Small Business Insight of Hampton Roads by Small Business Insight

Top Five Franchisable Businesses in Hampton Roads PAGE 20

BEHIND THE SCENES: A GREAT FRANCHISE

Franchising Your Business

A SPECIAL EDITION

What works, what doesnâ&#x20AC;&#x2122;t and why it matters to you.

p. 16

ALSO INSIDE Re-negotiate your lease for lower rates

PAGE 11

Glenn Davis of Geeks on Call. p. 34

Meet Our Friends

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SBI 900 Commonwealth Place, Ste. 215 Virginia Beach, VA 23455

PRESORTED STANDARD US POSTAGE PAID RICHMOND VA PERMIT 930

Has your business hit the mark?

Hitting $1 million for the first time is a big deal, and we want to celebrate with you!

rom start up to maturity, companies pass through several developmental phases. We start with the classic napkin-on-the-kitchen -table phase where we hatch the entrepreneurial idea, to the company reaching maturity with a fully staffed professional management team in place. First, we enter the start-up phase where we initially fund the project and recruit our first clients. Shortly after that, if our concept is gaining traction, we begin to add employees. This adds to our ability to bring in additional work because of a gain in manpower and sometimes additional expertise. The company is growing, but it is still being driven by the abilities of the owner. The employees are mainly helping the owner do more, but not to operate independently. Traditionally, the business grows to the point of the owner’s span of control. Then growth slows or stops. The business is on the door step of being what is called a Stage Two business. A Stage Two business is when the business is bigger than what one person can manage, but is not big enough to support a fully functioning management team. The Edward Lowe Foundation reports on a study done by Eric Flamholtz and Yvonne Randle that indicate to a CEO that second stage is at hand when: 1. Many people are not aware of what others are doing. 2. People lack an understanding of the firm’s ultimate goals. 3. A precipitous drop in product quality occurs for unknown reasons.

4. Turnover increases sharply, just when the company needs more personnel. 5. You wake up worrying about operational tasks that someone else ought to be handling. 6. All your customers want to meet with you, but finding the time to do so seems impossible. This stage begins for most businesses when they build revenue to about $1 million and continue till revenue passes $50 million. At that point, the business enters the third phase of its life as a professionally managed mature company. Helping businesses to reach Stage Two and growing through to maturity is a major initiative of SBI. The reason is that the majority of job growth happens within stage two businesses leading not only strong companies, but strong communities and a healthier economy for all. To accomplish this, we have started two membership organizations, The SBI Owners Council and SBI Emerging Businesses. The Owners Council vision is to help owners of stage two businesses develop their companies to maturity The Emerging Businesses is to help businesses reach stage two for they can have rapid growth and impact the community. Source: Growing Pains: Transitioning from an Entrepreneurship to a Professionally Managed Firm, by Eric Flamholtz and Yvonne Randle, revised ed. (Jossey-Bass, 2000), 9-10, 33. This paper makes heavy use of Chapter 2 of Growing Pains. Flamholtz and Randle identify seven stages: New venture, expansion, professionalization, consolidation, diversification, integration, and decline and revitalization. Here we compress their stages 2 and 3 into a single second stage, and treat their stages 4-7 as a single third stage.

If your business has hit $1 million in gross revenue for the first time, SBI magazine would like to recognize you in Million Dollar Milestone: It’s Just the Beginning. Submit a signed letter by your CPA stating that you’ve earned at least $1 million for the first time in at least three years no later than February 1 and you will be recognized in the class of 2010. For more information, visit www.smallbusinessinsight. com. The Million Dollar Milestone is sponsored by the following companies:

For sponsorship information, contact info@ smallbusinessinsight.com

smallbusinessinsight.com

Calendar of Events September

November

21 — SBI Owners Council Luncheon* Tripps Restaurant, Virginia Beach • 11:30 a.m.- 1 p.m. Meet fellow OC members on the Southside. Speaker TBA. RSVP to info@smallbusinessinsight.com.

16 — SBI Owners Council Luncheon* Tripps Restaurant, Virginia Beach • 11:30 a.m.- 1 p.m. Meet OC members on the Southside. RSVP to info@ smallbusinessinsight.com.

16— SBI Magazine Network-

21— SBI Magazine Network-

ing Event Tripps Restaurant, Virginia Beach • 4-6 p.m. Meet the SBI staff and readers and enjoy light hors d’oeurves. $6 online at sbivbsept.eventbrite.com or $10 at the door. Open to the public.

23 —

MULLIGANS ALLOWED | Members of the SBI Owners Council met last week at Greenbrier Country Club for a round of golf. For a recap of all Owners Council activities, turn to page 40.

SBI Appreciation Luncheon Tripps Restaurant, Virginia Beach • 11:30 a.m.-1 p.m. Businesses featured in the magazine will enjoy lunch and meet other featured companies. Invitation only.

Bring your clubs and play a round with other members of the Owners Council. $60. RSVP to info@smallbusinessinsight. com.

28 — SBI Owners Council

19 — SBI Owners Council

Luncheon* Schlesinger’s, Newport News • 11:30 a.m.-1 p.m. Meet fellow OC members on the Peninsula. Speaker TBA. RSVP to info@smallbusinessinsight.com.

October Luncheon* Tripps Restaurant, Virginia Beach • 11:30 a.m.- 1 p.m. Meet fellow OC members on the Southside. Speaker TBA. RSVP to info@smallbusinessinsight.com.

28 — SBI Magazine Network- 19— SBI Magazine Network-

ing Event The Pub, Hampton • 4-6 p.m. Meet the SBI staff and readers on the peninsula. $6 online at sbipeninsulasept.eventbrite.com or $10 at the door. Open to the public.

29 — SBI Owners Council Golf Outing* Greenbriar Country Club • Noon lunch, 1 p.m. tee off.

ing Event Tripps Restaurant, Virginia Beach • 4-6 p.m. Meet the SBI staff and readers and enjoy light hors d’oeurves. $6 online at sbivboct.eventbrite. com or $10 at the door. Open to the public.

21 —

SBI Appreciation Luncheon

Tripps Restaurant, Virginia Beach • 11:30 a.m.-1 p.m. Businesses featured in the magazine will enjoy lunch and meet other featured companies. Invitation only.

26 — SBI Owners Council

Luncheon* Schlesinger’s, Newport News • 11:30 a.m.-1 p.m. Meet fellow OC members on the Peninsula. RSVP to info@ smallbusinessinsight.com.

26 — SBI Magazine Networking Event The Pub, Hampton • 4-6 p.m. Meet the SBI staff and readers on the peninsula. $6 online at sbipeninsulaoct.eventbrite.com or $10 at the door. Open to the public.

27 — SBI Owners Council

Golf Outing* Greenbriar Country Club • Noon lunch, 1 p.m. tee off. $60. RSVP to info@smallbusinessinsight.com.

ing Event Tripps Restaurant, Virginia Beach • 4-6 p.m. $6 online at sbivbnov.eventbrite. com or $10 at the door. Open to the public.

18 —

SBI Appreciation Luncheon Tripps Restaurant, Virginia Beach • 11:30 a.m.-1 p.m. Businesses featured in the magazine will enjoy lunch and meet other featured companies. Invitation only.

23 — SBI Owners Council

Luncheon* Schlesinger’s, Newport News • 11:30 a.m.-1 p.m. Meet OC members on the Peninsula. RSVP to info@smallbusinessinsight.com.

23 — SBI Magazine Networking Event The Pub, Hampton • 4-6 p.m. $6 online at sbipeninsulanov. eventbrite.com or $10 at the door. Open to the public.

24 — SBI Owners Council

Golf Outing* Greenbriar Country Club • Noon lunch, 1 p.m. tee off. $60. RSVP to info@smallbusinessinsight.com.

* Guests who qualify for membership of the Owners Council can attend a Council event once for the member price of the event.

4 Small Business Insight | September 2010

CONTENTS

September 2010

TROPICAL PARADISE | Life is smooth for Tropical Smoothie owners Dean and Sue Gonsior. See page 26. Photo by Paul Chin, Jr.

INSIGHT

Franchising in Hampton Roads What is a franchise? How to I start one? Is it worth it? SBI digs deeper into the business of franchising, and what it means to small business owners in Hampton Roads.

p. 16

Apply the franchising model to your business. Just because you don’t own a franchise doesn’t mean you can’t model your business after one.

p. 17

Liberty Tax Read what owner John Hewitt has to say about his company’s success.

p. 18

On the cover

Geeks on Call owner Glenn Davis. Photo by Paul Chin, Jr.

Most Franchisable Businesses SBI presents the top five finalists in our search for companies that would make a successful franchise.

p. 20

smallbusinessinsight.com

CONTENTS

COLUMNS 11

Commercial Real Estate

Find out if you can renegotiate your lease early.

Financial Planning

YNot Pizza

p. 25

Geeks on Call

Buy-sell agreements and smooth transitions, explained.

Internet Marketing

2 brothers, 3 locations, too many pizza combinations to count.

Glenn Davis didn’t just open a store, he bought the entire franchise.

Impressions in Print

How to leverage your website for franchise opportunities.

This mother-daughter team provides major merch for franchisors.

p.29

CHARITY

INSIGHT Franchising Your Biz

A leading franchising attorney answers common questions.

Serve the City p. 30

Why I Choose Not to Franchise.

COMMUNITY

Selma’s owner 25 Simply states her reasons.

SBI Owners Council

Smoothly Sailing

Area developer of Tropical Smoothie shares his stories of success.

Flip that Franchise

40 p. 36

Throughout hard times, Rich Studebaker makes it look easy.

42 46

Subs so fast, you’ll freak: check out this new sandwich franchise.

p. 42

6 Small Business Insight | September 2010

Confetti owner Eric Hinkle brings a sweet taste to Hampton Roads.

Networking Events

Despite numerous name changes, the fresh bagels remain the same.

Jimmy John’s

The 31 charter members enjoyed luncheons and a golf outing last month.

Gelato, Anyone?

Bagels N’ More

Heart of Compassion Partnerships brings hope to the community.

Each month, SBI hosts 2 different networking events for readers.

GURUS WANTED Are you an expert in any area of small business? SBI is looking for bloggers to provide small business owners of Hampton Roads with knowledge on how to grow their business. If you are interested, please e-mail editor@smallbusinessinsight.com.

September 2010 Vol. 2, Issue 6 900 Commonwealth Place, Suite 212 Virginia Beach, VA 23464 757-742-3233 | smallbusinessinsight.com e-mail: info@smallbusinessinsight.com

PUBLISHER Art Radtke

editor

Jessica O. Swink

Copy Editors

Caroline Dozier Jackie Gilmartin

Art Director Paul Chin, Jr.

Contributing Writers

Blake Dozier Leon Garber Karen Miller Al Moore T.J. Prieur Art Radtke Stephen E. Story, P.C. Jessica O. Swink

Contact Us Please e-mail info@smallbusinessinsight.com for information regarding: Advertising SBI Emerging Businesses Letters to the Editor Subscriptions E-mail sbiownerscouncilHR@ gmail.com for info on SBI Owners Council

Secrets of Successful Global Businesses FRED WEST ENTERPRISE SOLUTIONS INTERNATIONAL Most global companies, if not all of them, have systems and policies in place to control all aspects of the company. Now, I am sure you are saying to yourself, “I run a small business! What does that have to do with me?” Operations management does amazing things for a small business. Just to name a few: it can increase proficiency, reduce shrinkage, and increase the worth of the business for resale or appraisal. The general rule is a business is only worth as much as the distance it is from the owner. To make that happen, here are a few ideas taken from the global business model: systemization, delegation, tracking results, improving efficiency, and accountability.

