September 2014 - Franchising World by Rahath Alam

n n et w o i t c o a

GE ME

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FRANCHISE RELATIONS 19 Franchise Relations Dialogue Community — An Avenue to Building Positive Relationships 22 Due Diligence: Not as Easy as 1, 2, 3 24 Franchisee Engagement and Support: The Keys to Success 28 Gaining Traction: 5 Steps to Drive Franchise Performance and Profitability 31 Franchise Compliance: A Light at the End of the Tunnel 34 Positively Memorable Experiences – They’re Not Just for Customers!

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VOLUME 46, NUMBER 9

CONTENTS

Publisher Stephen J. Caldeira, CFE Associate Publisher Scott Lehr, CFE Executive Editor Alisa Harrison Senior Vice President, Media Relations & Public Affairs Matthew Haller Marketing Manager Courtney Moore

FEATURES

19 Franchise Relations Dialogue Community —

An Avenue to Building Positive Relationships

By Barbara Moran-Goodrich, CFE

Graphic Design Coordinator Rahath Alam Publishing Manager Laura Fenwick Senior Director of Advertising & Media Solutions Gregory M. Cook Membership & Advertising Manager Sara Williamson Membership & Advertising Assistant Elizabeth Bailey Regional Advertising Managers Kelley Class Carly Wooley Certification Program Director Rose DuPont Communications Manager Jenna Weisbord

Franchising World (ISSN 1041-7311) “Volume 46, Number 9,” is published monthly by the International Franchise Association, 1900 K St., N.W., Suite 700, Washington, D.C. 20006. Subscription rates are $50.00 per year for 12 issues. Periodicals postage paid at Washington, D.C., and additional mailing offices. Single copy price: $5.00. IFA members receive Franchising World as a membership benefit. POSTMASTER: Send address changes to Franchising World at 1900 K St., N.W., Suite 700, Washington, D.C. 20006. When requesting address changes, please enclose mailing label. Please allow 4–6 weeks for the change of address to be fully processed. For advertising information, call: IFA Advertising Department (202) 628-8000. The full text of Franchising World is available in the electronic versions of the H.W. Wilson Company’s Business Periodicals Index. For information call (800) 367-6770; outside the U.S. Call (718) 588-8400. Fax: (718) 590-1617. Copies of Franchising World issues and articles also are available for purchase on 16mm microfilm, 35mm microfilm and 105mm microfiche from University Microfilms Inc., 300 North Zeeb Road, Ann Arbor, MI 48106-1346; (313) 761-4700. Franchising World is indexed in ABI/INFORM database. (800) 626-2823; Fax (502) 589-5572. Franchising World welcomes views and comments from its readers. Correspondence should be addressed to Editor, c/o Franchising World at 1900 K St., N.W., Suite 700, Washington, D.C. 20006. Franchising World reserves the right to edit letters for publication and also reserves the right to refuse advertising. With the publication of Franchising World, IFA is not offering legal, financial or any other professional advice or endorsements. Readers are encouraged to seek advice from professionals in specialized fields before acting on any information published herein. The views and opinions expressed in Franchising World are those of the author(s) and do not necessarily reflect the views and opinions of IFA members or staff. For reprint information contact: PARS International Corp., Phone: (212) 2219595, Fax: (212) 221-1468, E-mail: reprints@parsintl.com, www.magreprints. com. Copyright © 2014 International Franchise Association. Printed in U.S.A.

DEPARTMENTS 6 PRESIDENT & CEO’S COLUMN

22 Due Diligence: Not as Easy as 1, 2, 3 By John C. Draper II

24 Franchisee Engagement and Support: The Keys to Success

By Jack Pearce, CFE

28 Gaining Traction: 5 Steps to Drive Franchise Performance and Profitability

By Eric Stites, CFE

31 Franchise Compliance: A Light at the End of the Tunnel

By Evan Hackel, CFE

34 Positively Memorable Experiences – They’re Not Just for Customers! By Paul R. Segreto, CFE

WE’VE MOVED!

PLEASE NOTE OUR NEW ADDRESS

60 WELCOME NEW MEMBERS!

FRANCHISING WORLD SEPTEMBER 2014

SEPTEMBER 2014

IFA INDUSTRY INSIGHTS

8 People & News Briefs GOVERNMENT RELATIONS & PUBLIC POLICY

12 A New Strategic IFA Initiative: The Franchise Action Network

MULTI-UNIT FRANCHISE INNOVATORS

46 Franchisor Support Includes Best Practices and Training BY JOHNNY COLLINS, BRENT DEGENHARDT, ARMANDO MORALES AND ADRIAN NUÑEZ INTERNATIONAL DEVELOPMENT

BY ERICA FARAGE

14 FranPAC Report Card

48 Negotiating a Master Franchise Agreement — Getting to “Yes”

BY ERICA FARAGE

BY EDWARD (NED) LEVITT, CFE

STATE REPORTS — ADVANCING FRANCHISING

LEGAL

16 2014 – The Year of the Legislative Nor’easters BY DEAN A. HEYL, CFE

51 Privacy, Data, Security and PCI Compliance — Roles of the Franchisor and Franchisee BY LEN MACPHEE

LEADERSHIP

36 Remembering Dennis Wieczorek BEST PRACTICES

38 Strategic Alliances – How to Make Them Work for You BY MAX SCHOTT II, CFE IFA CONVENTION

41 What Happens in Vegas? You Connect, Innovate and Evolve

HONORING AMERICA’S VETERANS

54 Navy Veteran Joel Pellicci Successfully Melds Military and Brand Values and Standards BY KRAIG BAKER EVENTS

56 California Heats up as Franchisors Flock to the West Coast Franchise Expo BY SONIA PERRONE

BY LAURA FENWICK MANAGEMENT & OPERATIONS

43 Record Retention: What to Keep and Where to Put It BY REBECCA MORRIS

IFA’S MISSION The International Franchise Association protects, enhances and promotes franchising. IFA’S VISION IFA: The preeminent voice and acknowledged leader for franchising worldwide. EXECUTIVE COMMITTEE Stephen Joyce Choice Hotels International Chairman Melanie Bergeron, CFE TWO MEN AND A TRUCK Vice Chairwoman Aziz Hashim NRD Holdings, LLC Treasurer Shelly Sun CFE BrightStar Franchising, LLC Secretary Steve Romaniello, CFE Roark Capital Group and FOCUS Brands Inc. Immediate Past Chairman

Jeffrey Tews BrightStar Healthcare of Madison, WI S and J Home Care LLC Franchisee Forum Chairman John Kujawa, CFE McDonald’s Corporation Franchisor Forum Chairman Mark Kirsch, CFE Gray Plant Mooty Supplier Forum Chairman Ex-officio Stephen J. Caldeira, CFE International Franchise Association Pres. & CEO

BOARD OF DIRECTORS Doug Allison PepsiCo

Darrell Johnson, CFE FRANdata

James Anhut InterContinental Hotels Group

Saunda Kitchen, CFE Mr. Rooter of Sonoma County, CA

Jania Bailey, CFE FranNet Franchising, LLC David Barr PMTD Restaurants Susan Black, CFE Super Wash, Inc.

Gordon Logan Sport Clips, Inc. Robert McDevitt, CFE Golden Corral Buffet & Grill

Liam Brown Marriott International

Barry Miller Sylvan Learning Center of Girard, OH

Charlie Chase FirstService Brands

Catherine Monson, CFE FASTSIGNS International

Mitch Cohen Baskin Robbins/Dunkin’ Donuts Bayshore, NY

Tabbassum Mumtaz Apex Restaurant Management, Inc.

Jerry Crawford, CFE Jani-King International, Inc.

Guillermo Perales Sun Holdings, LLC

Ryan Cunningham Javelin Solutions Supplier Forum First Vice Chairman

Karen Powell, CFE Decor & You FranchisEsource Brands International

Carlton Curtis The Coca-Cola Company

Andrew Puzder CKE Restaurants, Inc.

Rocco Fiorentino, CFE Swiss Farm Stores

Todd Recknagel, CFE AM Conservation Group, Inc.

Kathleen Gilmartin Interim HealthCare Inc. Peter Holt, CFE Planet Smoothie/Tasti D-Lite

Michael Seid, CFE CFWshops

Mariana Huberman UPS Store of Washington, DC Franchisee Forum First Vice Chairwoman

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IFA PRESIDENT AND CEO’S COLUMN 6

Franchise Industry Unites to Counter NLRB’s Bureaucratic Overreach THIS MONTH, HUNDREDS OF franchise business

leaders, including franchisees, franchisors and suppliers, will gather in Washington for our annual legislative fly-in, the Public Affairs Conference. While you might think that Congress isn’t doing much, which has resulted in a 14 percent approval rating, there has never been a more critical time to travel to Washington, D.C. and get involved. We have been battling very formidable foes that want to break the franchise model. To the Seattle City Council, to the California State Legislature, organized labor led by the Service Employees International Union have decided that it would be far easier to organize employees of franchise businesses (and reverse the decrease in union membership and revenues) if they could change the basic and time-tested tenants of the franchise business model. The latest example is July’s decision by the National Labor Relations Board’s general counsel to issue complaint, absent settlement, against some McDonald’s franchisees and franchisor McDonald’s USA LLC, alleging that the McDonald’s franchisees and franchisor McDonald’s USA LLC are joint employers responsible for alleged unfair labor practices. In the event that the NLRB ultimately sides with the general counsel and finds the McDonald’s franchisees and franchisor McDonald’s USA LLC are joint employers, this could be a devastating blow to franchised businesses and completely dismantle the franchise model as we know it today. Franchise job growth and new business formation have outpaced non-franchise growth for the past five years, but this positive trend will undoubtedly come to a screeching halt if this NLRB agrees with the general counsel. This decision instantly becomes a candidate for the most egregious bureaucratic overreach and power-grab by a U.S. government agency in recent government history. In one fell swoop, it would rewrite binding contracts and force franchisees, depending on their circumstances, to go out of

FRANCHISING WORLD SEPTEMBER 2014

business, cut jobs and raise prices. It is not just fast food companies that are threatened by this decision; any business that grows and operates using the franchise business model would be at risk. The franchisor is responsible for managing, protecting and growing the franchise’s brand, and the franchisees are responsible for the daily operations of their individual location. Franchisees make all hiring and wage decisions, and own and operate their business separately from operations at corporate headquarters. If franchisors are joint employers with their franchisees, thousands of small-business owners would lose control of the operations and equity they have worked so hard to build. The jobs of millions of workers would be placed in jeopardy and the value of the businesses that employ them would be deflated. This recent NLRB recommendation coupled with the continued, strategically planned state and municipal attacks on the franchise business model by organized labor, will no doubt continue for the foreseeable future, so as an association and as an industry, we need to unite as one consistent and collective voice, moving forward. Attending the Public Affairs Conference Sept. 16-17 will go a long way to get our story out. And, joining the newly launched Franchise Action Network or FAN to mobilize the franchise industry will help us voice our concerns year-round across the country. By joining the FAN, we will unite our voices to convey the critically important message about the power of the franchise business model in every community across the country. Please consider joining us in battling these escalating public policy challenges by signing-up for the FAN today to make your important voice heard! Thank you for your ongoing help and support of the IFA and the franchise industry. By joining together in the FAN today, we can help to ensure that the franchise business model remains a positive driving force within the U.S. economy for many years to come.

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PEOPLE & NEWS BRIEFS PEOPLE

GROWTH Cruise Planners promoted Dan Hicks to vice president of franchise development.

Dan Hicks

Fish Consulting promoted Chad Cohen to senior vice president, Jenna Kantrowitz and Kim Ryan to vice president, Ashley Rodriguez to account director, and Amanda DelPrete and Elayne Sommers to senior account manager, and hired Toby Srebnik as social media director, Claibourne Smith as account manager and Andie Biederman as account executive.

Chad Cohen

Jenna Kantrowitz

Ashley Rodriguez Amanda DelPrete

Toby Srebnik

Claibourne Smith

Kim Ryan

Elayne Sommers

Andie Biederman

Planet Beach promoted David Mesa, CFE, to president of franchise operations.

David Mesa

Red Mango named Craig Erlich vice president of operations. Sport Clips Haircuts named Mark Kartarik president.

Bojangles’ opened its 600th restaurant; it is located in the company’s hometown of Charlotte, N.C. New franchise Burger 21, signed a multiunit franchise agreement to develop three additional restaurants in the Atlanta area. Locations include Buckhead, Cumberland Mall and North Druid Hills areas, with the first slated to open in 2015. Dippin’ Dots, the franchising arm of the iconic flash frozen ice cream maker Dippin’ Dots, has acquired snack franchisor Doc Popcorn, innovator of fresh-popped, kettlecooked popcorn. Based in Boulder, Colo., the company has nearly 100 franchise partners in 30 U.S. states, Japan, Mexico and Puerto Rico. Dunkin’ Donuts signed a multi-unit store development agreement with Wendover Donuts LLC, to develop five restaurants in Greensboro, N.C. The locations will incorporate traditional and combination unit development with sister brand, BaskinRobbins; the first restaurant is scheduled to open in 2015. Executive Care awarded Michael Creatore and Nick Kerpsack franchise rights to open their third location in the Northeast Ohio region. Operations in Canton and Mahoning Valley are underway. Express Employment Professionals awarded its 700th franchise location. Since 2010 the company has grown from 553 franchise locations and sales are up 152 percent. Fish Consulting is celebrating its 10-year anniversary.

Mark Kartarik

Travel Leaders Franchise Group’s promoted Brian Hegarty to vice president of marketing and destinations. Brian Hegarty

Anytime Fitness is the world’s fastestgrowing fitness club for the seventh consecutive year, according to new data released by The International Health, Racquet and Sportsclub Association, which annually issues its “Global 25” rankings as a barometer of the fitness industry.

FRANCHISING WORLD SEPTEMBER 2014

Hilton Worldwide signed an agreement to open eight Hampton by Hilton properties in Latin America, including four in Chile and four in Peru making it the biggest development for the brand in the region in recent years. Mama Fu’s Asian House signed a development agreement with GGICO Gourmet LLC for the United Arab Emirates. McAlister’s Deli celebrated its 25th anniversary this summer and signed an agreement with P&P Westbrook Investments LLC to open three locations in Tallahassee and Panama City, Fla. Pie Five Pizza awarded 18 franchise units to retired Cleveland Indians and University of Florida baseball star Matt LaPorta and his team of business partners. Quaker Steak & Lube signed an area development agreement with Wingnutz LLC to develop four restaurants throughout Central Florida. Red Mango celebrated the opening of its 300th café which is located in Oak Park, Ill. Sky Zone Indoor Trampoline Park, which has more than 60 locations in the United States, Australia, Canada and Mexico, celebrated its 10th anniversary in July. Wingstop, with more than 650 restaurants around the world, has landed in Indonesia opening its first location in Jakarta at the Kota Kasablanka Mall.

(Continued on page 10)

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MERGERS, ACQUISITIONS & ALLIANCES Safeguard, a business services franchise, acquired the assets of Plymouth, Minn.-based QBF, Inc., one of the largest providers of diversified marketing products and services in the Midwest. Snap Fitness puts the pedal to the metal as the primary sponsor for the No. 40 car driven by Landon Cassill in the NASCAR Sprint Cup Series that started June 28 at Kentucky Speedway.

HONORS & AWARDS Doodle Bugs! Children’s Centers, an education-based child care provider, was recently recognized by Pittsburgh Magazine in its “2014 Best of the ’Burgh” list in the Kids and Family category. The franchise was chosen as an editor’s pick for their “doodle differences” and exceeding efforts by typical public and private schools. Childhood friends and Zaxby’s co-founders Zach McLeroy and Tony Townley received the 2014 Franchise Founders Award from the Southeast Franchise Forum in June. The 650-unit quick casual chicken franchise concept is headquartered in Athens, Ga. The pair dreamed up Zaxby’s nearly 25 years ago while shooting hoops in McLeroy’s backyard.

From left, Grant Thornton LLP Partner and Southeast Franchise Forum Supplier Council Chairman Dexter Manning, Zaxby’s cofounder and Exec. Vice Pres. Tony Townley, co-founder and Pres. Zach McLeroy, Firestorm Exec. Vice Pres. and Chief Development Officer Jim Squire and Kilpatrick Townsend & Stockton Franchise Team Chairman Rupert Barkoff.

