the best equipment and instruction in our clubs, along with everything from online meal planning and nutrition, customized vitamins and supplements, and in-club
Franchising USA
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“Snap Fitness provides a level of support and value to franchisees that takes them through every step of the franchise process.”
technology. Combine those together, and we have everything you need to reach your goals.” While some Snap Fitness franchisees have a background in fitness or personal training, it is definitely not a requirement. Neither is an extensive business background a requirement for Snap Fitness franchisees, as the low-cost, proven business model is easy to follow at any stage of the business life cycle, and with any level of previous franchising experience. “They make it extremely simple for you to open your own fitness centre,” says Snap Fitness Club Owner Ben Cowan. Snap Fitness provides a level of support and value to franchisees that takes them through every step of the franchise process. The company is there to assist franchisees with site selection and lease negotiation, followed by four days of intense training that includes marketing, operations, and sales. After providing support for a new franchisee’s grand opening, Snap Fitness offers ongoing easyto-use marketing that is as simple as going online to order everything you need for your marketing campaign. “What separates Snap Fitness from other franchises,” says Taunton, “is the level of support you get from the day you sign your agreement all the way until you open your doors – and beyond. Whether it’s securing financing to open your club, choosing
the right location, sales and operations training, or year-round marketing support, our in-house team will help you through every step of the process to help you become successful and stay successful.” Snap Fitness helps franchisees stay ahead of the competition by providing affordable access to state of the art equipment, interesting promotions, and marketing supplies that really work. “One of the things I really love about Snap is that they’re constantly innovating,” says Snap Fitness franchisee and club owner Josh Shaubach. “To stay on top of the market, to stay ahead of the competition, you have to come up with new things.” Recently, Snap Fitness has partnered with Rolling Strong, the leader in driver wellness programs, and Pilot Flying J, the largest operator of travel centers and travel plazas in North America, to bring fitness to those who spend their lives on the road, by providing an easy-in, easy-out workout concept at numerous Pilot Flying J locations nationwide. By continuously looking for new opportunities and ways to reach more new members, Snap Fitness contributes to the ongoing success of the
company, and each of its franchisees. While the equipment know-how and the ability to run a business are important characteristics, perhaps the most important quality of a Snap Fitness franchisee is a positive attitude, and the drive to be successful. Franchisees need to be willing to put in the time to learn the business, its systems and processes. As with any career, the most successful Snap Fitness franchisees are passionate about what they do. They appreciate the rewards of helping members achieve goals and live healthier, better lives. The majority of Snap Fitness franchisees start with a single unit, with many adding additional units as the business and local market grow, and once they discover how easy it is to run a successful Snap Fitness location. But a large number of franchisees also start with a group of three connected franchise locations, what the company refers to as a three-pack. Snap Fitness franchise locations are currently available in locations across the country. For More Information: Web: www.snapfitness.com
Franchising USA
ex per t advice
Kelly Maguire, Sr. Director of Digital Strategy, AviaTech
T he I mportance of F acebook A ds and P aid S trate g ies to
Grow Your Facebook Community many pages and can only spend so much time engaging with brands on a platform that is primarily intended for them to engage with other people including friends and family, it becomes critical to support your social efforts with a thoroughly and properly thought out paid strategy. It is only through investment that you can truly stand out from the crowd and develop the meaningful connections that will drive your social presence forward and create the value it has the potential to offer. This can be a disheartening realization to the business owner that was excited about a “free” advertising platform. But it is important to look at social media as an investment. The exciting part of this is that unlike traditional advertising mediums, it is not a short term investment; it is an investment that will continue to pay off through an ongoing connection with not only the individual customer but through access to their social network as well.
Social Media represents an exciting and important opportunity to not only reach your customers but to actually connect and engage with them. Because of this unique ability to connect with your audience, it is important that your social community be as large as
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possible and grow continually to ensure that the time and effort that goes into a properly executed social strategy isn’t wasted or lost due to people not having the opportunity to see it. A few common misconceptions about social media are that it is “free” and that it works under a “if you build it they will come” philosophy. The fact is, there are hundreds of thousands of businesses that are all vying for the attention of what amounts to a limited audience with limited time. Since potential customers can only “Like” so
So accepting the reality that social media requires a paid strategy to reach its full potential, what are the best paid outlets for delivering this value? The primary one out there is Facebook ads, a relatively simple platform designed to allow the average business owner to jump in and begin a campaign. However, there are intricacies and hidden knowledge behind this platform that are really needed to develop and manage campaigns that will drive the best possible performance. Without this expertise it is easy to find yourself struggling to extract the most
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“It is only through investment that you can truly stand out from the crowd and develop the meaningful connections that will drive your social presence forward and create the value it has the potential to offer.” based on their psychological profile instead of their actions
Kelly Maguire
return on investment from these ads. Many factors go into the performance of Facebook ads but the primary areas to consider are: • Audience Targeting - You must be sure you are reaching the right people and not wasting your impressions on people who are unlikely to respond to your message. • Creative - It is critical to make sure the message you are promoting resonates with your target audience, if it doesn’t you will spend a lot of money without much results. • Segmentation - It is impossible to understand what is working and what is not if you do not break up your campaign into different variables that allow you to optimize based on what performs and what does not. Some tips to drive the best possible performance from your Facebook ads: • Think long and hard about who your target customer is and what they typically like. Unlike search ads, you are not targeting keywords that people are searching right then and there, you are targeting keywords that your audience has taken the time to place within their profile over time, think about the TV shows they watch, books they read, things they like, etc. Target
• Experiment with your ad image and ad copy; try different message tones and image types. Try to stick with images that are bold and stand out. Look for images with people in them, as they tend to perform better within this social environment. Whenever possible try to use some type of humorous tone in your copy and include a call to action such as “Like Us” or “Click Now”. • Rotate your creative regularly to avoid letting it get stale and allowing your audience to suffer from “Ad Blindness”. • Break out your ads into demographic buckets such as Gender (Male vs. Female) and Age (18-24, 25-35, 45+, etc.). This will allow you to see which audiences are responding and make adjustments to your campaign accordingly. • Pull your reports and analyze them, try to find what is performing and make adjustment to cater your campaign to those areas. There is a lot of data available to use: use it whenever possible. • Consider finding a Facebook ads expert that is adept at utilizing all these different ad parameters and executing against them, you will often find that whatever fee this requires will easily be recouped in the efficiency that this expert can develop for you. Overall the greatest tip available is to begin accepting that social media isn’t free, assign a budget to it that you are comfortable with, and begin to test different outlets and platforms to drive the connections that will help drive your
business forward in the social arena. Once you have your audience, take the time to put it to use by delivering value to them and watch the benefits it can have on your business’s reputation, your customer satisfaction, and most importantly your bottom line. Since joining Aviatech in 2010, Kelly has played a leading role in adding new services to the agency’s core capabilities, including the development of award-winning advergames and sweepstakes initiatives, digital PR, and paid social advertising. He has overseen the implementation of new technologies to help streamline departmental operations, and supervised a departmental expansion as it grew by more than 50%. Kelly has also contributed to the agency’s thought leadership with published articles and appearances at seminars and client conferences. Kelly’s former positions include Strategist at Omnicom network OMD, the world’s top global media brand, where he was involved in developing the emerging media department; and Senior Program Manager at Performics while owned by Google, where he interfaced directly with all major social networking sites. His work with Facebook directly impacted the introduction of cutting edge applications to their ad platform. Kelly holds a Bachelor of Science degree in Business Management from DePaul University of Chicago. For More Information: Web: www.aviatech.com
Franchising USA
Make Your Next Move with a WIN Home Inspection Business
Throughout North America, the home inspection industry continues to demonstrate strong growth and has already proven to be an integral part of the real estate transaction. As the housing market strengthens, we are experiencing a steady increase in overall volume of home sales and percentage of homes inspected, confirming that the home inspection business is a high demand service in a solid industry.
Home sales are set to keep marching upward this year after hitting their highest level in five years in 2012, economists say. Housing is finally contributing to the economy’s growth instead of pulling it down.1 Existing home sales for the full year rose 9.2% from 2011.2 More than ever, home buyers, sellers, Realtors , and lenders and investors, recognize and promote the value of a quality home inspection. Real estate service providers are especially aware of the importance of a professional home inspection. In fact, the National Association of RealtorsŽ concluded in a recent survey of its members that a home inspection is the most widely recommended service to home-buying clients. Ž
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Along with expertise, information and understanding, a home inspection provides the potential home buyer with the peace of mind essential to make this important decision. Today, an estimated five million home buyers seek out this confidence by having a home inspection contingency placed in their contract prior to purchasing a home. As housing markets continue to grow, so does the demand for home inspections. In addition, more progressive home sellers are recognizing the practical and financial benefits of a professional home inspection when preparing their home for sale. Looking ahead, the expansion potential of the home inspection industry is extremely positive.
The time to be in the home inspection field is now!
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“
Our business was founded on the concept of Strategic-Partnership. We have avoided growth through company stores as well as through traditional franchising. The essence of the WIN Way lies in the Strategic-Partnership we enjoy with our WIN franchisees, where we align our energies to serve our customers in a true “WIN-WIN” manner. Reflective of our commitment to the success of our Strategic-Partners can be found in the creation of our territories, as we shape them based on the industry proven control points for inspection opportunities; we understand the industry we serve, are aligned with its needs, and manage our business on fact based market metrics.
“
— Steve Wadlington, WIN President
10 Reasons Why Making Your Next Move With A WIN Home Inspection Business Is One Of The Best Moves You Will Ever Make: 1. 2. 3. 4.
Strong Income Potential Distinctive Brand Awareness Proven Business System Leadership Team Are Engaged Subject Matter Experts 5. Effective Customer Acquisition, Retention Programs & Marketing Support 6. Advanced Inspection Methods & Technology 7. Low Investment/Overhead, Cash Business 8. Home-based 9. No Employees Necessary 10. Meet New People & Work in New Surroundings Everyday
WE SEE MORE. CLEARLY. At WIN Home Inspection, we understand where we fit in, and we serve accordingly. We are blessed to provide a service that assists home buyers, sellers, and owners with what is typically their largest transaction, and among their most meaningful possessions — their home. We provide our customers with vital “need-to-know” information in a timely, professional and easy to understand fashion. We convey actionable information in a balanced context that ensures clarity and common understanding.
For more information about WIN Home Inspection franchise opportunities, please call 1-800-967-8127 or visit us online: www.WINfranchising.com © 2013 World Inspection Network International, Inc., a franchisor of home inspection services. 1 Mark Zandi — Moody’s Analytics Chief Economist | 2 The National Association of Realtors (NAR)
Franchising USA
ex per t advice
Diane Rosenkrantz, Senior Consultant, Tenet Financial
Franchising USA
Page 17
Overcapitalization is the Key
for a S uccessful N ew B usiness It is believed that the number one reason why new businesses fail in the first couple of years is due to lack of sufficient funding. Knowing that, you can be better prepared for how to avoid that obstacle and to ensure you are beginning your new venture at the right time. When I work with new clients and they reach out to review funding options, one of the first questions I ask is if they know the total capitalization required for the new business. This is relevant for a franchise start up or a resale. Too often they are quick to state just the franchise fee or the purchase price (and sometimes a few months of working capital). The true total capitalization can be difficult to predict, however there are a few important items to consider. Depending on the number of units you wish to buy or the size of the region you are interested in, the initial fees will certainly vary. Once you are sure of the
“With due diligence and planning, you can be sure that you are bringing to the business enough additional cash for any and all possible obstacles and opportunities. ” cost of the territory or unit, the other significant items to consider are working capital/ongoing business and living expenses. Based on the type of business you are considering, your personal experience, your business background, and the intended location, the working capital costs can vary greatly. Some franchisors will indicate the need of working capital for three months, some may suggest six months, and there are certainly businesses that need a year or more to break even. The more questions you can ask the franchisor and other franchisees the better. Though some parts of the country may have franchisees that are profitable in a shorter period of time, each location and each person will differ. It is to your benefit to plan to speak with as many franchisees as you can, and to make sure you have pre-planned questions to ask. Another idea is to ask each of them what questions they wished they asked before they began. Realize that your background, skill set and motivation may be different from
those that you speak with. Therefore you won’t likely mirror their exact path and timing. But with due diligence and planning, you can be sure that you are bringing to the business enough additional cash for any and all possible obstacles and opportunities. If possible, you will be best served if you have additional funds for the first 12 months of all expenses available. Let’s review our plan of attack: • Ask questions • Plan thoroughly • Ask more questions • Confirm your plan • Begin After you have learned the average monthly working capital needed for the business you chose, it’s time to evaluate living expenses for your part of the country. With regard to determining living expenses that you’ll need to plan for, there are other variables to consider. Is there other income coming into your
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ex per t advice
Diane Rosenkrantz, Senior Consultant, Tenet Financial
for people to get new home equity lines of credit, they need to be employed – or have access to an existing HELOC from an earlier time. With lower rates, that has been of great interest recently. Once you are aware of the total capitalization needed for your new business, and you have determined the ways you can fund it, you will know if you can afford to start the project at this time. If you are short on the funds, after reviewing all of your funding combinations, you would be wise to wait until you can save or borrow the difference. Planning in advance and waiting until you are sure you are overcapitalized, is the right way to begin your new venture.
household? Do you have other employed family members? Or do you receive other income, such as – severance, pensions, part-time employment? Are you solely responsible for your household expenses? Once you determine your families average monthly expenses, you’ll be aware of the amount of liquidity you will need. The type of funding you are securing/ using will also help you determine if and how you can get the extra funding cushion you’ll need. For a typical SBA (Small Business Administration) Loan there may be some consideration for additional expenses (called soft costs) built in, however, customarily, the lending amounts will be equal to specific costs of your franchise, equipment and fixed costs. If you are using 401K or IRA type funds, you have greater flexibility. You can include ALL of your possible business expenses. With Tenet Financial Group’s funding specialty, A Self Directed 401K plan, you can in fact use retirement funds for the purchase of the business, any and all working capital/business expenses and to pay salary.