To learn how to apply these global traits to your small business, visit smallbusinessinsight.com/blogs.

Kudos! In the August issue of Small Business Insight, we featured Zenetex, LLC, an IT service management firm in Virginia Beach specializing in government contracts. After the magazine was sent to press, Zenetex was awarded a Navy Seaport-e Prime contract on July 15. The contract is a multiple-award, IDIQ, task order vehicle valued at $5.3B per year. This contract has a 4-year base term with a single 5-year option period. Seaport-e is the Navywide “virtual” contract of choice for many Navy and DoD commands. “This contract is a major milestone in our Navy business development strategy and it will provide us a source of significant growth

and customer access for at least the next nine years,” said Gery VanderVliet, executive vice president, business development. The contract lists 22 functional service areas within the scope of the contract, and for more information, or to learn more about the Zenetex Seaport-e contract can contact Gery VanderVliet at gvandervliet@zenetex.com. SBI extends a warm congratulations to the team at Zenetex for achieving this accomplishment.

Corrections, clarifications

In the August 2010 issue of SBI, we misidentified LTI, formerly Lee Telecom, Inc. as LTI Telecom and apologize for any confusion this may have caused. smallbusinessinsight.com

Let’s grow together.

Editor’s Desk

If You’re Happy And You Know It... It is really easy to get bogged down with to-do lists and day-to-day routines.

For a limited time, the application fee is waived to join SBI Emerging Businesses. Pay only the yearly rate. More details available at www.smallbusinessinsight.com.

After sending one issue of the magazine to press, there tends to be a brief moment of resolution and relief, then it’s a flash of cold water to the face and we’re already behind in getting the next issue out the door. Pepper in lunches, interviews, and meetings and there just doesn’t quite seem to be enough time in the day sometimes for this one. But then again, I’m preaching to the choir. After speaking with business owner after business owner, it’s surprising that most of you even have time to pick up the magazine and read it, let alone read anything not directly related to your business. What keeps you going, though, is your drive to be successful. Everyone has their own story on why they got into the business they are in, and what keeps them ticking throughout the day. Some of us, though, handle the stresses of work more gracefully than others. How? I think the more graceful folks tend to remember more frequently what got them into their job position in the first place: making that first sale, when they fixed that broken contraption and felt a sense of accomplishment, or when they had that “A-HA!” moment when their product or service was first scribbled down on notebook paper. Honing in on your passions and falling more in love with your business everyday is a wonderful feeling, and it’s a great way to answer the question “How in the world will I get everything accomplished this week?” What keeps me going and feeling exhilarated in stressful times is the opportunity to meet business owners and hear these stories. My job allows me to listen to everything from struggles to success stories in business, and that’s an incredible thing. This month’s issue is focused around franchising, and we’ve put together a magazine that covers everything from how to get started, success stories, why businesses shouldn’t franchise and which businesses we think would make excellent franchises. Having the opportunity to speak with these business owners and hear their stories was a great experience, and as a reader, you won’t be disappointed either. It is my hope that these stories not only inspire you, but also serve as a resource in your future endeavors. Now it’s time for me to check “write your column!” off my to-do list and move on to next month’s Legal & Liability issue...

We all start somewhere. Growing a business can be an overwhelming task when you have big dreams and not quite enough resources. Weâ&#x20AC;&#x2122;re here to help. Join SBI Emerging Busineses and meet other owners and entrepreneurs, as well as participate in workshops, seminars, networking events and luncheons designed to help you take that next step with your business. Membership is open to a broad range of companies: financial, legal, industrial, sales, and more.

For details about SBI Emerging Businesses, visit www.smallbusinessinsight.com.

POWER UP.

LOG IN. SPEAK OUT. Stay plugged in for info about upcoming issues, events and information about SBI Owners council and SBI Emerging Businesses.

www.smallbusinessinsight.com

@SBI_HamptonRds facebook.com/SBI.HamptonRoads Find our group: Small Business Insight magazine

Columns | Commercial Real Estate BLAKE DOZIER CB RICHARD ELLIS

Have a Pre-Recession Lease Rate? Re-negotiate Early! Many business owners believe they can’t take any action to lower their occupancy costs until their lease expires. They are kicking themselves because they signed long-term leases at the top of the market which don’t expire for 18 months or more. They also fear that by the time their lease expires market lease rates will have gone up again. Fortunately for tenants who are in this position, today’s down market offers an opportunity that adds value to both tenants and landlords: the blend and extend approach. In this scenario, a tenant will propose an early renewal to the landlord in exchange for a lower rent, more money to improve the space, the ability to expand or contract, or some combination of these and other benefits. A blend and extend is a particularly good option if certain criteria exist. Increased availability of space in the market must exist as it makes rates on competing buildings lower and creates a more difficult environment for landlords to retain tenants. This is definitely the case today, as vacancy rates across property types are at their highest in many years. Another big factor is the vacancy in the building the tenant occupies. If it is 20 percent or higher, the landlord has a much higher incentive to do whatever is necessary to retain current tenants. This can also be true if the building is 100 percent leased, but the subject tenant occupies a large portion of the building and would create a large vacancy if it were to move out. Creditworthiness of the tenant is also paramount, as it is part of the value proposition to the landlord when the tenant offers to blend and extend. Before considering any of these things, tenants must evaluate if the location fits future business plans. In today’s market, landlords stand to benefit from a blend and extend even if they are reducing rent and offering huge concessions. Not only does a long term lease renewal secure a property’s future, it adds value by stabilizing the rental income. Arguably the biggest benefit is that it avoids very expensive lease-up costs of new

build-outs, long-term vacancy, and higher levels of free rent and other incentives to secure a new tenant(s). For every month the space sits empty, the landlord is losing 8.33 percent of the annual income for that portion of the property. In addition, when a landlord negotiates a lease renewal early, they usually are not competing with other landlords as they would be if the lease expiration were looming. This competition for tenants in the market is causing owners of Class A buildings to offer space at the same prices and incentive levels of those which were offered during good times in Class B and C buildings. For a tenant, a blend and extend offers more than just reduced rent and more tenant improvement dollars to reconfigure the space to meet changing needs. It allows a tenant to avoid moving, which can disrupt business and cost thousands of dollars. It can reset the flexibility of the lease by adding in new termination, renewal, or expansion options. Many leases have provisions where landlords charge tenants additional rent of amortized tenant improvement money to pay for high initial build-out costs. A blend and extend may help a tenant lower or eliminate this remaining obligation from the original lease.

A tenant may even be able to secure some free rent in their renewal term, not to mention expand or contract now instead of waiting until the lease expires. Key questions for tenants to ask when evaluating the viability of a blend and extend as an option are: Has the property been sold or refinanced recently? What is the value of the proposed rent reduction and other concessions? What are the landlord’s costs to re-lease the space? What is the projected lease rate at expiration? What value does the tenant add to the property? If you don’t know the answers to these questions, an experienced commercial real estate agent can help you to evaluate the situation and approach your landlord — in most cases at no cost to you. Opportunities for savings and flexibility are out there right now and the savvy tenants are reaping the benefits. It may be time for you to sit down and evaluate your company’s occupancy costs. Blake Dozier is a commercial real estate agent in the Norfolk Virginia office of CB Richard Ellis. He can be reached at (757) 217-1878, or by e-mail at blake.dozier@ cbre.com.

Opportunities for savings and flexibility are out there right now, and the savvy tenants are reaping the benefits.

smallbusinessinsight.com

Columns | Financial Planning T.J. PRIEUR SAGEMARK CONSULTING

Buy-Sell Agreements: Taking Care of the Eight D’s ost all closely held businesses, especially multi-owner corporations and partnerships need to have a buy-sell agreement in place. Individually owned businesses can also profit from the use of a buy-sell agreement. This is essential for smooth transition of ownership upon the occurrence of several events, namely the “Eight D’s.” In a single-owner business, the buyer could be key employee(s), a competitor, a supplier, or even a customer.

1. Death of a shareholder. In the event of death of an

owner, the business can suffer a financial setback. This problem can be compounded if the surviving shareholders have to take in a new partner, the deceased owner’s spouse. He or she may have very little knowledge of the business, but yet expect a salary and profits from the business. Harmonious transition of the business can be accomplished with a buy-sell agreement fully funded with life insurance coverage.

2. Disability of a shareholder. While most buy-sells take into account death (even though the agreement value may be low or underfunded), many totally ignore what could be a more serious financial drain, disability (the living death). Alternatively, disability is poorly defined (if at all), not funded or underfunded. A disabled shareholder would expect his/her salary to continue, as well as to get a share of profits. If the disability was extended, how long could the business keep paying? All of these decisions should be outlined in the agreement. It should be a business decision based on previously agreed-upon terms, not on emotions. And, of course, the disability agreement needs to be fully funded. 3. Departure of a shareholder. When a shareholder leaves,

whether for regular retirement or early voluntary retirement, his/her business interest should be purchased. The purchase price can be the same as or less than the death price (it cannot be more). A lower purchase price might be set for early termination. As for retirement planning, a life insurance policy can provide a death benefit and cash values can also be used as a retirement supplement.

4. Divorce of a shareholder. It would not be unusual for a spouse to end up with one half the business interest of a closelyheld business, in event of a divorce. There should be a provision in the buy-sell to have such spouse forced to sell stock back to either the: (a) corporation; (b) original shareholder; or (c) other shareholders. Again, the price cannot be higher than the death price. 5. Deadlock. If equal owners come to a major disagreement, the

business can become “deadlocked” and unable to further conduct normal operations. In this case the business may have to be liquidated. This may have to be taken into consideration in the agreement.

12 Small Business Insight | September 2010

6. Disagreement among owners. If ownership is unequal, and there is a major disagreement, a minority shareholder could be forced out of active employment. In that case, it would also probably make sense to purchase his/her interest. This possibility should be taken care of in the agreement. 7. Default. In most closely-held corporations, the individual

shareholders must personally guarantee corporate loans from banks and/or contribute payments to the bank or business. There should be a provision whereby if a shareholder defaults, a buyout would be triggered for his/her interest.

8. Determination of value. The most important item in a

buy-sell is the valuation of the business interest. No one wants to over-pay for a business interest. In addition, each owner would want to be sure he or she or their family received fair value in event of a living buyout or death. Appraisals may be viable and even required if family members are involved. Another reason for proper valuation is to fix the value in the deceased’s estate for federal estate tax purposes. One of the stipulations is that the value must be fair market value at the time the agreement is entered into. If appropriate life insurance is not purchased to fund the full value, then an installment purchase arrangement should be provided for the balance. When buy-sells are drafted or reviewed, perhaps the “Eight D’s” would make a good checklist for consideration, when it’s far easier to make business decisions regarding these situations rather than make emotional decisions after the fact.