COMMUNITY OUTREACH CD One Price Cleaners Supports Project Honoring Military Heroes

CD One Price Cleaners is partnering with Fisher House Foundation to raise support and awareness for Fisher House Foundation and two of its houses in Chicago and Minneapolis. The Fisher House program provides a “home away from home” for families of patients receiving medical care at major military and Dept. of Veterans Affairs’ medical centers. The “Heroes of the Neighborhood” program’s collaborators will create a customized photographic flag mosaic as a visual thank you to all U.S. military members and their families. The photos will be combined to create an incredible art piece that forms an image of the American flag. The flag, along with a cash donation, will be presented to Fisher House Foundation, the Chicago Fisher House and the Minneapolis Fisher Houses.

Choice Hotels Partners Mentor Camp for Young Men

For the sixth consecutive year, Choice Hotels International Inc. partnered with the Steve and Marjorie Harvey Foundation for the Steve Harvey Mentoring Camp for Young Men. The annual camp, scheduled around Father’s Day Weekend, targeted 100 at-risk youth who mostly come from homes without regular father figures. Choice Hotels, the largest in-kind donor and one of the founding sponsors of the camp, was represented by Pres. and CEO Steve Joyce who joined celebrity entertainer Harvey in teaching the teens, ages 13 to 17, about maturing into responsible young men and discussed how to reach for the corner office in the business world.

FRANCHISING WORLD SEPTEMBER 2014

Marcoâ&#x20AC;&#x2122;s Pizza Presents $50,000 Check to USA Cares

From Memorial Day, May 26, through Flag Day, June 14, Marcoâ&#x20AC;&#x2122;s Pizza, celebrated 500 Strong, by honoring veterans and military families nationwide and raised $50,000 for USA Cares Jobs Assistance Program. The national nonprofit provides financial and advocacy assistance to post-9/11 U.S. military families. A formal check presentation took place June 14 between the two companies. To celebrate the milestone 500th store, Marcoâ&#x20AC;&#x2122;s locations nationwide have been accepting $1 donations to benefit USA Cares Job Assistance program with the goal of helping 500 veterans find employment. From left, Wilmington, N.C. Mayor Bill Saffo, Marcoâ&#x20AC;&#x2122;s Franchising LLC CEO and Chairman Jack Butorac, Marcoâ&#x20AC;&#x2122;s Pizza Area Rep. and multi-unit franchisee Joe Walker, Marcoâ&#x20AC;&#x2122;s Pizza Pres. & COO Bryon Stephens and USA Cares Corporate Dev. Officer Cindy Good.

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G O V E R N M E N T R E L AT I O N S & P U B L I C P O L I C Y

A New Strategic IFA Initiative: The Franchise Action Network “Politics is a contact sport” - FASTSIGNS International CEO Catherine Monson, CFE BY ERICA FARAGE

he franchise business model is under unprecedented attack by anti-business activists launching a coordinated campaign in cities, states and at the federal level. From discriminatory wage increases in Seattle, and potentially Chicago, to federal regulations that would recast franchisors as employers of their franchisees’ employees, this attack against the franchise industry is like nothing we have ever seen before. To defend the franchise model against these increasing threats, franchise businesses need to unite under a single, unswerving, strong and collective voice on behalf of our remarkable industry.

THE TIME TO MOBILIZE IS NOW Earlier this summer, the IFA board of directors approved a new strategic initiative, the Franchise Action Network, known as FAN, to mobilize and unify the franchise industry. Through FAN, franchisees, franchisors and suppliers are working to educate lawmakers, regulators, key influencers and the public about the crucial economic advantages provided by the franchise business model across the country. Moreover, FAN is helping its members to speak out against those who would seek to weaken the franchise business model.

WHY JOIN FAN? In addition to keeping you in the loop about the latest news affecting franchises in your area, FAN will work to neutralize antifranchising forces, while simultaneously educating policymakers that locally-owned franchise businesses are indeed essential small businesses. As a member of the franchise industry, you know that behind many familiar logos and trusted brands are small-business owners seeking to increase opportunity — not just for themselves — but for their entire communities. By joining the Franchise Action Network, individuals can become a critical part in delivering this message to policymakers in Congress, in the states, and in cities across America. The time to act is now, and we must come together as an industry to do this immediately.

OBJECTIVES FAN’s objectives are as follows: •

Recruit current franchisees, franchisors and suppliers in each state to educate them on public-policy issues;

FRANCHISING WORLD SEPTEMBER 2014

• •

Motivate these individuals to come together for a common industry cause; Prepare and position Franchise Action Networks for legislative activity in the 2015 legislative sessions and beyond.

By launching FAN, the franchise industry aims to seize control of the debate, build our network of grassroots supporters, and educate policymakers and the public about the benefits of franchising.

LOCAL ACTIVITY FAN launched only this summer, but we are already leveraging the voices of our members to address unfair wage hikes in cities such as Chicago and Los Angeles on minimum wage, at the state level in California against a harmful franchise relations bill, and at the federal level on the joint-employer issues. In Seattle, for instance, FAN has been working to educate the public about a proposal that would single out independently owned franchises for an “accelerated adoption” of a minimum wage increase. And in Los Angeles, FAN is getting the word out about a proposal that would increase the current minimum wage by a whopping 70 percent.

WE NEED YOUR HELP At our recent International Franchise Expo in New York City, IFA board member and FASTSIGNS International CEO Catherine Monson, CFE, said it best: “Politics is a contact sport.” The fact is that those who make laws affecting our industry often know very little about how franchising works and how their regulations affect our day-to-day operations. If we want to get our message out there, we have to take the game to them by forming relationships with lawmakers at every level. If you want to ensure lawmakers listen to the franchise community, the most important thing you can do is to become a FAN today by visiting www.FranchiseActionNetwork.com. By joining together in the Franchise Action Network, we can help to ensure that the franchise model remains a critically important part of the overall U.S. economy. n

Erica Farage is senior director, political affairs & grassroots advocacy for the International Franchise Association. Find her at fransocial.franchise.org.

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REPORT CARD Erica Farage is senior director of political affairs & grassroots advocacy for the International Franchise Association. Find her at fransocial.franchise.org.

U.S. Senate: Alexander, Lamar (R-TN).......................................................$5,000 Begich, Mark (D-AK).............................................................$2,500 Blumenthal, Richard (D-CT)..................................................$1,000 Brown, Scott (R-NH-Candidate).............................................$2,500 Capito, Shelley Moore (R-WV-Candidate)..............................$5,000 Cassidy, Bill (R-LA-Candidate)...............................................$5,000 Cochran, Thad (R-MS)............................................................$5,000 Coons, Christopher (D-DE)....................................................$5,000 Collins, Susan (R-ME)............................................................$7,500 Cornyn, John (R-TX)...............................................................$7,500 Cotton, Tom (R-AR-Candidate)...............................................$5,000 Daines, Steve (R-MT-Candidate).......................... ...............$10,000 Donnelly, Joseph (D-IN)........................................................$5,000 Durbin, Richard (D-IL)...........................................................$2,500 Enzi, Michael (R-WY)............................................................$5,000 Gardner, Cory (R-CO-Candidate)...........................................$7,500 Hatch, Orrin (R-UT)...............................................................$2,500 Johnson, Ron (R-WI)..............................................................$2,500 Kaine, Tim (D-VA)..................................................................$2,500 Land, Terry Lynn (R-MI-Candidate).........................................$5,000 Landrieu, Mary (D-LA)...........................................................$5,000 Manchin, Joe (D-WV)............................................................$2,500 Markey, Ed (D-MA).............................................. ............$1,774.56 McConnell, Mitch (R-KY).......................................................$5,000 Pryor, Mark (D-AR)................................................................$5,000 Risch, Jim (R-ID)....................................................................$2,000 Roberts, Pat (R-KS).................................................................$2,000 Rounds, Mike (R-SD-Candidate).......................... ...............$10,000 Rubio, Marco (R-FL)............................................ ...............$10,000 Sasse, Ben (R-NE-Candidate).................................................$1,000 Scott, Tim (R-SC)....................................................................$5,000 Shaheen, Jeanne (D-NH).......................................................$2,500 Tillis, Thom (R-NC-Candidate)...............................................$5,000

FRANCHISING WORLD SEPTEMBER 2014

IFA’s political action committee, FranPAC, supports profranchise, pro-business candidates for U.S. Congress. FranPAC’s current financial support of federal candidates as of early August is reflected in the following “report card.” 2013-2014 Cycle Expenditures: $778,474.56 Republicans: $633,700.00 Democrats: $129,774.56 Other: $15,000

Toomey, Patrick (R-PA)...........................................................$2,500 Udall, Mark (D-CO)...............................................................$1,000 Warner, Mark (D-VA).............................................................$2,000 U.S. House of Representatives: Amodei, Mark (R-NV-02).......................................................$1,000 Barber, Ron (D-AZ-02)...........................................................$3,500 Barletta, Lou (R-PA-11)..........................................................$1,000 Barrow, John (D-GA-12)........................................................$5,000 Benacquisto, Lizbeth (R-FL-19-Candidate).............................$5,000 Benishek, Dan (R-MI-01).......................................................$2,000 Boehner, John (R-OH-08)......................................................$5,000 Bilirakis, Gus (R-FL-12)..........................................................$2,000 Buchanan, Vernon (R-FL-13)..................................................$4,000 Byrne, Bradley (R-AL-01).......................................................$5,000 Cain, Emily (D-ME-02-Candidate)..........................................$1,000 Camp, Dave (R-MI-04)..........................................................$5,000 Cantor, Eric (R-VA-07)......................................... ...............$10,000 Carter, John (R-TX-31)............................................................$2,500 Coffman, Mike (R-CO-06)......................................................$5,000 Collins, Christopher (R-NY-27)...............................................$1,000 Collins, Douglas (R-GA-09)...................................................$7,500 Comstock, Barbara (R-VA-10-Candidate)...............................$2,500 Costello, Ryan (R-PA-06-Candidate)......................................$5,000 Cuellar, Henry (D-TX-28).......................................................$5,000 Davis, Rodney (R-IL-13)...................................... .................$10,000 DeSantis, Ron (R-FL-06).........................................................$3,900 DelBene, Suzan (D-WA-01)...................................................$1,000 DeMaio, Carl (R-CA-52-Candidate).......................................$2,500 Diaz-Balart, Mario (R-FL-25)..................................................$1,000 Dold, Bob (R-IL-12)...............................................................$5,000 Ellis, Brian (R-MI-03-Candidate)............................................$5,000 Ellmers, Renee (R-NC-02)......................................................$3,500

Farr, Sam (D-CA-20)...............................................................$2,500 Fitzpatrick, Michael (R-PA-08)...............................................$2,000 Fleischmann, Chuck (R-TN-03)..............................................$5,900 Fleming, John (R-LA-04)........................................................$5,000 Flores, Bill (R-TX-17).............................................................$5,000 Gerlach, James (R-PA-06)......................................................$5,000 Goodlatte, Bob (R-VA-06)......................................................$2,500 Graves, Samuel (R-MO-06)....................................................$7,000 Griffin, Tim (R-AR-02)............................................................$2,000 Grimm, Michael (R-NY-11)....................................................$2,500 Guthrie, Brett (R-KY-02).........................................................$4,400 Hall, Ralph (R-TX-04)............................................................$1,000 Hanna, Richard (R-NY-24).....................................................$3,000 Hayworth, Nan (R-NY-18-Candidate).....................................$5,000 Heck, Denny (D-WA-10).......................................................$2,000 Heck, Joe (R-NV-03)..............................................................$1,000 Hensarling, Jeb (R-TX-05)......................................................$5,000 Huizenga, Bill (R-MI-02)........................................................$5,000 Hunter, Duncan (R-CA-50)....................................................$1,000 Holding, George (R-NC-13)...................................................$7,000 Hoyer, Steny (D-MD-05)........................................................$2,500 Hudson, Richard (R-NC-08)...................................................$5,000 Jenkins, Evan (R-WV-03-Candidate).......................................$5,000 Jenkins, Lynn (R-KS-02)..........................................................$2,000 Jolly, David (R-FL-13).............................................................$5,000 Joyce, Dave (R-OH-14)..........................................................$5,000 Kelly, Mike (R-PA-03)........................................... .................$2,500 Kind, Ron (D-WI-03).............................................................$5,000 Kline, John (R-MN-02)...........................................................$7,000 Latham, Thomas (R-IA-05).....................................................$2,500 Lipinski, Dan (D-IL-03)..........................................................$5,000 Luetkemeyer, Blaine (R-MO-09)............................................$2,500 Matheson, Jim (D-UT-04).......................................................$5,000 McCarthy, Kevin (R-CA-23)....................................................10,000 McCaul, Michael (R-TX-10)...................................................$2,500 McMorris-Rodgers, Cathy (R-WA-04).....................................$5,000 McSally, Martha (R-AZ-02-Candidate)...................................$5,000 Meehan, Pat (R-PA-07)...........................................................$5,000 Mullin, Markwayne (R-OK-02)...............................................$2,500 Mulvaney, Mick (R-SC-05).....................................................$4,500 Murphy, Patrick (D-FL-18)......................................................$1,000 Murphy, Tim (R-PA-18)...........................................................$5,000 Neal, Richard (D-MA-01)......................................................$5,000 Nunes, Devin (R-CA-22)........................................................$2,500 Olson, Peter (R-TX-22)...........................................................$1,000 Paulsen, Erik (R-MN-03)........................................................$2,500 Poe, Ted (R-TX-02).................................................................$6,000 Pompeo, Mike (R-KS-04).......................................................$5,000 Price, Thomas (R-GA-06).......................................................$5,000 Radel, Trey (R-FL-19).............................................................$1,000 Reed, Tom (R-NY-23).............................................................$2,000 Renacci, James (R-OH-16).....................................................$5,000 Roby, Martha (R-AL-02).........................................................$2,500 Rokita, Todd (R-IN-04)...........................................................$5,000 Roskam, Peter (R-IL-06).........................................................$5,000 Ross, Dennis (R-FL-15)..........................................................$3,500

Rothfus, Keith (R-PA-12)........................................................$5,000 Runyan, Jon (R-NJ-03)............................................................$2,500 Ryan, Paul (R-WI-01).............................................................$5,000 Scalise, Steve (R-LA-01).........................................................$1,000 Schock, Aaron (R-IL-18).........................................................$5,000 Shimkus, John (R-IL-15).........................................................$2,500 Shuster, Bill (R-PA-09)............................................................$1,000 Simpson, Mike (R-ID-02).......................................................$5,000 Smith, Jason (R-MO-08).........................................................$2,500 Southerland, Steve (R-FL-02)..................................................$1,000 Stivers, Steve (R-OH-15)........................................................$2,500 Swalwell, Eric (D-CA-15).......................................................$2,000 Terry, Lee (R-NE-02)...............................................................$1,000 Tiberi, Patrick (R-OH-12)..................................... ...............$10,000 Upton, Fred (R-MI-06)......................................... ...............$10,000 Van Hollen, Chris (D-MD-08)................................................$1,000 Wagner, Ann (R-MO-02)........................................................$1,000 Walberg, Tim (R-MI-07).........................................................$5,000 Walden, Greg (R-OR-02)..................................... .................$5,000 Walorski, Jackie (R-IN-02).....................................................$2,000 Walters, Mimi (R-CA-45-Candidate)......................................$1,000 Webster, Daniel (R-FL-10)......................................................$2,500 Wilson, Joe (R-SC-02)............................................................$2,500 Yoder, Kevin (R-KS-03)...........................................................$2,500 Young, Todd (R-IN-09)...........................................................$5,000 Leadership PACs: AmeriPAC..............................................................................$5,000 Ann PAC................................................................................$1,000 Bluegrass PAC.......................................................................$2,500 COATS PAC...........................................................................$2,500 Continuing A Majority PAC....................................................$5,000 ERICPAC.............................................................. ...............$10,000 First In Freedom PAC.............................................................$1,000 Freedom & Security PAC........................................................$5,000 The Freedom Project..............................................................$5,000 Majority Committee PAC.......................................................$5,000 New Pioneers PAC................................................................$5,000 Orrin PAC..............................................................................$1,000 People for Enterprise Trade and Economic Growth PAC.........$2,500 Pioneer PAC........................................................ ...............$10,000 Prosperity PAC..................................................... ...............$10,000 Rely On Your Beliefs Fund.....................................................$5,000 Republican Operation to Secure and Keep a Majority..........$10,000 PAC to PAC: American Society of Association Executives (APAC)...............$5,000 Blue Dog PAC..................................................... .............. $10,000 Democratic Congressional Campaign Committee................$15,000 National Republican Congressional Committee... ...............$30,000 National Republican Senatorial Committee......... ...............$30,000 New Democrat Coalition.......................................................$5,000 Republican Party of Michigan................................................$2,500 U.S. Travel Association PAC................................. ................$10,000

