FranchiseDictionary FranchiseDictionary FranchiseDictionary FranchiseDictionary Business FranchiseDictionary JANUARY 2019
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THE ABC’S OF FRANCHISING
DREAM TEAM Meet the dynamic couple behind THE ABC’S OF FRANCHISING Just Let Me Do It! Commercial Services
THE ABC’S OF FRANCHISING
Taking Care of
THE ABC’S OF FRANCHISING
B2B and tech e taking ar es ic rv se THE ABC’S OF FRANCHISING off. Find out why.
28 34 A new franchise brings sweet returns.
How this standout franchisee helps others.
54
The IFA does more than you think.
Interested in owning a franchise?
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FranchiseDictionary FranchiseDictionary FranchiseDictionary FranchiseDictionary FranchiseDictionary FranchiseDictionary FO FranchiseDictionary Fr anO chDiseDictionary ry na io FranchiseDict Fran 5 chiseDictionary Game SEPTEMBER 2018
FRAN CHISI NG THE ABC’S OF DECEMBER 2018
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THE WAFFLE EXPERIENCE:
Hommati Changing the way real estate ts doNG agenCHISI FRAN THE ABC’S OF business
a new take on an old favorite
THE ABC’S OF FRAN CHISI NG
THE ABC’S OF FRAN CHISI NG
FRAN CHISI NG THE ABC’S OF
FRANCHISING NOW THE ABC’S
Get in line for fresh and healthy mea ls
FRAN CHISI NG THE ABC’S OF
…and how to solve
Changers ea Brands that mak
difference
them
Pork belly provided
by Jones Dairy
Farm
FranchiseDictionary FranchiseDictionary FranchiseDictionary 5 anchiseDictionary Fr FranchiseDictionary APRIL 2018
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CLASS ACTS
Educational Franchises are Making the Grad e From Corporat e America to Franchising: Things You Need to Know
The Winning Formula Behind Snapology®
THE ABC’S OF FRAN CHISI NG
THE ABC’S OF FRAN CHISI NG
THE ABC’S OF FRAN CHISI NG
THE ABC’S OF FRAN CHISI NG
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49 This franchise is turning service heads with a unique
36
It doesn’t have to taste bad to be good for you.
He left Corporate America and never looked back.
Meet the dream team behind The Waffle Experien ce.
A college-planning franchise takes off
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How to shop for an educational franchis e
Using franchising for the greater good
for The sky’s the limit Hommati’s Jerry Clum
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46
42
Cresanti IFA President Robert s on game changer
OF FRAN CHISI NG
Legal Hassles for Restaurant FranTHE ABC’S OF FRAN chisees CHISI NG
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con·tents
kən�tents/ noun
1. Your January lineup of stories and features 2. An amazing resource for franchisees
28
34
DEPARTMENTS 12 Letter from the Publisher 14 Letter from the Editor 17 Buzzword What’s trending now.
25 28
Update
30
Legal Advice
32
Franchising’s latest headlines.
Franchisee of the Month
When “too good to be true” is for real. Why do you have to sign a receipt for an FDD?
Franchising 101
Avoid these common franchise mistakes.
34
Entrepreneur
58 60
Interview
62
Taking the family business to the next level. Jessica Melendez on vetting franchisors.
Spotlight
Trending businesses you want to know about.
Last Word
Simple steps to building a better business.
January 2019 7
con¡tents 48 46
54 FEATURES 38 In the Business of Helping Businesses
There are many benefits that come with B2B franchising.
40 Tech Support
With a technology franchise, you get the support of a system in a thriving industry.
42 Taking Care of Business
Business and technology are some of franchising's best-kept secrets.
52 Tough Road Ahead
An antique car restorer didn’t let a bad credit score detour his plans.
54 Meet The IFA
What does this organization do for franchising?
56 Breaking Down the FDD: Part Six Item 19: Financial Performance Representations
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FORGING EMERGING FRANCHISE BRANDS
Guiding entrepreneurs through every step of the franchise process Have a proven business concept? We want to talk to you! A full-service franchise development company focused exclusively on start-up and emerging franchise brands
franchisefoundry.com 832.797.9851
January 2018 Publisher/CEO Alesia Visconti avisconti@franchisedictionarymagazine.com VP of Franchise Expansion Joan Winchester joan@franchisedictionarymagazine.com Direct: 610-724-7084
Editor-in-Chief Jill Abrahamsen editor@franchisedictionarymagazine.com 888-315-9549, Ext 505 Senior Editor Mary Lynn Mitcham Strom
Director of Franchise Expansion Madhavi Patel madhavi@franchisedictionarymagazine.com Direct: 609-865-5742
Associate Editor Maria Tattoli Web Designer Audra DeFalco
Senior Executive Coordinator Michele Goitiandia michele@franchisedictionarymagazine.com
January Contributors Jonathan Barber, Geoff Batchelder, Diana Capirano, Nancy Friedman, Michelle Hummel, Jessica Melendez, Nicole Micklich, Jerry Reider, Paul Segreto
on the cover FranchiseDictionary FranchiseDictionary FranchiseDictionary FranchiseDictionary Business FranchiseDictionary JANUARY 2019
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THE ABC’S OF FRANCHISING
DREAM TEAM Meet the dynamic
couple behind THE ABC’S OF FRANCHISING
Just Let Me Do It! Commercial Services
THE ABC’S OF FRANCHISING
DREAM TEAM Meet Colleen and Curtis Pyle, the husband-and-wife team behind Just Let Me Do It! Commerical Services. This pair created a franchise system with a built-in customer base. Read more about this up-and-coming brand on page 44. Tech Support
Taking Care of
THE ABC’S OF FRANCHISING
B2B and tech ces are taking off. Find out why.
serviOF FRANCHISING THE ABC’S
28 34 A new franchise brings sweet returns.
10
How this standout franchisee helps others.
54
The IFA does more than you think.
CONTACT US Franchise Dictionary Magazine, 345 Route 17 South, Upper Saddle River, NJ 07458 888-315-9549 • info@franchisedictionarymagazine.com
franchisedictionarymagazine.com Entire contents copyright ©2018
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ANCHISE OPPORTUNITIES AVAILABLE • Large, protected territories • Fast startup, low overhead • Flexible, home-based business
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A FRANCHISE YOU CAN TRUST
January 2019 11
let·ter
\�le-tər \ noun
1. A welcome note from our publisher/CEO 2. Alesia Visconti on new adventures
Hello and happy 2019! A new year always brings new hopes, new plans, and new goals. Why not make 2019 your best year yet? If you’re looking to change your career path, it’s not that hard to do—with all the franchise opportunities and resources portrayed on the pages ahead, you’ll have plenty of opportunities to explore. Franchise Dictionary Magazine was born to help you find your “career bliss”—joy in what you do. For so many of us, the franchise industry provides a path of happiness, freedom to pursue our dreams, and a genuine route for financial stability. With a plethora of brands, categories, and business models, it’s not hard to find something ideal. The bottom line is it’s all at your fingertips—all you need to do is find the concept that works best for you. If you feel overwhelmed at figuring out which brands might be your perfect fit, there are several articles in this issue written by top-notch franchise consultants— professionals whose job it is to help you explore being your own boss through franchise ownership. Their services are all at no cost to you! In 2019—or any year for that matter—that’s a pretty sweet offering! Here’s to a FRAN-tastic 2019!
Alesia Visconti Publisher/CEO avisconti@franchisedictionarymagazine.com
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www.ReviewMyFDD.com Providing you
PEACE OF MIND when buying into a franchise!
January 2019 13
let·ter
\�le-tər \ noun
1. A welcome note from our editor 2. A happy birthday to us!
One year ago, we launched the very first issue of Franchise Dictionary Magazine. We started by covering home-based businesses, and each month, we dug deep into a different area of franchising: beauty, food, fitness, you name it. With so many opportunities available, it seems you can own a franchise no matter your budget, interest, or lifestyle. Talking with franchisees every month, I often hear, “I wish I had done this sooner.” Take Jerry Rahill, for instance. The millennial franchisee left his unfulfilling sales career to open a Patch Boys business, and he couldn’t be happier. Find out more about his road to business ownership on page 17. Also, in this issue, we take an inside look at business services and technology franchises. While that may not sound as sexy as owning a food or fitness business, there are extremely innovative concepts out there. Check out some of these cutting-edge brands, starting on page 42. We are thrilled to start our second year covering this industry. Every day, we see new and exciting changes in franchising, and we can’t wait to share them with you. Whether you are looking for a franchise or are already in the business, we’re glad to be part of your journey. We wish you a happy and healthy new year and much success is 2019. All the best,
Jill Abrahamsen Editor-in-Chief editor@franchisedictionarymagazine.com
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Getting started is easy. Request a Franchise Information Kit at: overthetopcakesupplies.com/franchising
A Sweet Opportunity
Over the Top Cake Supplies is a retail store for the everyday home baker AND the local chef, a place to learn how to decorate baked goods and also a fun place for children and adults alike to decorate cakes, cupcakes and cookies in a fun, party setting.