T.J. Prieur is a registered representative of Lincoln Financial Advisors Corp., a broker/dealer, member SIPC, and offers investment advisory service through Sagemark Consulting, a division of Lincoln Financial Advisors Corp., a registered investment advisor, One Columbus Center, Suite 800, Virginia Beach, VA 23462. (757) 777-3137. TJ.Prieur@LFG.com. Insurance offered through Lincoln affiliates and other fine companies. This information should not be construed as legal or tax advice. You may want to consult a tax advisor regarding this information as it relates to your personal circumstances. The content of this material was provided to you by Lincoln Financial Advisors for its representatives and their clients. CRN: 201003-2039753

smallbusinessinsight.com

Columns | Internet Marketing AL MOORE MARATHON CONSULTING

Websites For Franchisees ebsite and Internet marketing strategies for franchisees are typically defined and managed by the franchisor. Websites are usually major components of the franchisor brand and, as such, generate a great deal of attention and are tightly controlled.

which they might be interpreted later. Using the rules expressed in the Franchising Agreement as the background, it is important for the franchisee to understand how the websites will be used to benefit the franchisee. All rules governing the websites should be documented in the Franchise Agreement. Items for exploration include the following: Effectiveness — How easy is it for potential customers to find your store using the Internet? How well will the site represent your business? People cannot buy from you if they cannot find you. Regardless of the sales mode – physical store or Internet store – buyers need to know who you are, where you are, and what you’re selling. We are overrun with statistics proving that an increasing number of buyers find sellers using Internet search engines such as Google, Bing, and Ask.com. Effective sites are designed for Search Engine Optimization (SEO). Well designed sites consistently enable buyThe overall designs and functionality of the websites are ers to find sellers because the sellers’ sites appear high on the list going to be totally controlled by the franchisor. of search results. SEO makes that happen. Another technique to market the business is pay-per-click (PPC) As the franchisee, your ability to create independent webadvertising. These are the “sponsored links” that always appear at sites describing your franchise will be extremely limited or the top or side of a Google results page. non-existent. PPC campaigns are typically established and funded by the franchisor and they are typically most often limited in duration and Controlling the brand’s appearance and use in all conceivable managed similarly to other advertising campaigns using print, TV, media is a key element in the protection of the brand. or radio. This can even extend to For the franchisee, both the registration of company methods are easy to evaluate and information on sites such If potential customers reach your compare. Franchisors can meaas LinkedIn, Facebook, and business through the Internet, that sure exactly how many Internet Twitter. searchers are finding their sites, The rigidity of these rules website must be able to make the most what search terms are used, and makes it extremely important positive first impression possible. how the searcher navigates the for the franchisee to undersite. stand them and the manner in However, if you are considering purchasing a franchise whose future is largely dependent on an effective Internet presence, you need to understand how that presence will contribute to your success. If potential customers reach your business through the Internet, that website must be able to make the most positive first impression possible. While discussing franchisor operations with John Hewitt of Liberty Tax Service, one of the most successful franchisors in the country, he talked about the importance of a franchisor’s ability to offer “systems better than anyone’s.” This applies to websites as much as it applies to management systems such as procedures, guide books, and operating budgets. For the franchisee, there are a couple of website-related rules that will probably be non-negotiable:

1. 2.

14 Small Business Insight | September 2010

This is universal, regardless if the franchisor is using SEO, PPC, or both. Understanding how the franchisor utilizes search engine technology can be critical to the success of some franchises. Another measure of effectiveness is how well the site represents the business. Does it make a lasting, positive impression? Does it reflect a modern design? Is the look and feel appropriate for the type of business? Does it tell “the story” in a manner that leads to sales? Does the corporate site include an effective “Store Locator” with a map, directions, and contact info? This is an essential component for franchises operating in brick-and-mortar facilities. Flexibility – This is a very important characteristic of the site, from the franchisee’s perspective. Does the franchisor provide location-specific sites for the franchisee? While local sites might provide a degree of local maintainability, the franchisee must understand exactly what that means. Franchisees often need to create specific messaging for their stores. Photos of local events and staff listings or bios are good candidates for site content. Sales promotions, celebrity appearances, extended hours, and community sponsorships are items that should be maintained at the local level. The ability to present these on the Internet has a considerable impact on how effective the site will be. Even when a local site exists, if these items are maintained by the franchisor, timely updates might be difficult to achieve. Sites often include templates — page space dedicated to certain uses: the “Announcements go here,” “this goes there” approach. By understanding the capabilities and constraints that control site maintenance, the franchisee has a higher probability of avoiding future frustration. Specialization – How many company websites exist and what functions do they perform? The franchisor might have several sites designed for specific use. For instance, if participating in the retail business, there might be separate sites for visitors, regular customers, and employees of the company. Sites restricted to customers and suppliers are often referred to as Extranet sites. Sites restricted to company use are often referred to as Intranet sites and may be used for stock replenishment, time entry, etc. Specialty Intranet sites might be maintained by third-party entities who provide services to the franchisees. When exploring the use of multiple sites made available to franchisees, evaluate the sites for consistency of design and performance. Highly consistent sites often indicate the franchisor’s commitment to keeping their technology up to date. Websites are becoming more important to business every day. Understanding the franchisor’s website strategy will be important to you at some point, whether it’s now or later. smallbusinessinsight.com

Special Edition

FRANCHISING 101 EVERYTHING YOU EVER WANTED TO KNOW, AND THEN SOME. Featured Companies:

Liberty Tax Royal Chocolate Surf Rider Metro Scoot YNot Pizza Aromas Simply Selmas Tropical Smoothie Bagels Nâ&#x20AC;&#x2122; More Jimmy Johns Geeks on Call Impressions in Print

p. 18 p. 21 p. 21 p. 22 p. 22 p. 23 p. 25 p. 26 p. 29 p. 30 p. 34 p. 36

Just what is a franchise?

A system for the distribution of goods and services with four basic elements: independently owned businesses, conducting business under a federally registered trademark, initial and ongoing payment of fees and specific operating procedures mandated by the franchisor.

A few misconceptions Often the public assumes dealerships (Toyota), small store front chains (Starbucks), and co-ops (Ace Hardware) are franchises. Dealerships have signed agreements driven by contractual product purchase requirements, chains like Starbucks are all company-owned and were typically pre-existing businesses that join the co-op, and converting their business to conform to the standards of the co-op.

W equhaattiâ&#x20AC;&#x2122;s the righ on? t

A Hot B A Pow rand + erful F ranchis Suffici in e Battle- nt Developme g Strategy + Tested nt Cap K it A Stron g Franc now-How = al + hise Sy stem

A special thanks to Walter Ewell of Franchise Republic for providing this information. Ewell has 30 years of experience as a corporate and franchise development specialist, having helped build five of the top 50 worldwide franchise companies.

16 Small Business Insight | September 2010

Applying the franchise model to your non-franchise business BY ART RADTKE

What does it take to franchise?

· A distinctive brand name, filed for

federal registration of the trademark

· A highly successful existing business, ideally in multiple locations · A model adaptable to inexperienced operators from startup to operational requirements documented in a manual · Realistic goals and growth strategies · Sufficient funding for the packaging and launch of the franchise program, typically $250K plus · Support of experienced franchising professionals

When should you NOT franchise?

Franchising your business is like starting a whole new business which you most likely know nothing about. If you do not have a sufficient amount of capital to employ professionals to assist you, your business is basically a startup without documented procedures and a clear business model for others to follow. Do not franchise your business until you are truly ready.

The reason many people own their own businesses is to have the lifestyle they want for themselves and their family. To accomplish this, businesses need to produce enough time and money. The challenge is that the way most businesses produce money is by trading the time of the owner for the money, resulting in a common trap: the more money the owner makes, the less time he or she has. This problem usually starts right at the beginning when the owner decides that they would rather work for themselves rather for someone else. The image many of us have is that we will do, to a large extent, what we are already doing, but will get all the profit because the boss will no longer be getting his unearned cut. Thus, from the very beginning, the owner begins to trade dollars for hours. To escape this challenge, a business owner needs to do two things. First, he or she must systemize all aspects of the business so the expertise of the owner is not needed. Then, he or she must educate his or her staff so they learn the system correctly. In working with business owners for over 15 years, I have experienced resistance to both of these steps. Being a seasoned professional in their field, they often feel that employees should understand how to do the job, and in fact it is really just common sense. Then they get frustrated when people don’t remember how to do the task at hand. To gain perspective on this, let’s look at this situation from a perspective of high performance. One situation many of us are familiar with is the NBA championship series. Imagine for a moment that it is the last game of the championship series, and there is 30 seconds left. The Celtics have just went ahead by one point. What happens next is very predictable. The Lakers call a time out and go over

the final play. These players have been studying and preparing for 20 years for this situation, and they go over the play one more time — not just orally, but with the chalkboard and diagrams to make sure that everyone understands. If this is what we need to do with the best in the world to get high performance, wouldn’t it make sense that we need to do it for everyone? Step one: Get everything documented and written down. How is every step of the process done, and in what order? Once you have written it down, do the process following the steps. Did you include everything? Was it understandable? When you are satisfied that it is correct and complete, have someone else do the task by following the instructions. Once this is done, we move on to the second stage: educating. The education process is an area that small businesses struggle with, because they are typically short staffed and the employees are not fully trained. Often, the owner is too busy to train staff correctly in order to ensure that the job gets done, creating a cycle of problems only he or she can handle. The best companies in the world are typically the best-trained companies in the world. The company must develop a training culture both in the training of new hires and the continuing education of the more-tenured staff. This should be from training manuals in a scheduled, consistent manner. Assign your most trusted team member to this task and figure out how to make it fun and relevant to the participants. To have a properly trained staff that can handle the work day in a productive and predictable way is a major undertaking. It will take time, energy and self-control to see it through to the end, but if you do, you might just make your equivalent of the NBA championship series, but more importantly you will be on your way to having the time and money to live the life you want for yourself and your family.

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| Franchising

From A to Z

Liberty Tax owner John Hewitt explains the record growth of his business, from strategies, struggles and success. BY AL MOORE

18 Small Business Insight | September 2010

PHOTO BY PAUL CHIN JR.