FRANCHISING WORLD SEPTEMBER 2014

S TAT E R E P O R T S — A DVA N C I N G F R A N C H I S I N G

2014 – The Year of the Legislative Nor’easters Bad ideas die hard and the threshold to introduce them is exceptionally low. BY DEAN A. HEYL, CFE

FRANCHISING WORLD SEPTEMBER 2014

he Weather Channel describes Nor’easters as some of winter’s most ferocious storms. They are known for producing heavy snow, rain and oversized waves that crash onto Atlantic beaches, often causing beach erosion and structural damage. Wind gusts associated with these storms can exceed hurricane force in intensity. In other words, they are a lot like the franchise legislation we saw in the Northeast region of the nation this past year. A blizzard of harmful franchise relationship bills hit Maine (Legislative Document 1458), Massachusetts (Senate Bill 73), New Hampshire (House Bill 1215) and Pennsylvania (House Bill 1620). Fortunately, none of these legislative measures made it to the desks of any governors. After myriad efforts put forth by the International Franchise Association, its coalition of members and like-minded business groups, the respective legislatures in these states recognized that the bills were solutions in search of problems that didn’t exist. In addition to blustery franchise relationship legislation, we saw threats to the franchise model itself in two additional states. In Connecticut, IFA was joined by franchisors, franchisees and other business groups to defeat House Bill 5069, which would have required franchisees to pay their employees more than the state’s minimum wage and would have assessed franchisors a surcharge of 30 percent of that amount payable to the franchisees’ employees. Despite numerous statements from those opposed to the legislation, the bill’s sponsor was indifferent to the fact that franchisors do not control franchisees’ hiring decisions. Thankfully, a subsequent committee recognized the W-2s that (Continued on page 18)

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(Continued from page 16)

franchisees’ employees receive come from the franchisee and not the franchisor — thus abrogating the bill sponsor’s position. Other legislation clouding the franchise model was introduced in the Empire State. New York Senate Bill 6455 and Assembly Bill 9386 are unlikely to move forward this year due to strong opposition by IFA. If enacted, these bills would classify franchisees as large employers and require them to pay $15 dollars per hour despite their size, solely due to the fact that they are affiliated with a franchise brand. Moreover, under these bills both franchisors and franchisees would be jointly liable for the payment of the franchisees’ employees.

2015 NORTHEAST LEGISLATIVE FORECAST Granted, the 2014 legislative season was a rough one for many Atlantic states; 2015 is shaping up to be just as active. Bad ideas die hard and the threshold to introduce them is exceptionally low. However, IFA has positioned itself and built up strong coalitions of franchisees, franchisors and like-minded business groups, in addition to a network of legislative champions to weather whatever storms come our way. n

Dean A. Heyl, CFE, is vice president of state government relations, public policy & tax counsel of the International Franchise Association. Find him at fransocial.franchise.org.

IFA Franchisees of the Year! Congratulations to Home Helpers and Direct Link of Southeast, Indiana! Mike and Becky St. Clair named IFA Home Helpers Franchisee of the Year. As successful owners, Mike and Becky consistently deliver: • an expanded network of care for the community, having developed multiple territories. • innovative service oﬀerings, pioneering new business segments and services. • an impressive track record of awards, including the 2014 Home Helpers Presidents Award and the 2012 Home Helpers Pioneer Award. • 7 years of experience serving their community.

1 (800) 413-4899 | HomeHelpersHomeCare.com Home Helpers of Southeast, IN | Each office is independently owned and operated.

FRANCHISING WORLD SEPTEMBER 2014

FEATURES

FRANCHISE RELATIONS DIALOGUE COMMUNITY — AN AVENUE TO BUILDING POSITIVE RELATIONSHIPS There are many educational sessions, programs, guides and articles that have been developed over the years by leaders within the franchise community. BY BARBARA MORAN-GOODRICH, CFE THE REL ATIONSHIP BET WEEN THE franchisor and franchisees within a system is greater than any normal business relationship you would have with a supplier or a business account. The franchisor-franchisee relationship is much like a marriage. There is a courtship between the parties, an offer of intent to join together, the preparation for the commencement of the relationship, and the overall ceremony joining the two parties in a long-term commitment with the intention to work together following a proven business system. And as with any marriage, there is an extensive process to ending the relationship should one or both parties desire. In fact, when ending this relationship, you hope that it will go smoothly; however, sometimes it can be just like a difficult divorce, which creates stress on everyone involved. This is why the relationship you develop between one another is vital to the overall success of the relationship and your system.

CULTIVATING THE RELATIONSHIP Establishing and maintaining positive relationships within a franchise system takes a sustained effort. It can not only be arduous at times, but also overwhelming. Knowing where to turn for advice and information on cultivating positive franchise relationships is a key component of the equation.

One of the most significant benefits of being a member of the International Franchise Association is the ability to access a body of members that collectively possess a wealth of varied experiences and knowledge. Through your IFA membership, you have the ability to network with your peers and to share and benefit from each other’s past experiences and knowledge.

IFA RELATIONSHIP TOOLS That is why I consider the tool that has been recently launched to be the most valuable accomplishment that has the power to change how we obtain information between members. With this tool we have the ability to achieve the goals that we have all strived for in having successful, healthy relationships with our franchisees. The association’s Franchise Relationship Committee, in conjunction with several IFA board members, oversaw the development of a member-to-member communication tool within FranSocial’s web pages, fransocial. franchise.org, specifically about enhancing relationships. This tool is the Franchise Relations Dialogue Community to which all IFA members are linked. All we have to do is to utilize it as a resource for questions, sounding board, feedback provider to others and a point of access to the library of programs and guides that had been on the IFA website. (Continued on page 20) FRANCHISING WORLD SEPTEMBER 2014

(Continued from page 19)

In addition to this amazing tool that has been developed to enhance our ability to communicate with each other, but also access information on relationship building, there are other programs, guides and tools to provide assistance. Highlighted here are just a few of those tools that are available to IFA members now in the Franchise Relations Dialogue Community located in FranSocial. •

•

Let’s start with what is available in a downloadable format that can be implemented in your system or even communicated to your team members. Within this library/resource center is a guide called “Effective Development of a Franchise Support Organization.” This text was developed with the intent of helping franchisors develop an effective operational support system within their organizations. The information that is covered within this guide is invaluable and covers topics about franchise support principles, basic elements of support, support standards, goals, objectives and measurements of the support organization. In addition, this guide also provides an appendix of sample support forms and letters that can be implemented within a system. Another informative guide that has been developed for the IFA is the “Successions Planning and Transfers Handbook.” It was created to be used interchangeably, by either a franchisee or franchisor, as a guide to help in planning for the eventual exit from your business. This guide explains why a succession plan is needed, how to develop the plan along with detailed information on the sale and transfer of a franchise. The detail within the sale and transfers section is broken into steps ranging from selling to an outsider to marketability of the franchise business, valuation methods, selling to an employee and the importance of establishing a transfer policy within a system. A program that has been developed by the Franchise Relations Committee for IFA members is “The ABCs of Establishing a Mentorship Program for Your Franchise System.” This guide can be downloaded and implemented easily within any franchise system. The areas covered define mentoring and its benefits, the role of the operations department within the program, what it means to be a mentor and what it means to be a protégé. In addition to this program outlining the roles and responsibilities of the participants, it also provides a breakdown of areas in which the protégé may need assistance along with the necessary forms and templates to be utilized within the program.

FRANCHISING WORLD SEPTEMBER 2014

•

In addition to the written materials, you can access PowerPoint presentations such as “Getting Franchisees Engaged, Productive and Profitable,” as well as “Franchise Relations in Action,” “Crises Management” and “Social Media Risk,” which were educational sessions and summits that had been conducted by the Franchise Relations Committee. And another source of information that we have compiled within this library is an extensive collection of past Franchising World articles that are relevant to establishing and nurturing positive relationships within a franchise system.

•

One final, but important source within IFA regarding tools that drive positive franchisee-franchisor relationships is the Certified Franchise Executives™ program. The mission of the program is to enhance the professionalism of franchising by certifying the highest standards of quality training and education. The program offers a wide range of educational sessions for franchise executives to learn and to grow professionally. With the extensive collection of classes, forums and educational sessions available through the CFE, there is sure to be a focus within the curriculum that you will find that drives positive franchisee-franchisor relationships. In fact, the Franchise Relations Committee has been actively working with the ICFE in developing accredited educational sessions focused on that specific topic, such as the ICFE Special Session held in 2013 on Franchise Relations in Action and the Webinar being held this month on Successions and Transfers.

I have only scratched the surface of the available tools that we as members of the IFA can access to drive healthy, positive franchisee-franchisor relationships. There are many educational sessions, programs, guides and articles that have been developed over the years by leaders within the franchise community. Now we have the most beneficial communication tool of all within FranSocial. The community is solely dedicated to our being able to quickly ask questions, share information, ideas and data on enhancing, improving and driving positive, healthy franchise relations within our systems. What more could we ask? Why are we waiting? Let’s log on and start sharing. n

Barbara Moran-Goodrich, CFE, CEO and co-founder of Moran Family of Brands, serves as chairwoman of the International Franchise Association’s Franchise Relations Committee. Find her at fransocial.franchise.org.

FEATURES

Due Diligence: Not as Easy as

1, 2, 3

Due diligence calls for serious attention to concept economics, leadership, product offering and the franchise disclosure document. BY JOHN C. DRAPER II HERE ARE SOME FIRST steps I’ve used in developing my businesses that will help experienced franchisees and multi-unit

franchisees to choose the best concept for them. These steps include giving serious attention to such areas as concept economics, leadership, product offering and the franchise disclosure document. Concept Economics. You have to ask yourself what is the best use of capital. Given the change in the economic landscape, most new concepts are in the fast casual segment. And in most cases the fast casual segment is more in line with today’s consumer. In our process we look for concepts that have a clearer picture of profitability which is a lot different from an old philosophy that drove our capital toward the mature QSR space. Today’s fast casual segments can offer a three-to-one (sales vs. investment) which is closer to the matrix we like to operate within. This comparison gets us closer to profit, provides the ability to spread risk, and allows us to use smaller portions of leverage. The process of elimination starts here. If a brand cannot measure up to this standard at the time of review, we simply move on to the next. The required square footage should be taken into consideration. A smaller square footage allows flexibility in available real estate, but most importantly lends itself to a smaller labor force that, in turn, lends itself to better economics. Leadership. The knowledge base of those in charge is a critical aspect to consider. Who’s behind the brand? Is this a start-up with little experience? Is this an off-shoot from a mature brand? Or is this a well-funded high growth machine? Brands that are well funded by larger companies are in the position to adapt and make changes when necessary. Take a close look at real estate, marketing and construction departments. Knowing the leadership and financial health of the company is a key component in your deliberations. Real Estate. There are three things to consider when evaluating real estate: the development rights, the development schedule and the real estate selection and approval process. 1. Brand development rights are assigned differently depending upon the brand. Your development rights can be calculated by ZIP code, households or by city/state boundaries. It is important to know how your brand calculates your development rights. We typically conduct a broker search for real estate prior to specific development right discussions. Make sure to understand what your rights include before negotiating any other points of the potential deal. Brands (although they might not admit it), will sell rights to areas that potentially are not developable based on real estate inventory. 2. Development schedule gives you the time frame in which you must sign a lease or develop a restaurant. This can be critical in understanding what is needed in your upfront capital and how you should structure your finances. It is also important to understand the flexibility of this schedule as to not lose your investment. 3. The real estate selection and approval process can be critical to your development rights and schedule. In addition to our pre-screening of territories with our dedicated broker, we also like to test the water in terms of a real estate developer’s appetite for the brand or if we can get deals done. However, the most important factor here is the selection process. There are several ways sites are evaluated. Brands can potentially assign you a preferred broker

FRANCHISING WORLD SEPTEMBER 2014

in your designated territory or they can allow you to hire your own broker and use him in the deal flow process or they could also find sites for you with no franchisee inclusion. The most preferred of these, of course, is to have the ability to hire your own broker. However, preferred brokers can be something of an advantage if they understand your given market, so don’t walk away yet. The last thing to consider is how the sites are approved. Seasoned real estate departments may have the authority and flexibility to approve sites, but also must have the foresight to understand the franchisee’s knowledge of the territory. Will these sites be approved in the field? Are your sites approved through some form of committee vote? Be careful to ask these questions because this could determine the overall success of your development. Marketing. Social media is a big part of today’s marketing strategy. It is important to consider the relevance of your brand or its connection to today’s consumer. We ask ourselves such questions as: How fluid is the message from website to app to social marketing platforms? How young (or cool) is the marketing department? What tools do they use for branding and marketing of their concept? This part of the evaluation is not a deal breaker in most cases, but you need to know what support you have in the fight against all the new concepts. Great companies will be in tune to what their consumers’ needs are today and in the future. Construction. Knowledge of the construction department lends itself to a better investment. What you are looking for in a construction department is a professional who

understands the process. More knowledge makes for easier maneuvering around construction design flaws or through delicate municipalities. Knowing that you have a resource base to refer to during the already challenging construction phase of your development gives that brand an “up” in your due diligence process. Other questions you should ask: What is the build out time/ construction time? How much flexibility will you have in the selection of vendors or contractors? Product Offering. Consistency. Consistency. Consistency. How simple is the product? How difficult is the production process? In this very competitive fast casual segment you must have a great product for a reasonable price and most of all must be consistent to continue to maintain its market share. Review the FDD! The franchise disclosure document contains valuable information on 23 points of information. Whether you are a first-time or longtime franchisee, always review items 1, 3, 5, 7, 11, 15 and 19 of the document. n

John C. Draper II is managing partner of Cottrel Coliseum Group LLC with more than 16 years of retail and food management experience managing multiple brands that have included Auntie Anne’s Pretzels, Burger King, Coffee Beanery, Haagen-Dazs and Pizza Hut. Independently, he is working on a development agreement with Wingstop and recently opened the third store as part of his aggressive instate expansion plan that includes 28 locations over seven years, and four over the next 12 months. Soon, He will also be closing on a three state development deals with Pie Five. Find him at fransocial.franchise.org.

Perkins Coie “Best in Class” Value Chain The Competitive Advantage for Franchise Systems

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FRANCHISING WORLD SEPTEMBER 2014

FEATURES

Franchisee Engagement And Support: The Keys to Success The industry is just beginning to truly understand their significance. BY JACK PEARCE, CFE

WHAT IS TRENDING? During the International Franchise Association’s recent annual convention in New Orleans, there were four key “takeaways” identified by the attendees: franchisee engagement, franchise support, social media and international development. The latter two topics seem obvious since international markets have been leading franchise growth for years and social media seems inescapable in touching many aspects of both our personal and business lives. Without much analysis it’s easy to see why these two topics are on the short list of what is trending in the franchise industry today. When did the subjects of franchisee engagement and franchise support rise to the status of top-of-mind awareness? Franchise support is acknowledged by most in the industry as a “best practice” and a fundamental operating principle. But now support seems to be joined at the hip with the relatively new topic of franchisee engagement. Exactly what does this new term mean and why is it so important to both franchisees and franchisors?

WHAT IS FRANCHISEE ENGAGEMENT? If you rely on a dictionary to define engagement relative to the franchise industry, it is difficult on the surface to find a meaningful interpretation. But if you read between the lines, you might find the following interpretations: 1. Agreement to marry. Isn’t a franchise agreement similar to a marriage, dedicating each to the other, taking vows to honor and respect in a variety of ways? 2. Commitment to involvement. Both franchisee and franchisor make a commitment to interact with each other, to take part in the activity of franchising, to be present. 3. Short-term job. Whether in the context of the franchise agreement term or relative to the view of a franchise as an investment, engagement lasts for the term of the agreement and then it’s over. 24

FRANCHISING WORLD SEPTEMBER 2014

4. Military operation. Mostly viewed in the negative context of a battle, but the franchise engagement can also be viewed as simply an encounter between two parties. 5. Active or operational state. Engaging the inner workings of a machine is easy to imagine and it is not a stretch to see the same engagement between franchisee and franchisor coming together in an active and operational state. Take the definitions above, put them all together and what you end up with is a functional relationship between two parties.