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Through this “Rollover As a Business Start Up” (which has been a funding option since the 1970’s) you can access retirement funds that you have not yet paid taxes on and ensure that you have sufficient capital for your new business. You are able to use traditional IRA’s, 401K (from your prior employer), and other types of retirement funds, without taxes and without penalties. You are able to do so, with Tenet’s rollover funding services, and with that process, you are using the funds to stock your new corporation. The use of unsecured lines of credit (LOC) can also allow you the flexibility to have sufficient capital for any new business. This option can be used alone or in combination with other funding options. Today it is common for people to consider a combination of funding options. For those that feel that they don’t want to “put all their eggs in one basket”, they can be creative. It is common for people to use some combination of the following: Retirement funds, Unsecured Lines of Credit, Cash, SBA (often for loans greater than $100,000) and Home Equity. Note that
Diane has been working in the pension industry/consulting/customer service areas for the past 25 years. Currently, she is assisting clients, brokers, and franchisors across the country find the best funding options for their businesses. A specialty of Tenet Financial Group is working with clients that have retirement funds; and Diane helps educate them on the process of accessing those funds for businesses. Tenet Financial Group is a comprehensive Third Party Administration Company with over 70 years of combined experience in SelfDirected 401(k) plan design, installation and administration. Tenet Financial Group effectively simplifies all aspects of the retirement plan administration process for our franchise or independent business owners. With more automated processes, our systems are more accurate and efficient in managing your retirement plan data. For more information: Phone: 1-888-901-3335 Extenion 9 Option 2 Email: diane@tenetfinancialgroup.com Web: www.tenetfinancialgroup.com
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Regional Developer Opportunities Available in the U.S. and Canada Single and Multi Unit Territories Available
Best Opportunity in the Booming Pet Industry‌ $52.8 Billion spent on U.S. pets in 2012 30% increase over the last 5 years Rapid growth plans to expand to over 400 locations 90%+ of customers pre-pay for future services, no accounts receivable
Contact us today to find out if Dogtopia is right for you Thomas Franchise Solutions 602-354-9357
www.dogdaycare.com Franchising USA
f ra nchisor in depth
Guava:
A S weet A pproach to H ealthcare
Mary Schreiber
It all began with a phone call from the hospital where Mary Schreiber’s father had been admitted for a heart attack. Mary was in Delaware, while her father was in Minnesota. She was a single mother raising her three children while working full-time. This phone call brought her world to a screeching halt. Mary flew to Minnesota to take care of her father. During her journey she experienced the difficulty of finding in-home nonmedical as well as medical attention. Schreiber found herself overwhelmed by all the little things her father now needed support with: a 30-minute drive for blood tests; a 45-minute drive for wound care, appointments, and finding someone to
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cook and clean in house. All of this was very demanding and tough to orchestrate. Mary found herself reflecting on her struggle thinking, “I’m sure many other people are probably experiencing these same struggles”. After her father’s recovery, Mary returned to Delaware inspired to study the healthcare system and gradually began building a business that would provide non-medical and medical care in-home. Schreiber spent a year studying the industry, looking at the systems and regulations. “I decided to create an organization that encompassed everything: medical non-medical, babysitting, staffing, errands, and meals,” said Schreiber. And so she began. Schreiber immediately met this concept with success because of the high demand. She began working out of her kitchen office in December 2006, two weeks prior to Christmas. “My children thought I was crazy for not waiting until the new-year to open. My first week in business, we had 17 in-home clients. This was a time when family and friends were reuniting and discovering their loved ones needed help. We were one of the only organizations picking up the phone,” shares Schreiber. It all began with her sons delivering
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“Guava represents an approach that was very different from any other in the industry. Guava Healthcare represents something naturally medicinal, fresh, bright, and simple. This is a very fun approach to healthcare!” groceries and mowing lawns. Schreiber and her daughter would visit with clients. “My motto was everyone is a client. When I brought my car into get serviced one day, I gave my mechanic my card. The next time I was there he told me he needed knee surgery and was looking for help with his kids. We get calls from plastic surgeons for post-op care or businessmen and women who need help with a sick child.” With Schreiber’s attitude, the business continued growing and two years later, in 2009, the business franchised. Guava has grown to include 11 franchises and 17 corporate offices. The services Guava Healthcare provides are very broad in scope. The focus is on the geriatric population, however services are not limited to just that. Guava Healthcare provides pediatric through geriatric care. Therefore, a Guava team member can come into your home and provide almost any service requested: anything from light housekeeping, medication reminders, bathing, linen change, pet care, wound care, injections, occupational therapy, physical therapy, or a medical doctor visit. Guava Healthcare can go into schools, assisted living facilities, and reach any population that requires their services.
Guava has a unique Healthcare building block system for franchisees. Franchisees are able to build their business as the revenue increases. “It’s a one step at a time model. What we do, is if you’re in a state that doesn’t require licensure, you can start off doing all non-medical care services. If it doesn’t, you build up your business as your licenses go through. Once a franchisee receives the licensure, he or she can go into the home. From there, it takes roughly two years to offer medical services,” explains Schreiber. Joe Binati a franchisee could not be more pleased with the way Mary’s vision has shaped this company, “I’ve been a physical therapist and a healthcare administrator for over 33 years. I’ve developed programs on a local to national basis. In the area of senior care, I’ve been national director of a senior care rehab program, lectured across the nation on senior issues, focusing on fall management, which is pandemic in this population. I saw companion services as being absolutely critical at this and growing steadily in the future. There aren’t enough assisted independent facilities so care will have to be done in the home. In my experience in the healthcare market place, there wasn’t any differentiation in the companion services, and that’s what got me excited about
guava. It starts with Mary. She’s created a platform that has a whole platform of service that focus on the individual. She focuses on education for employees and the clients. She has a strong focus on the communities she serves. Because of my passion for seniors and reducing isolation, I wanted to develop a program, in South Carolina, and I chose Guava. In the next seven to ten years, the US is looking at roughly 80 million people over the age of 65 who will need some form of care. As that number increases, so too does the desire for more Guava franchisees. Franchises are currently available in every state. Franchisees don’t need to have any healthcare experience. Schreiber and the company are looking for
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f ra nchisor in depth
people who are caring and compassionate; business savvy; excited to go into his or her community and market the business; and personable. “We want people who will follow the guidelines of the franchise and really engage in building our system further. We all work together to build the business,” explains Schreiber. People perceive Guava Healthcare as quality healthcare. Every franchisee is given Guava’s values, standards of care, and code of ethics. It’s included in every home assessment package, client folder, franchisee packet, and on the wall at the offices. The culture of quality, familyfeel service is instilled into each person engaging in Guava. Multiple revenue streams, including private pay; 93 different insurance companies; medicare; medicade; and, National contracts equates to franchisees having the ability to enter in to the franchise and generate revenues quickly due to having the licensure provided. Franchisees get trained on everything. Schreiber shares, “I did it myself. I learned every challenge and can help each franchisee down this road.” Franchisees receive an initial intensive training, leadership calls, online webinars, online updated training seminars, and access to others in the Guava network. Guava provides the complete back-end support: the payroll, billing, insurance billing, credentialing, and licensure. Franchisees have the time to build relationships in the community and build a strong client-base without getting caught up with the lengthy tasks listed above. “We consider our franchisees to be part of the Guava family.
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Our franchisees are constantly given information to grow and carve out what they want to accomplish. We also offer incentives to our franchisees: the more money they make, the less royalties they pay,” said Schreiber. Guava Healthcare is committed to staying up-to-date in the best and most efficient technology concepts. One example of this is a “facebook-esque” system called Guava share. This enables a number of people to join a network and preview and contribute to appointment scheduling, blood pressure tracking, eating records, pictures, and anything else that needs to be shared or coordinated for a client. Software is also available for applications like employee monitoring or making sure a clients’ stove gets turned off. When Mary began Guava Healthcare it
was important that this business was first and foremost a family oriented business in order for her children to get involved in addition to maintaining a strong presence in their lives’. Secondly, it was essential that this be a “feel-good” business for everyone involved. “I sat down with my children and we came up with the name Guava. To us, it represented an approach that was very different from any other in the industry. Guava Healthcare represents something naturally medicinal, fresh, bright, and simple. This is a very fun approach to healthcare!” People want to be able to trust the person and the brand coming into their home. Guava Healthcare is a name that can be trusted to deliver inspiring quality care. For more information: Web: www.guavahealthcare.com
Health and Beauty: An Industry Shining Bright in the Spotlight
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feature
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feature We are living in a culture and an age where one can’t escape the topic of health. Whether it’s body weight, body aches, esthetics, or simple quality of life, there are hundreds of media shows, thousands of books, and countless businesses that are built upon this industry. Health and beauty franchises continue to expand, especially within the past decade.
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The US has increasing awareness and interest in the benefits of preventative health measures such as massage, and nutritional supplements. Additionally, health insurers have begun to express their support by offering incentives for individuals to take care of themselves. According to the United States Census Bureau, 67 percent of adults aged 18 and over last contacted a doctor or other health professional within the previous six months. The attention American’s are putting on their health and appearance has become a central focus and priority. The health and beauty industry has just about every American being serviced in some way or another: senior services, tanning services, chiropractic services, massage therapy, spa, esthetics, weight
management, and supplemental nutrition. Entrepreneur Magazine’s 2013 annual ranking of America’s top franchise opportunities, the Franchise 500, featured 41 health and beauty franchise concepts. Below we have taken a closer look at several franchises in the beauty and health industry that have made their way on to this list. 21st on the Franchise 500:
Miracle Ear Inc. One in every ten Americans, over 30 million people, experiences some degree of hearing loss. Exposure to excessive noise: car horns, jet planes, iPods, headphones, rock concerts, office equipment, lawn mowers, and exercise classes, are becoming more and more common, fueling the need for hearing
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“Health and beauty services are finally receiving the attention they deserve as a positive strategy for self-care and preventative health efforts.” care providers. The Miracle-Ear franchise offers franchisees the most recognized brand name of hearing instruments; a high-profile network of more than 1,200 national and local advertising support; comprehensive sales, technical and management training; and, ongoing field support that keeps you current with the latest industry advances. Hearing loss is the third leading chronic health condition amongst Americans and due to the social, emotional, and economic repercussions of hearing loss, this is something that is hard to ignore. If you possess a solid business background, excellent people skills and a deep desire to make a difference in the lives of hearing-impaired individuals, Miracle-Ear Inc. would be interested in you! With 65 years of experience behind this company and it’s current growing demand, considering this company could
be the start to a sound future. 29th on the Franchise 500:
Great Clips Great Clips, a haircut salon, has been evolving for the past 29 years and is the largest salon brand in North America today. This, in part, is credited to franchisees multi-unit ownership mentality: the average franchisee owns five to six salons after five years with Great Clips. Regardless of the economic climate, people still get haircuts. Cosmetology has been ranked as the most recession-resistant industry a business owner can pursue. Great Clips is even more appealing in gloomy economic times because their quality haircuts an affordable option in comparison to boutique-style salons. The franchise itself devotes efforts to stay current. At the beginning of this year Great Clips
launched “Clip Notes”, a technical application used by stylists to enhance consultations and give customers the haircut they want every time they visit any Great Clips Location. Also, they have launched the industry’s first online checkin service, allowing customers to add their name to the wait list of a Great Clips salon before they arrive. With more than 3,000 salons continent-wide, Great Clips isn’t going anywhere anytime soon. 33rd on the Franchise 500:
GNC From their beginning in 1935 as a single store in downtown Pittsburgh, to today’s more than 7,900 retail locations, GNC is truly the leader when it comes to helping consumers live well. Higher healthcare costs and concerns over the effects of prescription drugs are driving the increase in preventative measures, including
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feature to increase energy, endurance, strength and speed of recovery. GNC sets the standard in the nutritional supplement industry by demanding truth in labeling, ingredient safety and product potency, all while remaining on the cutting-edge of nutritional science. As the company has grown over the years so has their commitment to Living Well. 59th on the Franchise 500:
Comfort Keepers
nutritional supplements. A desire to live longer, healthier lives has resulted in increased awareness of the health and wellness benefits derived from nutrition and supplementation. There’s a growing number of fitness-oriented consumers interested in sports nutrition products
With many companies emerging in this industry Comfort Keepers stand behind their philosophy of interactive caregiving that encompasses four interrelated aspects: engagement of the mind, an active body, proper nutrition, and safety. The company was designed to assist seniors and others maintain optimal levels of independence in the comfort of their own homes. Comfort Keepers offer conversation and companionship; meal preparation; laundry; light housekeeping; grocery shopping/errands; incidental transportation; medication reminders; grooming guidance; live-in services; 24-
hour care; respite care or relief for family; bathing, grooming and hygiene; mobility assistance; transferring and positioning; toileting and incontinence care; feeding and special diet; dementia care; end-of-life care; and, veteran care programs. 81st on the Franchise 500:
Massage Envy Massage Envy was ahead of the industry a decade ago when they began to develop their effective, customer-centric business model. Since 1997, the number of Americans using massage therapists had doubled; people visit massage therapists 140 million times a year. Massage Envy’s mission to deliver a highquality experience promoting a healthy lifestyle through the art of massage and facials is continuing to gain attention. Massage Envy offers a wide variety of facial options; Swedish massage; deep tissue massage; trigger point therapy; sports massage; cranial sacral therapy; prenatal massage; geriatric massage; and reflexology. Massage is recognized as a source of stress relief, lowering blood pressure; aiding pain management; relaxing muscles; improving flexibility and range of motion; and, increasing relaxation. Clearly Americans can use massage therapy in their lives: consumers spend between five and seven billion dollars annually on massage therapy. Currently, there are nearly 800 locations spread across 45 states with that number expected to continue strong growth in the years to come. 171st on the Franchise 500:
Palm Beach Tan Palm Beach Tan built their brand around providing members with convenience, choice, and state-of-the-art sun bed and sunless services, all delivered in a relaxed, spa-like environment. The company has a 20-year track record of growth and success behind them. They maintain a standard in forging long-term customer relationships with a foundation in service, quality and
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value. Palm Beach Tan features the latest in state of the art indoor tanning systems: relaxing 20-minute beds and quickbronzing ten minute beds. Customers can also opt for a sunless spray tan. Added services like Beauty Angle, a full body exercise and toning system, offers the customer more services to utilize. Palm Beach amenities such as music, cooling fans, aromatherapy and air-conditioned beds compliment the entire experience elevating Palm Beach Tan’s atmosphere from a quick drop-in, high-turnover tanning business to a warm, welcoming customer friendly business. 322nd on the Franchise 500:
Medi Weightloss Franchising USA Medi-Weightloss Clinics offer an aggressive long-term growth strategy under a physician’s care and extensively educated support team. This business offers a lifestyle change program that encompasses medical, motivational, physical, nutritional and educational aspects of weight loss. With an online resource center for clients with weight loss tools, recipes and fitness advice, this program can be accessible anywhere. With 85 locations Medi-Weightloss Clinic is the fastest-growing medical weight
loss program and has already helped
2030. These individuals will have higher
pounds.
well” into the future. Health and beauty
their patients lose more than 2.4 million
disposable income and expect to “live
The franchises above are just a small taste
services are finally receiving the attention
concepts out there. According to the
self-care and preventative health efforts.
percent of the US population was over 55
ethic and business sense, you can take
of all the creative and successful franchise
they deserve as a positive strategy for
United States Census Bureau, in 2011, 24.9
With proper planning and a strong work
years old. Nearly 110 million Americans
one of these ‘feel-good’, people focused
will be over the age of 50 by the year
franchises into your community.