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oogle the phrase “tips for franchisors” and you’ll find about 45,700 pages. What will be difficult to find is meaningful information describing the most important factor in franchisor growth: long-term commitment to franchisee success. In order to develop a better understanding of franchisor operations, SBI sat down with John Hewitt, founder and CEO of Liberty Tax Service. John’s accomplishments in the world of franchising are well known and tough to match. The Liberty operation is consistently ranked at the very top of high performing franchising companies in the country. The awards that have been won by John and Liberty are too numerous to list. Two characteristics contribute to this success: 41 years of experience in the tax preparation industry; and a commitment to franchisee success that goes to the finest level of detail on storefront operations. Supporting these two characteristics was Hewitt’s clear vision of where he wanted his company to go. He wanted to run the Number One tax preparation business in the country. After launching Jackson-Hewitt in mid-1986, and growing from six to twenty-one stores in four years, he said, “I quickly realized that, at this pace, I wasn’t going to live long enough to surpass H&R Block’s store count of thousands.” He replaced the organic growth plan with a franchising strategy, turning Jackson-Hewitt into the fastest growing tax service in the country. Jackson-Hewitt went public in 1994 and John departed in 1997. While waiting for his non-compete agreement to expire, Hewitt launched Liberty Tax in Canada, creating a platform from which he could expand into the U.S. Liberty’s growth has been sensational, in both good times and bad. The store count is now over 3,500. Liberty even grew during the past two years, adding over 800 franchisees during the worst economic downturn in our lives. Liberty’s commitment to franchisee (“Z” in Liberty jargon) success begins before an individual buys a Liberty franchise. Each potential Z is required to participate in a one-week training program. This orients them to the Liberty operation and begins exposure to the Liberty business model. Potential Zs are assessed and John Hewitt meets with each potential Z on an individual basis. John stated that one of the most important factors from the Z’s perspective is their willingness to execute the business model. “Not listening is human nature. Our model is based on 41 years of success. The number of people who would make an investment and not listen used to amaze me. Now I accept it for what it is. I even tell them during training that they probably won’t listen right away.” Another aspect of the selection process is understanding why the potential Z wants to invest. As you would expect, John’s advice is much more specific than what you find on the Internet. While most of the checklists advise fran-

| Franchising

chisees to pick something they like to do (tuning cars, baking, lawn work), John says, “Enjoying being a leader is much more important. Being able to work through others and get things done is much more important than liking to prepare tax returns. If the franchisee wants to succeed, he or she will do the things needed to grow the business”. The operational detail contained in the business model is astounding. It is so detailed that it is used to help the Z identify potential store locations and potential revenue. Each location is evaluated and Liberty is able to tell the Z how many returns that location will prepare on each day of a typical tax season. From that basis, Liberty provides a pro-forma budget detailing the financial model for that specific location. If the model is followed, profits result. When asked about support and guidance in specific operational areas such as staffing, technology, etc., Hewitt replied, “Think everything! The model is extremely complete.” Yes. It even defines the different waving techniques to be used by Miss (or Mister) Liberty when folks drive by. Hewitt also cited the dozens of conference calls he holds every day during the 105-day tax season. Each Z’s daily performance metrics are reviewed, with John and the more established Zs providing mentoring to the newer ones. “It consumes a lot of time, but it’s crucial to success,” says Hewitt. “The tax season is short and it’s important to review results each day and help the franchisee make adjustments.” “I believed from the beginning that our success would result from our management systems being better than anyone’s,” says Hewitt. Naturally, the model is constantly evolving over time. Changing technologies and other factors have required Liberty to continually increase the investment in support systems that enable the Zs to compete effectively. The lesson for the potential franchisor is the importance of the commitment to franchisee success. John Hewitt exemplifies the success of this approach, enabling him to bring over 4,000 individuals into his enterprise.

“The number of people who would make an investment and not listen used to amaze me. Now I accept it for what it is.” smallbusinessinsight.com

Most

SBI

2010

Franchisable

Businesses

of Hampton Roads

We’re happy to announce the...

Top 5 Finalists % % fran · chis · a · ble

[fran-chahyz-zuh-buhl]

adj.

1. Companies that exhibit the following qualities: highly profitable business

model, fully developed sales strategy, unparalleled organization and business leadership from owner, strategic, targeted marketing campaigns, proactive goal-setting and goal-reaching metrics : a franchisable business

2. A business that has traits of a franchise, whether or not it will ever

become a franchise.

See also pages 21-23.

Surf Rider

Chesapeake, Hampton, Norfolk, Virginia Beach

The Royal Chocolate Virginia Beach

Before Brenda Tusing and Terry Restin opened the doors in 2006 at The Royal Chocolate in Town Center, they knew they would evolve the business model into a franchisable one. “We spent a very long time developing each part of the business: The chocolate we make, the dipped apples, the gift baskets, the packaging ... we looked at every detail of this business to consider a lot of different concepts before we ever opened the doors,” Tusing says. With Restin as the “foodie,” specializing in all things chocolate and purchasing, Tusing tackles the bookkeeping side of the business. The two are selfproclaimed “perfect partners.” Currently, the owners’ focus is making the Town Center location the best it can be and opening up wholesaling opportunities. According to Tusing, the store is projected to have the biggest fourth quarter yet. The secret to success? Listening to customers and offering over the top customer service. “Current customers really

drive our business, and while we want to introduce them to new products and tastes, we have to be sure we’re providing what they want day to day”, Tusing says. “Fortunately we have a superb staff who really understand what it means to offer outstanding service to our guests.” So, when will this tasty store franchise? It’s hard to say. “We are cautious because we are still learning about (franchising),” Tusing says. “Probably without the setback of the economy, we’d have another store by now. People come to us all the time and say bring your business here. And it’s very tempting for us to do that, but you have to really keep a check what you have done so far and make the most of the current location.” Making sure their current store stays intact while they grow is the number one objective for Tusing and Restin. Either way the two women decide to go, the future looks sweet.

Chris Bennett has been working since he was 10 years old. His father, a retired police officer, was injured on duty, and wasn’t allowed to work on the force full time, so he and Bennett’s grandmother opened a restaurant at Oceanfront serving breakfast and lunch. One day, a local tackle shop owner came in the restaurant as asked if they could cook some oysters and crab meat he had brought in, and everyone seemed to be in consensus that a seafood restaurant would be a great business. Thirty years later, Bennett has not looked back. “I had just turned 20 when I opened my first store on my own,” Bennett says. “I couldn’t even buy a liquor license because I was underage.” Now, Surf Rider has seven locations, and he just broke ground on a new location in Poquoson, with plans for Williamsburg and Suffolk in the

next year. His secret to success? Bennett doesn’t open a single store without having the last restaurant paid for in full. “2008 was our worst year ever, and we thought ‘How will we keep restaurants in operation when people weren’t going out to eat, and gas was $4 a gallon,’” Bennett explains. “If I had owed the bank money or had a lease on equipment, we might not have made it.” Keeping low overhead, having 250 loyal “family-like” employees and staying out of debt keeps his business simple. The future of Surf Rider hinges on Bennett’s son’s extent of involvement, but franchising is certainly an option. “One reason we are successful is not just our work ethic, but how simple it is,” Bennett explains. “We don’t make it hard. Some of my best kitchens are staffed with high school kids.”

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YNot Pizza

Norfolk, Virginia Beach

Metro Scoot Virginia Beach

On Feb. 5, 2009, Paula and Bryan Wells were officially open for business on the roads of Virginia Beach. This mother and son team are the owners of Metro Scoot, a business designed to reduce drunk driving by driving both the customer and their cars home at the end of the night. By using eight scooters, the 17-person staff of Metro Scoot answer calls of those needing a sober drive home, the drive to their location. The drivers then fold the scooters down to the size of a medium-sized suitcase, place them in the trunk of their customer’s car, then drive both the customer and his or her car home safely. In addition to using scooters, employees also use “chase cars” to follow another employee to the customer’s residence. There were a lot of factors that Bryan calls “no-brainers” when the two started the business. For example, according to Bryan, the number of cabs regulated by city governments, plus the lack of dependable city transportation “almost encourage drinking and driving.” While the company is still in

start-up phase, franchising isn’t on the horizon any time soon, but perhaps some day. “We have a lot of potential, so it’s exciting,” Paula says. “However, what works here might not work elsewhere, so we have to research each market to understand what works where.” Paula is still in the information gathering phase, strategically placing herself in community organizations such as Drive Safe Hampton Roads. According to Bryan, the target market is young professionals, but the challenge is reaching the 50-65 year old market. “Another big challenge is changing attitudes,” Paula says. “Right now, you either drink and drive or take a taxi, so we are asking them to change.” Whether the Wells duo intends to franchise does not change their desire to grow the company. “We are a new breed of social entrepreneurs,” Paula says. “You do something good, and make a business out of it.”

22 Small Business Insight | September 2010

After 17 years in the pizza business, YNot Pizza owners and brothers Tony and Harry DiSilvestro are ready to take the next step. “After a lot of experience operating the business and researching different options, franchising appears to be the way to expand,” Tony says. Their first location was opened in 1993 at the Great Neck Square location. Since then, they have opened locations in Ghent and Kempsville. Although this isn’t exactly what they had originally envisioned for the company, “it has emerged as the most effective way for (them) to expand and maintain (their) culture,” according to the DiSilvestros. What sets this pizza place apart from the rest is its strong presence as a family-owned, neighborhood business. “(This) has resulted in a great deal of success over an extended period of time,” says Tony. “That culture is embedded in the business and is visible every day. Commitment to

maintaining the culture is extraordinarily strong.” With three locations (two in Virginia Beach and one in Norfolk), the brothers have already made themselves known in the community. The next step for the brothers is finalizing the legal documentation and working out the details on the first restaurant. A candidate franchisee is already identified for the next store. Their vision is one of gradual expansion, selling only to franchisees that are totally committed to maintaining the culture of customer service excellence. The plans do not include becoming a high-volume franchisor, however, the geographic reach is intended to be limited to the Hampton Roads region. According to the YNot website, the DiSilvestro family has one simple wish for all of its guests: “May you have an enjoyable time at our humble table, never leave it hungry and visit us again and again.”

Aromas

Newport News, Williamsburg Aromas owners Don and Geri Pratt describe their coffeehouse as “fast casual” dining, offering entrees for every budget and meals for every time of day. If customers are looking for stone-ground grits and shrimp with a glass of wine, or simply a Snickers latte, Aromas is the place to go. “There are not many places like us, but there are plenty of people interested in getting into the business,” Geri says. Don explains that when they opened their doors for business 10 years ago, there weren’t many businesses named “Aromas,” but now there seems to be many. However, the Pratts have posi-

tioned themselves for expansion some day by trademarking their name early in the game. “When we opened our doors, we had no idea what was going to happen,” Geri says. “But from the time we unlocked that door, it swung open and never stopped!” The two have considered franchising, but are still in the researching phase of it. “We’d like to carry the concepts to other localities where the model would fit,” Don says, naming college communities with tourist populations as ideal spots. Aromas in Williamsburg was the first store opened, and the

Newport News location opened in June 2006. “I’m happy to say we’ve successfully duplicated our store to a second location,” Geri says. Don and Geri both knew when they started that they had a concept that people were looking for, and there wasn’t anything

like it around. “We began identifying things that made us separate from others, and what we would carry with us,” Don explains. “These are the basics of what business is about, and for us, it’s centered around the customer’s experience.”

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| Franchising STEPHEN E. STORY KAUFMAN & CANOLES, P.C.