THE FRANCHISE RELATIONSHIP Very simply, the franchise relationship between franchisee and franchisor typically begins and ends with an agreement. Many different versions of a franchise agreement are used in the industry today and in many cases a very successful franchise organization may employ an almost identical agreement to one used by a struggling or failing franchisor. Why is one organization very successful and another failing when the key relationship document they each use is nearly the same? The answer is that the success of the franchise relationship is not simply based on the quality, balance or fairness of its franchise agreement, but possibly on other more important elements. As was suggested by attendees to last year’s IFA convention, two of those critical elements may very well be franchisee engagement and franchise support. How, exactly, do these two elements come into play and why do they have such a dramatic impact on the overall success of a franchise organization?

ENGAGING FRANCHISEES To truly engage and support franchisees there needs to be an atmosphere or culture conducive to the development of strong franchise relations. This culture typically begins at the top of the organization with the founder or chief executive and must (Continued on page 25)

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(Continued on page 24) then filter down through every facet of franchise operations. The foundation for this type of culture and relationship typically includes the following components: Franchise Relations • Two-way communication is essential. • Constructive, honest and open feedback leads to ongoing development. • Trust is essential; all parties must feel free to speak their minds. • Alignment of goals equals mutual benefits. • Transparency is important for the difficult process of allocating limited resources. Company Culture • To set the tone, the “you win, we win” culture begins with individual unit profitability. • Re-investing in the business model is a sign of franchisor commitment. • Open communication creates transparency and promotes trust. • A franchisee-centric attitude which asks “Does it drive sales at the franchisee level?” • Support, support, support.

THE TOOLS OF ENGAGEMENT Once the winning culture has been deeply rooted into the organization and a foundation of strong franchise relations has been built, then it is time to effectively execute the tools of engagement. Most franchise organizations use a common set of tactical support methods, yet their success will depend greatly upon the quality and depth of the relations and culture described above. Here is a short list of the common tools of engagement deployed by many franchise companies: • CRM systems. The franchisor tracks all franchisee communications to promote consistency, accuracy and fulfillment. • Two-way communications: Monthly individual phone contact, frequent operations and marketing bulletins, robust email discussions, webinars and an “always available” phone policy for all staff and management personnel. • Training, coaching and counseling. “Grand Opening” training, ongoing educational programs for franchisee and staff, business management coaching and confidential counseling for franchisees with special circumstances. • Mentor programs: Very popular among successful franchise organizations, peer-to-peer mentoring is highly effective at increasing maturity and success levels in new franchisees, plus it supports motivational and problem-solving goals. • Convention: This is the most fundamental, longstanding and sound investment made by any franchise company. Primary convention benefits include learning new concepts, building relations with fellow franchisees, increased motivation to succeed and improved camaraderie among all participants. • Franchise support. The most essential of all engagement tools and according to attendees at the 2014 IFA Convention, one of their most important “takeaways.” 26

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WHY FRANCHISE SUPPORT IS SO IMPORTANT Every franchise organization does it and depending on the business concept, just exactly how support is done can vary in hundreds of different ways. In general, franchise support is the mechanism by which the intellectual property of the franchisor is transferred to the franchisee for the purpose of replicating the success of the business model. It is not difficult then to understand why strong franchise relations and a positive culture are synonymous with support success. A good source of reference for a strong support model can be found in the IFA Handbook, “Effective Development of a Franchise Support Organization.” It breaks down the model for support into two basic levels, organizational and operational. On an organizational level, the discussion is about support principles like the relations and culture discussed above. On an operational level the discussion turns toward tactics and methods. Simply, the tactics and methods used for franchise support usually fall into just three major categories. Some of those typical methods found in each category are: Field Support • Site selection • Grand opening support • On-site operations training • Key performance indicator coaching and consulting • Business management/financial review • Compliance visits Home Office Support • Collateral marketing materials • Training classes • Preferred vendor negotiations, contracts and support • Online or “help desk” support services • Intranet systems, electronic bulletin boards, discussion forums, etc. Other Support • Franchise advisory council • Mentor programs • Convention • Regional meetings A company’s winning culture sets the tone for driving the mutual success of all parties and franchise relations are made easy by frequent and constructive communications, by a strong foundation of trust and by the effective operation of a well-trained support organization. Taken together, it is easy to see why franchisee engagement and support are truly two of the most important keys to franchise success. n

Jack Pearce, CFE, is executive director of franchise relations for Annex Brands Inc., a 450-plus-unit franchise organization. He serves on IFA’s Franchise Relations and Marketing and Technology committees. Find him at fransocial.franchise.org.

IFA SUPPLIER FORUM SPOTLIGHT

A Message to Our FRANFriends: Thank You for a Great 25 Years!

I have been privileged to be CEO of FRANdata for nearly 15 years. There has been tremendous change to the business model during that span of time. What haven’t changed FRANdata’s standards of integrity and objectivity, which I attribute entirely to the professionalism and dedication of the great team around me. I’ve also been honored to work with some of the best minds in franchising. Your willingness to share information, experiences and knowledge and your desire to seek answers that lead to improved performance have allowed FRANdata to serve such a central role. For this I offer my sincerest gratitude and I look forward to an exciting future. Darrell Johnson, CFE, CEO

From the first UFOC collected 25 years ago to the research and consulting projects of today, FRANdata has built its business from a culture of integrity and objectivity to help the franchise community grow and improve.

emember the term UFOC? We started as a regulatory document collection company but soon client inquiries started coming, asking us to measure their performance against their peers. We became a data company and quickly grew into a data analysis company, dissecting and analyzing data into understandable pieces of strategic and tactical information. In the mid-1990s we were proud to be commissioned by the IFA to create one of the earliest attempts to analyze the franchise industry as a whole, called the “Profile of Franchising” report. As we rolled into the following decade, we expanded our analysis capabilities into a more expansive research company. While we were built on the foundation of information from thousands of UFOCs/FDDs, we reached beyond franchise regulatory information to other types of franchise information relevant to the industry. As part of that growth, we launched the Franchise Registry to help the franchise industry gain better access to capital. Forty thousand FDDs and more than 10,000 franchisor and supplier clients later, the franchise community has embraced our robust analysis and advice. This has allowed us to evolve into our role as industry analysts and consultants who are capable of objectively addressing franchise business model performance. Along the way we developed analytical tools to correctly measure the right outcomes and decipher the causes that lead to better performance. We are taking a central role in developing performance standards around particular areas of the franchise model and setting the bar based on those standards. Some of these standards have found their way into common usage, such as continuity rates, true failure rates, and time to break even, which the lending community obtains in the form of the Bank Credit Reports. Many more standardized measures are coming across unit, system and franchisor performance.

This is an exciting time in the industry and at FRANdata. I am honored to lead the company at a time when customer demand for business intelligence and capital access services is expanding at a rapid rate. FRANdata is a result-oriented, thoughtful and visionary company. Our proprietary databases, braintrust and best-in-class client base continue to raise the level of sophistication in franchising. Through my time at FRANdata, I have seen our clients continuously challenge the way they do business, stay open to new ideas and welcome game-changing thinking. Edith Wiseman, President What gets me excited about working at FRANdata is the sheer variety of client needs that we get to cover. After eight years with the company, you could assume that projects would become repetitive but what I’ve found is that each client is very different and so our approach to each is highly customized. I am proud to have been a part of FRANdata’s remarkable growth in analytical and strategic capabilities from years ago to today. My team breathes life into data and converts them into powerful decision-making tools for our clients. It is inspiring to me to see us make a difference for all types of companies, from start-ups to Fortune 50 firms, and I hope to see this continue for years to come.

SU PP FO LIE RU R M

Peter Schwarzer, Director of Research

Having worked as a franchisee, franchisor and area developer, I’ve been lucky enough to have experienced franchising from most perspectives. What drew me to FRANdata is the opportunity to work with a unique perspective that shines a spotlight on the franchise industry as a whole, FRANdata being one of the few organizations that has the capability to do so in this magnitude. We are able to “see the forest” and thereby let each of our franchisor clients understand where they currently stand and where there is room to grow.

Eric Simon, Senior Business Intelligence Advisor 

FEATURES

GAINING TRACTION: Steps to Drive Franchise Performance and Profitability

Creating a culture of transparency. BY ERIC STITES, CFE HAVING A STRONG CULTURE of transparency is critical for

the long-term success of your franchisees and your system as a whole. Franchisees can easily get distracted as their business grows, which will ultimately stall their growth. Being 100 percent transparent as an organization will keep you and your franchisees laser-focused on things that really matter. Here’s how.

STEP 1 — FINANCIAL BENCHMARKING Being transparent requires accurate financial benchmarking, which starts with a standard chart of accounts. This may seem simple, yet it is amazing to me how many brands don’t require their franchisees to use a standard chart of accounts within their accounting system. Once you have established a standard chart of accounts, you will need to start collecting financial data, and you need to go deep. Top-line revenue reporting for royalty calculations is not enough. The best franchises collect full profit and loss data, as well as balance sheets from their franchisees on a monthly basis (or more often). This will give you a detailed view of the true financial health of your system. For brands that have never collected and shared financial data, there can be some initial pushback from franchisees. The best way to overcome this is by showing franchisees just how powerful financial benchmarking can be in helping grow their business. Create a franchisee task force to help advise you on your benchmarking program and establishing the key performance indicators that will be reported. Agreeing on the most important KPIs will be the next challenge. Set a goal to come up with a short list of KPIs, and 28

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be sure to include a few non-financial metrics as well (customer counts, marketing/sales conversion rates, customer satisfaction, etc.) Too much financial information can be just as bad as having too little, so limit your focus. “When everything is a priority, nothing is a priority,” explains Mary Kennedy Thompson, CFE, Dwyer Group executive vice president and Mr. Rooter president, who recommends no more than 10 to 15 KPIs. Sharing the data across your network in real time, with intuitive dashboard reporting that compares franchisees by region, tenure and performance should be your primary objective. That said, it’s important to realize not everyone will have the same level of comfort digesting the data. Teaching franchisees how to read the information, and coaching them on how to manage KPIs to drive their business will be an ongoing process.

STEP 2 — SET REALISTIC EXPECTATIONS FROM DAY ONE

Many franchisees start their business with unrealistic financial expectations. Some of the blame falls on optimistic salespeople who pitch best-case examples of top performers, rather than grounding candidates with most likely scenarios. With unrealistic expectations, the franchise relationship is doomed from the start. One way to overcome this is with a detailed Item 19, showing gross and net figures. Illustrate to candidates exactly how your system performs for the average franchisee. East Coast Wings & Grill, led by a master of unit economics, Pres. and CEO Sam Ballas, CFE, offers a great example of

tracks all their KPIs and business ratios, and helps franchisees identify when they get off track. Thompson says the tool “shows franchisees exactly where they are today, and where their business is going to be in the future.” It is a powerful way to show franchisees how their efforts directly impact their business value.

what a good Item 19 looks like. Theirs includes system-wide average/highs/lows for net sales, cost of goods sold, lease, marketing, operations, payroll, royalties and net income. Every Item 19 should be this detailed. Lastly, don’t assume candidates will read and understand your Item 19. Walk them through your financials in detail. Talk about average ramp-up time frames, and educate candidates about paying off debt, re-investing in their business and normal “take-home” income.

STEP 4 — ACTION PLAN Have your franchisees boil down their vision into a quarterly action plan. “Traction: Get a Grip on Your Business Traction,” a book written by Gino Wickman, does exactly that in a step-by-step format. Wickman’s simple yet genius tool, Vision/Traction Organizer, will bring clarity to the key priorities of any business. Having a clear vision and a detailed plan will dramatically improve your franchisees’ success. PostNet International Franchise Corp., BrightStar Franchising LLC, Moran Family of Brands and ZOUP! Fresh Soup Co. are just a few brands using “Traction” (and companion book “Get A Grip: How to Get Everything You Want from Your Entrepreneurial Business”) to push their businesses forward.

STEP 3 – BIG PICTURE VISION Understanding the personal goals of franchisees is critical to coaching them to long-term success. This exercise should begin during discovery day. Ask them to develop a long-term “vision plan” and present it to your team and other candidates. It should look ahead 10 years and include business and personal goals, as well as shorter-term milestones. They should include the critical factors that will help them achieve each milestone. Mr. Rooter uses a performance enhancement tool to help guide franchisees. It’s a detailed worksheet that projects forward 10 years, looking at their income statement, net income, debt repayment, business reinvestment, wealth contribution, asset accumulation, personal income and estimated business value based on typical resale multiples. It

STEP 5 — PEER ACCOUNTABILITY Even the most focused, well-intentioned franchisee can get off track. One of the best ways to keep them on track (Continued on page 30)

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(Continued from page 29) is through peer performance groups. Franchisees are likely to follow the advice of their colleagues, and the inherent pressure and competitiveness spurred by these groups will kick performance into high gear. Strangely, two-thirds of franchise brands don’t offer formal performance groups based on our research. Still, categoryleading brands such as Home Instead Senior Care and TWO MEN AND A TRUCK credit franchisee performance groups as a major differentiator. Obviously franchisees can form informal performance groups on their own (and they often do), yet having a formal performance group program will help encourage greater participation across your system, especially for franchisees who need them the most. Rolling out franchisee performance groups isn’t difficult or expensive. Here are several tips to make yours successful. •

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Ask your franchisee advisory council to help develop your performance group program. If you don’t have an FAC, simply ask six franchisees to volunteer to be the first group. The most effective performance groups are always on the smaller side (six to eight people). Franchisees should be grouped with such similar franchisees considering such factors as business size, tenure, geography, single-unit versus multi-unit, etc. Start with groups being led by a corporate executive or a professional facilitator and migrate to franchisee-led after the first year. Review IFA’s Supplier Forum members at www.franchise.org for suppliers

FRANCHISING WORLD SEPTEMBER 2014

•

specializing in financial benchmarking and facilitating franchisee performance groups. Group meetings can vary in length and frequency. Some of the best I’ve seen meet quarterly for a full day with some sort of social activity on either end. Meetings can be hosted by a franchisee to reduce costs, and the meeting host should be rotated. Meetings should all have a formal agenda and include a full review of KPIs, financial statements and current challenges. Meetings should conclude with stated objectives, which will be reviewed at the beginning of the next meeting.

Rolling out performance groups across your system will take some time to perfect, but the benefits will be tremendous. Start small and adjust things as you go. Once you’re comfortable with the way the program has developed, require new franchisees to join immediately upon opening. This will help ensure they get the best possible start and develop a habit of peer accountability early. n

Eric Stites, CFE, is CEO and managing director of Franchise Business Review and serves as a member of the IFA Franchise Relations Committee. Find him at fransocial.franchise.org.

FEATURES

FRANCHISE COMPLIANCE: A Light at the End of the Tunnel

For a brand to be effective, everyone has to be on the same page, support the brand and act as one. BY EVAN HACKEL, CFE COMPLIANCE ISSUES IN A franchise system tend to have a snowball effect — it can start with something fairly minor like not attending convention, but it doesn’t take long before the infractions get bigger. And, if the franchisor looks the other way, eventually it will be enforcing only compliance on royalty payments. Franchise systems that compromise their compliance put themselves in great jeopardy. The system-wide challenges they could encounter as a result of non-compliance are far greater than the legal ones. Creating a consistent brand experience requires standards. Look at a brand such as McDonald’s Corp. that holds its franchisees to high standards — it has an estimated value of more than $92 billion, according to Yahoo! Finance on Aug. 5.

ACTING AS ONE For a brand to be effective, everyone has to be on the same page, support the brand and act as one. When there is no compliance, franchisees have the opportunity to act independently. The result is a fragmented system, not one that is aligned and moving toward the same goals. Some franchisees believe that when one franchisee isn’t in compliance that franchisee is only hurting himself. This couldn’t be further from the truth. Non-compliance of one franchisee hurts the whole system. Take the minor infraction of not attending the annual convention. Consider what the franchisor needs to do to ensure non-attendees know about everything they missed at convention. Reality is, there isn’t enough time or resources available in most systems to make this extra effort, and consequently, the franchisee isn’t kept up to date. Even if the franchisor has the resources, the time spent updating the non-attendees is taken away from those franchisees attending the conference.