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ex per t advice
Dan Kim, Founder and Chief Concept Officer, Red Mango
How Social Media Benefits
F ranchised B usinesses
For many entrepreneurs (especially those who don’t have a ton of franchising experience), the idea of owning and operating a successful franchised business may appear to be too risky or unaffordable.
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National brands like McDonald’s and
In fact, the risk factor that franchise-
of franchising success, but they also
most concerned about is the strength and
Hampton Hotels have become beacons require significant capital and experience. Less known concepts that serve niche or
growing markets, such as Gigi’s Cupcakes
or Koko FitClub, might require less money and expertise, but also come with the
risks of any new business, including low
brand awareness and a limited advertising
budget that can’t do much until the concept matures.
seeking entrepreneurs seem to be the
effectiveness of a franchisor’s marketing prowess. Indeed, this may be the case
because brand marketing is often beyond
the control of any single franchisee. But I
believe that this legitimate concern is more grounded in the fact that entrepreneurs are all marketers at heart. We all understand
that no matter how desirable our products or services may be, and no matter how
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“The operating parameters of a business that entrepreneurs can control (like excellent customer service and consistently high product quality) may finally become more and more important in determining the strength and quality of a brand.” well we manage our operations and customer service, the most surefire way for a franchise to become successful is by building and maintaining a strong brand reputation with marketing and advertising strategies that positively influence the purchasing behavior of consumers. For the majority of this century, the power of marketing and advertising programs was directly correlated with the size of a company’s advertising budget. Businesses with a lot of money could hire the most talented agencies, create the most compelling campaigns, and buy the most influential media to proliferate their messages. Television, radio, magazines and newspapers (or what I call “traditional media”) have always been the most effective ways to reach the most number of people; and because such valuable media could only be purchased by the larger and more established businesses that could afford them, it became increasingly difficult for newer, smaller concepts to build their brands and expand their customer base. Of course, there are a number of franchise systems that have become notable exemptions to what appears to be an ironic world in which only successful businesses can succeed. But such exemptions are driven by disruptive ideas, new business models, abundant talent, or quite honestly, sheer luck. Most successful franchise system have remained that way because of their unwavering commitment to strengthening their brand with effective and influential advertising. The inability to cultivate a strong brand reputation
is a big reason why some franchised businesses operate like mom-and-pop amateurs, while others are beneficially mistaken for well-run corporate stores. Traditional media has been effective because television, radio, newspapers and magazines have, for the longest time, represented the most relevant and ubiquitous channels to command the attention of consumers. Television and radio, for example, were the only ways we could indulge in entertaining content, so we had to watch commercials. Newspapers were the only way to stay on top of current events, so articles were adorned with ads of all sizes. Because the general philosophy of traditional media is to reach as many people as possible, traditional media isn’t cheap. And even if a business wanted to focus its ads on a specific segment of consumers, it could only do so by advertising to an entire city or county, or perhaps by loosely communicating to people based on the types of magazines they read. Even with such demographic targeting, the cost to purchase media to reach such a filtered audience was still high because of the large number of impressions such a targeted ad still reached. Even if the ad were affordable, there was no guaranty that they wouldn’t get lost in the clutter of localized advertising that provided advertisers with very few levers for control (just consider all of the irrelevant junk mail you receive). In short, this conundrum boiled down to the simple fact that effective marketing was expensive, and effective brand building through
Dan Kim
effective advertising was available only to those franchise concepts that could afford it… at least until now. The past few years represents only a fraction of the amount of time franchising has been around, but it is also a time when social media disrupted the ways in which we communicate, share ideas, and engage with content. Companies such as Facebook, Twitter, Pinterest and Instagram have become such dominant platforms for information sharing and engagement that instead of just being names, they have quickly become descriptive verbs that identify our preferred modes of communication. These interactive and media-rich social channels have significantly decreased the exclusive importance and relevancy of traditional media, and have become fluid environments in which consumers of all ages now spend an increasing amount of both personal and professional time. Unlike television or radio, these social platforms have become immersive, widereaching forums in which information can be shared in all directions with nearly anyone we want, including friends, family members and public figures that many of us would trust more than the advertisements of an impersonal corporation.
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ex per t advice
Dan Kim, Founder and Chief Concept Officer, Red Mango
at the beginning of a very exciting time for franchising. Social media empowers both smaller franchise systems and singleunit franchisees to design and execute the same types of effective marketing campaigns that their larger counterparts are implementing in their current efforts to cultivate and strengthen their brand reputation. It doesn’t cost anything to create a Facebook brand page, and it’s free to tweet. All that may be required is creativity and determination. And even the paid social advertising solutions are highly controllable, affordable and more effective, which means the size of an advertising budget may no longer be such an important driving factor in the success of a business.
Social media has also made information sharing more accessible, relevant and meaningful. Anyone with a phone or computer can access a social network made up of people, brands and content with like-minded preferences. This is why consumers will continue to replace television with on-demand programming or YouTube, and opt to receive news from Twitter instead of the daily newspaper. Whereas, in the past, consumers were introduced to brands and products only through television commercials or printed advertisements, they now discover them in a more meaningful way through sites like Facebook and Pinterest. Consumers now trust the opinions of their colleagues more so than brand advertisements. All of this means one thing: the model for effective advertising has dramatically changed. In the old world, television commercials and print advertisements were essentially the only effective way to influence consumers and build a brand. This is how many of today’s top franchises have achieved – and continue to maintain – success. In today’s world, technology has given birth to another, equally effective (if not more so) advertising and
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branding system comprised of interactive forums where content like Yelp reviews has the potential to achieve a lot more than a television or radio commercial. The increasing prevalence of social media is very meaningful to the franchising world because it completely changes the rules of marketing and advertising – and therefore branding – for both franchisors and franchisees. Television, radio and other forms of traditional media are no longer the only ways to influence consumers. In fact, some would argue that for many companies, traditional media is no longer the preferred way to advertise because social channels like Facebook and YouTube offer more attractive marketing opportunities with better demographic targeting and higher, more measurable ROIs. And since advertising on social media is significantly more affordable and controllable, franchised businesses finally have access to powerful advertising tools and platforms without having to purchase expensive traditional media which only larger, well-funded companies could previously afford. This is why I believe that we are currently
The operating parameters of a business that entrepreneurs can control (like excellent customer service and consistently high product quality) may finally become more and more important in determining the strength and quality of a brand, especially as consumers rely upon these metrics to forge their opinions of companies and their products or services. After one understands the powerful impact that these opinions can have on a brand’s reputation, it becomes evidently clear just how social media can level the competitive playing field for many small business owners, and make franchising that much more exciting. Dan Kim is the Founder and Chief Concept Officer of Red Mango, a leading national frozen yogurt and smoothie franchise with over 200 units. He regularly engages with his 1.7+ million followers with his Twitter accounts @ dankimredmango and @redmango, and has a combined Facebook fan base of nearly one million fans for /redmango and /dankimredmango. He is also active on his personal Facebook account, fb.com/frozenyogurt. For more information: Web:
www.redmangousa.com
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M elanie B er g eron
And the Cycle of Success Melanie Bergeron
It all started with a newspaper ad offering the services of two men and a truck. In 1987, Lansing, Michigan single mother Mary Ellen Sheets was trying to help her two teenage sons, Jon and Brig, make a little extra money. Mary Ellen comments on her newspaper ad, saying
that they were barely two men, and barely a truck. But there was need, and her boys were ready to fill it. They had an old Chevy truck, a doodlebased logo, and a desire to work hard. TWO MEN AND A TRUCK® was born! The calls started coming in. When the boys went off to college, Mary Ellen not only kept the business going, but started building it. In 1989 Mary Ellen’s daughter, current TWO MEN AND A TRUCK® Board Chair Melanie Bergeron, was awarded the first franchise in Atlanta, Georgia. Melanie had a full-time career in pharmaceutical sales. Her TWO MEN AND A TRUCK® franchise was her afterhours business. She reinvested all her profits back into the family business, until she reached a point of wanting to focus on the franchise full time. After moving back to the home office in the early nineties, Melanie was named President of TWO MEN AND A TRUCK® in 1994, COO in 2002, and CEO in 2007. Today, the company remains family owned, equally between Brig the CEO, Jon the Executive Vice President, Mary Ellen, and Melanie. Today TWO MEN AND A TRUCK® has 260 franchise locations worldwide, with
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women in f ra nchising
Bergeron has worked hard over the years at creating and maintaining balance in her life. She credits a high energy personality for her ability to get it all done in a day. She has a number of roles to fill, but has always made it a priority to take care of herself, by getting up early to hit the gym before starting the rest of her day. And her days are full! In addition to her current role as Board Chair for TWO MEN AND A TRUCK®, Melanie is on the Executive Board of the IFA, a mentor, and heavily involved in non-profit work, as well as being a wife, and a mother to two teenage boys. In addition to having her days and weeks very carefully planned, she has one key secret to her happiness and success. That is to “be in the moment.” When Melanie is working, she is 100 percent present and immersed in that work. When she is with family, the same holds true. She also adds that perseverance has been a key factor for her. And there were times when it was needed.
235 of those in North America. Areas for expansion include the US East Coast in particular. This phenomenal growth and success has been achieved through hard work, and through focussing on the core purpose of TWO MEN AND A TRUCK®. Their goal is moving people forward. When customers are moving, it is often due to less than pleasant circumstances. And it is always stressful. TWO MEN
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AND A TRUCK® works to put people in a better place, and to make that transition as easy for the customer as possible.
“We like to look at ourselves as service providers,” says Melanie.
The Woman Behind the Men As the woman currently behind TWO MEN AND A TRUCK®, Melanie
When Melanie took over the TWO MEN AND A TRUCK® business, there were 36 locations, and franchising was a new concept for the company. Melanie had no background or understanding of the franchise model, and no network to connect with at the time. Thanks to a grant from the state of Michigan, Melanie was able to work with a franchise consultant for a year. He taught her everything she needed to know about the franchise business model, and how to implement it. At the end of the year, the consultant left his high profile career to become a TWO MEN AND A TRUCK® franchisee. That consultant turned franchisee had a profound impact on the way Melanie moved forward with franchising.
The Importance of Giving Back Another of Melanie’s key influencers was Dina Dwyer-Owens, of The Dwyer Group. The two women met at a conference, in
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a dessert buffet line, when Melanie was six months pregnant with her twin boys. They hit it off immediately, and DwyerOwens took Melanie under her wing, providing not only support, but an example of the importance of family, service, and leadership. Melanie was especially influenced by Dwyer-Owens’ humble personality, and her passion for helping others. That passion for giving back is one of the key features of TWO MEN AND A TRUCK®, and has been since the very beginning. After putting everything back into the business, Mary Ellen Sheets ended her first year with $1000 profit. She wasn’t sure how to deal with the tax paperwork. So she wrote ten cheques for $100 each and gave them to ten different charitable organizations. Her mother’s generous spirit and sense of humour have had a profound positive effect, not only on Melanie, but on the company as it has grown through the years. Although tax paperwork is no longer an issue, that spirit of giving back has carried over and become part of the corporate culture at TWO MEN AND A TRUCK®. To date, the company and its franchisees and employees have contributed over $26 million to various causes, and it is something that Melanie is intensely passionate about. She says that giving back “is what really drives me and feeds my passion.”
Franchising: The Cycle of Success Melanie’s role with TWO MEN AND A TRUCK® has evolved over the years as her title has shifted from President, to COO, to CEO, to her current role of Board Chair. Her current role gives her the opportunity to mentor and inspire others in the franchise community. She sees franchising as a way that “anyone can live the American Dream,” and refers to franchising as a “really fun ride.” One of
“When Melanie is working, she is 100 percent present and immersed in that work. When she is with family, the same holds true.” the greatest rewards of her career has been witnessing what she refers to as “the cycle of success.” Movers that are employed by TWO MEN AND A TRUCK® franchisees achieve personal success, and become franchisees. In turn, they train and influence new movers, helping them achieve success. And the cycle continues. Having learned so much along the way, Melanie is keen to share her experiences with others. Her best advice for someone new to franchising is to check lots of references. And when you talk to current franchisees within a system, ask them if they would do it again. Make sure
the concept is profitable, and that it has the potential for longevity. For more established franchisees, Melanie stresses the importance of hiring the right people, people who can cover the areas where you are not as strong. From mother to daughter, from franchisee to Board Chair, Melanie Bergeron exemplifies the cycle of success that is possible in franchising. As she continues to inspire and share with others, the cycle continues. For more information: Web:
www.twomenandatruck franchising.com
Franchising USA
inter national f ra nchising
Richard Simtob, President, Zoup! Fresh Soup Company
Make Canada Your First Stop
on the R oad to I nternational F ranchisin g With Canada’s stable economy, geographic proximity and many similarities to the United States, our neighbor to the north offers an enormous opportunity to franchisors looking to grow their company’s international footprint. And, while some U.S. brands have already staked a claim there, far fewer brands do business in Canada than in our country. So, not only will you likely encounter less competition, you might even have the chance to be a pioneer in your industry. For example, Zoup! Fresh Soup Company’s expansion north brought Canadians their first exposure to a restaurant concept centered around 12 always-rotating daily soups. In fact, the entire fast-casual restaurant category (fresh and healthy meals, served in a
Franchising USA
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setting with upscale décor and a bill under $10) is new to Canada. Expanding to Canada will help build your customer base and allow you to test how prepared your company is to handle the challenges and uniqueness of international markets. Before you make the leap, however, you must carefully plan for these legal, business and cultural aspects of your expansion. Secure Trademark Rights to Your Brand: • Start this process well ahead of the time you expect to begin your Canadian expansion, and expect challenges along the way. • Hire a Canadian trademark attorney to conduct a complete search for previously registered marks and names that could be considered overlapping. For example, Zoup!’s trademark search found a Canadian trademark called Simply Zoup, Inc., which we were able to track down and purchase from the owner. Once we owned that mark, our attorney was able to secure rights for both the Zoup! and Simply Zoup, Inc. names and marks.
Prepare to Comply with All Legal Requirements: • Hire a Canadian attorney to adapt your U.S. FDD to the format and stricter requirements of the CDN Disclosure Agreement. Your attorney also will counsel you on other related laws, which can differ from province to province. • Work with a Canadian CA (Chartered Accountant) to help you set up the proper business entity and tax structure in the U.S. • Seek out the advice of a Canadian expert in your industry to find out what licenses and permits you will need and what other barriers to entry you might encounter. For example, at Zoup!
we had to become familiar with the country’s food safety and handling laws, and the government agencies that make and enforce them. Then, we had to plan how to adapt to those that differed from U.S. laws and practices.