Franchising Your Business

o, you own a thriving business that is well-run, successful and making money. You have thought about franchising your business and wonder what that entails. This article will give a very brief overview of the basics of franchising your business. 1. Is your business franchisable? Not all businesses can be successfully franchised. Businesses that lend themselves to the franchising business model are, among other things, typically easily systematized, easily replicated, and not dependent on the personality strengths of the founder for its success. Conversely, businesses that are highly complex and don’t lend themselves to easy systematization, or that are heavily dependent upon the founder’s personality or skill, are less likely to be successfully franchised. The existence of other franchisors in your line of business is usually a good sign that the business can be successfully franchised. Consultants can also help with this determination in more specialized cases. 2. Franchising is a different business than the business you franchise. When you become a franchisor, you truly enter a different business, with a different business model. As a franchisor, your focus will be on recruiting the right franchisees, training them to replicate your success and providing ongoing assistance and support. While you must remain knowledgeable about successfully running your underlying business, your focus as a franchisor will differ significantly from just running that business. Be sure you are well suited to become a franchisor. Carefully read Chapter 16 of Franchising for Dummies (coauthored by Dave Thomas, the founder of Wendy’s). 3. Franchising is highly regulated. Franchising is highly regulated, at both the federal and state levels. You must provide prospective franchisees with a Franchise

Disclosure Document (“FDD”), a government mandated document that has 23 specific disclosure items. In addition, you must file your FDD and have it approved before you can lawfully offer to sell franchises in the following states: California, Hawaii, Illinois, Indiana, Maryland, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington and Wisconsin. You will also need a franchise agreement, the contractual document that governs the relationship between you, as franchisor, and your franchisee. 4. Register your trademark. If you are even thinking about franchising your business in the future, you should immediately investigate registering the name under which you operate your business as a federal trademark with the United States Patent and Trademark Office (“USPTO”). The USPTO can take up to 18 months to issue a federal trademark registration, and there are distinct advantages to having a federal trademark registration at the time you begin selling franchises. 5. You will need working capital. Successful franchising takes substantial working capital. State franchise regulators will want to see that the franchisor entity has sufficient working capital to remain in business and support its franchisees. Between legal expenses, working capital, accountant’s expenses, developing the training program and operations manual and the infrastructure necessary to sell and support franchises (all discussed below), those entering franchising will typically need well in excess of $100,000. 6. You will need an operations manual and training program. As a new franchisor, you will need an operations manual, a comprehensive manual that explains to your franchisees how they can successfully replicate your business

24 Small Business Insight | September 2010

Stephen E. Story is a partner in the law firm of Kaufman & Canoles, where he chairs its Franchise Group, representing franchisors and franchisees. He is a member of the ABA Forum on Franchising and the IFA Supplier Forum. He has previously spoken at the IFA Annual Legal Symposium and the ABA Forum on Franchising, and is a member of the IFA Legal/Legislative Committee. He is a former chair of the Virginia State Bar Antitrust, Franchise and Trade Regulation Committee and has been named to Best Lawyers in America and to Virginia Super Lawyers, both in franchise law, the only lawyer in Hampton Roads to attain those designations. You can reach him at (757) 624-3257 or sestory@ kaufcan.com.

model. If you do not already have training materials, you will need to compile them, either in-house or by hiring a skilled consultant or technical writer. 7. You will need audited financial statements. You will be required to have three years of financial statements for your business (unless you choose to have a new entity, such as a new limited liability company, serve as franchisor (recommended), in which event financial statements will be required from the inception of that new entity). These financial statements usually must be audited by an independent certified public accountant. 8. You must develop support infrastructure. You will need to develop infrastructure to support solicitation and sales of franchises and ongoing support of franchisees thereafter. Successful franchising requires hiring and training employees to successfully sell franchises, train new franchisees and monitor new franchisees’ compliance with your system. 9. You should find a good franchise lawyer. Franchising is subject to a wide variety of intricate and specialized laws. Your attorney must be familiar with such specialized areas as registering your franchise offering in the registration states, determining allowed sales and advertising activities, disclosure requirements, and when you must give an FDD to potential franchisees and have them sign the required contracts. It is imperative that you find a good lawyer who specializes in franchising and can guide you through the maze of legal requirements. Good indicators of a qualified franchise attorney include representing other franchisors and membership in the American Bar Association Forum on Franchising and the International Franchise Association’s Supplier Forum.

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| Franchising

WHY I CHOOSE NOT TO FRANCHISE. Kathy Axelrod, owner of Simply Selma’s in Virginia Beach knows what she’s doing. Solid leadership, energetic staff and unique products set her apart, and some qualities are not easily duplicated.

BY JESSICA SWINK PHOTOS CONTRIBUTED Take one step into Simply Selma’s in the Prominade shopping center in Virginia Beach and you won’t get very far without being greeted with a smile and a warm welcome. This, combined with brightly colored shelves filled with hand-painted art, picture frames, home decor and designer jewelry, almost makes customers experience a sensory overload of positive attitudes upon arrival. “It’s very important to us to have people feeling good when they come here,” says owner Kathy Axelrod. Axelrod opened her doors 14 years ago in memory and honor of her mother Selma, who passed away from breast cancer. “This store hopes to epitomize a graciousness that Kathy has tried to bring into this store,” says store associate Meg Leeman. “To surround with beautiful objects is not just a frivolous thing. You can actually bring happiness, contentment, thoughtfulness to a person’s life, and it’s very much a part of what we do.” And business is good. To give an idea of the store’s growth, the ladies compare the store’s initial location in Ghent to its current location. A total of 120 ornaments were ordered for the store’s first Christmas. Now the staff spends two solid days at the January buying show specifically buying nothing but ornaments.

“We went high-end when there was a vacuum in the area of businesses that had closed,” Leeman says. “We looked at this as, if we can hold on, we have the opportunity to fill that void and make ourselves known to reinvent ourselves once again as a place you can come to find wall art, mirrors, lamps, and end tables ... accent pieces for your home that make it pop.” And throughout the downturn of the economy, Simply Selma’s has certainly shined through. Store associate April Stutz explains why: “No matter what happens with the recession or the economy, babies are born, weddings are planned, birthdays are celebrated, and anniversaries are celebrated. While we are a boutique, we are a gift shop, and at the end of the day, people know they can come in and get a gift from $12-$2400 and have it wrapped beautifully.” This business plan is one Axelrod and her staff don’t plan to duplicate, though. “I love what we do, we do too. If you have something somewhere else, you’re going back and forth, back and forth,” Axelrod says. The hesitation lies

in putting the business in someone else’s hands. “You ask yourself, ‘Is it going to have that same magic that Kathy brings?” Stutz says. “She says everyday that this store is what it is because of the people that work here.” At the end of the day, the staff of Simply Selma’s agrees that the store is simply too original to duplicate. “The bottom line is, we’re control freaks!” Leeman jokes. It’s obvious the staff at Simply Selma’s has a fun time working, and often refer to themselves as a close family. “We love what we do and continue to have a good time,” Axelrod says.

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SMOOTHLY SAILING

SIMPLE CONCEPTS | Dean Gonsior relied on the structure of the franchise to guide him toward success. 26 Small Business Insight | September 2010

Learn how this Smoothie area BY T.J. PRIEUR PHOTO BY PAUL CHIN JR.

How does a retired Navy Master Chief become the top franchisee for a fast food restaurant? For Dean Gonsior, the answer is easy. “When I was looking to get out of the Navy I thought to myself, ‘Why work for someone else the rest of my life?’” Gonsior, a 22-year Navy veteran, began looking into franchises a few years before he decided to retire in 2002. “I looked at them all, Subways, Blimpies, you name it. Then I came across Tropical Smoothie Café and I fell in love with the concept.” The franchise, which is headquartered in Florida, was only five years old at the time, and had just expanded from offering only beverages to a food menu, also. “I wanted the structure of a franchise to tell me how to be successful. I didn’t know the first thing about smoothies or wraps, but to me the franchise system made sense,” he says. Gonsior and his wife Sue opened their first store in the Collins Square Shopping Center in Virginia Beach in 2001, before Gonsior had actually retired from the Navy. “I was still on active duty when we opened up our first store and I think that helped me to take the plunge. I knew I still had the military to fall back on, but fortunately I never had to worry about that.” While Gonsior had no restaurant experience in his background, his wife did. “We work well together; I have the leadership and the structure, and she knows the customer service and hospitality piece,” he says. But Gonsior also learned that there are drawbacks to joining a young franchise. “We were the first Tropical Smoothie Café to open in the state, we had no brand recognition. I wondered at first why I was paying all these royalties to do it myself.” He soon found a way around that obstacle. “By the end of the first year we had four stores, ten in the second, and 16 by the third year. We got that brand recognition,” he explains proudly. In most franchises you have two choices: expand using your own capital or franchise and let others invest. (continued on next page)

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developer turned his Tropical into the most successful ... of the entire franchise. (from page 26) Tropical Smoothie offered the Gonsiors the rights to buy territory from Williamsburg down to the Suffolk area. The Gonsiors pay a development fee for the rights to open up new stores themselves or create other franchises. They chose the latter route and now have 37 stores in their market. “All of our franchisees are owners of their stores. They take care of all daily activities and expense. They pay the company and the company pays a percentage to us as the area developer,” he explains. “There were a lot of growing pains working with a new franchise; there was a lot of trial and error with them but they had a good plan on how to be successful,” he says of Tropical Smoothie. He believes that is what a person should really look for when choosing a franchise company. “It’s not about developing the recipes. They had the structure in place to show us what we needed to do on a daily basis; not just how to make smoothies, but on how to bring people in the door. Yeah, we had a lot we still learned ourselves, but it was always nice to call the corporate office and ask if what we were planning made sense. They supported us.” In turn, he offers the same support to his own franchisees. “From day one I don’t al-

low my franchisees to go off and do their own thing,” he says, even while admitting, “Maybe there’s a little of that going on now in those 37 stores.” The secret to running a successful franchise business is consistency. “The owner can’t go making his own smoothie recipes because then the customer will be disappointed if he can’t get it when he goes into another store. I explain to my franchisees that they are not allowed to do certain things because the system won’t allow it.” His methods have paid off. The Gonsiors’ territory is the most successful in the entire franchise. The next largest territory is in Las Vegas, where there are 20 Tropical Smoothie Cafés. After that, territories are generally under ten franchises. Gonsior credits two things for his success. The first is uniqueness. When they first opened up, they had no competitors. But the second factor is really the most important: that’s the leadership he and his wife have shown. “We made sure our first store was successful. People coming in could see the lines and see the success. Then they’d talk to us and we’d convince them it was a good concept. They’d look at us and think, ‘If Dean and Sue can do it and they’re just average people, then I can do it, too.’”

“They’d look at us and think, ‘If Dean and Sue can do it and they’re just average people, then I can do it, too.’”

| Franchising

See it.

Want it?

Flip it. Flip it.