STEPS TO ENSURE COMPLIANCE So, how does the franchisor ensure compliance? The simple answer is to enforce all of the rules in the franchise agreement. But, this is easier said than done. Consider the

convention non-attendee. What if he was in a major car accident on the way to the airport? Missing the convention seems fair (and legitimate). In a franchise system where non-compliance is simple termination, this franchisee would be terminated, a little severe considering the circumstance and the reason most franchisors are unwilling to use it. The better answer to ensuring compliance is to first ensure the franchise agreement has rules the franchisor needs enforced. Any rules that don’t serve a real purpose should be eliminated. The rules need to be black and white for the franchisees — if it’s in the franchise agreement it needs to be followed. Period. Once you have the right rules, you need to have reasonable penalties. Think about termination as the penalty for not attending convention. Because the franchisor rarely enforces such a harsh penalty, there really aren’t any rules enforcing convention attendance. What if the franchisor instituted a reasonable penalty for non-attendance? An example could be a $1,000 fine paid into the national advertising fund, with the fine increasing by $1,000 increments for each missed convention. This penalty is more appropriate, and thus, likely to be enforced by the franchisor. Changing a rule in some franchise systems can take 10 years — you add the new rule into franchise agreements as franchisees renew. There is a way to work around this issue: the franchisor can give the franchisee the choice of either paying a fine or accepting termination. As long as the franchisee can choose to accept the lower penalty, and the franchisor will enforce the actual penalty if the franchisee doesn’t pay the fine, you achieve your goal of having a lower penalty. Reviewing all of the compliance rules and developing more reasonable and fair penalties is a critical part of this process. To be successful and have franchisee support, you need to make them part of the process. To accomplish this, create a special committee of franchisees, or in a system with a franchisee association, have the association help create the committee. The franchisees will help you develop a thoughtful set of penalties that are likely to garner a higher level of acceptance from the franchisees. Don’t kid yourself, franchisors won’t get calls from franchisees who are happy with the compliance system. These franchisees (Continued on page 32) FRANCHISING WORLD SEPTEMBER 2014

(Continued from page 31) believe in the system and understand the benefits of compliance; and they are ultimately more aggressive in dealing with compliance issues than the franchisor.

ENFORCEMENT CONSISTENCY Now we’ve circled back to the major issue in franchise compliance: franchisors don’t like to enforce the rules. This happens for two main reasons: one, they don’t want to risk losing a franchisee who is providing the system with substantial income; and two, they develop personal relationships with franchisees. Failure to enforce the rules consistently can create legal issues for the franchisor. The lines between a franchisee’s legitimate exemption request and the franchisor playing favoritism can become very blurry, and the franchisor can eventually be at risk for legal liability. The solution is to create a variance committee of franchisees. The franchisor’s management chooses the committee members with input from either the franchise advisory council or the franchisee association. Like other committees, the membership should rotate over time. Essentially, the variance committee reviews the franchisee’s application for variance to the franchise agreement and recommends to management whether or not a variance should be granted. Ultimately, the decision to grant the variance is made by management, but from my experience, the variance committee tends to be tougher than management on the franchisee and management rarely overturns the committee’s recommendation. Let’s go back to the example of franchisees not attending an annual convention. The franchisee said he was planning to attend the annual conference, but had to return on the

way to the airport because of a call about a sick relative. The variance committee conducted a deeper investigation. The committee learned the franchisee hadn’t registered for the convention. The franchisee claimed to plan to register on-site. The variance committee then asked for a receipt from the airline ticket. If the franchisee could produce the receipt from the airline ticket, the committee would approve the variance. The franchisee wasn’t able to produce the airline ticket and the variance wasn’t approved. Sadly, without a variance process I would have approved the request, because I wouldn’t have had the guts to ask for the proof. There are several keys to successful franchise compliance. First, review all of the rules. Rules that are not important should be rescinded. Compliance should be about what is important — and the entire system should be focused on those things. Second, create reasonable penalties for lack of compliance. You need to find the right balance between encouraging compliance and desire to enforce. Lastly, use a franchise variance committee to make recommendations on enforcement. This will take pressure off management and increase the likelihood that the rules will be enforced. Implementing an effective and fair compliance system will transform how a franchise system works with its franchisees. A franchise system that has compliance challenges will be able to create real compliance and with that, the entire franchise system will benefit. n

Evan Hackel, CFE, is the principal and founder of Ingage Consulting, a member of the IFA Franchise Relationship Committee and a New England Franchise Association board member. Find him at fransocial.franchise.org.

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*Results measure company-wide same store sales figures for each fiscal quarter over the previous year’s fiscal quarter. The measuring period is March 22, 2010 through June 29, 2014. Excludes store sales from the State of Florida. Not all individual stores experienced the same results. New franchsees may have results that differ. This advertisement is not an offer of a franchise. Franchises are offered and sold only through a Franchise Disclosure Document. STATE OF CALIFORNIA: THESE FRANCHISES HAVE BEEN REGISTERED UNDER THE FRANCHISE INVESTMENT LAW OF THE STATE OF CALIFORNIA. SUCH REGISTRATION DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION, OR ENDORSEMENT BY THE COMMISSIONER OF CORPORATIONS NOR A FINDING BY THE COMMISSIONER THAT THE INFORMATION PROVIDED HEREIN IS TRUE, COMPLETE, AND NOT MISLEADING. STATE OF NEW YORK: THIS ADVERTISEMENT IS NOT AN OFFERING. AN OFFERING CAN ONLY BE MADE BY A FRANCHISE DISCLOSURE DOCUMENT FILED WITH THE DEPARTMENT OF LAW OF THE STATE OF NEW YORK. SUCH FILING DOES NOT CONSTITUTE APPROVAL BY THE DEPARTMENT OF LAW OF THE STATE OF NEW YORK. MINNESOTA STATE REGISTRATION NUMBER F–2873. Hungry Howie’s Pizza & Subs Inc., 30300 Stephenson Highway, Suite 200, Madison Heights, MI 48071, 248-414-3300.

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FEATURES

Positively MEMORABLE Experiences – They’re Not Just for Customers! Certainly, validation and multi-unit ownership are strong indicators that positively memorable experiences exist within your franchise system. BY PAUL R. SEGRETO, CFE

A RECENT GOOGLE SEARCH for the phrase, “positively memorable experience” revealed results that were exclusive to customer experiences, and TripAdvisor.com garnered one-half of all results with the phrase. So, what causes customers to be so emphatic about their experience that they deem them “positively memorable?” Further, what implores them to share their thoughts so openly within a public forum? To answer these questions, we must first examine the definitions of the words that make up this phrase as shown on Google:

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• •

Positively: In a positive way, in particular; with certainty, so as to leave no room for doubt; used to emphasize that something is the case, even though it may seem surprising or unlikely. Memorable: Worth remembering or easily remembered, especially because of being special or unusual. Experience: Practical contact with and observation of facts or events.

Now that we fully understand the meaning of these words, their impact when joined together truly makes sense, not only as a powerful phrase, but as a compelling statement. Clearly, this is a statement we should strive to hear from customers at every location within our franchise systems; such a clear, concise message is something we want to share every chance we get. It speaks volumes of the relationship between customer and business, one that both sides can agree on as a benchmark for excellence. Utilizing this phrase as a filter, ask yourself if your franchise relationships merit the same sentiment. Better yet, imagine if 34

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your franchise relationships were deemed as being “positively memorable experiences.” Is this possible or even practical to consider? Of course it is!

THE BEGINNING OF THE EXPERIENCE Pick one franchisee and think back to the time when he first inquired about your franchise. What made him want to continue through the next steps of your franchise sales process? Now, think about what that franchisee must have been feeling along the way through the due diligence and validation processes. Imagine how he must have felt when he shared with family and friends what he was going to do. Then, after signing and remitting a check for the franchise fee and committing to the initial investment along with a five, 10- or 20-year term, imagine how he justified his decision to these same confidants. Do you think this was all part of a positively memorable experience? I believe most within franchising would agree that this is the case or the franchise sale would not have occurred. Yet, too often the positively memorable experience diminishes from this point forward. Sure there are many happy, satisfied franchisees across many great franchise systems. But how many, during or after the fact, would actually say the experience was positively memorable?

MOVING THE POSITIVELY MEMORABLE EXPERIENCE FORWARD Just like at many of the hotels mentioned in the search results on TripAdvisor.com, there must be clearly defined criteria — a filter of sorts — that every customer, and in this case, every franchisee, must go through at every stage of the

relationship and on a daily basis. This is essential to creating positively memorable experiences. Here are five tips that will help move toward this end. 1. Understanding the true meaning and spirit of interdependent franchise relationships. This must be shared and exemplified at every point of contact with franchisees. 2. Developing the right culture at all levels. Be careful — culture is also defined as bacteria. This takes time and commitment, and is a reflection of how people, whether franchisees, employees, suppliers or others, are treated at all times. 3. Creating an environment of truth, trust and transparency based upon open, two-way communication — the cornerstone of creating the right culture. Think of a three-legged stool that could hold a great deal of weight when fully intact, yet would immediately fall under its own weight if one leg was compromised. 4. Establishing your franchise system as family. Treat them as such, but understand that this is not the typical type of family of yesteryear with subservience to the head of the household. Mutual respect is paramount. 5. Building an environment of bottom-up profitability and growth with all parties to the franchise agreement and other related agreements focused on mutual goals and objectives. All must sing from the same hymnal, and not just for dress rehearsal; be sure to give them the hymn book.

Certainly, validation and multi-unit ownership are strong indicators that positively memorable experiences exist within your franchise system. Another way to confirm the existence of these experiences is simply to ask your franchisees: Would you do it all over again? However, as a franchisor you must first earn the right to even be taken seriously if you ask this question. That starts and must continue by consistently working through the criteria identified above. As you head down the path of creating positively memorable experiences with each franchisee, be sure to consider all touch points, even those beyond the obvious mediums of in-person, by phone and via email. Think digitally. How do you interact with franchisees on Facebook? How do you come across to your franchisees in LinkedIn discussion groups? Is there common courtesy? Are you proud of each other’s actions within these platforms? Many will refer to all of this as being great in theory, and not really practical. But just think what could happen if every touch point were seen as another opportunity to create or enhance positively memorable experiences. How would that change the culture of your system? How would that lend credibility toward growing your brand? Think of the ripple effect. Live it and breathe it every day for optimum results! n

Paul R. Segreto, CFE, is CEO of Franchise Foundry and serves as a member of the IFA Franchise Relations Committee. Find him at fransocial.franchise.org.

FRANCHISING WORLD SEPTEMBER 2014

LEADERSHIP

REMEMBERING DENNIS WIECZOREK

Dennis Wieczorek addresses IFA board members during an IFA board meeting.

FA’s General Counsel Dennis E. Wieczorek, partner and Franchise Practice Group chairman of DLA Piper law firm, Chicago, passed away July 12 after suffering injuries from a fall. He was well respected among the entire franchise legal community and the IFA membership at large. His longtime friend, colleague and fellow DLA Piper Partner Philip Zeidman of Washington, D.C. shared with Franchising World his views of the invaluable influence Wieczorek had on the franchise industry and the many people who knew and loved him.

He was all about getting the job done, without fanfare or drama, even under difficult circumstances. The fact that he could achieve that without alienating people, even folks who disagreed with him, is a tribute to his values as much as to how he comported himself.

Q: AS HIS FRIEND AND COLLEAGUE, WHAT ARE SOME OF YOUR MOST TREASURED MOMENTS OF DENNIS, BOTH PROFESSIONALLY AND PERSONALLY?

Zeidman: He was such a good lawyer, and he so enjoyed doing the things lawyers do, that I have a hard time imagining him not being a lawyer, whether in franchising or elsewhere. He relished almost every form of sports, and had a bottomless well of knowledge about it. He wasn’t the type to force anybody into such a conversation, but I could well imagine him as a sports commentator. But, fortunately, we don’t have to speculate. In a May 2013 Legal Eagles Hall of Fame publication, he said that when he was young he wanted to grow up to be the captain of a tuna boat, “because I loved being on and in the water and loved tuna in all of its iterations. Still love tuna, but piloting a boat remains a mystery to me.”

Zeidman: Our first contact was one neither of us remembered. A couple of years ago he showed me an old letter he found in his files. It was from me, on the stationery of a predecessor law firm, rejecting his application for a job. How’s that for an eye for legal talent? Candidly, the professional and personal merge; that’s not true of many people in life. We could be working on a project, or a difficult problem, or an IFA assignment, and the discussion would turn seamlessly to his family; there was never any doubt where his heart was. But he was interested in others as much as himself; he remembered your interests, your enthusiasms and your setbacks. In that as in so many other respects, he was simply unique. I will always miss him.

Q: WHAT MADE DENNIS SO GOOD AT PRACTICING FRANCHISE LAW? Zeidman: I think a large part of his success — for IFA, for franchise clients, and for the many roles he played — was due to his subordination of his own ego to others’ needs (IFA, or the others he served). 36

FRANCHISING WORLD SEPTEMBER 2014

Q: IF DENNIS HADN’T BECOME A TOP LAWYER IN THE FRANCHISE COMMUNITY, WHAT DO YOU THINK HE WOULD HAVE DONE PROFESSIONALLY?

Q: DENNIS MADE A SIGNIFICANT CONTRIBUTION TO THE SUCCESS OF FRANPAC BY SHARING HIS LOVE OF WINE TO HELP RAISE MONEY FOR THE POLITICAL ACTION COMMITTEE. HOW DID HE BECOME SUCH AN AVID WINE CONNOISSEUR? Zeidman: I think it was a product of some time and resources he could devote when he began to reach his prime. I don’t know that it was an early love; he didn’t come from landed gentry or a family of connoisseurs. He found it was something he could master; but, more important, that he truly enjoyed it.

IFA GENERAL COUNSEL DENNIS WIECZOREK

Dennis Wieczorek and IFA Pres. & CEO Steve Caldeira at the 2011 Summer Board Meeting in Coeur d’Alene, Idaho.

With the passing of IFA General Counsel Dennis E. Wieczorek, Philip Zeidman, partner at DLA Piper, will continue serving as counsel on international issues and will also serve as IFA’s general counsel. Zeidman will be supported by Bret Lowell, CFE, and Stuart Hershman, as assistant general counsels. Lowell will lead the efforts to handle corporate governance. He has long served as general counsel of the IFA Educational Foundation. He is an eminently-recognized and highly respected franchise lawyer, is former chairman of the ABA Forum on Franchising, and is a prolific writer and speaker on franchising. Hershman will support IFA’s legislative and regulatory efforts. Like Lowell, Hershman has spent his career in the franchise practice at DLA Piper, and is widely recognized and a highly distinguished expert throughout the industry and the legal profession. He has served on numerous IFA committees, addressed numerous IFA Legal Symposiums and ABA functions, and is a member of the IFA Supplier Forum Advisory Board.

Q: WHAT IS HIS PRINCIPAL LEGACY TO YOUR LAW FIRM? Zeidman: Above all else, friendship. He nurtured people and built a franchise law practice for the firm without a parallel in the world — as all the “ranking” services testify. But perhaps his lasting monument is the number of people and organizations — prominently including IFA, I am proud to say — which remain valued and committed clients after all these years. In a world of high competition and low attention span, that’s rare indeed. n

ZEIDMAN

IFA Past Chairman Lawrence “Doc” Cohen, DOC & Associates, Ltd. president and Dennis Wieczorek share duties during a wine auction fundraising event for FranPAC during the 2014 Summer Board Meeting in Middleburg, Virginia.

LOWELL

HERSHMAN

Dennis Wieczorek addresses an IFA board meeting. FRANCHISING WORLD SEPTEMBER 2014

BEST PRACTICES

Strategic Alliances – How to Make Them Work for You Strategic alliances may be worth the investment to increase brand coverage in today’s competitive environment. BY MAX SCHOTT II, CFE

he world of franchising is full of strategic alliances — relationships involving a sharing that is meant to benefit all participating parties. This article focuses on strategic alliances that allow a franchisor or its franchisees to sell branded products and services from locations that they would not otherwise be able to access.