Investigate Requirements for Importing Your Products If you’re planning to import products from the U.S. or other countries, begin working with a customs broker. Although there is no law requiring it, a broker will help you comply with the guidelines and fees associated with each item, and will handle the related paperwork. Every industry can expect some unique hurdles; to give you an idea, here are a few we encountered: • Because our soups are made in the U.S. – and we have hundreds of recipes, each with different ingredients – each item being imported had to be approved and/ or registered by CFIA and NAFTA. • Certain ingredients, such as the chicken and cheese we use in salads and
sandwiches, could not be imported at all since the Canadian government controls the market for each of those items. In fact, Federal statutes restrict importation of a wide range of items, including meat, plants, seeds, fruits and vegetables, magazines and books, drugs and others.
Develop a Product Distribution Plan All of the products you import in bulk will need to go to a central site where they will be portioned, packaged and sent out to your individual units. Research existing distributors and choose one that is well located and best suited to your businesses’ needs.
Research and Contract with Key Vendors and Service Providers • You will need to find Canadian vendors for many of the routine and businessspecific services you use. For example, Zoup! needed to contract with a Canadian payroll company, credit card
Franchising USA
inter national f ra nchising
Richard Simtob, President, Zoup! Fresh Soup Company
“Expanding to Canada will help build your customer base and allow you to test how prepared your company is to handle the challenges and uniqueness of international markets. Before you make the leap, however, you must carefully plan for these legal, business and cultural aspects of your expansion.” processor and phone service provider, to name a few. • Start by contacting your U.S. vendors to determine if they can service your Canadian operations. Contact the Canadian Franchise Association (CFA) for referrals.
Visit the Market and Develop a Growth Strategy Canada is large country, almost twice the size of the U.S., but with only 10% of the population. Most of this population, however, is concentrated along the U.S./ Canadian border, with almost 35% living in the southern most part of Ontario. How do you decide where to put your first location? • If possible, start with a city close to your company’s home base. If you’re located on the West Coast, for example, consider the Vancouver area. On the East Coast, the fast-growing Toronto area is a solid choice. • After you open your first unit, develop additional franchises nearby. Then, give yourself and your franchisees time to identify issues and problem-solve before growing into other areas.
Network with Franchise Referral Partners Join the Canadian Franchise Association (CFA) and seek out referral partners, such as independent franchise brokers and commercial real estate brokers. For example, Zoup! works with FranNet, a franchise broker organization that evaluates prospective franchisees’
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capabilities, needs and preferences, and matches them with a franchise program that is a good fit. Gary Prenevost, FranNet’s top-performing Toronto-based franchisee has numerous relationships with the franchisor and franchise supplier community; he will be able to provide key referrals to proven Canadian vendors mentioned above.
Visit Your Chosen Market to Research Locations and Prospective Franchisees In selecting a location, it’s best to work with a local real estate broker who knows the area and can help you find the right geographic and demographic match for your concept. In choosing your first franchisee, here are a few things to keep in mind: • You initial franchisee should be an early adopter, who understands the pros and cons of being first, and is patient and willing “to go the distance.” Zoup!’s first Canadian franchisee was unruffled throughout a lengthy site selection and approval process, but he has been well-rewarded in having one of the topperforming stores in our system. • The first franchisee also has to be wellcapitalized because obtaining financing can be challenging for a concept not yet proven in Canada.
What Else Should You Know About Expanding Your Franchise to Canada? When expanding into any foreign country,
you must be flexible and open to making changes to the way you do business. Some changes will be simple (like adding ketchup to serve with our Mac & Cheese soup), while others will be significant: • Franchisees obtaining financing in Canada will be required to make a down payment near 40% versus the 20% to 30% that is typical in the U.S. And, because Canada has fewer banks (and your franchisees will have fewer options), it’s important for your company to develop and maintain strong relationships with all major institutions. • Canada was mostly unaffected by the recent global economic downturn so real estate prices have remained high. Leasing space will cost your Canadian franchisees more, as will related costs, such as taxes, insurance and commonarea expenses. • Canada also has a higher minimum wage rate and higher tax rate than the U.S. At Zoup!, we found that we have to charge more for our menu items than in the U.S., but we also found that doing so put us solidly at market price and allowed us to still be competitive with similar restaurants. • Fees and services in Canada are subject to Harmonized Sales Tax (HST), which is a combination of a provincial tax and a Goods and Services Tax (GST). You will need to work with your Canadian accountant to set up a system for tracking your HST and getting reimbursed for it. • Marketing and advertising materials will need to be modified to comply with Canada’s cultural, language and spelling preferences. For example, Canada uses the metric system for measurements and nearly 80% of Quebec’s population speaks French only. Even in Englishspeaking Ontario, common words are spelled differently, such as “cheque” instead of the U.S. version “check.” While making a foray into Canada might seem as daunting as it is exciting, keep in
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mind that there is something unique about Canadians and the loyalty they have for the brands they trust. As a Canadian- born American citizen I know from experience that we Canadians love our brands (like Tim Hortons, Boston Pizza and Harvey’s). I also know that for those U.S. brands that can successfully capture the minds and hearts of Canadians, you can count on their loyalty to help drive your international growth. Richard Simtob is a Canadian-born American citizen with 28 years of experience as a small business owner, and as a franchisee and franchisor of multiple brands. Currently, he is President of Michigan-based Zoup! Fresh Soup Company, where he is responsible for the strategic direction and management of the organization’s franchise growth. Since joining Zoup! in 2003 Simtob has helped grow the company’s franchise system from 5 stores to 50 today. He also led Zoup!’s expansion into Canada
in 2011, where today the company operates two units, with 5 additional franchise agreements signed or in various phases of development. Prior to his role at Zoup!, he was a principal and Senior Vice President of Wireless Toyz, where he expanded the company’s franchise network through the opening of 66 new stores in 2006. Simtob also has provided business-consulting services in the areas of strategic planning, management, franchising and sales for a variety of successful brands.
About Zoup! Founded in 1998, Zoup! is the leading fast-casual soup concept restaurant that is defining the category with its premium and proprietary soups and other recipes. A dining experience that features 12 always-rotating soup varieties each day in an environment that focuses on comfort, satisfaction and convenience, Zoup! has grown
Richard Simtob, President, Zoup! Fresh Soup Company
its network of franchises to nearly 50 restaurants throughout the District of Columbia, Colorado, Michigan, Indiana, Ohio, Missouri, Connecticut, Massachusetts, Illinois, Kentucky and Canada. For more information: Web:
www.zoup.com www.zoupfranchise.com.
Franchising USA
CPR CELL PHONE REPAIR: Revolutionizing small electronics repair, 1 gadget at a time.
The first ever public cell phone call was made rd on April 3 , 1973. In the 40 years after that, mobile phone usage has exploded into a global phenomenon and a multi-billion dollar a year industry. ®
CPR Cell Phone Repair is a company built on the cutting edge of that incredible market. By offering consumers the option for repair instead ® of expensive replacement, CPR has positioned itself as a leader in the mobile electronics world. ® CPR repairs all types of small electronics devices, including, but not limited, to cell phones, tablets, smartphones, mp3 players, laptops, computers, GPS systems, and game systems. This wide range of electronics repair ® services has made CPR one of the fastest growing franchises in the world, with almost unlimited growth potential. In addition to repairs, CPR® Cell Phone Repair offers other services including a buy, sell, trade program and our nationally recognized CPR Shield protection plans. Customers who visit a CPR Cell Phone Repair store can trade-in their old phone for cash or recycle their old device for credit towards a new device or accessory. CPR is proud to partner with Shriners Hospital for Children as part of our recycling efforts, and a portion of all proceeds from recycled devices is donated to Shriners Hospital. Our CPR® Shield protection plans can protect a large number of electronics from accidental damage from water, drops, breakage, cracks, and more, for less than our competitors. This protection is
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backed by CPR’s nationwide 6 month warranty, and is valid at any of our participating locations. ®
CPR Cell Phone Repair currently operates 114 stores throughout the US, Canada, and South America, with another 40 slated to open in the ® first few months of 2013. By the end of 2015, CPR is projecting 1,000 open stores throughout the world. Owning a CPR Cell Phone Repair location means becoming part of an international team of electronics professionals dedicated to their customers, their communities, and each other. Our specialized teams of Gadget Technicians are certified by CPR University, and ready to take on any challenge. CPR® Cell Phone Repair has been ranked for 3 years in a row on the Entrepreneur Franchise 500, and was also named one of the fastest growing tech franchises in the country. In addition to these accolades, we are proud to have a large technical and operational support staff, sales advisors, and many other vital support tools to help our owners become a success. If you’d like to know more about what makes CPR Cell Phone Repair stand out from the crowd, then visit us on the web at www.cprfranchise.com today!
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Franchising USA
f ra nchisee in action
Shaok ao Cheng, B oConcept
A Modern Lifestyle Every line and detail of each and every piece of BoConcept Furniture is based on true Danish design traditions. But their inspiration comes from the big cities around the world. That is how they take the best from their Danish design heritage and combine it with the modern, urban lifestyle. BoConcept’s history dates back to 1952. From living furniture, storage furniture, dining, sleeping, hallway, working and accessories: BoConcept has furniture options for the entirety of your home. The companies’ vision, to make BoConcept the number one brand within urban interiors is being fulfilled in New York where husband and wife, Niki and Shaokao Cheng, currently own seven BoConcept franchises, operating five of those seven. Below, Shaokao Cheng shared his experience with us of how a business he invested in mainly for his wife’s interests, has become the source of their families livelihood.
Franchising USA
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An Unexpected Opportunity Niki and Shaokao Cheng were renovating their New York apartment in 2002. At that time in New York, when you began renovating and redesigning your home there were two sides of the spectrum for modern furniture: Ikea and the high end, expensive furniture. The two of them were looking through design magazines when a coffee table in an ad caught Shaokao’s eye, “The furniture in the ad was modern. I saw this coffee table that I had been dreaming of. What was better: the $299.00 price tag.” As Cheng continued to examine the page, he noticed in small print at the top of the ad, “For franchise opportunities…”. That was enough to peak Cheng’s curiosity. With both his wife and his own passion for modern furniture coupled with his wife’s background in interior and architectural design, they began to research the opportunity to franchise. The two of them signed the papers in 2003. Two months later they opened. By
“First and foremost, I don’t look at this as work. This is a new way of living, or a new lifestyle. This business in some ways is like a child of mine and so I treat it as such.” the time the paper’s were signed, Cheng had done much of the research, location scouting and other preparatory measures. Cheng didn’t put all of his eggs in the BoConept basket right away. “I was thinking my wife would run the floor and I’d keep my day job. At night I would deal with the paperwork,” Cheng shared. That idea didn’t last for long. From day one they were so busy, Cheng realized it was “do or die”. The couple had invested a lot into the business and he wasn’t prepared to lose the investment they had made. Prior to their Grand Opening, Cheng was working with McKenzie & Company as an IT executive. “On day one there was a line and we ended up working that first day until three in the morning. The store opened the next day at nine thirty so we went home for a couple hours of sleep, showered, and were back a few hours
later to open the doors,” said Cheng. That rigorous routine lasted for the first two years. The couple devoted their life to their business and they continued to watch their sales, customer base, and employee commitment grow.
The Support Behind BoConcept There is a head BoConcept office in New Jersey. The BoConcept training that really stood out in Cheng’s mind, was the support of a number of executives there to support them for their Grand Opening. At the time, there were only a handful of BoConcept stores in the US and having a franchise in the US was very exciting for the company at large. Cheng shared, “We didn’t have to go anywhere; they brought everything to us.” The hands on support lasted for about a month, helping
Franchising USA
f ra nchisee in action
Shaok ao Cheng, B oConcept
culture,” explains Cheng. He has learnt the importance of modeling the business. the couple learn the ins and outs of store operations. After that visits continued on an almost weekly basis. The couple has a number of training and franchisee tools to help them succeed in building their business: marketing tools, sales techniques, and employee management. Cheng recalls being very comforted by the thorough training manuals they provided that encompassed every aspect of the business. Additionally they have accessible experts in fields such as finance, and accounting so you have someone to show you how to manage these tasks. BoConcept is orchestrated on the values of respect (always showing you care), thinking smarter (always looking for the better solution), playing with the team (always using your freedom of responsibility), and loving city life (doing your best to know what’s going on in your community). “If you want to change something around you, you have to be that change first. If you want people to care about the company you have to care about the company. In that way you create a
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A Community Within A Career When the topic of a work/life balance arose Cheng’s attitude was very developed, “First and foremost, I don’t look at this as work. This is a new way of living, or a new lifestyle. This business in some ways is like a child of mine and so I treat it as such. There’s no such thing as ‘I’m not going to deal with you between the hours of five in the evening and eight in the morning.’ Whenever something comes up, I’m there. And so the balance is what you make of it.” As of late Cheng is learning the art of being a bit more laid back and doing his best to let go of aspects of the business. The couple has been in business for ten years. There is a strong engine in place and so the couple no longer needs to constantly be overseeing the entire operation. “There are still times when I have a crazy week, but overall I spend considerably less time on the business now. And I worry a lot less.” In the future, the couple is working towards further improving the efficiency of their operation. That includes the
efficiency of their employees “I come from a corporate background and at first I tried to create a process for everyone and run my business like a corporation. When you manage people by tasks, they’re just task executers. What you really want is people who go above and beyond on your team. I’ve learnt you have to treat employees and customers like family,” says Cheng. This is a business that is for people who love design and appreciate affordability. BoConcept offers designs and products that are modern and the perceived value is much higher than the actual price. “Something about this style is very New York; it’s high-design, with a great price point, and it felt very comfortable. In some ways, we feel that BoConcept was part of our destiny,” said Cheng. “Prospective BoConcept franchisees much know that this is going to be a new lifestyle. It’s not a job, it’s not work, this isn’t something you can do part time. For the first years, at least, a business is something you have to become a part of, and it has to become a part of you.” For more information: Web: www.boconcept.com
ex per t advice
Darren Wallis, CEO, G.J. Gardner Homes
Identifying the leader, understanding the group and implementing change “Within each group of people there is someone that everyone looks up to and listens to. Here’s the bad news – it’s probably not you. The sooner you accept that, the better off you will be.”