You’ve heard of house flipping, but what about flipping franchises? BY LEON GARBER PHOTO BY PAUL CHIN JR. When the Navy brought a young Rich Studebaker to Hampton Roads almost 20 years ago, he never expected to find himself the owner of a growing string of franchised restaurants. It all started after he left the Navy and joined the Norfolk Fire Department. With his free time, he bought and grew a Subway franchise, taking his profits from that endeavor and investing them in real estate, buying and renovating houses along with larger multi-family buildings. He left the fire department soon after to focus on his burgeoning businesses. Studebaker eventually sold his very successful Subway along with a few larger properties and by late 2007 had started looking for a larger business in a different industry to purchase and grow. After an exhaustive search that didn’t yield what he was looking for, Rich decided to return to his roots in franchised food service and bought a recently closed Tropical Smoothie Café in early 2009 that he believed he could re-open and turn around. With summer quickly approaching and the bank eager to salvage what it could of the loan to the original owner, both the timing and the price were right. He quickly reopened the café and hired and trained staff members in time for a successful summer season. As winter came on, Rich trimmed staff to match the typically slower period and started looking for his next acquisition target. Studebaker teamed up with his longtime (continued on next page) smallbusinessinsight.com

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| Franchising

(from page 27) friend and attorney, Joel Nied of the law firm Williams Mullen, to purchase additional under-performing food service franchises. Given Studebaker’s experiences with both industry leading Subway and Tropical Smoothie Café, the concept made a compelling business case to franchisors, landlords and bankers trying to save an ailing location. The team rapidly identified and began to pursue the acquisition of a local Quiznos that was soon to close. Overcoming Hardships All seemed to be going well, until one evening in February 2010 as he was getting ready to retire for the night. Rich collapsed from what turned out to be a massive stroke. His wife Paula summoned paramedics and Rich was rushed to the hospital. Prompt action by Paula and outstanding medical care saved Rich from any serious permanent damage, but it was immediately apparent that he wouldn’t be back to normal or able to work for quite some time. With Rich incapacitated, Paula was literally forced into the breach and got to work. “From the moment I realized that something was wrong with Rich, it was seamless. I just went into survival mode and got go-

ing,” Paula said. Fortunately, the staff rallied around Paula, helping her learn the routines. She also credits her strong bond and relationship with her husband for enabling her to be able to “sit back and say to myself, what would Rich do?” In the meantime, friend and partner Joel Nied immediately took over the ongoing negotiations with Quiznos, the franchisee and the landlord. His efforts kept the deal from falling apart and avoided a setback to the Studebakers’ plans. Rich survived his brush with death but was faced with a long road back to normal life. Amidst all of the rehabilitation and therapy, Rich managed to attend Quiznos’ new fran-

28 Small Business Insight | September 2010

chisee training and begin to assist Paula at the café. Often, his son Sid, 10, would accompany Rich and work as his dad’s helper. “I had always hoped to have my son learn about work and business at the café, but I didn’t expect him to be taking inventory as a 10 year old!” Rich credits Paula with not just running the business while he was recovering, but for holding the family together as well. “I think I lucked out with her, she’s not just my life partner, she’s now my business partner too!” By mid-summer, with his recovery almost complete, Rich and his team are looking forward to closing on the purchase of the Quiznos and an early fall re-opening. Given its focus on hot sandwiches, the concept should be an complementary partner to the Tropical Smoothie franchise with a strong customer appeal over the colder part of the year, enabling the company to have steadier revenue year round. Rich has prevailed through adversity that would have stopped others in their tracks. The team is stronger for the experience, with Paula on board as a true partner in the operations of the company. Poised to grow rapidly, the future looks tasty.

SMOOTH OPERATOR | Rich Studebaker, pictured here with his wife Paula, is back to work, opening another Tropical Smoothie in early fall.

‘Not Your Average Bagel Joint’

Insight

| Franchising

Bagels n’ More owner shares how the business has been a part of many franchises...

and thrived. BY T.J. PRIEUR PHOTO BY PAUL CHIN JR.

Bagels N’ More in Virginia Beach has been a part of many franchises in its 16-year history. In fact it’s been part of so many franchises that the current owner, Carol Lonigan, can’t name them all, even though she has worked at the bagel shop since a few months after it opened in 1994. “The original owner was John Turner,” explains Lonigan. “We were just a bagel bakery and we made bagels from scratch here on the premises.” The only “full scratch” bagel chain in the U.S., it was started by “two guys who came up with the idea. The original logo was the Washington Monument. Then we were Chesapeake Bagel, then Chesapeake was bought out by Manhattan Bagel” (a part of the Einstein and Noah Group). But throughout all the changes, one thing remained the same: fresh bagels made daily. “The first year we were open we were insanely busy. We hit over a million that first year; you have no idea how crazy it was,” remembers Lonigan. Turner was surprised himself. His background was in construction, not the food business. “His daughter talked him into it because she’d been to a bagel place while she was at UVA.”

Just because you’re on your own, doesn’t mean you have to go it alone.

ONE OF A KIND | Carol Lonigan likes the soloproprietorship role over that of a franchisee. But while the local store was doing well, things weren’t so good at the corporate level. The first name change led to another and finally, “Chesapeake Bagel was bought out literally overnight. I mean I learned about it the next morning from one of the customers,” Lonigan says. The deal the corporate office made stated that the new company had the right to turn any of the stores into a Manhattan Bagel shop at any time. “John Turner put on the war paint!” says Lonigan. He broke with the franchise and went out on his own as Bagels n’ More. A short time later, in 2006, Turner decided to retire and sold the business to his longtime employee, Lonigan. “Our name officially changed on Aug. 3, 2005, and I bought it in January of 2006. I would never have bought the business if we’d been Manhattan Bagel.” Buying the store from Turner wasn’t a difficult decision. “It wasn’t a massive decision, it was a natural evolution. First, if I hadn’t bought it I’d have had to go out and find another job. The store is my baby. I raised it. I have employees who have been here four to ten years and more. Some are my family. If

I hadn’t bought it we would have all lost our jobs. The store would have died,” she says. “We’re not your average bagel joint,” says the business’ website. Lonigan makes sure that the restaurant always lives up to that claim with fresh, homemade bagels, croissants and focaccia bread sandwiches. There are some things she misses about the franchise experience. “There’s a lack of camaraderie with the other stores. When you think about a franchise you pay fees for advertising, for the camaraderie. But the franchise was never strong. If we wanted to do local advertising the other stores were never interested.” “I guess I’m just anti-franchising. I worked at Burger King and Hardee’s and there was a lot of bureaucracy. I don’t want corporate coming in here and telling me my floor’s dirty and get it clean when we just had a $300 hour!” Lonigan understands the need for consistency in a chain, but in the end, she wants to go it alone. “Here, at Bagels n’ More, I just think we are better off by ourselves.”

Lonigan learned during the conversion of a Chesapeake Bagel Bakery franchise into the solo-proprietorship Bagels n’ More that even if you’re not following the franchise model, you can still access the benefits of the franchise experience by choosing the right vendors. Lonigan relies on the knowledge and longevity of Sysco to stay competitive in the local market. Sysco is the leading distributor of food products, equipment and supplies to local restaurants. Sarah Moore, marketing associate for Sysco Hampton Roads, explains that “the success of the individual is the success of Sysco.” The company’s support staff helps local proprietors like Lonigan manage their menu choices, food orders, and marketing strategies. Further, Sysco representatives are students of local competition and of the tactics employed by corporate-run franchises to keep American butts in the chairs of chain restaurants. Not a bad team to be sitting in the corner of small business.

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Insight

| Franchising

30 Small Business Insight | September 2010

Insight

| Franchising

There’s A New Sandwich In Town BY JESSICA O. SWINK PHOTOS BY PAUL CHIN JR.

Step aside, other sandwich shops. Jimmy has come to town, and by the looks of things, he’s here to stay. This 1,000-plus store franchise has 39 stores nationwide, with two new stores open in the Hampton Roads area and more on the horizon. Jimmy John’s Gourmet Sandwiches gives other subs a run for their money, offering fresh ingredients, friendly service and freakishly fast sandwich assembling. With locations in Chesapeake and now in Town Center HOGVirginia HEAVEN |Beach, General these franchisees areof cashing in manager Ray Perry onBayside Hampton Roads’ love of Harley-Davidson shows off some sweet rides Tom sandwiches, one Turkey of the showroom. or Bootlegger Club at a time. smallbusinessinsight.com

SO FAST, YOU’LL FREAK Jimmy John’s employees work at warp speed to assemble sandwiches.

sk the owner of a Jimmy John’s what the big Turner’s store has been in operation since Ocdeal is about their sandwiches, and you’ll tober 2008, and he admits many people may not get a straightforward answer. realize its location because it is so tucked away. “Unfortunately, Subway has flooded the market, “A lot of the marketing we do is beneficial to so when people walk in, they expect us to pull out that,” Turner says. a bag of lettuce, plastic bags of sliced tomatoes Turner and his associates prepare sandwiches, and prepackaged meats,” says Town Center Jimmy cut them into thirds and hand them out along with John’s owner AJ Kramer. menus to various office buildings during the day. This couldn’t be further from the truth. “It’s a lot more cost-effective to hand out free “I’m here at 6 in the morning slicing vegetables food and a menu than to get on the radio and tell and making the bread,” he says. “Everything is them what it’s like,” Turner says. fresh, and we buy local.” The cost of a Jimmy John’s franchise is $35,000, Chesapeake Jimmy John’s owner Shane Turner and that’s just the rights to the name. While Turnadds another tasty perk. er admits everything else added to that price is a “Our bread is never more than three hours old, little pricey, it’s “worth every penny.” and that’s only if we are really slow. During the day, “We’re going to break a million this year. This Owner Shane Turner you are getting hour-old bread,” Turner says. location alone is ranked fourth in the country in Neither Kramer or Turner has owned a franchise comparative sales from year to year — up 51 perbefore, nor worked in the food industry. cent from last year,” Turner says. For Kramer, getting involved with the Jimmy After admitting that it was a gamble being the John’s franchise was as easy as listening to his dad. first to open a Jimmy John’s in Hampton Roads, “He’s always had something brewing on the side, Turner is valuing his marketing efforts and hard and growing up, I always thought that way as well,” work, and plans to open another store in Norfolk Kramer says. as his next location. One day on his lunch break, his dad told him to Both stores offer delivery in 15 minutes or less, look into the Jimmy John’s franchise, and Kramer and most of the time, the staff at both locations decided to go for it. will have an order ready before it’s even paid for. “I was taken back at first, but then I went forward Both owners, having had no former experiwith it,” Kramer said. Soon, he was on a plane to ence in franchising, describe their undertakings Champaign, Illinois to the corporate offices to find as an adventure. Long hours, less vacation and the perfect location here. He decided on Town Cenmany sandwiches later, Kramer looks forward to ter. a bright future with Jimmy John’s. “We’re right under Two Columbus, so we’re a “The glory of franchising is that someone’s Owner AJ Kramer part of Town Center proper,” Kramer explains as he already done the hard work. Someone’s made misreflects on being close to Panera Bread and Schlotzsky’s Deli. “No takes,” Kramer says. “With Jimmy John’s, they tell you ‘This is one can match that, plus we’re open till 10 p.m.” what’s worked in 1,000 other stores and it should work for you. Do Kramer opened for business June 8 this year. this, and you’ll win the Super Bowl.” On the other side of town, Turner operates a Jimmy John’s off According to Kramer, “So far, they’ve been right about 99 percent Greenbrier Parkway in Chesapeake. of everything.”

32 Small Business Insight | September 2010

Why Franchise?

WHY NOT?

BY T.J. PRIEUR PHOTO BY PAUL CHIN JR.