USING STRATEGIC ALLIANCES TO INCREASE BRAND COVERAGE If a franchisor who has expanded only through traditional locations and arrangements were to map out brand coverage, it would no doubt notice a number of areas where the brand is not present. Upon further review, the franchisor would likely discover that many of these areas involve locations considered to be “non-traditional” or “special.” While these locations may represent untapped markets for the franchisor’s products or services, access to them is often restricted or limited because of who owns them, how they are operated, the purposes they serve and how they are regulated. Under most circumstances, however, these restrictions and limitations can be overcome by utilizing the right strategic alliance. In some cases, the owner of the “host” location will serve as the franchisee. Other times, the host location owner will enter into an agreement with the franchisor or one of its franchisees, or both, to

FRANCHISING WORLD SEPTEMBER 2014

allow for the operation of the branded business, or to permit the sale of the franchisor’s branded product or service.

WHAT OPTIONS ARE AVAILABLE? The following is a list of some of the commonly recognized non-traditional locations or arrangements, and a summary of the typical strategic alliances related to them. •

•

Universities and Colleges. These institutions can provide on-campus access to their students and staff. It is not uncommon, however, for these institutions to have in place existing agreements with management companies. If that is the case, the franchisor likely will need to enter into a franchise relationship with that company. Otherwise, a franchisor will sign a franchise agreement directly with the university or college or with a franchisee who is able to lease space from the institution. Airports and Other Transportation Terminals. Airports provide an excellent opportunity for a franchisor to sell its products and services to a captive audience. Getting the franchisor’s concept into an airport, however, can be complicated. Airport authorities typically award “concessions” to one or a small number of concessionaires, such as HMSHOST, after conducting a lengthy and

(Continued on page 40)

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(Continued from page 38)

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detailed request for proposal process. A franchisor can seek to become one of these concessionaires on its own or collectively with other operators. As a more common alternative, the franchisor can attempt to enter into a direct franchise relationship with an existing concessionaire to allow the concessionaire to operate a concession, or the franchisor or one of its franchisees can attempt to enter into an arrangement with an existing concessionaire to allow the franchisor or its franchisee to operate a concession. Other transportation terminals, such as those for trains, buses and ferries, may present similar opportunities. Sports Venues. Stadiums, arenas and other sports venues may provide opportunities for additional sales and brand marketing. Much like an airport, a franchisor may deal directly with the venue owner or with concessionaires, like Aramark, that have negotiated an arrangement with the venue owner. Military Bases. As one would expect, partnering with the U.S. government to offer a franchisor’s products and services to military personnel and their families on military bases involves a detailed approval process and compliance with a multitude of laws and regulations. Many franchisors, however, have successfully navigated the process and found the arrangement to be beneficial from both a sales and brand image perspective.

Under most circumstances, a franchisor wishing to expand to a military base will participate in an RFP process with the applicable governmental entity tasked with facilitating the operation of an exchange for that branch of the military and providing services to those stationed on the base. For example, the Army and Air Force Exchange Service is the entity that has the authority to grant to a franchisor or one of its franchisees the right to operate a franchise as a concessionaire on a particular army or air force base. Some of these entities, including the AAFES, also may seek to enter into a direct franchise relationship with the franchisor and operate the franchise business on the base itself. •

•

Tribal Lands. A franchisor interested in locating a franchise on tribal lands will typically enter into an agreement with the tribe. It is important that a franchisor carefully review the entity with which it is contracting and to address the issue of sovereign immunity and whether the tribe is willing to waive it. Hotels and Resorts. Hotels and resorts offer a number of potential opportunities for a franchisor and its franchisees to form strategic alliances. It may be as simple as a branded cookie display case in the lobby, or as involved as a branded restaurant or service provider on the premises. In each case, the franchisor will need to determine whether the owner of a particular facility will serve as the franchisee and directly or indirectly operate the franchise, or will lease space to the franchisor or its franchisee to allow it to operate the franchise business. Co-branding. Although certain types of co-branding appear to be on the decline, there still may be opportunities (in addition to those described above) for a franchisor to co-brand with a related or an unrelated franchisor or another company. For example, a restaurant franchisor may be able to

FRANCHISING WORLD SEPTEMBER 2014

•

co-brand with a franchise or non-franchise gas station/ convenience store owner, or with a large department store or grocery store chain. Alternative and “Outside-the-Box” Distribution. Alternative channels of distribution also may be available to allow a franchisor to connect with more customers. These may include the sale of branded products from grocery stores and other retail locations, the use of kiosks, carts and temporary retails shops in malls, and the implementation of food trucks. In addition, there are countless other “outside-the-box” alliances available to franchisors (and franchisees) to allow them to expand the reach of their brand if they only think creatively. Finding synergies is the key. For example, a cupcake or bakery franchisor could form an alliance with event planners or other businesses to promote the sale of cupcakes; a provider of music or art lessons could partner with a musical instrument or art supply retailer or with public or private schools to provide lessons; or a seasonal home services company (lawn care) could form an alliance with a non-seasonal home care business (pest control or plumbing) to cross-promote the brands.

KEY CONSIDERATIONS •

•

• •

•

Authority. Before entering into a particular strategic alliance, the franchisor must ensure that its existing franchise agreements reserve to it the rights necessary to take advantage of the alliance. Impact on Existing Franchisees. Even if the franchisor has the right to enter into a particular strategic alliance, before doing so, it should analyze whether the alliance will negatively impact sales at its existing franchisees’ businesses. Changes to System. The franchisor must determine which changes to its system it will allow to accommodate a particular strategic alliance. Non-Standard Agreements. Some of the strategic alliances will likely require the franchisor to either modify its form franchise agreement or enter into agreements provided to it by its alliance partner(s). The franchisor will need to determine whether it is comfortable signing these agreements. In addition, the franchisor will need to analyze whether the use of these modified or additional forms of agreement create any disclosure or registration issues and, if so, whether any exemptions are available. Brand Enhancement. Bottom line: the franchisor must assess whether a proposed strategic alliance will enhance the value of the brand.

Despite the extra work and analysis involved, the use of strategic alliances may be well worth the investment and offer franchisors the means of increasing their brand coverage in today’s competitive environment. n

Max Schott II, CFE, is a principal in the Minneapolis office of law firm Gray Plant Mooty. Find him at fransocial.franchise.org.

IFA CONVENTION

What Happens in Vegas? You Connect, Innovate and Evolve Reflecting your input helps keep the convention relevant. BY LAURA FENWICK

ranchising’s biggest event — the International Franchise Association annual convention — has a high bar to clear next year following the recordbreaking attendance of 3,500 participants that jammed the New Orleans Convention Center in February. Taking your franchise brand to the next level of excellence through effective and proven strategies is a task that IFA’s Convention Committee and Conference Department consider of paramount importance. Next year’s convention, scheduled Feb. 15-18 at Las Vegas’ MGM Grand, will feature the theme “Connect •▪Innovate • Evolve.” It’s designed to better enable franchisors, franchisees and suppliers to unite and work together to protect and grow their brands. This will be accomplished through educational forums led by innovators from the franchise, business, political and media communities. There will also be ample opportunities to network during events conducted in the exhibition hall, receptions, the ever-popular “Taste of Franchising” and the closing gala.

What makes each convention distinctly unique? You. The topics you suggested on this year’s convention evaluation form, plus your communications with IFA’s Conferences Dept. staff play a significant role in the convention’s evolution. “We conduct a call for session ideas and topics to all members and we gather their ideas,” said IFA Conferences and Meetings Senior Dir. Anne Poodiack. “The session content is a collaboration that certainly involves our members and includes what they tell us about their needs and hot button issues.”

BY THE NUMBERS It is the association’s task to try to best meet your needs by supplying the latest news, addressing trends and sharing updates on public policies currently affecting the franchise industry. This drives program development. Your ideas and thoughts not only matter, but serve to guide (Continued on page 42) FRANCHISING WORLD SEPTEMBER 2014

(Continued on page 41) the focus, tone and direction of the convention program. And what does that program include? Let’s look at it by the numbers: • •

•

Four Blockbuster General Sessions: Hear from best-in-class leaders who will inspire you to make a difference for your business and for franchising. 40-Plus Educational Sessions: Thought-provoking formats, case studies and panels of experts will present solutions, best practices and strategies to help you best counter the challenges you face daily. Taste of Franchising: Yes, the food is great, but the networking is not to be missed. While you enjoy samples from more than a dozen brands that represent some of the best that the franchise industry’s food and beverage companies have to offer, you’ll be making new friends, sharing tips and tactics and gathering industry intelligence that you can’t get anywhere else. Bring lots of business cards. Exhibition Hall: Nearly 200 companies will showcase their latest products and services that can jump start your business. And this is also another essential networking venue that can help you build a better business.

INTERNATIONAL ENGAGEMENT

anniversary of the WFC’s founding during IFA’s 1994 Annual Convention, also in Las Vegas. This official meeting, which will better help to shape the international environment for franchising, is open only to WFC representatives. However, attendees will have opportunities to network with WFC representatives during the convention.

GIVING BACK The IFA convention also provides for groundbreaking of a different sort that will benefit a Las Vegas community. The Franchising Gives Back community service project, first conducted during the 2012 Annual Convention, has drawn hundreds of franchise industry representatives who volunteer to help with such projects as rehabilitating a veterans’ center with a park in Orlando; preparing hygiene kits and boxes of food in 2013 for a Las Vegas non-profit organization that provides educational and social services to those affected by HIV/AIDS; and earlier this year, helping improve the grounds of a charter school in New Orleans. There’s always room for more willing hands. The community service project will be announced soon. These are just a few highlights from the upcoming convention that you can expect. But don’t just read about it; register now so you’re part of the convention action. It’s your turn to connect, innovate and evolve. n

Laura Fenwick is manager of publishing for the International Franchise Association. Find her at www.fransocial.franchise.org.

IFA will host the World Franchise Council’s spring 2015 meeting during its 55th Annual Convention that will be conducted in Las Vegas. The association is a founding member of the WFC, which unites national associations from 42 countries. The meeting will coincide with the 21st

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MANAGEMENT & OPERATIONS

Record Retention: What to Keep and Where to Put It Consider these steps to address your record retention concerns. BY REBECCA MORRIS

mployers are required to maintain numerous employee records to comply with federal, state, and local laws. Proper recordkeeping practices can also help to administer human resources policies and practices with greater efficiency. Many employers have questions about what records must be retained, how to properly maintain them and for how long. The following frequently asked questions address some of these concerns.

Q: WHICH FEDERAL LAWS GOVERN RECORDKEEPING REQUIREMENTS? A: Several federal laws require employers to maintain certain

records for a specified duration. These laws include, but are not limited to: •

•

Equal Employment Opportunity laws, including Title VII of the Civil Rights Act and the Americans with Disabilities Act require employers to retain resumes and job applications, requests for reasonable accommodations and records related to promotions, demotions and performance reviews for at least one year. The Fair Labor Standards Act requires employers to keep pay-related records, including time cards, work schedules, total daily or weekly earnings, overtime payments, and deductions and additions to wages, for at least three years. Note: Payroll records required for tax purposes should be retained for at least four years.

•

The Immigration Reform and Control Act requires employers to complete and retain Form I-9 for all new hires. Retention period: three years from the date of hire or one year following separation, whichever is later. The Occupational Safety and Health Act requires certain employers to record work-related injuries and illnesses using OSHA Forms 301, 300 and 300-A. Retention period: five years. Note: Record retention requirements vary by jurisdiction. Many states have laws requiring employers to retain, among other things, records pertaining to compensation, state mandated leave of absences, non-discrimination, workers’ compensation and unemployment. Check your state and local laws to help ensure compliance.

Q: CAN ALL INFORMATION PERTAINING TO ONE EMPLOYEE BE KEPT IN THE SAME FILE OR DO I NEED TO KEEP CERTAIN INFORMATION IN SEPARATE FILES? A: It is a best practice to maintain several separate files

for each employee. For example, many employers maintain a personnel file for each employee, a confidential medical or health information file for each employee and an I-9 file. It is also a best practice for employers to maintain a separate investigation file should the employee initiate or be the subject of any complaint requiring investigation. (Continued on page 45) FRANCHISING WORLD SEPTEMBER 2014

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(Continued from page 43)

Q: WHAT INFORMATION SHOULD BE INCLUDED IN AN EMPLOYEE’S PERSONNEL FILE? A: An employee’s personnel file generally contains

records related to: • • • • • •

Hiring (e.g. application and resume), promotion, demotion, transfer, lay off or termination; Rates of pay or other terms of compensation; Training records; Job descriptions; Employee handbook acknowledgment; and, Performance reviews and any disciplinary actions taken against the employee.

Q: WHAT SHOULD NOT BE INCLUDED IN AN EMPLOYEE’S PERSONNEL FILE? A: The following information should not be kept in

personnel files: •

•

Any information reflecting an employee’s membership in a protected group, such as their voluntary selfidentification of gender, ethnicity, or race, veteran’s status or as an individual with a disability. These types of records should be kept in a separate file. Any document relating to an employee’s health or medical condition, including any leave of absence requests based on an employee’s injury or disability. These records should also be maintained in a separate file. I-9 forms and other immigration-related documents. It is a best practice to store all I-9 forms together in one file, since they must be produced promptly following an official request.

Q: ARE EMPLOYERS PERMITTED TO RETAIN EMPLOYEE RECORDS ELECTRONICALLY? A: In general, employers are permitted to store employee

records electronically, and should ensure that their electronic storage system includes controls to protect the integrity, accuracy and security of the records retained. Depending on the type of record, electronic storage may be subject to specific federal and state rules. For example, the Employee Retirement Income Security Act of 1974, as amended, requires that systems storing benefit plan records in electronic form meet specific security requirements. Additionally, employers that maintain I-9 forms electronically must meet certain system requirements. Employers should consult with legal counsel if they have questions about complying with these specific security requirements. Note: Employee records should never be transmitted electronically unless it is done over a secure network and the records are encrypted. Additionally, if employee records are stored electronically, you should be able to control and log when the records are accessed and by whom.

Q: IF AN EMPLOYER STORES DOCUMENTS ELECTRONICALLY, CAN IT DESTROY PAPER COPIES OF THOSE SAME DOCUMENTS? A: Generally, an employer that stores documents

electronically can destroy the paper copies of the documents that it has scanned and stored in that system, if: • • •

It is the business practice to do so (which should be articulated in a policy); The electronic copy accurately reproduces the original record; and, The employer can recreate a paper copy from the electronic form of the document.

However, an employer who chooses to destroy its original paper documents and rely solely on an electronic system of record should consider the impact of not having a paper back-up. For this reason, employers who have embraced the electronic system of recordkeeping often consider retaining a small paper file of critical documents containing original signatures. Often original signatures play an important role in authenticating a document, and can assist an employer who is faced with a claim of. Note: Employers should always consult with legal counsel to discuss the risks involved in document destruction, and what, if any, documents that employer should consider retaining in hard copy.

Q: WHAT IS DONE WITH RECORDS ONCE THE RETENTION PERIOD ENDS? A: When the time comes to dispose of employment records,

employers must be sure to do so in a manner that ensures the records cannot be read or reconstructed. Reasonable measures for disposing of employee records may include, but are not limited to, the following: • • •

Burning, pulverizing or shredding papers containing employee information; Destroying or erasing electronic files or media containing employee information; or, Hiring a reputable document destruction contractor to properly dispose of employee records. n

Rebecca Morris is the content development manager for ADP HR411. Whether it’s human resources, payroll or benefits, ADP provides the services and insights that let you focus on what matters: growing your franchise. For more information, contact ADP Vice President, Strategic Alliances Joe Francis. Find him at fransocial.franchise.org. Disclaimer: This content provides practical information concerning the subject matter covered and is provided with the understanding that ADP is not rendering legal advice or other professional services. ADP does not give legal advice as part of its services. While every effort is made to provide current information, the law changes regularly and laws may vary depending on the state or municipality. This material is made available for informational purposes only and is not a substitute for legal advice or your professional judgment. You should review applicable law in your jurisdiction and consult experienced counsel for legal advice. FRANCHISING WORLD SEPTEMBER 2014

M U L T I - U N I T franchise innovators

Franchisor Support Includes Best Practices and Training

Franchising’s high-achieving, multi-unit franchisees share views on key topics.