Darren Wallis
As the CEO of a large franchise, I am constantly making changes and implementing new procedures to my franchise system that can affect more than 110 franchisees around the world. Leadership in franchising can be tricky. Leadership is usually associated with being in charge, providing strategic direction and to a certain extent, telling people what to do. But in franchising,
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successful leadership is much more than that. If you are a franchisor, it is likely that you will find that franchisees are not your typical employee. As they are business owners or shareholders of your brand, they will not necessarily follow direction just because you give it – and nor should they. Franchisees usually evaluate the direction and what it means for their business. If they believe it will have a negative impact they will certainly let you know. While the individual franchisee has a right to protect their interests, it can at times be frustrating when you are trying to implement a business strategy you know will help their business in the long run. Franchisees can be resistant to change,
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It was that day I realised the importance of understanding the dynamics of the group and the role the leader plays in change implementation. I decided I would consult the leader before the next meeting and arranged a time to see him face-to-face to ask for his input on the strategy, how he would implement it and welcomed his feedback on the best way to approach franchisees. The leader acknowledged there would be negative franchisees, and suggested that we worked together to get everyone on board. He started to take ownership of the strategy: with his input and after being consulted, he had a vested interest in the successful implementation of the strategy. Once I had the leader’s support, the rest of the franchisees followed and we had one of the most successful implementations to date. especially when they buy in to a company for the sense of stability and system that franchisees already have in place. To a certain extent they are right to access the affect on their business. But as a franchisor and a leader it is your role to ensure the future success of the business, for the benefit of all franchisees, by implementing strategies that will continue to help it grow, despite pushback from those who cannot see the immediate need or benefit of the change. Understanding the dynamics of your group is essential to leadership, especially in an environment such as franchising. It can be difficult to master at first, but through years of experience in franchising and successful change implementation, I have developed a method that has proven results. Let me share a simple tip I learnt very early in my franchising career: within each group of people there is someone that
everyone looks up to and listens to. Here’s the bad news – it’s probably not you. The sooner you accept that, the better off you will be. Identifying that person can make meetings more productive and new strategies become so much easier to implement: they are the leader of the group and they have more control of a group situation than you think. I remember a franchise meeting to announce a new marketing direction for G.J. Gardner Homes, where I presented a marketing solution that was nothing but mainstream and if implemented correctly could mean a huge increase in sales for my franchisees. When I finished, all eyes in the room turned to the leader of the group. He instantly said the strategy would never work and without hesitation the rest of the group followed his lead in rejecting the strategy and the project was doomed.
This example taught me an important lesson that engaging the leader can be an extremely useful practice, especially for the announcement and implementation of a new strategy, policy or procedure for your franchisees. I have continually used this strategy to build my business and better connect with my employees.
Understanding the ‘Leader’ and becoming the influencer While leaders can be helpful in engaging other franchisees, they can also have the opposite effect if you don’t effectively manage the situation. Leaders can be opposed to anything you say and instantly disagree with your strategy without knowing the details. Sometimes natural leaders don’t like to be surprised and instinctively do not like an idea unless it is their own or have had played a role in its formation. That’s why it is important to engage the
Franchising USA
ex per t advice
Darren Wallis, CEO, G.J. Gardner Homes
leader first. Presenting what you will be discussing and how important their input is will help you achieve their stamp of approval before addressing the group. If you let the leader know you are aware some of the group is likely to respond negatively to the announcement, the leader can help you to come up with ideas on how to handle the announcement. Having the leader involved will help you to take control of the announcement and understand, from a franchisee level, what it will mean for the business. In most cases I see frustration by franchisors trying to implement change or strategy that they know will not only be good for the franchisee’s business but also for the franchisee. If you announce a new change without gaining the leader’s support first, it may result in little or no buy-in from your franchisees, which could ultimately lead to the demise of your initiative. Learning how to influence your
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franchisees is a powerful tool and it helps you be a better leader, attributing to the success of your company. The question is simple – how successful do you want to be as a leader? Being a leader does not mean barking orders and fighting your way through change. Be smart, connect with your franchisees and understand that being able to influence others will lead you and your franchisees to a better business.
About G.J. Gardner Homes Founded by Greg Gardner in 1983, the group is Australia’s most experienced and trusted homebuilder, having built more than 25,000 custom homes in Australia, New Zealand and the United States since its establishment. G.J. Gardner Homes now has an international network of more than 111 G.J. Gardner Homes franchises and an annual turnover of more than $525 million. Over the past 12 months, CEO
of G.J. Gardner Homes Darren Wallis, has successfully positioned the company as a leader in homebuilding in Australia, New Zealand and the United States. According to the recently released HIACOLOURBOND, Steel Housing 100 report, G.J. Gardner Homes is the 8th largest builder and the 7th largest detached house builder in Australia. In New Zealand, G.J. Gardner Homes is currently the number one residential builder. A finalist for CEO Magazine’s Construction Executive of the Year, Wallis has a passion for generating business that will see the G.J. Gardner Homes franchise reach new heights in the coming years. G.J. Gardner Homes currently has 57 franchises in Australia, 26 in New Zealand and 28 in the United States with a growing team of 855 employees. For More Information: Email: angela.jessup@iconpr.com.au Web: www.gjgardenerhomes.com
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Da n Schaef fer, ProTect Painter s
The Painting Professional
whose F ocus in on C ustomer S ervice After spending ten years in the food, beverage, and hospitality industry Dan Schaeffer started to reflect; it was time to make a change.
“No matter how long I work on certain things, there will be things I’m not good at doing and don’t enjoy. So I found someone to do those things. Now I can spend my time doing what I’m good at.”
He began investigating small business ownership. Schaeffer’s search began with considerations of building a food-based business from the ground up. “I was looking for something really different; I was looking for new challenges. A service-based, relatively low cost, low inventory, efficient business was what I desired,” explains Schaeffer. He soon realized that with a business in the food industry he would need to manage a storefront, low margins, high school aged employees, a potentially seasonal market, and inventory that had the potential of spoiling and going to waste. It didn’t take Schaeffer long to shy away from this original idea.
Finding the Best Fit Schaeffer spoke with a franchise broker and learnt that opening a business in an industry that wasn’t related to his past
Franchising USA
f ra nchisee in action
Da n Schaef fer, ProTect Painter s
experiences, a franchise was the best way to go. He would have the opportunity to start a business, but rather than hitting all the speed bumps a new business encounters that slow a person down, Schaeffer would be able to ramp up his business in a shorter time frame: a franchise would do all the homework for him This was a huge factor in Schaeffer gravitating towards franchise ownership: he would have a brand, training, supplier relationships, website templates, and technology infrastructure, all from day one. Based on Schaeffer’s interests and investment levels his franchise broker presented Schaeffer with a few franchises to investigate. “I chose ProTect Painters for a variety of reasons. The industry was stable, it was a Service Brands International company, and I found a strong track records of success in
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the existing ProTect franchises,” said Schaeffer. The more he researched, he uncovered a strong business infrastructure and tools behind the widely recognized brand. So in the fall of 2009 Schaeffer signed a franchise agreement with ProTect Painters. The next month or two involved on-going distance training: webinars, phone calls, and emails, to support Schaeffer in setting up the business. Schaeffer then spent two weeks at the ProTect Painters head office for intensive, on-site classroom training. On-site estimating, time management, painting systems and failures, marketing, and financial forecasting were a few of the topics covered during the training intensive in Ann Arbor. After finishing this preparation process, Schaeffer’s ProTect franchise was up and running January 2010.
A Business is Alive and Ready to Grow January of this year marked Schaeffer’s three-year ProTect Painters Franchise
anniversary. “When I started, I was a one man show for a year and a half. At that point I made the decision to hire someone. Since, my role has changed from doing everything to being able to focus more on the business development: sales and marketing. The person I hired, does a lot of the project management,” explains Schaeffer. At this point, Schaeffer intends his growth to continue, “We’ve almost doubled our sales each year. At this point I’m looking to possibly expand our services to a broader territory.” What’s important to Schaeffer first and foremost is continuing to provide great service. “I’ve seen companies get bigger and as they grow, the service is compromised. I want to grow, but in a controlled way.” Schaeffer utilizes the on -going webinars, and calls across the system. ProTect offers task forces to help implement new technology or services. There’s an annual convention where, for four days, franchisees engage in training and round tables. A final aspect of regular training ProTect Painters franchisees receive are industry events where new products or
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techniques are introduced into the field. All of these tools help ProTect franchisees stay at the front of the curve. “I would love to be in a position where the business more or less runs itself. I’d like to hire a couple more people and set up systems so that the business is successful with or without me,” shares Schaeffer. Coming from a background in management, Schaeffer continues to use this training to transition more and more into a role of overseeing operations opposed to frontline work. With the beginning stages so fresh in Schaeffer’s mind, he had three universally valuable lessons to share to all current and prospective franchisees: • “I had to figure out that I wasn’t good at everything. When I started this business I felt, as the owner, it was my responsibility to do everything, know everything and be good at everything. As time has passed, I realized no matter how long I work on certain things, there will be things I’m not good at doing and don’t enjoy. So I found someone to do those things. Now I can spend my time doing what I’m good at. That was a big eye opener for me. You need to know the inner workings of your business, but you don’t have to be good at it. Hiring someone for those things will make your life much easier. • “Secondly, make sure you take care of all the details. Owning a business comes with many small details. Don’t assume that something has been taken care of. You can do eight out of ten things, but if you miss those last two, the customer will remember. The whole job, each detail, must be taken care of: no cutting corners. As an owner, you have to be engaged in the business and
focused on everything until the product is done and done right. • “Finally, employees. I cannot stress enough, the importance of being very selective when adding people to your team. Do your best to hire people who are going to be a good fit; strong ambassadors for the brand and its’ values; and who have a genuine passion for customer satisfaction. Unlike a big company where you can bury a weak link, when your company is a crew or two, everyone has to be very strong.” Every position Schaeffer held prior to purchasing a ProTect Franchise was about customer service whether it was serving a dinner, coordinating an event, or picking a bottle of wine. “I love to work with people
and deliver a good experience. I have adapted that philosophy to this business,” says Schaeffer. ProTect Painters naturally aligns with Schaeffer’s love of pleasing the customer. The company at large is dedicated to delivering a great experience and exceptional customer service. With a heavy focus on communication, responsiveness, and time, the experience is one the customer enjoys. “People want you there, and they are excited to change the way their home looks. Our customers are a pleasure to work with. If you are a detail oriented person who enjoys working with people this is a fun business in a stable industry.” For more information: Web: www.protectpainters.com
Franchising USA
vetera ns in f ra nchising
Keith A. Mathias, Director of Strategic Market Development, WIN Home Inspection
W I N for A merica with
WIN Home Inspection
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In the fall of 2010, “Operation Enduring Opportunity” was taking shape within the International Franchise Association (IFA). The campaign to hire and recruit 75,000 veterans and their spouses, along with 5,000 Wounded Warriors, inspired the WIN Home Inspection team and planted the seed for us to pursue a greater outreach with veterans. It was with a lot of planning and research that our WIN for America program began and was launched 11/11/11. At this time, WIN committed 1.2 million dollars in financing and created our own “WIN for America” program to honor our veterans. This program was created to aid the Veterans transition into the civilian business world, while capitalizing on their valuable military skills by awarding qualified veterans the opportunity to waive all or part of their franchise fee. We believe the training and skills veterans learn during their military service are very transferable to the civilian workplace and valuable in running their own business. This is not to say we are giving away franchises; quite the contrary. We created the “WIN for America” Veterans program with three goals in mind:
1. To reward qualified veterans. 2. To provide realistic opportunities for veterans to become successful business owners and, 3. To serve as a key contributor to a positive life-changing event for these veterans. As our program was taking shape, we knew it was something veterans could learn from while actually having to earn the Service Award/franchisee fee waiver. If you look at the program, the eligibility process has structure to it, something veterans with a military background are surely used to and appreciate. First, they fill out a questionnaire and an application and provide WIN with a DD214 to show proof of their honorable discharge. From there, we complete a series of phone interviews and briefings to determine if they are qualified, and what Award level they are qualified, to earn. The Gold award waives 100% of the franchise fee, Silver waives 50%, and Bronze waives 10%, - all significant discounts for our future Strategic-Partners, or S-P’s as we call them (that’s “franchisee” in WINspeak). Once the Award Eligibility review process is complete, potential S-P’s will agree to engage in the WIN “homework process” which takes about 4-6 weeks to complete. During that time, the Veteran candidate has a weekly phone call with me to monitor progress in the “homework process “and maintain accountability. The candidate will work through a competitive market survey, research the real estate market in their area, and make validation calls to existing WIN S-P’s around the country to gather information. This
research and information gathering will prepare them to complete a Business Development Plan, three-year financial projection, a Start-Up Marketing plan (which we call the “GO Plan”) and respond to Five Essay Questions. Business Plan and Financial modeling templates are provided to them so they need only to do research to gather information from local sources, our WIN S-P’s and home office staff. All this “work” is intended to provide the Veteran candidate with the information they need to make a good decision on business ownership and joining the WIN Home Inspection Team. Our goal at the WIN home office is to make sure that prospective franchisees have a complete understanding of how we go to market, how they will establish relationships within the industry, and the tools and support available that go into starting, growing and operating a successful WIN Home Inspection franchise. For example, we take the candidate through a 12-month Marketing Game Plan that shows the coordination of national, regional and local level marketing activities already in place and ready to go. We leave no surprises. We want to be clear that this homework process is for everyone’s benefit. While the candidate is not obligated to commit to purchasing a WIN franchise before going through this “homework process” they are expected to complete the “homework” and submit the finished work for review. We know they need all the info to make a good decision for themselves and their family. Plus, the bottom line is, WIN is looking for good people to grow our business. If the S-P’s aren’t happy and fully invested, it doesn’t work.
Franchising USA
vetera ns in f ra nchising
Keith A. Mathias, Director of Strategic Market Development, WIN Home Inspection
Once the legwork and “homework assignment” is completed by the potential S-P, the home office forwards all information to members of our internal Veteran Award Committee for scoring and review. The committee members are WIN franchise owners with a military service background. They review the homework, score it, and conduct a verbal interview with the candidate. At the end of the interview, the committee sends scoring results and a thumbs up or thumbs down if the person will be a good fit with the WIN organization It’s important to WIN that the entire system is involved in making a decision regarding a WIN for America Service
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Award recipient, as we don’t want to create a class system within our structure where people look at a veteran that comes through the program and somehow think of them as different. WIN for America is just a vehicle to help them join our company, and once they are in the WIN system, everyone is equal. The integrity of this process and determining an appropriate fit is so important to make this program successful for the S-P’s and our system as a whole. One of our recent WIN for America recipients, Air Force Veteran Leonard Curto of Thunderbird, Arizona, is a great example of an effective entry into the system. Leonard heard about WIN on the
radio in late May 2012. He then attended an “In-Market Discovery Day” meeting in Phoenix and made the decision to apply for the WIN for America Veteran program Service Award. Leonard completed the “homework” process, was reviewed by our Veteran Award Committee, and was approved by the company to receive the Gold Service Award. His homework was so outstanding; we were in happy disbelief and proud of how prepared he was. Certainly, his veteran ranking and work history in retail automotive supplies and Wal-Mart as a mid-level manager prepared him to be a high achieving, detail oriented S-P. He had always dreamt of having his own business and the WIN for America
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“Our goal is to make sure that prospective franchisees have a complete understanding of how we go to market, how they will establish relationships within the industry, and the tools and support available that go into starting, growing and operating a successful WIN Home Inspection franchise.” program provided that opportunity to change directions and pursue his dream. He is now completing his AZ license requirements and hopes to start his business by March 2013. As part of the IFA Chairman’s Corporation, we are always willing to speak with other companies who would like to implement a similar program. Offering five to ten percent off a franchise fee was a common industry standard a mere year or two ago, and now it is fairly common for a discounted rate of 50 to 100 percent available for veterans. I think there is a positive movement afoot within franchising to continue growing our systems in this challenging economic climate by continuing to bring quality people into our organizations, albeit in non-traditional ways. I hope our “WIN for America” Veterans program will encourage franchisors to explore creative ways to attract quality people to their concept and then provide “a path” to joining their organization. In a business environment screaming for short-term solutions we shouldn’t lose sight of the long-term benefits of adding quality people to our business now. Veterans are good people to grow with.