When it comes to understanding your business and leveraging your success, it’s hard to beat the brothers who own and operate YNot Pizza in Virginia Beach and Norfolk. Brothers Tony and Harry DiSilvestro are initiating an expansion plan built upon franchising and a well-understood formula for success. That formula has served them well for over 17 years. Unlike many, if not most, franchisors, YNot is planning to measure the success of the expansion by more than numbers alone. Tony DiSilvestro stated, “Protecting the stability of the brand is our number one priority.” Operating their restaurants in a manner that leverages the best a family-run restaurant can offer, while implementing the consistent discipline that typifies many corporate chains, has enabled them to maintain a pattern of increasing sales. Harry said, “Even over the past three years, when many food service establishments have suffered, we just haven’t seen it.” Customer-facing practices such as wait-staff uniforms and consistency in the way things are done surpass what might be seen in many family-run establishments. Harry commented, “New customers are always asking us if this is a franchise. That is often their first impression when they experience a meal in one of our places. It is a direct result of our emphasis on consistency.” However, the emphasis on consistency of performance is not allowed to interfere with personal touch that goes so far to enhance the customer experience. The owners routinely “walk the front” to make sure they have the opportunity to interact with customers. While it is easy to detect the passion with which the brothers describe the culture at YNot, what really exemplifies that passion is the manner in which they describe the selection of potential franchisees. “Our best candidates for franchise success are folks who have worked here for several years,” explained Tony. “If they’ve been here a while, they see how we, as owners, take personal interest in each and every customer experience,” continued Tony. Harry added, “If they’ve worked here, we can see how they react and it’s a good indicator of how they feel about the business.” Other potential franchisees will have to find a way to demonstrate these same traits. Their emphasis on maintaining the culture of the business was instrumental in the decision to expand through franchising. “We considered expanding through the opening of more companyowned stores,” said Tony, “but we feel that we can get a higher degree of commitment to our values by placing an owner-operator

OH BROTHER | Tony and Harry DiSilvestro plan to take YNot Pizza to the next level through franchising. into each store. Store managers who are employees of the company just do not have the same passion that an owner has. And, like many small businesses, operating capital is always a consideration for us,” he continued. “Franchising meets both of our requirements.” In addition to the experience gained through the establishment of their restaurants, the brothers have sought expertise from various specialists. While legal assistance is key to any franchising initiative, the brothers have expanded their outside resources to include both a local advertising agency and a remotely located restaurant operations consultant. The agency is responsible for ensuring that YNot’s marketing efforts keep pace with their needs. The operations consultant assists with the identification and implementation of recommendations intended to fine-tune the operation. YNot’s strategy of conservative expansion, coupled with the strongest possible commitment to the company’s culture, positions the DiSilvestro brothers for continued success. smallbusinessinsight.com

NO POCKET PROTECTOR REQUIRED | Geeks On Call owner Glenn Davis acquired the entire corporate structure of the franchise in 2009 and reworked the system for success. 34 Small Business Insight | August 2010

THE WHOLE ENCHILADA How Geeks On Call owner seized an opportunity and revitalized a struggling franchise

BY T.J. PRIEUR PHOTO BY PAUL CHIN JR.

It’s common to hear of someone buying a franchise — one McDonald’s, one Subway store. We also hear of the successful franchisee who owns a dozen or more stores. But how often do you hear about someone buying the entire franchise’s corporate structure? That’s exactly what Glenn Davis did in 2009 when he bought out Geeks on Call, a 10-year-old franchise company that offers technical support and repairs services to both residential and business customers. Davis was a partner in a local telecom company which specialized in selling voice and data services as well as tech support. He’d begun to think about expanding their business out of state, but was concerned about the logistical difficulties. “How were we going to supervise managers three or four states away, especially when they didn’t have the same stake in the business that we did? That’s when we began to look at franchising the company we had,” he says. Then he heard about problems at Geeks on Call, a well-known franchise that was suffering from a variety of problems, both financial and structural. He began to research the company, and decided that despite the problems, Geeks on Call offered many advantages over starting his own franchise from scratch. “They had already had a strong national presence on which we could overlay our business model. The company had been having financial problems and the 55 franchisees had lost a lot of trust in corporate,” he explains. “But they had a successful infrastructure; instead of having to build our own, we could just fix their issues,” he explains. When Geeks on Call began to franchise in the early 2000s, it was geared toward residential customers. While many of the franchisees had moved into the more lucrative area of tech support for small businesses, the corporate offices had “never made the jump,” Davis says. He also realized that his own company’s experience in telecom would be a great asset to many of the franchises. But acquiring the

company wasn’t simple. “It was a publicly traded corporation. If we had tried to acquire it by purchasing stock we would have taken on a lot of debt,” he adds. Instead he was able to acquire the note for the company’s debt and foreclose on the company, forcing the board of directors to surrender their assets. “That way we acquired control without the liability.” Then Davis began the task of rebuilding the trust of his franchisees. “We had to get out of the gate and ramp up very quickly,” Davis explains. “We did have several benefits. First, we had an existing infrastructure. Second, we had 54 successful owners who had weathered the storm. We flew the franchise advisory council into town to discuss with them what we could do to help them re-energize.” The first thing Davis learned was that communication between the corporate office and the franchisees had been non-existent. He immediately instituted weekly conference calls that last anywhere from 30 minutes to two hours. “I’m on Twitter. I do conference calls and video blogs. The franchisees know that if they need to reach corporate quickly, they can.” He also reworked the website within 60 days to reflect the reality that Geeks on Call was in the business of servicing other businesses. A live chat feature makes the site more user-friendly, a call center helps set up appointments, and search engine optimization has increased traffic and brought new, favorable, attention to the brand. As the head of a national franchise, Davis sees his role as different from that of his franchisees. “You get what you want out of life when you help others. That’s the franchise environment. My mission is not to be the best computer repair company on earth. That’s our franchisee’s job. My job at the corporate level is to enable their success.”

“They had a successful infrastructure; instead of having to build our own, we could just fix the issues.”

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Insight

| Franchising

GIRL POWER | Ashleigh Bagwell, left, pictured with mother Debbie Higgins, right, review original merchandise.

Designing Women

Impressions in Print helps franchisors fulfill all merchandising needs locally, nationally, and globally. 36 Small Business Insight | September 2010

Insight

BY T.J. PRIEUR PHOTO BY PAUL CHIN JR. When Impressions in Print owner Debbie Higgins was asked to present her first marketing and branding campaign for a company in 1994, she was still working out of her garage. After scrambling to find an office space with a board room to present to the board of directors at Ocean Breeze Waterpark, she presented an entire line of items for the gift shop, employee uniforms and mascots.

“They loved it,” Higgins said. “That was my first big client.” Now, Higgins and her daughter, Ashleigh Bagwell, run a successful one-stop shop for all marketing material needs, including everything from logo design to employee tshirts, drinkware, signs, banners, commercial print, and even car wraps. With Higgins taking a CEO role, Bagwell manages a staff of 15 and the daily operations of the business. Recognized by the Inc. 5000 list as one of the fastest growing private companies in the country, Impressions in Print is headquartered in Virginia Beach, but has clients worldwide. Higgins couldn’t have predicted her business would grow to this size when she began as a school teacher, helping a mother of one of her students begin making custom hand-painted t-shirts. The two women began getting orders not only throughout the school, but the school system, and even school systems outside the state. Before long, it was time to make a decision. “Eventually, she realized she had no intention of going into a business like that, and I realized there was more profit in what we were doing than there was in teaching,” Higgins said. So, Higgins moved the shop into her own garage and started focusing on the creative side of the business, designing logos, mascots and promotional material for different companies in the area. After her presentation with Ocean Breeze Waterpark, Higgins moved out of the garage and the company began to take off! The company also developed a merchandise program for Festevents for OpSail 2000 Virginia (featuring Tall Ships) that won a silver pinnacle award from the International Festival & Events Association for the category best merchandise program. “That was the catalyst for us to begin to see we were a merchandising agency at that point,” Higgins said. After a stint in the events industry, Higgins and her daughter Bagwell moved forward with business-to-business merchandising on a corporate level. Offering anything a business would need to brand itself, they consulted with a software company to facilitate proprietary software to use for private label e-commerce stores for their companies. “Now we host online stores for franchi-

| Franchising

sors or companies with multi-office organizations where they need their marketing and branding materials to comply with corporate standards,” Higgins said. That’s not all. Impressions in Print also offers order fulfillment, warehousing, product distribution, and kitting services. Bagwell explains: “Say a company wants all of its franchisees to use the same logo, but they are in different states with different addresses to their offices. With our software, you can order a cup, a customer can type in their custom address, it goes right on the cup, they see a proof, we don’t touch it, and it goes straight to print from there.” The franchising market is one that Impressions in Print continues to seek. With the experience of providing marketing and promotional materials for the 2500 franchisees and corporate office of Liberty Tax since 1997, Higgins has her sights set on additional large national franchise and multioffice accounts like Chick-fil-A, Geico, and Subway. Impressions In Print has also been chosen as the National Vendor of the Year for Liberty Tax for four years in a row. “We allow franchisees or franchisors to have one place that they can easily order one thing they need, and we can get it out in 24 hours.” Higgins said. “We offer that free as part of our services, and most companies jump right on board for that.” Higgins explains that her company is set apart because, although they sell logo apparel, it’s not all they do. “We are one of the few companies in the area, or even regionally, that offers everything all in one place,” Higgins said. “This keeps the brand consistent, and we help control their branded assets by keeping everything in one place.” The 2.5 acre lot behind the Impressions in Print building is empty for now, but Higgins expects to expand as the business continues to add new clients. “We had to be an expert in what we did because we needed that confidence,” Higgins said. “It didn’t matter who the client was, we knew we could handle it.” With this attitude, Higgins and her daughter are “hungry for more,” ready for the next level. “When I was starting out, I didn’t get any advice; I learned at the School of Hard Knocks,” Higgins said. “When someone or something knocks you down, that should just make you stronger and you can move on. Know your own vision. Go with and respect your own vision.” smallbusinessinsight.com

Charity

| Heart of Compassion

Have a Heart, Serve Your City.

Volunteer your time and make a difference in your community BY JESSICA O. SWINK PHOTOS CONTRIBUTED BY HEART OF COMPASSION PARTNERSHIPS This summer, from June 21-26, 253 volunteers worked more than 3,000 hours cleaning up their neighborhoods during the Third Annual Serve the City Chesapeake. These volunteers and projects represent approximately 25 percent of the overall effort. In the first two years of existence, Serve the City Chesapeake has seen dramatic improvement changes in crime, including an 88 percent decrease in robberies and 34 percent reduction in overall crime. Statistics for this year’s event are being compiled and will be available later this month. “All year, we gear up for that one week in June, with a concentrated effort in bringing in volunteers,” said Wanda Russell, grant writer for Heart of Compassion Partnerships, an organizing body of Serve the City. Because Heart of Compassion Partnerships relies on grants and private donations for operation, volunteers are needed to make Serve the City Chesapeake a success. “No matter how small the help is we give the people, they are so appreciative,” Russell

says. “You can just see the relief on their face when you can tell them you can help them.” This year, 17 home projects were completed in South Norfolk, along with 117 repair jobs, 15 community clean up projects, and 4 projects with the Chesapeake Housing Authority. Overall, Serve the City Chesapeake received $63,863 of donated labor. Major players include the City of Chesapeake, Chesapeake Police Department, 11 local places of worship, civic leagues, schools and local businesses. “We really bring together all kinds of volunteers,” Russell says. Russell recalls one project that comes to mind from this year’s week-long program. “This one older gentleman was in a wheelchair and there was no way for him to sit outside as a family, let alone go anywhere. So we built them a deck with a wheelchair ramp,” Russell explains. “For the first time in years, they told us they could enjoy their neighbors and feel as if they are part of the community. It was pretty heartwarming.” And that is the focus of Heart of Compassion Partnerships’ mission of Serve the City: to bring hope to communities. “Some of the other things we did this year were to replace the flooring in someone’s kitchen, and we did roofing,” Russell said.