QUESTION: What type of franchisor support do you find most useful and why?

COLLINS: “Guidance and opportunities to grow are the two most important things I get from

Johnny Collins currently has four Wingstop restaurants in South Texas. They include two locations in McAllen, one in Mission and one in Edinburg. Find him at fransocial.franchise.org.

my franchisor. Wingstop offers support in all fields: the POS system, chicken prices, temperature charts and so many more topics. The guidance is there. They even offer best practices for our busiest days of the year. Wingstop has been a franchisor for 20 years, and I have been a franchisee for more than 10 years. In that time, I have grown my business to include four Wingstop locations throughout South Texas. I can say from firsthand experience that I can pick up the phone at any time and seek their expertise in any field. That makes me feel confident to run my restaurants. Wingstop has conference calls that are also extremely useful in letting me know when new items are coming out. There is a Wingstop convention every one and one-half years; the next one is this October. It’s a great time to see old friends, as well as meet new franchisees. New items are presented and it’s always great to see how much Wingstop has advanced. We meet everyone at the corporate office who directs and moves the company. This helps to put names and faces together, which greatly improves communication and helps when you need something from the corporate level. New information is always presented and you can make numerous contacts from vendors who support Wingstop.”

FRANCHISING WORLD SEPTEMBER 2014

DEGENHARDT:

Brent Degenhardt is a principal of City Wide Maintenance of Cincinnati and Dayton, a single-source solution for all building maintenance services. Launched in 2003, the company is owned and operated by entrepreneurial father-son duo Don and Brent Degenhardt. Find him at fransocial. franchise.org.

“It is essential for every prospective franchisee to understand the type and level of support the franchisor provides before signing an agreement. A few recommended sources for determining this information include checking the franchise disclosure document, speaking with the franchisor and also touching base with other existing franchisees. My father and I conducted extensive research before signing an agreement to launch our City Wide office in Cincinnati. Despite doing our due diligence, the decision required a tremendous leap of faith. In 2003, City Wide Maintenance had just begun franchising and we were about to come on board as the brand’s third franchisee. As with any franchise, our team wanted to ensure City Wide, as the franchisor, would provide us with ample training and support as we launched the business. In addition, we wanted to verify that a formal system was in place to provide us with ongoing support during the growth and expansion phase of our business. City Wide fulfilled both of these commitments. Today, the growth and success of our office is helping validate the franchise opportunity. We are proud to be one of the brand’s major success stories. Each year we have the opportunity to showcase these successes at the brand’s annual franchise convention. The meeting is focused on rolling out new programs and initiatives, sharing best practices, and celebrating individual and system-wide accomplishments. This is the type of franchisor support that we find most useful in our current growth phase. The gathering reminds us of the important role we play in driving the brand forward, leaving us with a renewed sense of purpose and direction.”

MORALES:

Adrian Nuñez and Armando Morales are owners of two Assisting Hands Home Care locations in Miami. Find them at fransocial.franchise.org.

“The fast-growing home care industry in the United States is experiencing significant challenges and changes in laws and regulations. As multi-unit owners of Assisting Hands Home Care, Adrian and I rely on our franchisor for regular updates on how these changes can impact our business. Most importantly, we depend on our support structure which enables us to openly and regularly share ideas and best practices to help us overcome these challenges. Through annual retreats, monthly conference calls, trainings or daily telephone contact, our franchise support team provides these learning opportunities. We really value a franchisor’s corporate culture that allows franchisees to propose and test new services or processes to help us adapt to the changes in our environment and facilitate our long-term success.” n

FRANCHISING WORLD SEPTEMBER 2014

INTERNATIONAL DEVELOPMENT

Negotiating a Master Franchise Agreement — Getting to “Yes” Negotiating can be complex, challenging and demands careful thought and patience. BY EDWARD (NED) LEVITT, CFE

FRANCHISING WORLD SEPTEMBER 2014

nternational expansions of franchise systems have been increasing at a rapid pace for years. For some franchisors, such expansions have proved to be very successful, but for others, the experience has been costly and frustrating. Often, one of the greatest areas of frustration is getting the master franchise agreement settled and signed, even when the candidate and the fundamentals of the deal are right. This article examines some of the most common issues that arise in the negotiation of an international master franchise agreement and suggests some solutions which might help to get the deal done.

THE TERRITORY, FRANCHISE FEE AND PERFORMANCE CRITERIA Most international master franchise arrangements provide that the rights are granted, usually on an exclusive basis, for an entire country or group of countries, such as the Middle East. The prospective master franchisee often wants to lock up the broadest territory possible in the event the franchise expansion proves successful. However, serious problems can arise when the exclusive rights granted are to territories which are far too large for the capabilities of the master franchisee. Frequently, two sticking points in the negotiations are the amount of the initial franchise fee for the territory and the performance criteria, (usually the number of units required to be open each year) which, if not met by the master franchisee, are grounds for termination. If the franchisor can forego the larger initial franchise fee for a series of smaller payments based on a per unit opened measurement, then a deal can be more easily achieved by allowing the master franchisee to “earn” the right to ever-increasing exclusive territories within the target country or group of countries. This approach overcomes the fear for master franchisees who are paying a lot of money for a concept that is yet unproven in their country or region and still provides the franchisor with control over the development of the system within the broader territory.

Prospective master franchisees want the term of the master franchise agreement to be virtually and sometimes actually, perpetual.

THE TERM Prospective master franchisees want the term of the master franchise agreement to be virtually and sometimes actually, perpetual. Franchisors want to limit the term (including renewal rights) to a period of time that allows the master franchisee enough time to earn a good return on its investment and perhaps generate some capital gain on a resale. Assuming the franchisor would be happy with a successful and thriving system in the territory regardless of the length of the term, the number of renewal terms could expand based upon specific performance criteria that achieve that result for the franchisor, beyond the usual number of renewal terms. The message to the master franchisee is, “You can have a very long term, if you earn it.”

DIVIDING UP THE SPOILS AND JOB ALLOCATIONS Without a doubt, the most poorly handled issue in master franchising is the division of the front-end franchisee fees and continuing royalty fees for the unit franchises in the territory between the franchisor and the master franchisee. It is not unusual for the franchisor to base the decision on the allocation of these fees on the anticipated or desired return from the development of the system in the territory without serious or careful regard for how the master franchisee will finance the necessary development and support services for the unit franchisees. Mistakes with this (Continued on page 50)

Franchising Canada. At the forefront of the franchise and distribution legal industry, we represent clients from Canada and internationally in all types of Canadian franchise matters. For more information, contact Edward (Ned) Levitt at 416.646.3842 or nlevitt@dickinsonwright.com.

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FRANCHISING WORLD SEPTEMBER 2014

(Continued from page 49) issue will either ensure the demise of the master franchisee or reduce the quality and performance of the system in the territory. Additionally, presenting unrealistic numbers to a sophisticated prospective master franchisee can wreck the deal. The responsibilities for the development and administration of the system should be decided first as between the franchisor and master franchisee. Then the division of the various fees should be based upon the costs of discharging those responsibilities and only after that should the parties divide up the remaining “profits.” Being able to provide proof of a careful analysis of these matters will go a long way to getting the deal done with the best candidate.

SELECTION OF UNIT FRANCHISEES AND LOCATIONS Often, master franchisees want the right to select unit franchisees and locations within their territory, but franchisors do not want to abdicate the responsibility for final approval of franchisees and locations before the master franchisee has proven to be capable in these crucial areas. By proposing an initial fixed number of franchisor approvals, subject to specific achievements of the master franchisee, with a resumption of the requirement of franchisor approvals in the future if other criteria are not met, the franchisor can overcome a common challenge to concluding negotiations.

GOVERNING LAW Both parties are understandably more familiar and, therefore, more comfortable with the legal regime in their respective home jurisdictions. To avoid another obstacle to getting the deal done, the franchisor should consider having the governing law of the agreement be the most appropriate law depending upon the issue, with some issues being determined by the law of a third jurisdiction acceptable to all. While the governing law provision of the agreement will be more complex than usual, the extra comfort level of the parties will make it easier to finalize the agreement. Franchising is one of the best and most efficient ways of expanding a business. Once a solid foundation is built for the success of the system in the home jurisdiction, international expansion is a sensible and potentially profitable strategic choice. A poorly executed international expansion can drain the resources of the franchisor to the point of destroying the entire system. The moral being that it is less important what you do than how you do it.

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Getting to yes, with the best candidates, for the right master franchise agreements can go a long way in ensuring that international expansions are profitable and satisfying for the franchisor. The foregoing has only touched the surface of a complex and challenging area of negotiations. It is not “rocket science,” but it does demand careful thought and patience. n

Edward (Ned) Levitt, CFE, is a partner at Dickinson Wright LLP, Toronto, Canada, and provides legal services to Canadian and international clients on all aspects of Canadian franchise law. Find him at fransocial.franchise. org.

SOURCES OF INFORMATION International master franchising remains one of the least understood and most poorly implemented expansion strategies in franchising. According to Arthus Kalnins, Ph.D., a Cornell Univ. professor who released a survey in 2005, “Biting Off More Than They Can Chew: Unfilled Development Commitments in International Master Franchising Ventures,” out of 142 restaurant master franchisees, only 55 were in business at the end of the development term, 21 master franchisees did not open a single unit and six master franchisees met or exceeded their development commitments. It is important to set clear growth (and unit maintenance) targets for the master franchisee. On the other hand, most targets in master franchise arrangements are not met, the survey adds. In a survey by John P. Hayes, Ph.D., of Hayes Worldwide from 2000 that looked at the initial franchise fees for master franchise rights, of the master franchisees studied: • 36 percent invested $100,000 to $250,000 • 28 percent invested less than $100,000 • 21 percent invested $250,000 to $500,000 • 15 percent invested more than $500,000

LEGAL

Privacy, Data, T Security and PCI Compliance â&#x20AC;&#x201D; Roles of the Franchisor and Franchisee The risks and costs are great. BY LEN MACPHEE

he risk of a data breach is a major issue for retail businesses. The instances of breach by hackers and others, such as former employees, are prevalent and on the rise. And the direct and indirect harm can be substantial. Theft of customer data, as well as confidential and proprietary data, can be devastating to a business and lethal to a brand. The reputational harm and public relations cost to a brand in the event of a breach resulting in loss or compromise of customer information has had serious negative consequences for multiple brands. And apart from reputational harm, the direct economic impact of a breach, which may include liability to customers, defense of regulatory enforcement actions, costs associated with notification requirements, fines and penalties, can be devastating. For example, the Federal Trade Commission, as a federal regulator for privacy and data security, initiates investigations and brings enforcement actions against companies it perceives to have ineffective security practices related to collection and use of customer information. The costs of defending an investigation and action can be significant, and the FTC may impose substantial penalties and fines. Furthermore, most states have enacted laws mandating companies bear the often substantial cost of notifying affected cardholders and state attorneys general in the event of a data security breach. Customers, as victims of a data breach, may also assert claims, which may be costly to defend and result in liability. The Payment Card Industry Data Security Standards or â&#x20AC;&#x153;PCI complianceâ&#x20AC;? is another example of costs associated with customer data. This is a set of (Continued on page 52)

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(Continued from page 51) requirements developed to encourage and enhance data security for credit, debit and pre-paid cards. All companies that accept payment cards are contractually obligated to comply with these standards, which establish the minimum threshold for protecting cardholder data. Companies that are not compliant could face substantial liability. If customer cardholder data is breached, a non-compliant company could be liable for significant fines and penalties, the cost of reissuing new payment cards, fraud losses and legal costs. The card associations may also ban a company from accepting payment cards altogether. Thus, investing in the time and cost of data security and PCI compliance is critical for all retail businesses.

FRANCHISORS SHOULD ENSURE COMPLIANCE ACROSS THE BRAND AND PROVIDE ASSISTANCE The risks and concerns for a brand with a franchise system present added challenges and issues. While the brand faces the negative impact across the entire system for a data breach at a specific location, the franchisee, as a smaller business, may find it difficult to make the necessary investments and keep up with all the requirements, laws, contractual obligations and best practices. And the FTC and customers are pursuing franchisors for franchisee breaches or inadequate security practices with increasing frequency. Many franchisors have been hesitant to implement specific requirements or even provide franchisees with significant guidance on data security and PCI compliance. They are concerned that doing so would increase the risk of a liability finding if a data breach occurred even though the franchisee is a separate legal entity such that a franchisor should not be held liable for the franchisee’s actions. Generally, the greater the participation, control or involvement by a franchisor with respect to acts or practices of the franchisee, the greater the risk of a finding that the franchisor is liable for those acts. The risk applies to actions by customers and regulators. If a franchisor establishes required practices and provides the tools or methods or significant support to its franchisees to prevent data breaches, franchisors may be concerned that they will be exposed to an increased risk of liability if, for example, the tools or methods fail. However, in the case of data security and PCI compliance, there are several counter-veiling reasons why franchisors need to be involved; first, to protect the brand. Consumers may not distinguish between independently owned franchises and the brand so a data breach at one location can have detrimental impact across the entire brand. Second, many franchise systems use an interconnected computer network to varying degrees, allowing sophisticated hackers to expand the target upon entry at one location. One franchisee can be the weak link that allows a breach to occur across the network. Third, with respect to regulators and some claims for vicarious liability, a franchisor’s implementation of policies and requirements for data security may provide a defense. Fourth, through monitoring and auditing, the franchisor can mitigate some risk. Fifth, the parties can allocate the respective responsibilities for achieving and

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maintaining PCI compliance and provide other protections in the franchise agreements. The bottom line is the risk to the brand of liability to third parties and the government suggests that franchisors should be ensuring franchisees are PCI compliant and undertaking adequate data security protection measures.

APPROACHES TO ENSURING AND ASSISTING COMPLIANCE There are various approaches to ensuring and assisting franchisees’ PCI compliance and data security measures. The approaches typically involve setting up procedures and systems, requiring compliance with the same, training and educating franchisees, and providing access to resources or requiring use of certain equipment and systems, for example, upgraded point of sale. Many franchise systems require participation in an approved vendor program. Franchisors approve and may even contract with a PCI compliance and security vendor the franchisees use. The best approach for a specific brand should take into consideration the terms of the existing franchise agreements and the franchisor’s operating manuals, including the ability to update operational and other practices through operating manuals. Most franchise agreements have terms providing authority to establish and require compliance with operational and other standards. For example, most agreements contain broad provisions requiring compliance by franchisees with applicable law and compliance with standards and specifications as prescribed by the franchisor. Many agreements also incorporate an operations manual and provide that the manual may be changed to add operational requirements. The contracts should also include reporting obligations and audit rights to the franchisor to ensure compliance. Further, many franchise agreements contain provisions giving the franchisor the right to require franchisees to purchase equipment prescribed by the franchisor or a designated vendor or participate in a vendor sponsored program. As noted above, using the franchise agreement to clearly allocate the responsibilities for achieving and maintaining PCI compliance is wise as well. Further, provisions regarding insurance and indemnification may address related issues. Franchisors are in the best position to protect the brand and should establish necessary and proper policies for PCI compliance and processes and procedures for the collection, use and security maintenance of all data. Franchisors should address the issue in their contracts and manuals. Franchisors may also provide information, education and training with regular updates to ensure franchisees’ awareness and knowledge of procedures for PCI compliance and ensure compliance through reporting and auditing. Franchisors should also consider the use of approved or mandated third-party providers. n

Len MacPhee is a partner at Perkins Coie LLP. Find him at fransocial.franchise.org.

Hill, CFE

CFESpot light

“When I decided that franchise education would be essential in personal development, the CFE program became part of our corporate culture. Once team members achieve management level status, they must be certified within 30 months. Today our management team is 100% engaged, either having achieved CFE status or in candidacy status.”

The International Franchise Association’s Institute of Certified Franchise Executives offers a substantive mastery of franchising to successful candidates, and confers recognition with the Certified Franchise Executive™ (CFE) designation. Among franchise leaders, the CFE has become known and appreciated as a mark of distinction and professionalism. To learn more about the CFE designation, see www.franchise.org/cfe.aspx, or contact Rose DuPont at (202) 662-0771 or rdupont@franchise.org.