At WIN, we have a solid business model that has proven itself in the market for 20 years. We thoroughly understand who makes a good fit in this company. Our current franchise owners are successful and committed to growing our business by bringing in new people through our WIN for America program. The WIN for America program is a vehicle for veterans to join WIN Home Inspection, if they are willing to do the homework and earn the Service Award. They have to earn it. It’s not a hand out, and it’s not a giveaway. It’s an opportunity to be in your own business. For people that are serious, this is a tremendous opportunity. Keith A. Mathias joined WIN Home Inspection in April 2011 as Director of Strategic Market Development. He is responsible for Strategic-Partner business development in selected metropolitan markets across the United States. Keith has owned and operated several franchise businesses as well as starting, operating and selling several independent businesses. He started, operated and sold two ServiceMaster franchises in Minnesota, held franchise development and operating positions with ServiceMaster Consumer Services,
Keith A. Mathias
with the last position being VicePresident of New Business Development. Prior to joining WIN, Keith served as President of Mid-South Stone Masons Inc., a southeast regional masonry contracting company and President of Advantage Stone & Hardscapes Inc., a regional wholesale stone, masonry and hardscape material supply company in Memphis, TN. Keith graduated from the University of Minnesota in 1978 with an AgriBusiness degree. He lives with his wife, Leigh, in LaGrange, TN and enjoys the country life, where they have registered quarter horses, two Jack Russells, and way too much garden to take care of on the weekends. Keith enjoys the challenge of developing new businesses and growing existing ones, and says, “ My advice is ‘Run with a Purpose’ and ‘Life is a lot simpler if you plow around the stump.’ For More Information: Web: www.winfranchising.com
Franchising USA
ex per t advice
Leann Reynolds, President, HomeWatch Caregivers
Male Family Caregivers U ntapped C onsumer B ase for H ome C are Home care franchising, a fast-growing sector in the franchise world, presents an extraordinary opportunity for entrepreneurs. This is largely due to its relatively low startup investment and high consumer demand. Home Care: Demand and Challenges The number of seniors, as a percentage of the general population, is growing at an unprecedented rate: more than 10,000 baby boomers are turning 65 each day, and by 2013, one in five Americans will be 65 years or older. It’s hard to think of a market force more powerful. In addition to the growing number of older adults, the increasing demand for home care services can be attributed to a number of other factors: • A lack of informal caregivers who can provide consistent care. • The rising cost of traditional care.
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“Male family caregivers are more likely to use the Internet as a care-giving resource, yet they are less likely than female caregivers to seek out in-person care-giving training or support programs.”
Leann Reynolds
• The overwhelming desire for seniors to remain at home for as long as possible instead of receiving care in long-term care facilities. Today, home care is considered one of the hottest franchising sectors around. It’s not a surprise that such success comes with its own set of challenges — increasing competition. The sector grew from six franchisors just a decade ago to more than 40 brands today. In fact, home care is the largest category in Entrepreneur’s Franchise 500 — a comprehensive annual franchise ranking. This increased competition is forcing home care franchisors to adjust their strategies: by expanding their services to complement personal care with more skilled care and clinical oversight or by refining marketing planning and pursuing underdeveloped territories. But there is still another way to grow a home care franchising business: target a previously untapped market.
one’s needs. This family caregiver is typically a woman in her 40s or 50s, but the number of males taking on this role has been steadily growing over the past couple of decades. Currently, 45 percent of all family caregivers in the U.S. are men, signaling a major demographic shift. What’s more, in the last 15 years, the percentage of men caring for a loved one with Alzheimer’s or other forms of dementia has more than doubled, from 19 percent in 1996 to nearly 40 percent in 2009, according to the Alzheimer’s Association. Both male and female caregivers are concerned with the same things: the health, safety, and life quality of those under their care. However, the way men and women approach their care giving responsibilities often differs.
The Rise of Male Caregivers
Often unprepared for the newly found role of a nurturer, men are at times hesitant to provide hands-on assistance with such delicate tasks as bathing, dressing or toileting, especially if they are providing care to their aging mothers. Men tend to adopt a care manager role, compensating for their lack of experience with personal care (and, for some, with household chores) by hiring a home care agency.
As in other health care sectors, a family caregiver —not the senior or person needing care — usually makes the lion’s share of decisions when it comes to selecting the right care for their loved
For men — who are more likely than women to continue working full or part-time while serving in the role of a caregiver — home care becomes a vital service. In fact, data show that 40 percent
of men use outside assistance. Until recently, the home care industry has failed to market their services to male caregivers and capitalize on this consumer group. The major reason for this is the fact that the two genders approach the search for care-giving-related information and services in dissimilar ways. Male family caregivers are more likely to use the Internet as a care-giving resource, yet they are less likely than female caregivers to seek out in-person care-giving training or support programs. To provide male caregivers with new tools to succeed and educate them about available care options, Homewatch CareGivers, an international home care franchise company, launched the first-ofits-kind Male Family Caregiver Program. In addition to special training for franchisees and their staff, the initiative includes an online community that was specifically developed for care-giving husbands, sons, grandsons and brothers.
Man-sumers Drive Expansion Today, men are doing 50 percent more housework than they did in 1965, according to the Bureau of Labor Statistics. They are doing more grocery shopping than a generation before them, increasingly making buying decisions for families (52 percent of men say they are the primary grocery shoppers of their household). And product manufacturers that have traditionally marketed their
Franchising USA
ex per t advice
Leann Reynolds, President, HomeWatch Caregivers
goods exclusively to women (i.e., the makers of baby products or home appliances) have taken notice and are now targeting dads in their advertising. In the health care franchising arena, weight-loss brands have been targeting men since the mid-2000s. Recently, as part of the broader push to gain market share, franchise businesses have created websites with adjusted diet programs, launched mobile apps, and put tens of millions of dollars into ads telling men that it is OK to diet. Weight Watchers, the largest player in this field, has already seen an uptick in male enrollment in the company’s online program: the percentage of male users is now in the low-teens.
Franchising USA
Market Leader
untapped and growing consumer base.
Representing nearly half of the market, male caregivers remain largely underserved and unrecognized by home care providers, but this will change soon.
Leann Reynolds is President of Homewatch CareGivers, an international franchisor providing premier home care services for people of all ages. The company launched the industry’s first program to address the special needs of male family caregivers, including the Male Caregiver Community and special training for its franchisees and staff.
Targeting a non-traditional consumer base has long proved to be an effective strategy in an overcrowded market. In the home care industry, male caregivers will play an increasing role as primary and shared decision makers. An innovative franchise brand that can adjust its business and marketing strategies to reflect unique experiences, challenges and strengths of male family caregivers and speak to their needs, will not only enjoy a new line of revenue, but will also win the trust of this
For More Information: Phone: Email: Web:
800 472-2290 franchise@homewatch-intl.com www.homewatchcaregivers. com/franchise
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Franchising USA
f ra nchise focus
Dog topia
Dogtopia
Gears U p for Growth
Americans love to spoil their pets despite the state of the economy. The American Pet Products Association (APPA) estimates that we spend $53 billion annually on our furry friends - and this number is growing every year. In fact, it is up from $41.2 billion just five years ago, making for an almost 30 percent increase. Even in the toughest of times, the pet industry continues to thrive. One company experiencing this trend firsthand is Dogtopia, a leading national
Franchising USA
dog daycare and spa concept with 22 franchise locations, four company-owned and six under development. Led by Founder & CEO Amy Nichols, Dogtopia has seen year-over-year growth since its inception in 2002. Nichols’ focus since the company was founded has been to provide dogs and their families with an exceptional dog daycare experience by creating a home away from home for their pets. “All my life I have owned a variety of pets, and after college I was working 12hour days and felt guilty that my Boston terrier, Griffin, was home by himself all day long,” said Nichols. “I did extensive research on the open play business model, including attending multiple dog behavior seminars, and set about creating a business plan to open my own dog daycare.”
Through a partnership with Thomas Franchise Solutions (TFS) established in the summer of 2012, Dogtopia is now positioned to become the leading dog daycare franchise in North America. The brand launched a regional developer (RD) program to rapidly grow its footprint to more than 400 locations in the U.S. and Canada over the next seven years. “We examined hundreds of established franchise concepts before deciding that Dogtopia has the greatest growth potential,” said Peter H. Thomas, chairman and CEO of Thomas Franchise Solutions, Ltd. “We are now seeking regional developers who not only have an affinity for dogs, but also strong community ties, and a desire to own and manage a rapidly growing business.” The TFS partnership enables Dogtopia to strengthen its brand by investing in a new system-wide point-of-sale system (POS), an online university to enhance training, increased national marketing efforts to drive brand awareness and sales, and additional home office team members to enable superior support. Furthermore, a greater emphasis will be put on accelerating Dogtopia’s retail offerings to help drive store revenue for franchisees.
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“This is such an exciting time for Dogtopia and I couldn’t be more proud of the company’s success.”
“This is such an exciting time for Dogtopia and I couldn’t be more proud of the company’s success,” added Nichols. “It is because of our proven business model, dedicated franchisees and outstanding executive team that we have been able to achieve such significant achievements in just over a decade of operation.” Dogtopia owners benefit from four distinct revenue streams, including dog daycare, boarding, spa and grooming, and retail. With multiple revenue streams, Dogtopia is able to uniquely serve the pet services segment, which is currently underserved. To fuel growth, Dogtopia is now seeking RDs to expand the brand in major metropolitan areas, including Boston, Chicago, San Francisco, Southern California, Houston, Philadelphia, Atlanta, Dallas, and South Florida. Additionally, British Columbia and Alberta are key target markets in Canada.
Dogtopia RDs serve as local representatives for the brand and are responsible for selling local franchises and assisting owners in their regions with operations. Initially, RDs will be expected to open a minimum of one location to serve as a showcase. They will then sell the remaining areas within their region, though some RDs may choose to develop and operate all the units within their region themselves. RDs will earn half of the initial franchise fee for each unit license they sell, plus three percent of the ongoing revenue from each franchisee’s location. “At Dogtopia, we have a ‘live. love. play.’ philosophy that serves as the backbone for our business,” continued Nichols. “Dogs are truly loved and treated like family, and this in turn enables our customers to put their trust in our locations everyday.” Step into a Dogtopia location and you’ll instantly be drawn to the pleasing aesthetics and vibrant colors. Each playroom features an open play layout with climate-controlled rooms. The division of dogs between rooms allows Dogtopia
personnel to control air quality, minimize the risk of disease and actively monitor play, as well as provide an overall stressfree atmosphere. Unlike other dog daycare businesses, Dogtopia does not discriminate against any breed and welcomes social dogs of all ages, sizes and abilities. Yet each dog must first pass an evaluation before admittance to ensure the safety of all dogs and staff. “Owning four company locations has really kept us in tune with the needs of our franchisees and allows us to test and perfect new concepts before introducing them system-wide,” said Nichols. “We are thrilled to add new RDs and franchisees to the Dogtopia family, and look forward to being able to offer our services to the 46 million American households that own a dog.” For more information: Email: renee@ thomasfranchisesolutions.com Phone: 602-354-9357
Franchising USA
ex per t advice
John Geenen, Managing Partner, Waterfront Financial Group
U nderstandin g
Retirement Risks for Franchisees No matter what your age, an X generation 40-year old or a 65-year old baby boomer, someday you will leave your franchise business and retire. In preparation for retirement it’s important you be familiar with two words, Accumulation and Distribution. Understanding how they apply to retirement will be critical to providing retirement income for as long as you live. Franchising USA
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“The single portfolio allocation strategy, no matter how well diversified, can pose significant risks when it comes to ensuring income goals are met throughout retirement.” Accumulation As a franchisee small business owner you accumulate and invest assets differently than a typical investor whose strategy is to invest among stocks, bonds and cash. Sure, you may have a corporate retirement plan with some assets but by and large as a small business owner your largest investment is likely the franchise business. Over the years the business has generated sufficient income to fund the comfortable life style you have become accustomed too. If there was free cash flow it was re-invested back into the business and not into stocks and bonds. This method of investing has built your net worth and the basis of your assets for retirement. This is the accumulation stage of investing for a small business owner. The time will come when you trigger your exit plan and sell the business to a family member, employee or outside interest. At that time you might be forced out of your investment comfort zone. After all, your net worth builder and current income producing investment vehicle has been the business which you controlled and it will be monetized when the sale is completed. This could be new territory emotionally and financially. The business sale proceeds will need to be reinvested into possibly unfamiliar vehicles that hopefully will produce predictable, inflation adjusted retirement income that lasts the rest of your life and that of your spouse. How long could that be?
The Risk of Longevity With the expediential growth in life extending applications from bio technology and medical science, chances are very good that you could live substantially longer than your parents and grandparents. You might even spend
more time in retirement than you did while working requiring your assets to work harder. The potential for an extended life span could make the decisions of selecting the proper retirement income investments even more difficult. Longer life spans mean that your assets will be exposed to many more years of volatility while they are invested. Creating durable streams of retirement income lasting 25 or more years can be challenging. Retirement risk factors play a significant role in determining how long your income will last. The risk you face is that of a declining portfolio due to market activity while you are taking income. If so your assets may not last the duration of your retirement.
Market Volatility During the recent “Great Recession” many investors in retirement or nearing retirement have experienced considerable losses in portfolio value due to factors outside their control, including economic uncertainty, political unrest and financial market volatility. Think of how tragic it would be if you had worked and saved for forty years to retire and the year before you said good bye the markets experienced another 2008 meltdown and you had no plan on how to respond or proceed? When faced with increased market volatility, many investors have allowed emotional decision making to override a more rational approach which can be detrimental to attaining long-term goals.
A Plan to Succeed A rational approach to meet these goals would begin with the development of a retirement income plan to select investments on their ability to produce income and then to monitor the progress.