Visit us online at www.OverTheTopCakeSupplies.com/Franchising for more information.
January 2019 15
Stop by our booth #148
Sick of the Cold?
Join us in Sunny Florida January 24-26, 2019 at the
Franchise Expo South
Greater Fort Lauderdale / Broward County Convention Center Ft. Lauderdale, FL
FranchiseDictionary THE ABC’S OF FRANCHISING
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www.mfvexpo.com Use Promo Code FRANDICT for free admission
buzz·word
\ 'bəz-'wərd \ noun
1. A compilation of franchising trends 2. What franchise experts are talking about
A “Hole” New Career This millennial franchisee has just one regret: not starting sooner. Jerry Rahill started a career in sales right after graduating from college in 2014. After a few years, he realized it wasn’t for him. “I just wanted something I could be more passionate about. If I was going to spend the next 30plus years working, it was going to count,” Rahill says. He looked at franchising as an option and researched different brands in the home-services area. He was taken when he came across the The Patch Boys. “I knew right away that it was for me,” he says. “It’s a niche business with so much potential.” A drywall-repair service, The Patch Boys is a simple concept and Rahill fell in love with it. “We fix holes in walls. That’s it. It’s a service that everyone needs at one time or another,” Rahill says. “Usually, contractors won’t take these jobs because they are too small. But when that’s all you do, you have a lucrative, high-volume business.” The rapidly growing franchise system awarded 46 territories in 2016, including Rahill’s. When Rahill phoned to inquire about The Patch Boys, he never imagined he’d be up and running with his own location just weeks later. “I spoke to Leo Goldberger, founder and CEO, and he shared his vision. I could hear the passion in his voice and wanted in. I loved the unique concept, the high margins, and fast startup. The whole package was ideal. Before I knew it, I was in training,” he adds. Running the Greater Philadelphia area, Rahill has the opportunity to scale the business at his own pace. “The leads are flowing in. There’s no shortage of customers,” Rahill says. In fact, his biggest challenge is recruiting employees to accommodate his growing business, but he looks forward to the challenge. “It was one of the best decisions I ever made. I just wish I did it sooner. I’m finally excited about my work.” For more information, visit www.thepatchboys.com —Jill Abrahamsen
January 2019 17
buzz•word
It Makes a Village! Franchising’s community outreach has a long-lasting effect on its surrounding areas. Franchising contributed $868.1 billion to the U.S economy in 2016. So, by default, the industry has a huge impact on almost any community in terms of jobs for residents. It also puts wages-earned back into the communities, as residents often spend some of their income on goods and services that come from local franchises. But the impact franchising has on communities goes deeper than that. Typically, franchise owners live in the same communities as their customers and want to “give back” wherever they can. Many franchise systems will encourage some type of community involvement either at a local or national level.
Did You Know? Franchising Gives Back’s 512 members and 366,673 volunteers have donated $347,173,231 and 2,604,761 hours to their local communities.
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The Flying Locksmiths franchise in Tampa, Florida, for example, came to the rescue recently when someone broke into a local youth sports facility. The franchise’s expert staff added new locking mechanisms and security systems. The work would have cost thousands of dollars, but the local franchisee donated all of the labor. The franchisee also persuaded some of his local suppliers to donate products. WaveMAX Laundry® franchisees take extra time and effort to deliver all left-behind items to local Goodwill stores. These are just a couple examples of how a local franchise owner makes a difference in his community. Geoff Batchelder has been a franchise consultant and franchise development expert for the last 10 years. He helps launch successful businesses and builds strong franchise systems. Before that, he spent 25 years focusing on business development in the high-tech industry. Contact him at 877-222-3722 or email geoff@compassfranchisegroup.com.
For Better or Worse My husband and I started working together a long time ago—and we’ve been successful. Together, we’ve launched four start-ups. Of course, working with your spouse isn’t for everyone. So, if you’re considering working with yours, benefit from our experience and vow to follow these tips: Choose a final decision maker: All business owners disagree, so at the end of the day, you need one final decision maker. Figure out ahead of time who that will be. Then, deal with it. Live with it. Abide by it. Keep your sense of humor: This is very important. All business owners make mistakes and if you can laugh at some of yours together—instead of playing the blame game—you’ll work and live better together. Don’t force it: If you have a hard time coming to agreements at home, be forewarned: It doesn’t get any
easier at work. Know your spouse. Is he or she who you want to work with every day? If you’re not sure, don’t push it. Consider another business partner. Keep it clean: At work—or at home—it’s always a good idea to argue ‘healthy.’ This means, talk things out and stick to the points at hand. No swearing. No accusations. Talk things out behind closed doors or in neutral territory. Never go to bed angry: Sure, every couple has heard this rule, but when you’re in business together, it’s even more important. Remember you’re going to wake up and go back to work with this person. Contact Nancy Friedman at 314-291-1012, email nancy@telephonedoctor.com or visit www.nancyfriedman.com
Show Time UPCOMING SHOWS Visiting trade shows is a great way for investors to meet franchisors face-to-face. Below are some you’ll want to put on your calendar. The Franchise Show www.USFranchiseShows.com. January 11-12, 2019 World Trade Center Boston, MA Franchise Expo South www.mfvexpo.com January 24-26, 2019 Stop by Greater our booth Fort Lauderdale / #148 Broward County Convention Center Ft. Lauderdale, FL Use Promo Code “FRANDICT” for free admission The Franchise Show www.USFranchiseShows.com. February 16-17, 2019 Meadowlands Exposition Center Secaucus, New Jersey IFA2019 International Franchise Association's Annual Convention www.franchise.org/convention February 24-27, 2019 The International Franchise Association’s Annual Convention is franchising's biggest event for business development and personal growth. Mandalay Bay Las Vegas, NV
January 2019 19
buzz•word
ON THE TELEPHONE The person who answers your company’s phone makes a first impression on your customer. Make it a good one with these winning tips.
Make the customer feel important. Focus on the call and be a good listener. Be genuine. It may sound crazy, but keeping a smile on your face will help the tone of your voice. Seriously! Make the customer feel welcome. Build rapport with phrases like, “Glad you called,” or, “Nice to meet you,” or, “Great to hear your voice.” Close the call with a lasting positive impression. The end of a call is just as important as the beginning. Use phrases like, “So glad we spoke,” or, “Look forward to talking again,” or, “Thanks for the call.” Nancy Friedman is a popular speaker and author of nine books on customer service and sales. Contact her at 314- 291-1012 or nancy@telephonedoctor.com or visit www.nancyfriedman.com 20
5 Reasons Your Business Needs a Blog Strategy Blogging generates leads. Imagine if your customer is searching for the answer to his question on Google and your blog shows up on page one. When customers google questions, your answers need to appear at the top of the page. Write down your top five most FAQs and turn them into blog articles. Blogging helps you stand out from the crowd. What is your brand’s personality? Is it inspiring? Witty? Sassy? Or, is it all serious business? Defining your unique brand voice through blogging can help you become a more memorable, authentic, and relatable brand. Blogging starts engaging conversations. Gain valuable insights and build relationships with your customers through blogging. Be sure to ask questions of your readers in
your blog posts. Enable comments and reply to them. Write in a friendly tone.
Blogs are your social media hub. If you are participating in social media, blogging is a must. Writing magnetic headlines that make people click is the key to success. Having a consistent bank of great blog content to post can drive leads directly to your website when shared on multiple social media platforms. Blogs can help you get more email subscribers. Always have a call-to-action at the end of each blog. A powerful example is to ask readers to subscribe to your email list for even more great content. Michelle Hummel is CEO of Web Strategy Plus. Contact her at michelle@webstrategyplus.com, visit www.WebStrategyPlus.com.