Sam Ballas, CFE

Fay Ballas, CFE

Lee Easley, CFE

Steve Kontos, CFE

Tom Scalese, CFE

What will YOUR CFE Story Be?

H O N O R I N G A M E R I C A’ S V E T E R A N S

Navy Veteran Joel Pellicci Successfully Melds Military and Brand Values and Standards

It takes leadership to succeed in a franchise business.

McDonald’s owner/operator Joel Pellicci (former Navy lieutenant commander and aviator), center, is joined by members of his operation: Operations Supervisor Rick Jakel (former Marine), left, and General Manager David Mandirino (former Marine and Vietnam veteran).

BY KRAIG BAKER

cDonald’s is very proud of the partnerships and commitments we have made in the veterans’ community. McDonald’s USA and the restaurant owner/operators are proud to be a part of the White House’s Joining Forces Coalition and have committed to creating more than 100,000 career opportunities for veterans over three years. We currently have thousands of veterans who work within the McDonald’s system as employees within the restaurant, corporate employees or owner/operators. Joel Pellicci is one of many veterans who are current owner/operators. Pellicci initially began his career by entering the Registered Applicant Program (the initial step to becoming an owner/ operator) 37 years ago. He started with his first restaurant in Lewisburg, N.C., and now runs 12 restaurants in partnership with his son Joel Jr. in the Myrtle Beach, S.C. area. Pellicci has been an integral part of several leadership teams across McDonald’s. For six years he was the chairman of the East Division Leadership Council, the team that assists in the development and execution of regional plans. He currently is the East Division People Team Lead, the team that assists with issues in regards to people, human resources and training. In 2003, he won the Golden Arch Award, the most prestigious recognition awarded to an owner/operator who delivers a superior customer experience, gives back to the community and is a leader whose actions build trust in the brand. 54

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While extremely proud, he does not view this as personal recognition, but as recognition of the efforts and support of his family and the entire organization. His strong commitment to people is reflected through his company’s slogan, “Powered by People with Pride.” Pellicci is very proud of his military and McDonald’s experience: “I do not ever pass people in uniform and not thank them for their service. McDonald’s at a different level is keyed in on the same thing. It is serving the communities as a good corporate partner.” Here is his story.

Q: WHAT INITIALLY LED YOU TO MCDONALD’S? Pellicci: I was a lieutenant commander in the U.S. Navy and a naval aviator for nine years. During that time I flew the A-6 Intruder aircraft off the attack carrier Forrestal. While serving as a flight instructor, I went to work one day and a fellow officer next to me had a McDonald’s brochure on his desk. He had applied to be in the Registered Applicant Program, so I then wrote a letter to McDonald’s and drew parallels as to what I did as a leader as both an officer and a pilot. It takes people to run a restaurant. As a personnel officer I was responsible for caring for and feeding a squadron of 375 enlisted men. I knew if I could do that, I could care for a team in the restaurant.

Q: HOW DOES YOUR MILITARY EXPERIENCE AFFECT HOW YOU RUN YOUR RESTAURANTS? Pellicci: The military taught me commitment, value of structure, and standardization, and I try to instill that into my restaurants. Creativity and personalities are great ingredients to a strong team, but you still need to always embrace procedures, policies and standards. Along with my son Joel Jr., I help to oversee the director of operations and three supervisors in the organization (each supervisor oversees four stores). We standardize procedures and set policies as a team, allowing for more efficiency when employees go from restaurant to restaurant. As a pilot in the Navy for nine years, I used a pre-shift checklist on the first landing I made and used the same pre-checklist for the last landing I made. Use of existing tools and following the proper procedures in the military and in the restaurant allows for the easiest way to get the best and most positive results. I love the individual approach and ideas to things, but there is no compromising on policies, procedures and standards. Employees need to be trained; I was a teacher before I went into the military and was serving as a flight instructor. You have to be a leader and I was an officer and that helped to mold my leadership skills. I was accepted into the program and began training at McDonald’s in my off-time as a flight instructor and was able to grow from there. As a leader you accept responsibility, bring adaptability and provide discipline. If you are not a leader, you will not succeed in this business. You have to hold yourself and others accountable.

Q: HOW DO YOU RECRUIT VETERANS TO WORK IN YOUR RESTAURANTS? Pellicci: We represent and recruit at job fairs that target the military. Joel Jr. is a founder and current vice president of Special Operations Wounded Warriors and through him we have sponsored events that focus on Special Operations’ individuals. Location is an important factor. We used to have an air force base nearby where we would hold recruitment activities. We would recruit active military personnel, veterans, military spouses and their children when they were of age to work in our restaurants. While the local base was open, I staffed 60 percent of my managers with military personnel. I encourage business owners to build those relationships with local military bases and partner with them in recruitment activities.

Q: WHAT SKILLS FROM THE MILITARY HAVE HELPED YOU EXCEL AT MCDONALD’S?

command compliance, but you cannot command respect. If you order individuals to do things, they will do them, but it does not mean they will respect you. You need to help coach them and appreciate their value to the team. The military teaches you all these skills that are so valuable in other professions.

Q: WHAT DO YOU ENJOY MOST ABOUT YOUR JOB? Pellicci: The people. The community. The relationships. I enjoy focusing on taking care of the people I work with so they can take care of their customers. I love to see individuals grow within the organization. In seven of our 12 restaurants, general managers started as crew members and worked their way to the GM level. When I came to the Myrtle Beach area, the stores I bought were struggling. Some of the employees took customers for granted. You need to operate every day like your biggest competitor is opening next door tomorrow. Turning it around was not easy and I learned many lessons along the way. I got everyone together and let them know we were going back to the basics. We made each manager go back through various classes and we made the investment to send the GMs back to Hamburger University (global training facility in Oak Brook, Ill. for McDonald’s operations coaching and leadership development) for additional training. It took time, but once again it confirmed our belief in the McDonald’s system which provides opportunities, training and development for employees to grow and succeed. One of the things I appreciate most as an owner/ operator is the relationships with my fellow owner/ operators where we become not only just business associates, but dear friends — much like it was when I was in the military.

Q: WHAT ARE YOU PROUD OF WITH REGARD TO MCDONALD’S AND ITS VETERAN PARTNERSHIPS? Pellicci: I’m very proud of the fact that McDonald’s recognizes, values and appreciates the sacrifices our military men and women make every day. McDonald’s is able to recognize talent and potential that it can bring into the family. We are actively seeking additional partnerships from veteran organizations around the United States in helping us identify this great talent. n

Kraig Baker is project manager, U.S. recruitment services, employment strategy and U.S. human resources for McDonald’s USA, LLC. Find him at fransocial.franchise.org.

Pellicci: Working with people, understanding the value of teamwork and leadership has helped us succeed at McDonald’s. We understand that no one individual can do it alone; it takes teamwork. We have production teams, drivethru teams and grill teams. Many teams make up the whole team. Along with authority comes the responsibility and accountability to lead. I try to teach my teams that you can FRANCHISING WORLD SEPTEMBER 2014

EVENTS

California Heats up as Franchisors Flock to the West Coast Franchise Expo Learn how to ace media interviews on the showroom floor. BY SONIA PERRONE

he 11th annual West Coast Franchise Expo, scheduled Oct. 23-25 at the Anaheim, California Convention Center, will be the largest Western region industry event of the year, uniting qualified prospective franchise owners with growing brands. The West Coast continues to be an ideal market for franchise growth, and when the doors open this fall, hundreds of franchisors, thousands of prospects, and even many current small-business owners will be much closer to realizing their entrepreneurial dreams. California, according to research conducted by FRANdata, remains a hot franchise market. The state is headquarters for 569 franchisors and currently enjoys goods and services provided through nearly 40,000 franchisee-operated units. Those figures complement overall U.S. data from the International Franchise Association which predicts that the franchise industry in 2014 is expected to create approximately 200,000 new jobs and boost franchising’s share of the nation’s gross domestic product to nearly $500 billion. Hosted by longtime show producer MFV Expositions, the IFA-sponsored WCFE will feature more than 200 exhibitors, 50 free seminars, and five symposia. It will

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provide a unique experience for both franchisors and show visitors. In addition to its educational value and offering exhibitors a chance to generate buzz about their concepts, organizers say the opportunity for franchisor representatives and both new and active investors to meet face-to-face is invaluable. As momentum builds for this year’s WCFE, MFV Expositions will be riding the wave of success from the 2014 International Franchise Expo conducted earlier this year in New York City. The extensive press and media coverage played a key role in the show’s roaring success. In the weeks leading up to the event and during the event itself, exhibitors were given opportunities to get their brands in front of consumers and investors beyond the showroom floor. Media interest in the show was at an all-time high with attendance and coverage from top media outlets including “FOX & Friends,” Entrepreneur.com, Bloomberg, Fortune, Yahoo!, and Inc., in addition to vast regional coverage. With extensive marketing plans in place, franchisors and suppliers have been taking note of the increase in advertising and publicity garnered for each show, and are eager to take advantage of media opportunities that come their way.

(Continued on page 58)

3 FRANCHISE EVENTS,

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Share your brand with thousands of entrepreneurs and business owners at the largest franchise expo in the West!

Back in Houston for its second year! FES brings the hottest concepts in franchising and the most qualified candidates to one of Americaâ&#x20AC;&#x2122;s fastest growing cities.

Exhibit at the premier franchising event in the country and meet over 19,000+ qualified prospects from across the U.S., and around the world.

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ANAHEIM CONVENTION CENTER ANAHEIM, CA

NRG PARK (FORMERLY RELIANT PARK) HOUSTON, TX

JUNE 18-20,2015 THE JAVITS CENTER NEW YORK CITY, NY

Reserve your space now at these shows, call 201.881.1666 or email exhibit@mfvexpo.com

The world leader in franchise events, MFV Expositions, has been connecting businesses with qualified franchisees for over 20 years. To learn more visit: MFVExpo.com Follow us on:

(Continued from page 56)

“Before we enter a market for an event, our audience knows we’re coming,” said Tom Portesy, MFV Expositions president. “We create impactful campaigns that target the region’s most qualified prospects and place advertising in virtually every major industry magazine and regional newspaper, as well as on local television and radio.” Unlike advertising, public relations is never guaranteed. However, you need to know when a reporter may show up at your booth ready to conduct an interview that could put your brand in the national spotlight. As franchisors gear up for the WCFE, here are a few tips to ace your next media interview on the showroom floor.

THINK SOUND BITES Journalists often take notes in the form of sound bites. They are looking for short one-liners to use for quotes to enhance their stories. Going into an interview with this mentality will set you up for positive exposure. When conducting your interview, strive to be clear, concise and correct. While you may be an expert on your company and industry, have a few, short, key messages that you aim to include in every media interview. Don’t be afraid to create a “cheat sheet” for yourself that lists each of these key messages for review. When speaking, try to avoid technical answers. Be aware of your audience.

IF YOU DON’T KNOW THE ANSWER, JUST SAY SO A journalist may come at you with a “stumper question,” but there is nothing wrong with saying you don’t know. Remember, everything you say is on record. If questioned about important decisions that are yet to be made, feel free to let the journalist know that or that you aren’t sure of the answer and will report back.

FRANCHISING WORLD SEPTEMBER 2014

ANSWER WHAT YOU WANT TO BE ASKED The journalist may not ask you the question that you want to answer. It is your job to segue instead into the topic you want to discuss. For example, use transitions such as, “What really matters is…,” or “The more interesting question is…,” or “The most important issue is….” This goes back to planning what your goals are and knowing what you want to communicate from the start. You want to focus on your key messages as much as possible.

HAVE YOUR PRESS MATERIALS READILY AVAILABLE Whether your interview is conducted at your booth or at the press office, always have your press materials readily available to give to the journalist. Make sure your press materials are up-to-date, clean, have appropriate photos and include a contact number or business card in case the journalist needs to reach you for follow-up details. The better your press materials are, the more likely the journalist will pull from those materials to enhance the story.

INTERVIEW ETIQUETTE Remember, even a small-town newspaper can have a powerful effect. Your goal should be to establish a relationship with the journalist so you can go back to him or her with different story angles in the future. Thank journalists for their time and follow up to make sure they have everything they need for their stories. The 2014 West Coast Franchise Expo is Oct. 23-25 at the Anaheim Convention Center. For more information, visit www.wcfexpo.com. n

Sonia Perrone is director of marketing for MFV Expositions. Find her at fransocial.franchise.org.

Join the Movement Are You a FAN? Franchise businesses need to come together and speak with one, consistent, strong and collective voice on behalf of our great industry. IFA has launched the Franchise Action Network (FAN), to mobilize the franchise industry to be that voice. By joining the FAN, we will unite all of our voices within franchising with a strong message about the positive impacts of the franchise business model in every community across the country. Make your voice heard and join in this fight by signing up for the FAN today!

www.FranchiseActionNetwork.com If you have any questions about this new initiative, please do not hesitate to contact IFAâ&#x20AC;&#x2122;s Senior Director, Political Affairs & Grassroots Advocacy, Erica Farage at efarage@franchise.org or 202-662-0760.

WELCOME NEW IFA MEMBERS! Preferred HealthStaff Inc. Fairfield, Pa. Contact Donna Moyer

G.Neil Poster Guard Compliance Protection Sunrise, Fla. Contact Chris Prior

Pressed4Time Berkley, Mich. Contact Joni Sabo

Intacct San Jose, Calif. Contact Seiko Monahan

Real Property Management Salt Lake City, Utah Contact Doug Oler

Lasky Architect P.A. Fort Lauderdale, Fla. Contact Scott Lasky

Reem Al Bawadi Group Dubai, United Arab Emirates Contact Pankaj Gulati

Miller, Ross & Goldman Cedar Park, Texas Contact Mike Ross

Sew Fun Studios St. Augustine, Fla. Contact Brian Pappas

Programmers On Call Waco, Texas Contact Tom Thomas

Sherpa Kids International Pty Limited Brooklyn Park, Australia Contact Vicki Prout

RMH Business Solutions, Inc. Minneapolis, Minn. Contact Bob Hackl

Silverline Group Pty Ltd Somerset West, South Africa Contact Jonathan Pepler

Sigler Companies Ames, Iowa Contact Beth Cross

Vapor Shark Franchising LLC Miami, Fla. Contact Laura Leidel

Surefire Social, Herndon, Va. Contact Tom Lewis

Five Star Innovations Inc. Victoria, British Columbia Contact Evelyn Saurette

WINK Lisbon, Portugal Contact Daniel Soares FRANCHISE SUPPLIERS

The Profit Experts Allen, Texas Contact Fred Parrish

Garbanzo Mediterranean Grill Castle Rock, Colo. Contact Bob Bafundo

Benetrends Commercial Insurance Solutions North Wales, Pa. Contact Rocco Fiorentino, CFE

My Music Skool Company Denver, Colo. Contact Yumi Ha

DataSphere Technologies, Inc. Bellevue, Wash. Contact Gary Cowan

Patrice & Associates Franchising, Inc. Dunkirk, Md. Contact Patrice Spurlock

Freeman Audio Visual, Inc. Chicago, Ill. Contact Michael O’Brien

FRANCHISE SYSTEMS AngloINFO Limited Wallingford, Oxon Contact Fiona Aris Bee & Tea Chicago, Ill. Contact Mandy Calara bluefrog Plumbing + Drain Tempe, Ariz. Contact Robin Wilcox Brann’s Steakhouse & Grille Franchising, LLC Grand Rapids, Mich. Contact Mike Brann Challenge Island St. Augustine, Fla. Contact Brian Pappas Cheeseburger Bobby’s International, LLC Kennesaw, Ga. Contact Robert Stoll EagleRider, Inc. Los Angeles, Calif. Contact Chris McIntyre Falafill Cicero, Ill. Contact Mandy Calara/Forever Brands LLC

FRANCHISING WORLD SEPTEMBER 2014

VF Imagewear, Inc. Nashville, Tenn. Contact Terry Lena Zeehub, LLC Long Beach, Calif. Contact Jeroen Hessing

LOOKING

FOR YOUR NEXT

FRANCHISEES? Come to Franchise Expo South Returning to Houston in 2015 Get face-to-face access to thousands of the most qualified prospects from around the U.S. eager to explore opportunities in franchising.

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Contact Katharine Rosalen at (201) 881-1666 or krosalen@mfvexpo.com. Franchise Expo South @MFVExpositions