John Greenen
Notice I did not say a retirement plan I said a retirement income plan. Remember, it’s not your assets that pay the bills in retirement it’s the income from the assets that pays the bills. A prudent retirement income plan should structure your investment assets in such a way as to generate income that is predictable, inflation adjusted and able to last your lifetime and that of your spouse. This requires the incorporation of “seat belts and air bags” on the assets needed to produce the income.
How Will Your Plan Seek to Protect a Lifetime of Assets? Historically investors in the accumulation and distribution phase have relied on a single portfolio allocation strategy. This means that most of your retirement assets are invested in a mixture of stocks and bonds in varying percentages. While that can be an effective strategy for retirement asset accumulation, as you near or enter retirement, the single portfolio allocation strategy, no matter how well diversified, can pose significant risks when it comes to ensuring income goals are met throughout retirement. There’s an old saying, “the conservative percentage in your portfolio should match your age”. If you are 65 you should have 65% of the portfolio in highly rated bonds or the equivalent with the balance in stocks. The problem with this math might be if your portfolio is too conservative, it may not generate the income you need to outpace inflation and taxes, and fall short when you need it most. If an allocation is
Franchising USA
ex per t advice
John Geenen, Managing Partner, Waterfront Financial Group
too aggressive, you run the risk of losing value during a time when you are taking distributions or withdrawals from your portfolio. This can result in depleting portfolio assets during your lifetime. There may be a way more suitable for you to plan for your income needs in retirement.
Income Distribution, Is There a Better Way? Instead of relying on an investment portfolio with a single allocation, how about utilizing multiple time-segmented distribution accounts, or segments. The asset allocation for each segment is dependent on the time frame in which that stream of income will be used. The goal is to ensure a reliable, pension-like stream of income. Each segment has its own asset allocation. (No strategy can assure a profit or protect you from potential losses. Investments in securities involve risks such as loss of principal investment.)
Understanding the TimeSegmented Distribution Strategy In a hypothetical example let’s say your money is allocated into six “segments” each designed to provide retirement income lasting five years for a total of 30 years. They will hold invested assets ranging from very conservative to aggressive. Segment one, the most conservative bucket, receives the largest portion of your assets at 28%. Segment one seeks to preserve and protect assets for short-term income needs. The money you will rely on as your “paycheck” in retirement to fund current expenses is always held in this most conservative allocation. Investments may include money market, treasury bills and bonds, CD’s and income annuities. As segment one potentially pays out income, the goal of the other segments is to continually work to generate more income to refill bucket one. The successive segments in this example seek to have deposited into them 26%, 20%, 13%, 7% and 6% (total, 100%). The segments receiving the smallest amount of money are those which hold progressively
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more aggressive investments such as dividend paying stocks, income annuities and Real Estate Investment Trusts. The potential earnings from these more aggressive segments are strategically allocated to continually build wealth over a potential 25+ years in retirement and will be held for the longest period of time in order to potentially achieve the best possible chance of excellent investing results. This helps to ensure income is potentially protected for the duration of your retirement. (However, there is no guarantee that longer holding periods will reduce risk or increase investment returns.) The 6% in segment six is a hedge against you living beyond twenty-five years from the date of inception. If that segment meets its projected rate of return, it will hold sufficient assets to continue an income stream. Investments may be dividend paying stocks, real estate investment trusts, income annuities and stocks from emerging countries. At your death, any remaining assets will pass to your beneficiaries. Determining which investments are appropriate for an individual investor will depend upon your investment objectives and risk tolerance and should be discussed with your financial advisor before implementing an investment plan. John Geenen is a Financial Advisor and Managing Partner with the Waterfront
Financial Group in Minneapolis. He has been advising clients since 1984 offering strategic guidance to business owners in the areas of wealth management, retirement plans and generating lifetime retirement income. John is also a Certified Franchise Executive (CFE) with the International Franchise Association. Securities Offered through LPL Financial Member FINRA/SIPC Asset allocation does not guarantee a profit or protection from losses in a declining market. The more aggressive an investment, the more risk it is subject to. No strategy can assure a profit and may consist of investment products that are subject to the potential loss of principal. International and emerging market investing involves special risks such as currency fluctuation and potential instability and may not be suitable for all investors. Any guarantees for fixed annuities are based on the claims paying ability of the Insurance Company. For more information: Phone: Email: Web:
952-236-1755 john.geenen@ waterfrontfinancialgroup.com www.waterfrontfinancialgroup. com
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Robyn Gault, Vice President of Strategic Accounts, Direct Capital Franchise Group
O pportunity M oney :
A New Way to Look at Working Capital Every opportunity has a cost. Every missed opportunity has a greater cost.
Robyn Gault
Franchising USA
ex per t advice
Robyn Gault, Vice President of Strategic Accounts, Direct Capital Franchise Group
For franchisees, opportunities to drive more business to your franchise location may not come along every day. As a franchisee, your cash reserves may not always be optimally high, and thus paying for those initiatives can be problematic. Think of working capital loans as opportunity money. They can be used to pay for opportunities, and they can in turn provide opportunities for you to make even more money. First, it helps to understand what a working capital loan is and what it can do for you. Working capital loans are unsecured business loans that can be used for a wide range of expenditures, including marketing expenses, equipment and even taxes. The amounts available and the length of payback terms ultimately depend on the lender you’re working with, but a working capital loan is still among the most versatile types of financing available for franchisees. In this article, we will take a closer look at one way you can pay for opportunities with working capital loans without breaking the bank, and why you should take these opportunities when you have them. Letting great deals on inventory, advertising or technology pass by is something every franchisee may live to regret.
The Inventory Example One of the best examples has to do with inventory, something most every business ultimately needs. A working capital loan may be the perfect solution when you’d love to buy inventory
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“You need a lender with franchise experience, one that has put together loans and leases for everything from new technology to remodels, so they understand the kind of needs you’ll face.” in bulk to nab a great quantity discount and can pay the loan back quickly with the revenue generated from the sale of the goods. Let’s say, for example, that you own and operate an office supply franchise in downtown Philadelphia. Your local paper supplier is offering a deep post-back-toschool discount on their notebooks and reams of paper, so now would be a great time to stock up at a fraction of the usual price. Unfortunately, you’re lacking the upfront cash to be able to put down the substantial payment of the bulk purchase. That’s where working capital comes in. If demand for your goods is high enough, having more inventory on hand will allow you to turn over that inventory quicker and make a larger profit – a profit that will far exceed the cost of your initial loan. If you’re able to turn over your notebooks and reams of paper three times in six months at a 45 percent margin, each dollar borrowed will bring back a cool $2.05 in gross margin. For each initial $1 borrowed, the cost of funds would be between a mere 12 and 30 cents. That could be a huge savings for you, the franchisee.
same impact as a billboard, radio spot or even television spot. Anything the franchisor won’t help you pay for is likely to leave you with a sizeable dent in your bank account. A multi-faceted rollout of a new product or store image over social media in addition to those other mediums can pay off in a big way. If it takes financing to get you over the top, it’s worth pursuing financing. Look at it this way: If you can take $5,000 to help your location get the message out about a new product, it’s worth the investment. If you’re able to make back $2,000 a week with the new product, you will pay that back in less than three weeks, and your earnings off the new product will probably be higher than they would have been without the advertising. Just ensure you’re sending out the right message with that money and you’ll create an opportunity to pull in more customers.
The Software Example This might be the ultimate opportunity to invest in, even if the initial cost seems prohibitive.
Advertising opportunities and initiatives have a way of popping up quickly for franchisees. You may be on top of that new product rollout, but your local advertising and marketing efforts may need a quick boost.
Technology is evolving quickly. Even if you don’t have the newest point-of-sale system or electronic billboard at your franchise location, you’re likely aware of them. As these technologies become more common, any franchisees that do not have them are at a distinct disadvantage in terms of speed, ease-of-use and appeal to the customer.
The problem with traditional forms of advertising is that they’re often expensive. Social media and word-of-mouth are obvious exceptions, but you can’t necessarily count on them to make the
That’s why getting your hands on the latest technology should be a priority even if the franchisor isn’t the driving force behind the upgrade. Customers appreciate a more streamlined customer experience, one that
The Advertising Example
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makes use of the kinds of technology they use in their everyday lives. A traditional loan or working capital option can be the difference maker here, as well. If you can use it to get your hands on the software upgrades you need for that new technology, softening the replace that comes with having to purchase such expensive equipment, you’re doing well. You don’t want to miss an opportunity to upgrade your technology, especially if that technology has been around long enough for you to know it has staying power and a positive effect on the customer experience and your bottom line.
Why A Working Capital Loan? You need a lender with franchise experience, one that has put together loans and leases for everything from
new technology to remodels, so they understand the kind of needs you’ll face. Finding a working capital loan that works is all about researching finance firms and learning about their experience and history in the franchise space. That makes it a perfect fit for taking on opportunities that arise, especially those on relatively short notice. If you’re strategic and judicious about the financing you take on, it solves cash flow issues that might otherwise prevent you from taking on those opportunities, as well. Depending on the size and timing of the opportunity, it may not be a working capital loan you use to make these opportunities happen. It might be a different loan or your own money. What matters is that you find a way to not let these opportunities pass you by; because
the intent is to help your business grow and help you pull in more revenue. Remember: In all these cases and more, you can use money to make money. That’s one opportunity you should never pass up. Robyn Gault is the Vice President of Strategic Accounts for Direct Capital Franchise Group. Direct Capital Franchise Group is a national direct lender with 20 years of experience. The firm partners with Franchisors to provide competitive financing to support new store development, remodels, relocations, store acquisitions, equipment upgrades, and more. For more information: Phone: 603-433-9476 Email: rgault@directcapital.com Web: www.directcapital.com
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ex per t advice
Jack Eberenz, President, Franchise Integration
“SENSING”:
USING EXPERIENCE AS A TOOL As a businessperson you accumulate experience over years of business activity, and that experience becomes your inventory of knowledge that allows you to see patterns in what is happening in business. Those patterns that occur in a business situation allow you to analyze the pattern and make decisions based on a very few indicators, rather than have to mentally process a complex or even chaotic set of inputs. Maybe you have encountered business people who want to analyze every problem with a complete due diligence check list that ends up looking like an encyclopedia. At that point they have so much information that they become frozen, unable to make a timely decision because they cannot mentally process all that information and make a decision. You have heard people call that paralysis by analysis. But it’s not a joke. It’s a real thing that happens to companies all the time. The real value to accumulating experience is to have sufficient experience in many
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“You can make a fast decision because you sense the right course of action while only seeing a small set of facts.”
Jack Eberenz
situations that allow you to spot one or two indicators fairly quickly and analyze the pattern to come up with a satisfactory course of action. This is what is referred to as “SENSING”. In other words you can make a fast decision because you sense the right course of action while only seeing a small set of facts. We have to add here that this kind of sensing we are talking about is not just a matter of experience. It also involves understanding what you were sensing. There’s a strong analytical component involving reading, research and applied intelligence. Without the background of knowledge and understanding that allows you to appreciate these “sensings”, you might undergo these experiences and miss everything they’re trying to offer you. Maybe an analogy to football would help to describe Sensing in a very simplified way. Joe Flacco is a great quarterback Super Bowl winning quarterback who can come out of the huddle and up to the line of scrimmage and look at one or two defensive players and sense if he had to call an audible change of play or not. He knew from experience that if certain players on this opponent’s defense were in certain positions what the defense was. There are a lot of less successful quarterbacks who come out of the huddle and try to view the entire defense. With multiple sets and constant movement of the defense they only have one or two seconds to process a huge amount of information. With so much confusion they often make no decision, or the wrong decision, and disaster follows.
When we look at what companies are the most likely to succeed, we use our experience, intuition and whatever else you want to call it to make a fast decision. The vast majority of the time we make the right decision and know almost immediately if a company is worth the effort and the risk to work with. Once we are working with them we use the same Sensing powers to help them avoid the wrong play call. At the Board of Directors/Top Executive level it becomes even more critical. Judging strategic relationships, making merger/acquisition decisions, hiring key executives and many other things all become part of the judging process where you need your Sense tuned to the right indicators. The due diligence process may look at everything, but it is so much information and requires so much processing of complex issues that may be contradictory or confusing. A
strong executive must be able to “sense” the right answer from a few key indicators, particularly in an entrepreneurial company. Mr. Eberenz has over 40 years of leadership and executive experience. In a broad executive career he has experience as a General Manager, President, Chief Financial Officer, and Chairman of the Board in companies nationwide. Mr. Eberenz has been a key advisor to franchisors since 1981 drawing from his experience as a franchisee and President of a Franchisor. He holds board positions with regional, national and international franchisors and is the President of the Arizona Franchisor Association. He holds a B.S. Degree from the Syracuse University School of Management. For More Information: Web: www.franway.com
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ex per t advice
Dale Willerton, The Lease Coach
H o w F r a n c h i s e Te n a n t s can Negotiate a
Lease Renewal Rent Reduction Dale Willerton
As The Lease Coach, I have spoken at many franchise shows and multi-unit franchise conventions. Here is some solid information that I teach tenants during my seminars and presentations: Get Organized and Get Started Sooner versus Later. With our franchisee tenant clients, we prefer to start the leasing process at least 12 months in advance of the lease term expiring. If the landlord plans to raise your rent, better we find this out sooner versus later. We next evaluate your landlord and property manager. Understand there are five different types of landlords from the basic, “Mom and
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Pop” landlord who lives in your own city or town, right up to the institutional and professional landlords. You have to know your opponent to negotiate effectively.
Prepare for the Battle. I first read the franchisee’s lease documents. If you are like some franchise tenants I know, you have signed your Lease Agreement many years ago and you haven’t looked at it since! Franchisees can easily get caught up in the day-to-day activities and have difficulty stepping back to see if their financials are in order. You may have to show your financials to your landlord as a means of getting to your rent reduction on your lease renewal that you desire.
Talk to Other Tenants in your Building. I had a client who I visited with regard to negotiating her lease renewal. When I came to see her the first time, the space next door to her was vacant. When I
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returned, I noticed the neighbouring space was now leased – another tenant had just moved in. I introduced myself and asked about this tenant’s negotiations with the landlord and the agreed-upon terms and conditions. The tenant paused, pulled out his Lease Agreement, handed it to me and said, “Look for yourself”. In reviewing this document, I learned about his rental rate, free rent received, tenant allowance amount, personal guarantee and lease term length. This information obviously helped me negotiate my client’s lease renewal!
Create Competition for your Tenancy. The average franchisee tenant will, unfortunately, hand his/her lease renewal over to the landlord on a silver platter. When we take on a franchise tenant and we are negotiating their lease renewal, we try to make the landlord earn – or reearn – the tenancy because the landlord’s tendency is to take you for granted. You’ve been paying rent for five or ten years; the landlord will assume that you will renew your lease agreement and be willing to pay a rental increase. We start doing site selection, collecting Offers to Lease from other landlords and getting lease proposals on other sites – even if you don’t want to move.