Interested in exhibiting? Please contact Joan Winchester at joan@franserve.com / 610.724.7084
FRANCHISING & YOU Saturdays at 9:30 a.m. est on blogtalkradio.com
Dream it. Wish it. Do it.
SPONSORED BY
January 2019 21
buzz•word
What is an SBA loan? Every small business owner has heard the term SBA loan. But how much do you know about what it is and how it really works? An SBA loan is a loan that is partially guaranteed by the government’s Small Business Administration. The loan actually comes from traditional banks and lenders—some specialize in the SBA program—not from the government, as people often think. These loans can help small businesses with poor credit or limited collateral get financing—since they are partially guaranteed, the lending institution knows it will recoup at least some of the loan back and therefore is more willing to lend. Another benefit for small businesses is that often the terms of the loan are such that a business can make lower payments over a longer period of time. This gives breathing room to startups and other businesses who have limited cash flow. And since the SBA limits the
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interest rate spread that lending institutions can charge, the cost of the loan is generally less for the borrower than it would be otherwise. There are many types of SBA loans, but the most commonly used is the 7(a) Loan Program. This type of loan is the most flexible and allows business owners to borrow money for a variety of needs—working capital, machinery, furniture, general business costs, among other needs. The maximum amount you can borrow under the 7(a) Loan is $5 million. The SBA guarantees 75 percent of loans over $150,000 and 85 percent of loans under that amount. Of course, if you want to apply for an SBA loan, keep in mind you’re dealing with the government—expect a pile of red tape and paperwork to get the ball rolling. Still, if you get the financing you need, a payment plan you can work with, and an interest rate you can afford, then isn’t it worth it?
contactus@webstrategyplus.com
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FranchiseDictionaryMagazine.com contactus@webstrategyplus.com
up·date
\�əp- dāt\ noun �
1. The latest headlines in the franchise industry 2. Quick news bites to inspire you
By the Numbers
»
SPORT CLIPS HAIRCUTS DONATES $1.35 MILLION TO THE VFW Sport Clips CEO and founder Gordon Logan (far right), recently donated $1.35 million to the VFW Foundation to support Help A Hero Scholarships for active-duty U.S. service members and veterans. Sport Clips began fundraising in October with the goal to exceed the $1.25 million raised last year for the program. “To see the impact of 1,300 Help A Hero scholarships at work in the lives of individuals, who are pursuing post-military careers, is powerful and one of the best ways we can say, ‘Thank you for your service,’” says Logan, a U.S. Air Force veteran and Life Member of the VFW.
January 2019 25
up•date In brief ON THE ROAD TO RECOVERY
Going for Gold MASSAGE HEIGHTS SPONSORS STANDOUT USA BOBSLEDDER, NICOLE BRUNGARDT Through fundraising efforts, Chipotle Mexican Grill recently donated $380,000 to the United Way’s California wildfire recovery efforts. The funds are helping to rebuild communities that were affected by the devastating wildfires in California. “We hope this donation to the United Way’s California wildfire recovery efforts helps individuals and families impacted by some of the worst wildfires in our state’s history to re-establish their lives and rebuild,” says Laurie Schalow, chief communications officer at Chipotle. “We felt it was important to do our part and help the communities affected by these disasters.” For more information on how to support California wildfire relief efforts, visit www.UnitedWay.org/Recovery.
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Massage Heights, a franchisor of professional, affordable, and convenient therapeutic massage and facial services, recently announced that it is sponsoring Nicole Brungardt, a USA bobsledder and former employee of one of its franchisees. Brungardt, who worked as a lifestyle consultant for Massage Heights West Maple in her home state of Nebraska, was selected to join the USA Bobsled National Team and kicked off the World Cup season in Latvia this past December. “We are so proud of all Nicole’s achievements and stand in awe of her relentless, unwavering commitment to pursuing her dreams. It truly feels that things have come full circle as we build this partnership together and support her the way she once support-
ed Massage Heights,” says Shane Evans, co-founder and president of Massage Heights. “We’re so inspired by her and feel honored to stand behind her, cheering her on through this next journey with sights set on Beijing.” Brungardt joined the Women’s Bobsled Team on the North American Circuit in Oct. 2017, and in her rookie season, won three gold medals. “Massage therapy has always played a vital role in my success as a collegiate and professional athlete. I rely on it for not only the physical benefits, but for mental relaxation, as well,” says Nicole Brungardt. “As a former employee of Massage Heights, I have a strong personal connection and great respect for the brand. I'm excited about this new partnership together.”
Looking for your next career adventure? FRANSERVE: WHERE DREAMS COME TRUE
Being a FranServe consultant is like being a superhero
Find your dream career by helping others achieve their dreams of business ownership through franchising The world’s largest franchise consulting and expansion organization
www.franserve.com January 2019 800-206-5454
27
fran·chi·see \ fran-chī-zē, -chə-\noun
1. An outstanding franchise owner 2. When “too good to be true” is for real AMY CLEGG Express Employment Professionals Scranton, PA
W
by Jill Abrahamsen
hen Amy Clegg was approached to convert her independent staffing company into an Express Employment Professionals franchise, she was skeptical. “It sounded too good to be true,” says Clegg. “I already built my business, why would I want to invest in a franchise system? But it turned out to be the best business decision I ever made.” Clegg converted her business to Express Employment Professionals in 2009, and it’s still going strong. With 500 percent growth in her first year, you could say the proof is in the pudding. So what made the difference? “Tremendous resources. I don’t have to do it all on my own. The training, marketing, leadership events, and support is amazing,” Clegg says. “I thought it would be hard to follow a system, but it was great. They 28
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took all the back-end tasks off my plate, so I could focus on growing the business.” Being part of a franchise system gives Clegg more time to spend with family and to make a difference in her community—and in the world. Clegg is passionate about giving back. She’s involved in many charitable organizations, and Express corporate supports and encourages her efforts. Having adopted her own kids internationally, Clegg is a huge advocate for children. Clegg and her team support the Ruel Foundation, which provides love, care, and cleft palate surgeries to malnourished and orphaned children (www.RuelFoundation.com). Leadership comes naturally to Clegg and intuitively, as an independent business owner,
“It feels great to make
a difference in people’s lives.”
she had been doing all the things that a successful franchisee should do. “Getting out in the community, being involved in the chamber, and networking with business owners is huge,” she says. Clegg has hosted the award-winning Express Clydesdales in the Scranton St. Patrick’s Day parade for three years. This gave her the opportunity to give out yearly scholarships to young women interested in leadership by competing for the title of “Express Clydesdale Queen.” The Clydesdales' yearly visits brought smiles to tens of thousands and raised money for the local Children’s Hospital and the Ruel Foundation. Among her many accolades, Clegg was named one of the “Top 50 Women in Business” in Pennsylvania and was also awarded Express Employment Professionals’ coveted “Board of Director’s Award” twice. Clegg and her team achieved Bronze Circle of Excellence every year since teaming with Express, something franchisees must reach before being awarded a second location. “Partnering with Express has been the best business decision of my career. Express has changed my life in such a way that my circle of influence has increased to help inspire and encourage many more people,” she says. For more information, visit www.expresspros.com
Amy Clegg and her children, Ryan, Jack, Diana, and Lori Ella (opposite page). Amy and the Scranton Express team are continually involved in charitable events that benefit both international and local charities (top and above).
January 2019 29
le·gal·ese /lēgə’lēz/noun
1. The formal and technical language of legal documents that is often hard to understand. 2. Straight talk from Jonathan Barber
I
Why do I Have to Sign a Receipt for an FDD?
f a franchisor sends you, a potential buyer, a 200-to-300 page document and asks you to sign a “receipt page,” don’t panic. You’re only helping the franchisor to remain compliant with state and federal franchise laws. The receipt pages are not part of a contract, and you are not binding yourself to anything by signing them. They exist purely to show the date you were given or “disclosed” with the franchise disclosure document, commonly referred to as the “FDD.” THE DISCLOSURE RULES Why is that date so important? The Federal Trade Commission (FTC) requires franchisors to send each prospective franchisee a copy of its FDD, and the prospective franchisee cannot sign a franchise agreement or make payments to the franchisor until fourteen days after receiving the agreement. If a franchisee signs a franchise agreement or pays the franchisor prior to the 14 days he was disclosed with the FDD, the franchisor is in a world of trouble. Federal and state laws label this as an “unfair and deceptive trade practice,” which carries significant damages. Down the road, the franchisee could have serious claims against the franchisor, based solely
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on the timing of the disclosure. There are certain exemptions to the 14-day disclosure rule. Primarily, the FTC exempts the transfer of a franchise by an existing franchisee, as long as the franchisor has not had “significant involvement” with the prospective franchisee. Therefore, technically, a franchisor doesn’t have to disclose you if you’re buying an existing location. However, if you will be required to sign the franchisor’s then-current form of franchise agreement as a condition of the resale, then you must be disclosed even though you’re buying an existing location. Similarly, if the franchisor directs you toward buying an existing location, he must disclose you with the FDD. At the end of the day, while there are certain exemptions, it’s best practice for franchisors to simply disclose every prospective franchisee whether that candidate is exploring a resale or a new franchise location. We represent about 65 franchisors, and we recommend this to all of them. WHAT TO DO IF YOU’RE NOT DISCLOSED If you’re in the process of buying into a franchise, and the franchisor has not provided the
“If your franchisor has not
provided the FDD, you should reach out immediately and ask for a copy.”