38 Small Business Insight | September 2010

“In fact, one of the churches took on an entire house (project).” What is heart wrenching for Russell and the staff of Heart of Compassion, though, is when phone calls come in during the year with community needs similar to wheelchair ramps and house repairs, and having to tell those in need that the next Serve the City isn’t until next June. “There are so many people who are in need, and we are always looking for volunteers and partners to help us reach those people,” Russell said. Food baskets were delivered this year to the 17 houses that received help during Serve the City. This basket helped an elderly lady keep herself fed until the end of the month. With failing health and a small income making her ineligible for food stamps, having enough food month-to-month is difficult, Russell explains. “No matter how bad you think you have it, there’s always someone who has it worse,” says Russell. “Even my 14-year-old son didn’t realize how much need exists in the neighborhood ... he called us millionaires compared to some people.” To volunteer time or resources to help with Serve the City next year, contact mel.howell@hopecharitable.org.

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SBI Owners Council 足

Top left | From left, Blake White with Endurance Network Services and Art Radtke of SBI. Top right | From left, Kevin Johnson with Bayside HarleyDavidson, Dave Faggert with Faggert and Frieden, P.C. and T.J. Prieur of Lincoln Financial. Bottom left | From left, Rob Hamlin of Lincoln Financial with Dave Faggert. Bottom right | Neil Friedman of Friedman Associates and John Robertson with Lincoln Financial.

40 Small Business Insight | September 2010

Proactive networking

Exceptional events

Unmatched leaders

Off To A Great Start

Charter members enjoy kickoff luncheon and day on the links While sitting at the first Owners Council luncheon July 20, one Interested in joining us? blinding flash of the obvious occurred to everyone: success in small With a vision to help Hampton Roads become the most vibrant and business leadership surrounded the table. influential center of commerce in Virginia, the SBI Owners Council’s Eight of the 31 charter members made the Inc. 5000 List of the main goal is to connect small business owners and provide them with Fastest-Growing Private Companies in America. the opportunity to learn, communicate efficiently and develop straOne member’s business is the winner of the prestigious Ports- tegic relationships. mouth Small Business of the Year Award for 2010. Members of the Owners Council display an active interest in proTwo businesses represented in the Owners Council are on the moting small business growth throughout the region, as well as a deHampton Roads Chamber sire to push their companies to of Commerce’s “Top 10 to the highest level of excellence. Watch” for the fastest-growSome of the perks of being in ing small businesses in the the Owners Council include: area. Business Socials — Monthly One member won the 2010 luncheons for Owners Council Impressions in Print Leadermembers and their guests, golf ship Award for impact on outings, wine tastings, skeet workplace culture, commushooting, fishing and more. nity service and involvement, Workshops and Seminars — professional achievement By reaching out to local experts and perseverance from the and leveraging Owners CounHampton Roads Chamber of cil relationships, members can Commerce. learn about subjects including (We think our members are leadership in business, marketpretty great, too.) ing strategies and strategic planDuring the July luncheon, ning in small businesses. charter members introduced Self-facilitated Peer Advisothemselves and plans were ry Groups— Monthly meetings discussed for upcoming for noncompeting companies to events and opportunities for FORE! | From left, T.J. Prieur and Rob Hamlin with Lincoln Financial, plastic share with and council each other members. surgeon Dr. Fred H. Siegel, M.D. and Jeff Cavanaugh with Evergreen Landon both the challenges they face A week later, a few mem- scaping and Lawncare play a round of golf. and he opportunities available to bers hit the links and played them. Members also get the opa round of golf on one of the portunity to experience the freehottest days of the year. Temperature aside, a great time was had by dom of non-judgmental and collaborative relationship building. members and their guests. —Jessica O. Swink

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Community

| Local Businesses

A SWEET BUSINESS

Confetti Caffe and Gelato brings a new taste to the area, one smile at a time BY JESSICA O. SWINK PHOTO BY PAUL CHIN JR.

42 Small Business Insight | September 2010

Community

Eric Hinkle is in the business of making people happy. After a career in the cell phone industry, he saw many people come in his stores, displeased or frustrated with their phones and technology, and yearned for a way to simply bring them joy. Combining his love of ice cream and his growing interest in gelato, he decided to open Confetti Caffe and Gelato (formerly Melt Gelato) in the Town Center of Virginia Beach. “My wife had always planned on opening a cafe some day, and I wanted to do gelato, so we kind of just put it all together,” Eric says. But what makes gelato so special? Eric puts it simply: It tastes better, and it’s better for you. “The taste is better because there isn’t a lot of fat from heavy cream that hides the flavor. We also use more intense natural flavor ingredients that are imported from Italy,” Eric says. “We also use real fruit, nuts and premium chocolates — no fake syrups.” Never being in the food industry before, Eric and his wife, Denise, had a lot of learning to do. One of their ingredient vendors hosted training classes in North Carolina to learn the ins and outs of gelato production. Then, their equipment vendor visited them and presented a walkthrough. “That gave us enough to get started, and we can figure a lot out on our own,” Eric says. Each day, the couple and their staff of 10 whip up 24 different flavors of gelato. On a good day, 300 or more people come to the store, ordering flavors ranging from pink grapefruit and lemon basil to white chocolate and peanut butter. The possibilities of gelato flavors seem endless. Eric and his staff get most of their inspiration from customers, who suggest new flavors. “In a lot of cases, we’ll get their name and number, then call them when we make it,” he says. Sometimes, though, experimental flavors are not worth repeating. “We tried a matcha green tea gelato, and it was terrible. I think we only sold one serving; only one person liked it,” Eric says, laughing. “You can buy green tea ice cream, but matcha has a unique flavor, and we made it with real matcha green tea … it just wasn’t the right flavor.” Trial and error lead to perfection, though.

| Local Businesses

Tweaking recipes by adding and taking away sugars and different flavors has led to a plethora of tastes that keeps people coming back for more. “Business is good,” Eric says. “We opened up right before all of the bad news struck with the economy, so it was a little scary.” Denise explains another challenge. “Both of us come from a corporate environment different from the restaurant industry, so we had some learning to do,” Denise says. “I think we’ve done pretty well, and have come a long way since the first year when we were working long hours.” One drawback for Eric was opening in his particular location in Town Center. Plans to build a tower next door on the corner of Market and Bank have been delayed, so the amount of passersby isn’t what he initially expected. “Town Center is great, though. Most of the activity is in front of the plaza, but more customers are finding us all the time,” Eric says. Challenges for Confetti include continuing to market and promote the business. Plans for a new store are in the works, and the Hinkles are still in the prospecting stage to find just the right spot. Also on the horizon is wholesaling opportunities, where Confetti gelato will be available in local restaurants, hotels, caterers and other players in the gourmet industry. If gelato can’t satisfy a customer’s big appetite, Confetti also offers crepes and Panini sandwiches, along with various coffee drinks, smoothies and Italian sodas. “We just love providing food that is sweet and decadent,” Denise says. “And our customers can come here and eat as much as they want.” How It Is Made According to Eric, making gelato is similar to the process of baking a cake,

“I think we’ve done pretty well, and have come a long way since the first year when we were working long hours.”

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or any other tasty treat. “We take the ingredients, put them all in a bucket, add milk, blend it up and pour it into the machine,” Eric says. Inside the machine, the ingredients heat up to 185 degrees, which helps the molecules bond together. Then, the mixture is frozen and slowly churned with paddles. This is similar to how ice cream is made, except rather than a quick, whipping process, the gelato is folded slower to decrease the amount of air in the final product. “This makes the product more dense,” Eric explains. “There’s half the air in gelato as there is in ice cream.” The entire process takes about 20 minutes per batch. After the gelato comes out of the machine, it is quickly put into a blast freezer set at a chilling -30 degrees for 20 minutes. This keeps the size of the ice crystals small.

44 Small Business Insight | September 2010

Finally, the 5-quart batch is put into the walk-in freezer, set at -5 degrees until it is brought out front. “Ice cream is usually kept at temperatures between 0 and -5 degrees, but gelato is kept between 5 and 7,” Eric states. “That difference keeps the gelato softer and creamier.” Attention to detail is not lost when the gelato hits the display cabinets up front, ready for orders and colorful taste-testing spoons. Confetti’s display cabinets are imported from Italy, and forced air keeps everything at just the right temperature, even though the gelato is elevated out of the pan. The rest is history. While gelato can last up to a week in the display case, the staff at Confetti rarely sees gelato last that long. Eric says the average disappearing time of their gelato is around two to three days.

www.paulchinjr.com paulchinjr@gmail.com | 757.630.2183

Commercial, Event & Por trait Photography

smallbusinessinsight.com

COME MEET OUR FRIENDS Celebrate mid-week eve with the staff of SBI! Kick off those work shoes, loosen your tie and enjoy a business casual atmosphere with us! Small Business Insight is dedicated to growing small businesses in Hampton Roads, and each month, we offer two opportunities for our readers to come meet the staff and other readers of the magazine. With one event on the Southside and one on the Peninsula, business owners, associates and other fans of the magazine can network with each other and promote their business to the writers and editor of SBI. The invitation is open to owners, associates and other fans of the magazine in the Southside and on the Peninsula. SBI will provide light hors d’oeurves. This month, we are meeting at Tripps Restaurant in Virginia Beach on Tuesday, Sept. 21, and a week later, we are meeting at The Pub in Hampton on Tuesday, Sept. 28. The time for both events is 4-6 p.m. If you can’t make it out, be sure to check out page 4 for future networking events. Don’t miss this opportunity to promote your business with Hampton Roads’ newest business publication and its readers! WHO’S WHO | From top, Chandler Turner and J.D. Williamson, CPA; Cherie James, CPA and William Heil II with Homestead Computers; Kevin Copeland with Beach Mac and Caroline Dozier with Lincoln Financial.

46 Small Business Insight | September 2010

How Fit Is Your Technology? Answer yes (+1) or no (-1) to the 10 questions below: __ Do you have encrypted offsite storage for your business critical data? __ Do you perform test restores of your current backup on a regular schedule? __ Is your backup software up-to-date and under a current maintenance contract? __ Are your PCs, notebooks, servers, and firewalls updated to the latest software and security versions on a consistent, planned schedule?

__ Do you know for sure if you have the correct number of licenses for the software you are currently using? (Be honest…)

__ Do you have an organized set of documents detailing your installation notes, network configuration, passwords, diagrams, firewall/router settings, wireless configuration, etc? __ Is your e-mail scanned for spam and viruses BEFORE getting to your inbox? (Antivirus and spam scanning by your server doesn’t count.)

__ If a virus is detected, are you notified in any way other than by the user that just downloaded a virus to your network?

__ If a PC or your server stops working, do you have a plan to restore service in less than 3 hours?

__ Do you know what 1 hour of downtime costs you? (Hint: It’s not just your billable hour or salary.)

__ Total: If you scored less than 7, give us a call. We do technology. Well.

620 PROSPERITY WAY, CHESAPEAKE, VA 23320 757.321.4150 www.CvtTech.com

48 Small Business Insight | September 2010