Approach Your Landlord and Your Property Manager. Confirm your landlord contact. I phone and ask, “Who is handling lease renewals for ABC Plaza?” When I get this name, I may Google him/her to see what kind of background he/she has and then I start moving forward. Here’s a really key point: when I approach your landlord, I don’t say, “This franchise tenant wants to renew their lease.” Instead, I say, “This franchise tenant has been in this location for nine years … their lease is going to be expiring
“If the landlord is giving lease inducements (e.g. free rent and/or tenant allowances) to attract new tenants moving in, we believe that the landlord should offer those same incentives to you to entice you to stay. You are the repeat customer.” soon … are you interested in having this franchise tenant stay for another term?” Almost 98% of the time, the property manager or landlord says “Yes, of course we want the tenant to renew” meaning that you can probably avoid exercising the renewal option clause (which often triggers an automatic rent increase – or prevents a rent decrease).
Get the Landlord’s Lease Proposal. We don’t believe in negotiating on the first date. I went out to see a client (leasing 6,000 square feet) but met with his
landlord first. My client’s first question was “How did negotiations go?” I responded, “I only went there to find out who my opponent was.” I then went back to the landlord and said, “Since you want this franchise tenant to stay, you probably have a standard lease renewal document … why don’t you send me that the way that you would like it to be?” I want them to make the first offer and pursue me.
Submit the Counter Offer to Your Landlord. It is critical that the lease negotiation process go several rounds – meaning many
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ex per t advice
Dale Willerton, The Lease Coach
counter offers. You need to anticipate this and make your counter offers in writing. Verbal negotiations are critical but ultimately you must put the deal down on paper especially if there is a chain of command the counter offer must pass through as it gets to the landlord or their decision maker.
Negotiate to Win. Would you watch your favourite sports team simply playing to a tie game? The landlord and/or the landlord’s representatives are negotiating to win and you must do so as well. While we are negotiating, I will physically reveal the other offers which have come to me from other locations. Even if it is a more expensive deal, remember, that if you leave, the landlord gets a vacant property. Replacing an existing tenant can become very expensive for landlords who pay real estate commissions (which could be $30 - $50,000), deal with lost cash flow due to vacancy and contribute a tenant allowance, free rent and so on. Final Thoughts from The Lease Coach: If the landlord is giving lease inducements (e.g. free rent and/or tenant allowances) to attract new tenants moving in, we believe that the landlord should offer those same incentives to you to entice you to stay. You are the repeat customer. As you renew your lease, you may be renewing your franchise agreement as well. The franchisor may expect you to spend money for renovations. You might be better off spending that money moving your franchise to another location. For a free copy of my CD, Leasing Do’s & Don’ts for Franchise Tenants, please e-mail me to DaleWillerton@ TheLeaseCoach.com. Need a speaker for your next franchisee convention? Bring in The Lease Coach and help your franchisees.
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Dale Willerton is The Lease Coach, a Commercial Lease Consultant and author of “Negotiate Your Franchise Lease or Renewal”. Got a leasing question? Need help with your new lease or renewal?
For More Information: Phone: 800-738-9202 E-mail: DaleWillerton@
TheLeaseCoach.com
Web:
www.TheLeaseCoach.com.
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have your say
Jacob Mytelka, Vice President of Market Development and Market Research, Gourmet Streets
Is Location That Important? “It’s amazing what an engine and a set of tires can do for a business.”
Jacob Mytelka
The gourmet food truck craze has been rapidly spreading throughout the US. I’ve been around the block several times when it comes to the topic of food trucks (no pun intended). I speak with dozens of food truck want-to-be operators daily. The majority of the people I speak with, associate food trucks with the construction site roach coach of yester-year (some relics are still around). I would challenge anyone to a taste test between some of the finest
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Bricks N’ Mortar eateries and the better gourmet food trucks, the food truck parked outside on the street corner usually wins hands down. There is no coincidence that food trucks are growing at such a quick pace, with the brick n’ mortar feeling like yesterdays leftovers. Gourmet food trucks have many benefits over brick n’ mortar dining, but I want to focus on LOCATION, LOCATION, LOCATION! It’s amazing what an engine and a set of tires can do for a business. One of my focuses is getting our franchisees set up in locations. We have various techniques we use to facilitate these arrangements. I always tell our franchisees to get in their car and drive through the same neighborhoods they are familiar with on a daily basis, but instead of focusing on making it through the light, they should put on their ‘food truck spectacles’ and search out the many viable locations right under their noses. They inevitably come up with at least twenty potential gold mines for profitable operations. Although they initially respond with disbelief, they always come back later and say ‘Jake, you were right on’.
The question is, what do I know that they didn’t? When a food truck prospect thinks of location the first thought is large cities. In our franchise model the only place we don’t want to be is in a large city. Why? Food trucks have uniqueness to them that brick n’ mortar do not. They can start their day in one location and end it 14 hours later having visited four different locations, each where a brick n’ mortar won’t be found. I ask our future franchisees the question in reverse, why go to a city where there are thousands of restaurants, lots of traffic and headaches, strict regulations, no location security, and no peace of mind! Let’s discuss different locations to be considered: The majority of corporate office complexes throughout the US do not provide meals to their employees. If you stand outside a midsize company (300-500 employees) during lunch hours, carloads of people leave for local cafés and fast food joints. This consumes precious time from a typical ‘lunch-hour’ (who still has these anymore, anyways!). This is not
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only an inconvenience for management, but even more so for the employees as well. Depending on the size of the company, this arrangement may be profitable once, or twice a week, but in some cases, it becomes a great location every day. Depending on the popularity of the site, one may need to line up three or four of these arrangements. Working at corporations allows a special opportunity to build a relationship with your recurring customers that you may not find elsewhere. If you follow a schedule that customers will know, as well as greeting them on first name basis and allowing a little time for small chat, you will build a strong fan base which may lead to many future opportunities. Many food trucks may be happy with serving 100 meals then closing up shop: not us! As soon as the lunch hours are over you roll on down to the next location. In the afternoon and evening hours you are looking for schools that are letting out students, college campuses, and high volume foot traffic areas. There is an important rule to always keep in mind, kids and students are always hungry and food is the number one priority. If you are able to secure a location at a university campus, you are golden until the last wave of students leaves the library or better yet the bar. If you are not that lucky then you want to find a central location that many pedestrians travel through, but at the same time is lacking in brick n’ mortar restaurants. These locations are usually the areas where rush hour traffic travels through. If you still have more energy then get ready for some partying. Every town has a night-life, you just need to be part of it. We have found that the bars primarily focus on drinks and beverages, and only sometimes would serve food just to keep the customer in the area and hopefully get them to finish the bottle of scotch they started. The gourmet food truck fits in perfectly with this model. You can rearrange with the bar owners to park outside the bar and serve the clientele, and even work out
some ‘Drink & Eat’ specials with the bars, bringing the two entities together. This should keep you on your feet until the wee hours of the morning just make sure not to consume too many of the Drink & Eat specials yourself! Nope, it’s not time to sleep yet! By the time you finish cleaning the truck and preparing for the next day, the early morning commuters and hospitals are in full swing. Get that breakfast menu going and espresso machine cranked up high: nobody enjoys eating on the go like those early birds. Hospitals usually are open to the idea of having a food truck around campus serving the doctors, patients, and visitors, and if not, park on the street. Aside from your daily operations, a gourmet food truck attracts many opportunities. They are the perfect platform for catering a laid back party, religious event, or wedding. They can show up in places where only off road vehicles can reach, and at the same time serve up a menu only the finest diners would serve. Is location really that important? Yes it is, and that is why a food truck has so much to offer. The food truck business is for pioneers with innovation. You want to be where nobody else dreamed of going
too. It is important to use the uniqueness and originality of a food truck to its advantage. When it comes to franchising a restaurant, gourmet food truck franchises offer opportunities that cannot be matched by any other concept out there. Not only are they a fraction of the cost of a brick n’ mortar, they are also trendy, hip, tasty, and can serve a fresh hot meal right off the grill on top of mount Rushmore. Jacob Mytelka, Vice President of Market Development and Market Research, has been with Gourmet Streets since the company opened in 2009. One of Mytelka’s many focuses is identifying markets lucrative for the set-up of gourmet food trucks. Before working for Gourmet Streets I served as the Executive Director of Business Development for a small overseas college as well as Sous Chef for local catering establishments. Mytelka brings his passion for food and business together in helping food truck establishments succeed in fulfilling their dream. He began his college studies at NYIT and graduated from Touro University in New York with a Business degree in Finance. For More Information: Phone: 854-517-5060 Email: Jacob@gourmetstreets.com Web: www.gourmetstreets.com.
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abou t f ra nchising
Franchise Industry Could Create More Jobs with Meaningful Regulatory Changes The franchise industry could grow faster and create more jobs if Washington took more meaningful steps to address the tax and spending issues and regulatory uncertainty plaguing the small business community, according to Sean Falk, a multi-unit, multibrand franchisee, who testified on behalf of the International Franchise Association before a hearing of the U.S. House Committee on Small Business on “The State of American Small Businesses.” In his testimony, Falk, who is a Salsarita’s Fresh Cantina, Great American Cookies, Mrs. Field’s Famous Brands
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“With supportive economic policies in Washington, franchising and small businesses could make great strides, despite the recent economic downturn.” and Pretzelmaker franchisee, stated that with supportive economic policies in Washington, franchising and small businesses could make great strides, despite the recent economic downturn. Falk cited several policies that were holding back his growth and others in the franchising community, including the Affordable Care Act, piecemeal tax policy and access to capital. “I can’t make future business plans when Congress passes and extends regulations for only one year at a time,” he said. “The constantly-moving target created by short-term fixes makes it extremely difficult for me to evaluate investments and business opportunities, and hampers my efforts to expand my business and execute a long-term business plan.” Falk cited two aspects of the Affordable Care Act that were particularly problematic for franchise businesses. The 30-hour threshold that qualifies an employee as full-time; and the 50 fulltime equivalent employee threshold that requires employers to comply with the employer mandate. “Currently, I employ
43 full-time equivalent employees. If my business grows and I create more jobs, I will also drastically increase my costs due to the employer mandate. This has an undeniable impact on my bottom line and is making me reconsider opening new locations,” he explained. “Also, I may be forced to reduce my employees’ hours to less than 30 hours per week so that they do not acquire full-time status. With these challenges and changes, I fear that it may be a struggle just to keep the doors open on my 12 existing businesses.” Falk cited challenges and delays with the SBA loan approval process as holding back his development of new locations. “I had signed and purchased four new franchise agreements, meaning that two of the agreements never evolved into actual businesses, and I was never able to recover the lost franchise fees from the remaining two agreements,” Falk said. For More Information: Web: www.franchise.org
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2013
PROGRAMS & EVENTS IFA is the premier resource for franchise news, trends, and strategies. Plan your strategy for professional career, education and networking development.
Legal Symposium – May 5-7 – Washington, DC The 46th Annual Legal Symposium is developed by a task force of franchise legal experts. Blending topics focused on franchise business and law, programming addresses the latest business and franchise law developments and features knowledgeable franchise law practitioners, franchise executives and state regulators. IBA/IFA Joint Conference – May 7-8 – Washington, DC The 29th Annual IBA/IFA Joint Conference is developed in partnership with the International Bar Association’s Franchising Committee to create a program relevant to our friends in the international franchise law profession. Experienced legal counsel share invaluable information regarding the latest developments in international law. FranCamp 2013: Digital Marketing & Technology Best Practices Conference – May 14-15 – Atlanta, GA FranCamp 2013: Digital Marketing & Technology Best Practices is a new conference from IFA designed to help franchise professionals understand technology options and platforms. Includes case studies and best practices designed to integrate technologies like GPS, content management, communications, social, local, mobile and more into your business effectively. Public Affairs Conference – September 16-17 – Washington, DC Meet us in our nation’s capital for a gathering of our Board of Directors, committees, forums, councils and task forces to network and visit with their Members of Congress during IFA’s most important advocacy event. Leadership meetings will also be held in Washington September 15, 16 and 18 to conduct important association business. Franchise Development Seminars – July 17-18 – Philadelphia, PA // September 25-26 – Denver, CO // December 8-9 – New York, NY Participate in an in-depth exchange of information with franchise development experts revealing tips and tools for building your franchise brand, featuring programming focused on industry challenges, successes and what to expect for the future. International Symposium – June 18-19 – New York, NY The International Symposium focuses on the latest trends and strategies for increasing your franchise system’s presence internationally while meeting the people that can help you make it happen. With more and more countries opening their doors to businesses outside their own borders, executives from all over the world come together to discuss current trends and strategies. This year’s symposium will be held just prior to the International Franchise Expo. International Franchise Expo – June 20-22 – New York, NY Co-hosted with MFV Expositions, the IFE brings together hundreds of franchise concepts and thousands of qualified prospects from across the United States and more than 80 countries. West Coast Franchise Expo – October 24-26 – Anaheim, CA Co-hosted with MFV Expositions, brings together franchise concepts and qualified prospects from the growing West Coast market. Emerging Franchisor Conference – November 13-14 – Ft. Lauderdale, FL The Emerging Franchisor Conference is designed to address challenges and opportunities unique to franchise systems with 300 or fewer units. The Emerging Franchisor Conference is a prime networking and educational conference for franchisors that are ready to take their system to the next level. AND MARK YOUR CALENDAR NOW FOR THESE EARLY 2014 EVENTS Franchise Expo South – February 6-8, 2014 – Houston, TX Co-hosted with MFV Expositions, the FES brings together franchise concepts and qualified prospects from the southeastern United States, Latin America, and the Caribbean. Annual Convention – February 22-25, 2014 – New Orleans, LA More than 3,000 franchise professionals will gather to learn, network and chart the future of franchising. The Annual Convention presents multiple business and professional development opportunities along with a variety of ways to learn from and share best practices with successful franchise executives from various industries of all sizes. www.franchise.org Franchising USA
Franchising USA THE MAGAZINE FOR FRANCHISEES
ISSUE 4 - FEB 2013
$5.95 www.franchisingusamagazine.com
Franchising Insight FROM
DINA DW YER-OWENS
Secrets of
Successful Site Selection Steps to Building
Loyal Clientele Franchise Marketing i n 2 013 LATEST NEWS
FINANCIAL ADVICE FROM THE BANKS
TOP LAWYERS’ ADVICE
With a range of mobile platforms for any device, when potential franchisees search for new possibilities, they’ll find you here.
Contact Jenn Dean, Senior Sales Executive, for global solutions on your multi-media advertising approach. Email: jenndean@shaw.ca Phone: 250-590-7116
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