FDD, you should reach out immediately and ask for a copy. Most franchisors are fairly sophisticated and understand the basics of franchising enough to follow the disclosure rules. If you have already bought into a franchise and were never disclosed with the FDD, you should talk to an attorney to determine your options. If you have a great relationship with your franchisor, bring it up with them. However, if you weren’t disclosed, you are probably facing other issues with your franchised business. Franchisors are
required to follow the federal and state franchise laws, which exist to protect the consumer—you! Jonathan Barber exclusively practices franchise law as a partner at Barber Power Law Group, in Charlotte, North Carolina. He has assisted hundreds of clients world-wide with their FDDs and franchise purchases. Barber also represents emerging and established franchisors. Contact Barber at 980-202-5679 or JBarber@barberpowerlaw.com.
January 2019 31
fran·chis·ing \ fran-chī-z-ing \verb
1. The right to sell a company’s goods or services in a particular area 2. Covering the bases with Paul Segreto
Franchise Success by Avoiding Common Mistakes
M
istakes are a part of life. However, learning from mistakes is part of life, too. But if you could learn from the mistakes of others rather than your own, wouldn’t you want to? There are some common mistakes individuals make when exploring and investing in a franchise, and they’re easy to avoid. Here’s a few to watch out for, so you can improve your chances of success in your new business. MISTAKE 1: NOT LEARNING ABOUT LIFE AS A FRANCHISEE Sure you have good instincts, but when investing in a franchise, relying solely on your instincts is not necessarily the best decision. Rather than just trusting your instincts, which could land you in hot water with your franchisor, landlord, or tenant, choose to learn all you can before you finalize any agreement. That said, always trust your gut and dig into what may be giving you a bad feeling. Talk with other franchisees. Ask them to share with you a day in 32
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the life of a franchisee. Also, speak with other tenants in the shopping center where you’re considering a lease. For both parties, ask whether they would do it again. Knowledge is power. By learning from a leader within the franchise organization—as well as doing your own thorough research before you dive in—you are setting yourself (and your franchise) up for success. Ask franchisees how issues and disagreements have been addressed in the past. Ditto for tenants. MISTAKE 2: RUSHING YOUR DUE DILIGENCE Slow and steady can win the race, even in franchising. While you might be eager to get started as soon as possible, there may be moments where more time—and patience—is prudent. For example, when choosing a location for your business, never allow yourself to be in such a rush that you choose a bad location or fail to negotiate. You want not only the best rate per square foot, but also
“Read the small print
closely and carefully when you sign on the dotted line(s).”
a tenant improvement allowance and other benefits, such as free rent. Look to the future by checking current visibility, and try to determine if there’s a possibility of that visibility being blocked, maybe by a new building on a pad site along the property’s outer rim or heaven forbid, road construction. Often, plans for both are made well in advance. MISTAKE 3: NOT FOLLOWING AND TRUSTING IN THE PROCESS Remember, you are making an investment in a franchise. That means you’re making an investment in that franchise’s brand, processes, and procedures. Understand what that means and what you’ll need to do to adhere to operations manuals regarding the same. It’s a huge responsibility that may carry some significant liabilities if you’re not in compliance. You will want to make certain before you finalize your investment that you fully under-
stand the responsibilities—the franchisor’s and your own. Read the small print closely and carefully, so that you are fully onboard when you sign on the dotted line(s). This applies to all agreements—lease, equipment, suppliers, etc. Remember, it’s difficult to put toothpaste back in the tube. So, be diligent on the front end of all transactions and heed the age-old advice of haste makes waste. Paul Segreto is a recognized entrepreneur, franchise- and small-business professional. His expertise includes startups and turnarounds, strategic planning, business and franchise development, branding, social media and digital marketing with primary focus on restaurants and service-driven businesses. Segreto founded Franchise Today podcast in 2009 and Franchising & You podcast in 2018. He is CEO of the Franchise Foundry. Contact Segreto at paul@franchisefoundry.com
January 2019 33
en·tre·pre·neur änn-trə-p(r)ə-'nər\noun
1. One who manages and assumes the risks of a business 2. Taking the family business to the next level
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by Jill Abrahamsen
rowing up in a family of bakers, Kevin Johnson had a love
for the business. At his parents’ shop, his dad did the baking and his mom decorated his creations while running the front counter. As a kid, he loved helping with the business, but didn’t love waking up at 2 a.m. to go to work. So when it came time for Johnson to start making a living of his own, he took his bakery experience and put it to work in a business where he could wake up at a more palatable hour. Partnering with one of his brothers, Johnson started the Johnson Brothers Baking Supply Company in 1994. It flourished, and almost 20 years later, Johnson identified an untapped market to sell professional cake supplies at the consumer level, catering to hobbyists and small businesses. He opened a store next to his warehouse, and it was an immediate success. The next step was a brick-and-mortar shop in a retail location. He opened Over the Top Cake Supplies in March 2014. A retail store with a party room, Over the Top Cake Supplies offers cake-decorating classes and parties for groups of all ages. They host kids’ birthday parties, scouting groups, and corporate team-building events. Wildly popular, guests can bring their own wine to the Corks & Confections parties and enjoy a Ladies’ Night Out, Bridal Shower, or Bachelorette Party. Guests learn new techniques and get to take home their creations. 34
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“The volume went through the roof, so we decided that scaling the business through franchising was the way to go,” Johnson says. Offering franchise opportunities since 2016, Over the Top Cake Supplies lets investors choose retail stores with or without party rooms. “Most people pick the party room, though. The margins are high, like 95 percent.” You don’t need to be a baker to own this business, but a love for baking helps. “We teach franchisees everything they need to do to run this business. This is the only one of its kind. We are really excited about the possibilities,” Johnson says. For more information, visit www.overthetopcakesupplies.com.
“Franchising was the best way
to manage our increasing volume.�
Entrepreneur Kevin Johnson (opposite) identified an untapped market to sell professional cake supplies at the consumer level. Over the Top Cake Supplies offers classes and parties, catering to baking enthusiasts of all ages.
January 2019 35
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In the business of helping
BUSINESS
I
by Jerry Rieder
f you are customer- and service-oriented, you can go far establishing a successful business. A business service franchise may be a great option as they typically require a relatively low—under $100K— investment and encompass a wide range of service offerings. These services—everything from janitorial to marketing to printing and copying—can be purchased by prospective clients at less expense, and they’re often executed with higher quality through outsourcing than paying for them internally. One reason to consider a service-based franchise is that when you start a business, one of the most challenging tasks is the creation of an effective business plan. Business service franchisors offer business models with proven track records, and many provide franchisees with a high level of support to help ensure mutual success. Having a successful, proven method for
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growing a franchise helps ensure the franchisor’s brand remains strong. The relationship between a franchisee and a franchisor is a strategic partnership, and it's through this partnership that a solid business model providing quality services grows a franchise. Another key advantage of this type of franchise is that most service-based franchisors allow their franchisees to operate from home-based offices in the beginning, then once the operation grows considerably, they can expand into their own offices. This significantly reduces initial operating costs and overhead, when revenue is typically low. In general, business services franchises are a win-win situation for the franchisee, the franchisor, and the clients they serve. Considering a business services franchise? Here, we list three high-growth, in-demand categories—and a few well known franchises within them.
Commercial Cleaning
A great opportunity for recurring revenue and a recession-resistant business, commercial cleaning is usually geared toward executive ownership, meaning franchisees run and grow the business rather than doing the cleaning themselves. Office Pride and ServiceMaster Clean are both recognized as leading full-service commercial cleaning franchises with an emphasis on service. They both provide commercial-cleaning services, both short and long term.
Âť
Signage Sign franchises are a high-growth industry with many advantages: manageable business hours, low seasonality, few employees, and recession resistance. FASTSIGNS and Image360 are two of the industry’s leading sign and graphic franchises. Both are full-spectrum providers of all types of visual communication products and services. Using a computer-based design technique, these franchisors emphasize sign and graphic solutions, offering fast turnaround, a business-to-business environment, and top-quality signs and graphics for corporate, professional, and retail clients.
Consulting You don't need to be an expert to own a business consulting franchise. Training comes with any reputable franchise. Take Schooley Mitchell, for example. Focused on lowering client costs by offering objective advice and analysis to reduce telecommunications, merchant services (card processing), and small package shipping fees, the franchisee makes the relationship and corporate does the rest. A market innovator, ActionCOACH, has a proven business-consulting system in place that has been helping companies for more than two decades. These systems also show franchisees how to coach businesses as well as run successful coaching businesses, providing a systematized roadmap to franchisee success. Jerry Rieder has been a franchise consultant since 2012. He became part of the FranServe Training and Development Team in 2013 and has helped a large number of consultants become successful. His compassion and desire to see others achieve drives him to share his techniques and best practices with new and experienced consultants alike. He serves as a trainer, a mentor, and also as a facilitator for FranServe’s Power Teams. His prior 25+ years of management experience with Fortune 500 Companies provides the foundation for aiding others to achieve their goals. Contact Jerry at jerry@franserve.com
January 2019 39
Tech Support With a technology franchise, you get the support of a system in a thriving industry. by Alesia Visconti
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“Our dependency on technology impacts our daily lives, both professionally and personally.” As a society, it’s obvious we're in love with technology. It permeates our lives so deeply we hardly think about it until there's a snafu somewhere—maybe we can't receive our texts or emails or our social media accounts are not posting instantaneously. Our dependency on technology impacts our daily lives, both professionally and personally. For businesses, technology’s reach touches operations, marketing, cybersecurity, customer service, and a plethora of other areas. When it goes down, business halts. Technology is the core of what fuels businesses and consumers alike. And for many in the franchise industry, it’s the arena chosen for business ownership. You may not initially think of “technology” as a category in the franchise space, but it is— and there are numerous models and brands available for ownership. The wonderful thing about the franchise industry is that you can find a franchise in the area that interests you most, and for sure, technology brands are a solid and growing choice. They’re exciting, and they’re always advancing. Case in point: Commercial
drone franchises are an incredible sector that— just a few years ago—didn’t even exist. If drones aren’t to your liking, how about franchises providing information technology services to businesses? A huge market, it is estimated at $300 billion and growing. There’s also the electronic repair and services sector that readily fixes damaged phones, tablets, and PCs. Of course, cybersecurity issues are always a factor, so brands that protect the services for a device, data, and the user's identity are quite popular. If your desire is to work strictly b2b (business to business), brand specializing in digital marketing strategies and solutions will pique your interest. Services range the gamut and franchise owners are able to generate leads, sales, and customers for their clients. Whether you want to be involved in the day-to-day operations of a technology business or manage the overall operations, this is a category that offers numerous opportunities for franchise owners—both immediate and for the future.
Alesia Visconti has 20-plus years helping others find their career bliss. She is the CEO of FranServe Inc, the world’s largest franchise consulting & expansion organization. Her motto in life is “work hard, play hard, help others, repeat.” She and her expert team of franchise consultants are passionate about helping others achieve their dreams of business ownership through franchising. Alesia is a self-proclaimed nerd and loves all things “superhero.” For more information visit www.franserve.com. To reach Visconti, call 800-206-5454 or email avisconti@franserve.com
January 2019 41
COVER STORY
taking care of
Business Business and technology are some of franchising’s best-kept secrets
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by Jill Abrahamsen
hile food and fitness might be some of franchising’s better known offerings, business and technology brands are on the rise. Many come with recurring revenue streams, flexible hours, and great customer retention. Add the support and training a franchise system brings, and you may just have the perfect business. Want a business you can run from home? Check out Schooley Mitchell on page 47. This innovative franchise is designed to save companies money on operational services, such as courier, merchant services, and telecom. It’s an easy sell since the customer doesn’t pay a dime unless savings are realized. Want to turn heads? Look up in the sky and you may see a BirdsiVideo drone doing its magic. With a wide base of applications, drone technology is in demand and has a customer base that includes farms, schools, resorts, and real estate agents, just to name a few. Find out more on page 48. Boring B2B opportunities are so yesterday. On the following pages you will find six innovative brands that are far from business as usual. Could one of them be for you?
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January 2019 43
COVER STORY
Colleen and Curtis Pyle
JUST LET ME DO IT! COMMERCIAL SERVICES COMMERCIAL BUSINESSES HAVE TO STAY OPEN TO STAY PROFITABLE. When something stops working or needs repair, shutting down is not an option. Business owners want a reliable service that can get the job done quickly and efficiently, without interfering with their day-to-day business. Colleen and Curtis Pyle recognized that need when they launched Just Let Me Do It! Commercial Services back in 1997. You could say the Pyles are a dream team. Curtis always worked in the service industry, as a general contractor and as a repairman for air conditioning and refrigeration. “I have always been mechanically inclined,” he says. Colleen is a self-described “construction brat,” who spent her childhood helping her dad with projects. “Watching my dad build with his hands, and then marrying Curtis, I learned so much about the business. It’s almost second nature to me,” she says. A commercial handyman service, Just Let Me Do It! Commercial Services takes care of all kinds of jobs from carpentry, plumbing, electrical, drywall, painting, and more. “You
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“Our franchise partners have jobs waiting for them on Day One.” name it, we can handle the job,” says Curtis. “This is an extremely niche market and one that’s in demand.” In fact, the business kept growing until they had six corporate locations. THE MOVE TO FRANCHISING In order to scale the business further, the Pyles decided franchising was the way to go. “The beauty of this business is that franchisees walk right into established relationships and are placed into a preferred status. They can get to work quickly, with jobs waiting for them on Day One. Our franchise partners don’t have to worry about marketing and advertising,” says Colleen. “Essentially, it’s a turnkey business. We take care of the day-to-day business: answering phones, emails, and tracking jobs from start to finish. We have state-of-the-art software that helps us stay at the top of our game.” The couple draws on their backgrounds in order to keep customers happy. “We have incorporated a strive-and-thrive attitude within the
business and our customers trust that we’ll get the job done,” Colleen says. The client base includes large chain stores, major retailers, big box stores, restaurants, and convenience stores. “We have strong relationships with our clients and have become their preferred go-to vendor nationally,” Colleen says. Offering franchise opportunities since 2018, Colleen runs the franchising end of the business and Curtis runs operations. They’re certain this business concept is something special. “There’s nothing like it out there. The start-up is low and the margins are high. Plus, there’s a huge demand for the services we offer,” Pyle says. The pair attributes their success to the culture they created. “We foster a fun atmosphere where people love coming to work,” Pyle says. “We treat our employees like family, and our core value is ‘we care.’” For more information, contact colleen@justletmedoit.com or visit www.justletmedoit.com.
January 2019 45
COVER STORY
John Early
SHOE SHINE GUYS CORPORATIONS LOVE TO OFFER PERKS THAT ATTRACT AND RETAIN EMPLOYEES and John Early built a business around that premise. His mobile franchise brings shoe-shining, shoerepair and leather restoration services to corporate offices. Talk about convenience: Corporate employees work in their offices while a Shoe Shine Guys crew comes in, collects and shines shoes, then delivers them back the same day. Soon after launching the business, Early quickly landed major accounts like Merrill Lynch and Ford Motor Company. “It wasn’t a hard sell. It’s a win-win for these companies. Human-resource staffs love it. We are adding value to their benefits package, and it costs them nothing,” says Early. “We provide convenience for their employees.” The Shoe Shine Guys set a regular day to come to a job site. “We walk right into the office, collect shoes, and shine them out in the van. It couldn’t be easier. People hand us shoes right off their feet. They don’t even need to leave their desks. In other offices, a closet or basket is set up in the lobby. They know we are coming. We send an email reminder the day before. On a typical day, we might shine about 40 to 50 pairs of shoes,” Early says. Another revenue stream is shoe repair and restoration. “This is a very profitable part of the business. We get our franchisees set up with vendors and outsource this service. While we are on-site shining shoes, our customers will bring in shoes and purses that need to be fixed. We collect them, repair them, and bring them back within two weeks. Most of our customers are extremely busy professionals. It’s one less errand for them. They are grateful for the service,” Early says. Now offering franchise opportunities, Early wants to award territories to a particular type of professional. “Our ideal franchisee is a real people-person, who wants to be an owner-operator and very involved in the business. They have to like people. We’re all about customer service and building relationships.” For more information, visit www.theshoeshineguys.com
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Dennis Schooley
SCHOOLEY MITCHELL BUSINESS OWNERS HAVE PLENTY TO WORRY ABOUT. THERE'S PAYROLL AND healthcare, hiring and retaining employees, taxes, the economy, keeping ahead of competition, technology breakdowns, and more. So when it comes to paying bills for services like courier and telecom, business owners don’t always have the time to examine invoices or the market with a careful eye. In fact, companies are shelling out a lot more for services than they should. “On average, companies pay 35 percent more than they need to for operational services such as courier, merchant services, and telecom,” says Dennis Schooley, founder of Schooley Mitchell. Schooley knows how to dig deep when it comes to expenses. He recognized a need for a specialized service for business owners who don’t have the time to inspect all vendor invoices and compare the best offerings for the best deal. He launched Schooley Mitchell, which acts as a go-between for businesses and vendors, helping companies get reduced rates on operational services such as courier, merchant services, and telecom. Working on a contingency basis, the client only pays a portion of the savings realized through Schooley Mitchell’s advice. “We get paid by sharing in the savings. It’s a risk-free service for our clients,” says Schooley. “We have very successful franchise partners,” says Schooley. “If you’re motivated and willing to go out and talk to people, you will do well.” The company provides all the training and specialized tools needed to run the business. “This is a very rewarding opportunity. We help people save money. Every business needs our service and we have saved companies millions in some cases,” says Schooley. “The sky’s the limit for franchisees.” For more information, visit www.schooleymitchell.com
January 2019 47
COVER STORY
Josh Kneifel
BIRDSiVIDEO
DRONES MAY SEEM LIKE A SPACE-AGE NOVELTY, BUT THEY ARE ALL AROUND us and used in many applications. They’re not just a trend, either. Drones are big business. In fact, the commercial drone services industry is estimated to grow to $8.4 billion by 2025. A commercial pilot, flight instructor, and executive in the aviation business, Josh Kneifel saw huge potential in drone technology. So he did some research. “I went out and bought a drone for fun and also to see what it could do. Before I knew it, I started a business.” Kneifel’s company, BirdsiVideo offers an array of services to many different industries. Real estate agents and resorts and hotels hire the company to take aerial shots of properties. Many businesses, like car dealerships and restaurants, can use drone services for promotions and ads. Cities and schools enlist BirdsiVideo to capture community events. Drones help farms work smarter by providing a bird’s eye view of crops. With drones, farmers can gain insight into heat stress, water use, and plant metabolism. Another side of the business conducts infrastructure inspections, including building facades and roofs, cell towers, wind turbines, bridges and electric power lines. Using specialized equipment, BirdsiVideo uses thermal imaging and other techniques to reduce the time, costs, and risks associated with asset and infrastructure management. Franchisees get the full training and the certification they need to run the business. “We’re FAA certified and fully insured. We pride ourselves on delivering the best aerial imaging and data consulting services at a fraction of traditional costs,” says Kneifel. “This is a great business opportunity, with huge growth potential.” For more information, visit www.birdsivideo.com.
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Paul Berman
BIRTHDAYPAK
TALK TO PAUL BERMAN FOR FIVE MINUTES, AND YOU’LL BE EAGER TO OWN A BirthdayPak franchise. As CEO and co-founder of the company, he exudes passion and enthusiasm for his business. “BirthdayPak is advertising that works,” says Berman. The premise is very targeted direct marketing, that gives the end user valuable gifts to celebrate a life event, their birthday. BirthdayPak delivers gift cards for high-end restaurants, day spas, and select retailers to the mailboxes of affluent women on their birthdays. “There is a strong emotional element to this. Life events, such as birthdays, are proven triggers for higher spending,” Berman says. “We are giving women an excuse to pamper themselves.” Franchisees enjoy a straight-forward business model. They go to local businesses and sell the limited gift card spaces that are available. Each BirthdayPak features a maximum of 8 choice businesses. “The average selling price for advertisers is $300 to $400 per month, which is a very palatable price point for local business owners,” Berman says. Each month, a “BirthdayPak” is sent out to a different group of affluent women on their birthdays. “The advertiser reaches a new audience each month. There’s no other platform like this.” Once a franchisee sells the ads, BirthdayPak corporate takes care of the rest. “We do all the backend work, from graphics, production, and marketing to data analytics. We have a team of really smart people working behind the scenes,” Berman says. After “BirthdayPak” is received, the recipient enters her activation code online which sets the digital part of the business in motion. Reminders to use the gift cards are sent out as well as special messages throughout the year, like a Happy ½ Birthday, Happy Valentine’s Day, Happy Mother’s Day, etc. “That is our secret sauce. Our data takes the guesswork out of the equation and provides a low-cost print and digital solution to our clients. It’s super targeted and incredibly effective.” Berman is looking for motivated investment partners, who are willing to follow a system. “This can be a very rewarding business. We make people feel good on their birthdays. I can’t even tell you the number of “thank you” letters we have received from recipients. It’s a great feeling.” For more information, visit www.BirthdayPakFranchise.com.
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COVER STORY
Lendio’s innovative CrowdPitch events give aspiring business owners a chance to showcase business ideas in front of a live audience of small business owners and an expert panel of business lenders. Above: Florida franchisee Luis Salazar leads a local group. Lendio founder and CEO, Brock Blake (right) discusses how lending marketplaces provide an easier path to financing for small business owners.
Brock Blake
LENDIO
BROCK BLAKE HAS ALWAYS HAD AN ENTREPRENEURIAL SPIRIT. RIGHT OUT of college, he won a Shark Tank-like competition which awarded him $50,000 to start his own business venture. Through his journey into business ownership, he came across folks like himself who had great ideas, but needed financing to get them off the ground. Recognizing a need to connect capital with aspiring entrepreneurs, Blake launched Lendio in 2011, with a mission to fuel the American dream of business ownership. Unlike traditional banks, Lendio offers a variety of loan options through its marketplace model. “In business lending there are many different ways to get a loan, but banks typically offer only one loan product. The application and approval process can be time consuming and frustrating for borrowers,” Blake says. “That’s where we come in. What we do with loans is similar to what Expedia does for travel—everything is in one stop and in one place. Our process allows customers to comparison shop without the hassle.” Launched in 2017, the Lendio franchising program allows franchisees to reach out to lenders at a local level and act as a matchmaker between lenders and business owners in their community. Lendio franchisees make money by getting a percentage of the loan at closing. Blake describes the opportunity as a “business in a box.” A home-based model, Lendio franchisees get all the training, marketing materials, and tools they need to hit the ground running. However, to be successful at this business, franchisees need a certain set of soft skills. “We are looking for partners that are outgoing, motivated, and have good relationship-building skills.” A feel-good business, Lendio continues to build on Blake’s mission to make the dream of business ownership easier to achieve.. “We make money by helping people. What could be better than that?” For more information, visit www.lendio.com. 50
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America’s first and most trusted drywall repair franchise company
FRANCHISE OPPORTUNITIES AVAILABLE January 2019
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TOUGH ROAD AHEAD This antique car restorer didn’t let a bad credit score detour his plans.
L
by Diana Capirano
ike other Detroit natives, Anthony, a client of mine, worked at Ford Motor Company. Anthony, like prior generations of employees, had viewed positions at companies like Ford as secure, with a path to retirement. For 25 years, he felt his job was his safety net, but like many of you reading this magazine, he also aspired to own his own business through franchising. On bad days, Anthony was committed to quitting, but he rationalized there were still goods days where he was content with stable pay, growing retirement savings, and a large pension—Middle America’s dream.
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Conflicted, he began an on-line franchise search, and in October 2016, one fateful click connected him to me. Anthony shared his success as a prototype engine technologist and engineering tech for Ford, as well as his passion to restore classic and antique cars. He expressed a desire not only for “financial freedom,” but also the freedom that comes from owning your own business. He wanted a schedule with more time for family and hobbies. After years of designing and restoring cars, Anthony made a brave decision to re-engineer his life and his future.
BUMPY ROAD AHEAD Anthony’s story is not unique, but it’s highly inspirational. Along with mounting stressors at work, Anthony was caring for elderly parents in poor health, and he had just gone through a very ugly divorce. As a result of a damaging divorce settlement, his credit score plummeted more than 200 points to 560. Ouch! I knew that this would immediately disqualify him with franchisors and it would be impossible to secure a loan. Terrible credit is the “kiss of death” in our world, and his plans for an SBA loan were immediately crushed. Certainly, this is not the first time I met someone with a disqualifying credit score, but it was the most impactful. Anthony never came off of the throttle. (For those who don’t yet know me, I’m a car enthusiast so pardon the metaphors). Anyhow, my client, a self-proclaimed pessimist and cynic suddenly became fueled with conviction and positivity. His original fears and doubts were now powered with purpose and focus to overcome this major bump in the road. For many, this would have been their jumping off point—a point of acceptance and giving up. Anthony’s innate problem-solving skills now defined his personal strength as he kicked into high gear. Improving his credit to the targeted 700 score would not be easy, nor would it happen overnight. Still motivated to begin research for some great franchises, he began with the end in mind—freedom. He enlisted a credit-repair company and throughout the next 22
months, Anthony worked resolutely on building back his credit. Over many months, he met with six franchises and he was transparent about his situation. Wanting to stay in his comfort zone (automotive), I convinced him to break out of that boundary to view other models. Most franchisors will not even engage a client with poor credit, but as they “looked under the hood,” they saw Anthony’s desire, determination, and drive—all qualities needed for a successful franchisee. Anthony’s next key obstacle was adapting an employer’s mindset. After all, he had been an employee his entire life and a union worker for 25 years. Anxiety set in. Transitioning from receiving a guaranteed paycheck to being an employer who cut paychecks was worrisome. By finding the right model with FISH Window Cleaning, he realized that a recurring revenue structure would create a more predictable income. Anthony became confident and excited for the freedom of a limitless paycheck. Here’s the best part…days after Anthony returned home from Discovery Day, he received an email that his credit score had reached 700. Finally, after all of that hard work, he was granted his loan and signed his franchise agreement with FISH Window Cleaning. I hope Anthony’s story inspires you to take a path less followed. Anthony achieved his end goal—freedom, and in my opinion, his journey not only restored his credit, but also his credibility. He emerged just like one of his painstakingly restored cars—a total “classic!”
Diana Capirano’s expansive career includes corporate and franchise sales and development, marketing and operations, merger and acquisitions, structuring and negotiations as well as business ownership. As a highlyrespected consultant and mentor, Diana espouses a profound commitment to help prospective business owners and investors understand and navigate the multifaceted process of deciding franchise businesses to best suit them. Contact Diana at 941-999-0095 or email diana@focusfranchise.com
January 2019 53
MEET THE IFA
What does this organization do for franchising? Find out here.
Y
by Jill Abrahamsen
ou may have heard about the IFA (International Franchise Association), but you might be surprised by all they do. Last month, for our Game Changers issue, we went right to the source, and spoke to IFA's President and CEO, Robert Cresanti. He shared his passion for the industry and told us that he feels franchising is a game changer because it creates opportunities and changes lives for the better. To continue our coverage, this month we highlight the many aspects of the IFA. We spoke to IFA’s Executive Vice President of Development, Marketing and Conferences, Scott Lehr and IFA’s President of Development and Member Services, Paul Rocchio, to find out more. The IFA serves many roles. It has the back of the franchising industry and its members. A non-profit organization with voluntary membership, the IFA’s mission is to promote, protect, and enhance fran54
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chising. Think of it like a guardian, mentor, and event planner all wrapped up into one. Here, we tell you about just a few of its important jobs. IT PROTECTS THE FRANCHISE INDUSTRY. Located in Washington DC, IFA staffers lobby on Capitol Hill and educate legislators on the complex issues franchisors face. They also do this at an international level, tackling big issues like joint employment—helping to take the liability of the franchisor as an employer, since all franchises are privately run. IT BRINGS PEOPLE TOGETHER. Folks involved in franchising love to collaborate and share best practices. The IFA offers several opportunities at the organization’s annual convention and other events throughout the year. “Whether they are selling burgers or eyelash extensions,
The IFA recognizes franchising's charitable efforts through its “Franchising Gives Back” program. A day of service takes place every year at the start of the IFA’s annual convention (opposite page). IFA staffers lobby on Capitol Hill to educate legislators on the complex issues franchisors face (above, left). Through classes, round table discussions and seminars, the IFA offers an array of opportunities to learn, network, and grow (above, right).
franchisors all face similar issues,” says Rocchio. “There are 100 different industries all using the same system. It truly is unique.” IT EDUCATES ABOUT FRANCHISING. Through classes, round table discussions and seminars, the IFA offers an array of opportunities to learn, network, and grow. “People come to our events and create lasting friendships and business relationships. This is really one big family,” Lehr says. As part of the Franship IFA Mentoring Program, new members get connected with seasoned ones who offer guidance on an ongoing basis. “Even the busiest CEOs are happy to share their experiences and offer advice. We’re very proud of this program,” he says.
shelters to organizing marches for cancer research, franchises help organizations in their communities. IFA recognizes those efforts through the Franchising Gives Back Program. There’s also a day of service that takes place at the start of the IFA’s annual convention. IT PLANS FOR THE FUTURE. IFA’s NextGen competition gives 20 young entrepreneurs a chance to compete for a spot at the NextGen in Franchising Summit, a two-day educational and networking program. Finalists get to present concepts at the annual convention and work with leading franchisors. Winners get a monetary investment to help their business grow. With all they do, it’s surprising to learn that IFA has a small staff of about 50. “We are a passionate group. Many of us have been with the IFA for 20 years or more. We are small, but we are mighty,” Rocchio says.
IT HELPS COMMUNITIES. Millions of dollars have been raised for charities through franchising. From supporting Little League baseball teams to donating food for homeless For more information, visit www.franchise.org
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SPECIAL SECTION: PART 6
Breaking Down
the FDD
Item 19: Financial Performance Representations
by Nicole Micklich
A
ll prospective franchisees want to be sure they can make money if they buy a franchise. Items 19 and 21 of the franchise disclosure document (FDD) can help prospective franchisees assess the likelihood that they will reach financial success in a system. Franchisors are permitted, but not required, to include financial performance representations in their FDDs. A financial performance representation is any oral, written, or visual representation to a prospective franchisee that states expressly or impliedly a level or range of actual or potential sales, income, or profits. This includes statements made in the media. Financial performance representations can take the form of charts or tables, or calculations of possible results. Most often, a financial performance representation simply states a level or range of potential earnings. Such a representation might say, “During 2015 and 2016, 2,020 stores were in continual operation. These 2,020 stores had an average sales of $403,937 for the entire year 2016. A total of 848 stores had sales above this average, and 1,172 stores had sales lower than the average. The median sales for these 2,020 stores was $378,231.” Some financial perfor-
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mance representations use words like “sales volume,” “profit,” and “income.” Statements from which a prospective franchisee can infer a level of income or profits are also financial performance representations. For example, “earn enough money to buy a new Lamborghini” qualifies as a financial performance representation. On the other hand, puffery is sometimes not a financial performance representation. If a franchisor tells a prospective franchisee that the franchise provides an opportunity to “make a lot of money,” the statement may be considered puffery, and not a financial performance representation. Providing cost data is also not the same as making a financial performance representation. Listing expenses in Item 7 alone does not constitute a financial performance representation. WHAT'S REQUIRED Franchisors are not required to make franchise performance representations. If a franchisor chooses to include financial performance representations, the franchisor must have a reasonable basis and written substantiation for the representation. The disclosure must include the bases and
assumptions for the representation. Franchisors are prohibited from making representations that are false or unsubstantiated. If a franchisor does not make an Item 19 financial performance representation, the franchisor must not make any financial performance representations outside of the FDD, including in print and online. Financial performance representations in Item 19 of the FDD can help potential franchisees understand whether a business can be profitable. Many franchisors include average gross sales for units and cost information in their FDDs. Prospective franchisees can also compare the Item 19 disclosures of different franchisors, because the methodology used to calculate the numbers in the disclosures should be consistent.
ITEM 21: FINANCIAL STATEMENTS While franchisors have the option of providing financial performance representations, franchisors are required to include copies of their audited financial statements for the most recent three fiscal years in Item 21 of the FDD. This requirement exists so that prospective franchisees have enough information to analyze financial trends in the system. Evaluating financial performance representations and financial statements can be daunting and confusing, so a prospective franchisee is wise to seek advice from a franchise lawyer and accountant. Nicole Micklich is a franchise attorney with Garcia & Milas. Contact her at 203-773-3824 or nmicklich@garciamilas.com
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in·ter·view
\�in-tər- vyü \ � noun
1. A Q&A session with an industry expert 2. Jessica Melendez on vetting franchisors
A trainer and mentor for FranServe, Inc.,
Q
and CEO of WestStar Franchise Group, Jessica Melendez helps prospective franchise owners find businesses that align with their personal and professional ambitions. As a franchisor and president of Dryer Vent Squad, Melendez has first-hand experience in all aspects of franchising, making her an excellent resource for prospective franchisees. Contact Melendez at 915-202-8272 or Jessica@weststarfranchisegroup.com
What are some important questions for a candidate to ask a franchisor?
A
Working as a broker, I put together a template of questions for my candidates to use when talking to franchisors. During the discovery process, most of those questions are answered, and my clients can check them off their lists. However, I insist that they get clear, in-depth answers on the following questions.
Regarding Training • What does your training program look like? What ongoing training do you offer? • Do you provide a mentor? For how long? • Do you assist in training my team? Regarding Territory • What is my protected territory and how is it defined? • How many franchises have been awarded in my state? Have they all opened? If they haven’t, why not? • What are your plans to develop my state and how will that impact my franchise? Regarding Cost • Can you give me a break down of all of the expenses associated with getting started? • How much additional capital will I need after I launch my franchise? • What goods or services do I have to purchase directly from you, the franchisor, and can I competitively shop for a better deal? • Is there a national advertising/marketing fund that I must contribute to?
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Regarding Potential Earnings • What can I expect to earn if I join your franchise system, and does your franchise disclose this amount in your written materials? • Do you provide a pro-forma? • What is your average profit margin? • What is your average sales per month? Regarding Franchisee History • How many franchisees have you added in the past year? How many have you lost? • How many franchised units have failed and why? • How have previous franchisee/franchisor disputes been settled?
QA
What are some red flags to look out for? • Corporate takeovers: Pay close attention to item 20 of the FDD, which will give you information on the number of franchises transferred, canceled, or terminated; as well as the number of franchises that have not been renewed by the franchisor or have been reacquired by the franchisor. Corporate takeovers or terminations are red flags—possibly indicating there are failures due to training and support or infrastructure. • Resales: Are resales being sold at their prime for big profit? Or, are they selling to unload their business due to losses or no growth? • Unhappy franchisees: Another red flag would be several unhappy franchisees during validation calls. If you’re making validation calls and discover several unhappy validators, talk to the franchisor and see how he responds. Are they weak owners, or is the franchisor failing them?
QA
How should you prepare for a Discovery Day? Going through the buying process in its entirety is the best way to prepare for Discovery Day. By the time it arrives, you should have made your validation calls, reviewed the FDD to completion, had calls with the franchisor, and reviewed all materials/webinars provided. Discovery Day should be the day you meet the executive staff and see how they operate firsthand. At this point, you want to see if the brand and culture are a fit for you. Discovery Day is also a good time to ask final questions regarding the FDD or validations, discuss attorney review and offerings, finalize territory maps, and ask about next steps. Take care of the following before you arrive to make your trip more efficient: • Confirm travel arrangements. • Arrive a day early, as most Discovery Days start first thing in the morning. • Ask about dress code—some franchisors prefer business casual. • Ask for an agenda. • Ask if you need to bring anything with you, such as financial information. • Prepare a list of final questions.
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spot·light
\�spät-�līt \ noun
1. Trending franchise businesses you want to know about 2. A great place to show off your franchise
Dryer Vent Squad® Deck Medic® Since 1990, Deck Medic has established itself as the number one outdoor wood restoration company in the Chicagoland area. Deck Medic® has its own line of proprietary cleaners, strippers, and 100-percent oil-based stain that can only be purchased by franchise owners. Excellent customer service and the trademark Five-Step Wood Restoration Process sets Deck Medic apart. For more information, visit www.mydeckmedic.com
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WE GET THE LINT OUT
Dryer Vent Squad® provides a valuable, inexpensive service to homeowners that saves time, money—and could potentially save homes and lives. Since approximately 80 percent of all U.S. households have a clothes dryer, there is a huge base of potential customers. Dryer vents need to be cleaned and maintained on a regular basis. Dryer Vent Squad® takes away the worry and lets families reclaim time and money. For more information, visit www.dryerventsquad.com
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The Inspection Boys® If you’re looking for a lowcost, high-reward business, check out The Inspection Boys. Offering a service that’s in demand, but in a newer franchise system, franchisees reap the benefits of huge territories with a triedand-true business concept. The company prides itself in its cutting- edge marketing, using the latest in search engine optimization and social media to promote the brand at a corporate level. This home-based business offers low overhead, big margins and quick ROI. Learn more at inspectionboys.com or call 1-800-819-4403.
The Waffle Experience® The Patch Boys® Want to run a homebased business with low overhead and high profit margins? Check out The Patch Boys®. America’s most trusted drywall-repair company, The Patch Boys® takes care of damaged drywall caused by clumsy accidents or water damage. These jobs are usually too small for contractors, and most homeowners don’t have the time or skill to take care of drywall repairs themselves. When you join The Patch Boys® family, you become a part of an entrepreneurial community that works together to advance the brand. For more information, call 844-99-PATCH, or visit www.thepatchboys.com
Named as a must-try in MSN’s 50 Best Things to Eat Before You Die, The Waffle Experience is on the fast lane for franchising success. With a cultlike following, customers are standing in long lines to try TWE’s decadent dishes, which are made from locally sourced natural and organic ingredients and paired with flavor-infused waffles. A favorite, “Praise the Lard” features house-braised pork belly, a cage-free egg, arugula, roasted tomato, ricotta, cracked pepper agave syrup with a lardon-studded herb waffle. Franchisees enjoy a family-friendly schedule, low investment, and protected territories. For more information, call 916317-6057 or visit
Just Let Me Do It! Commerical Services® If starting a business with an existing customer base sounds good to you, consider Just Let Me Do It! Commercial Services. With corporate contracts in place, franchisees have jobs waiting for them on day one of opening for business. A handyman service for businesses, franchisees enjoy a turnkey model with low start up costs and high margins. The 20-year-old company has a proven business model and is now offering franchise opportunities. For more information, call 704-960-4554 or visit www.justletmedoit.com
www.thewaffleexperience.com
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last word
\ last \ \ wərd \ noun
1. Advice from a successful brand 2. Simple steps to building a better business
A Business Reinvented Tips from Cartridge World on playing your A-game. 1. Grow slowly: Launched in 1988, Cartridge World grew steadily as a leader in the industry. Today, the company is known for its efficient and low-cost office printing services. 2. Provide a great service: Cartridge World makes it easy for business owners by offering free printers that come with service and toner cartridges at a discounted rate. By using the latest technology, offering innovative programs, and guaranteeing great service, the company enjoys a high customer-retention rate. 3. Offer options: With a new executive office model, investors can choose between a brick-and-mortar location or a home-based business. 4. Care about the environment: By using cost-effective and sustainable printing products, the company helps the environment by reducing waste. 5. Make life easy for franchisees: The company built an easy-to-run business model with a ton of support and training. Franchisees can focus on growing their local business while corporate takes care of the rest. For more information, visit www.cartridgeworld.com
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A franchise opportunity with a built-in customer base > > > > > > >
Low start-up costs 20 years proven success Established clients Impressive sales growth High client demand Excellent support Business-to-business
“WE STRIVE AND THRIVE TO MAKE IT HAPPEN”
www.justletmedoit.com • 704-960-4554
We bring major brands directly to our franchisees
Water is for Swimming not for basements
The Water Damage Restoration
®
NO GOOD-BYE, ‘TIL IT’S DRY www.thedryboys.com • 844-99-DRYBOYS
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