Northwest Territories Feature Articles

Now, more than ever, is the time for every franchisor to look at opportunities to expand its system outside the United States. A bold statement, especially coming from a lawyer who, for the past 27 years, has cautioned clients and employers against moving too quickly outside the U.S. when the brand hasn't yet been fully exploited within the U.S.

Truly great franchise sales and development teams are hard to find... and can be even harder to create. For franchise sales executives, attracting the right mix of people, passion, and experience, along with creating a positive culture and providing the right mix of recognition and reward, it's a delicate balance. Achieving that balance means the difference between a marginal brand and a great one

Contract negotiations are usually about the relative value of "things." Each party seeks the highest value for their "thing" while downplaying the value of the other's "thing." Negotiations around those "things" are particularly difficult in international franchise transactions where relationships can span generations, territories can include entire countries, and the franchisor's system is at the core of the franchisee's business. In other words, the franchisee will set out to build an empire on a foundation it only borrows from the franchisor. That fact critically shapes the parties' negotiations.

Refugees from corporate America seeking capital to open a franchise business are tapping into their retirement plans to fund their fledgling businesses. So are multi-unit franchisees seeking to expand.

This is the last of three parts about how to maximize the effectiveness of your Discovery Day. Companies schedule Discovery Days in different ways: once a month, once a week, or anytime a candidate can make it! As your system grows, you'll be forced to schedule more frequent and specific dates so you don't overtax your home office resources. But sooner is better. Like a cold steak, your opportunity can lose its sizzle the longer the wait for Discovery Day.

As savvy franchise companies continue to flourish in this challenging economy, FUSR will continue to bring you good news each month, highlighting brands that are adding units, increasing comp store sales, striking deals with investors, and continuing to grow despite the economy - maybe even because of it. And, as the U.S. struggles through its "jobless recovery," growth-oriented franchisors continue to look overseas for expansion opportunities.

When Hurricane Katrina slammed into New Orleans five years ago, Glenn Mueller already was a grizzled veteran of the Gulf Coast hurricane season. Being a franchisee carries some special challenges for anyone who operates in the region, and Katrina put all of his considerable skills as one of the country's top Domino's franchisees to the test.

Recently, I had a discussion with a CEO of a franchise company, which I will call ABC Franchise Systems. The CEO was telling me about his company's area representative program, which was having problems. As I listened to the litany of issues he was facing, I began to reflect on my own experience as an area representative and how the same issues seem to exist in most area representatives programs. To understand how to solve these issues let's look at some of the mistakes franchise companies make when implementing area representative programs and explore solutions.

As savvy franchise companies continue to flourish in this challenging economy, FUSR will continue to bring you good news each month, highlighting brands that are adding units, increasing comp store sales, striking deals with investors, and continuing to grow despite the economy - maybe even because of it. And, as the U.S. struggles through its "jobless recovery," growth-oriented franchisors continue to look overseas for expansion opportunities.

As savvy franchise companies continue to flourish in this challenging economy, FUSR will continue to bring you good news each month, highlighting brands that are adding units, increasing comp store sales, striking deals with investors, and continuing to grow despite the economy - maybe even because of it. And, as the U.S. struggles through its "jobless recovery," growth-oriented franchisors continue to look overseas for expansion opportunities.

Franchisees are an optimistic lot, expansion-minded, on the grow, always alert to new opportunities. And for them, multi-unit franchising represents one of today's most attractive opportunities. Whether it involves increasing the number of units of their current brand or adding new brands to their holdings, the allure of multi-unit franchising is attracting the best and brightest franchisees in the business with increasing frequency.

It was only a few years ago that, for the first time, multi-unit franchisees controlled more units than single-unit operators did. That moment marked a shift that had been building for decades as franchising matured into today's world of dominant multi-unit and multi-brand franchisees--along with multi-brand franchisors offering several brands from under one roof. To paraphrase the old car slogan, "This is not your father's franchising." Or perhaps we should say, "not your mom-and-pop's." Franchising has grown up and it looks a lot like multi.

Not surprisingly, winning in professional sports has a lot in common with winning in the franchise business. If there's to be any chance of victory, individuals must work together, follow a strategic plan, and remain devoted to a collective cause. Seen in this light, it makes perfect sense that a number of former professional athletes--most of whom have competed in sports since they were tots--turn to franchising when their time on the field runs out. They understand hard work and dedication, and they know how to follow a system where each individual has a role that benefits the greater good of the team.

When Columbus, Ohio, native Jeff Rigsby was a 16-year-old frying chicken for KFC, he couldn't have foreseen that one day he'd own 21 Bojangles' restaurants.

Most franchise concepts are built around the personality of the founder. Entrepreneurial lore is filled with stories of founders who open a business, incubate it for years, and after much trial and error, create a successful business.

Social media platforms are now emerging as franchise recruitment tools. Granted, it's still early in the adoption process and only time will tell how successful these new channels are in generating leads and franchise sales.

As savvy franchise companies continue to flourish in this challenging economy, FUSR will continue to bring you good news each month, highlighting brands that are adding units, increasing comp store sales, striking deals with investors, and continuing to grow despite the economy - maybe even because of it. And, as the U.S. struggles through its "jobless recovery," growth-oriented franchisors continue to look overseas for expansion opportunities.

Economic realities have been harsh, lenders stingy with money, and many suburban territories unavailable or overbuilt. These are just some of the reasons a few multi-unit franchisees are turning to opportunities in nontraditional locations. Many franchises have potential in places that have not historically been franchise hotbeds, like airports, hotels, colleges, senior centers, highway rest stops, hospitals, and military bases.

In January 2007, the FTC released the amended FTC Rule on Franchising and made compliance mandatory by July 1, 2008. Since then, many of the states with franchise registration laws have also amended their laws to conform to the FTC's changes. Violations of the FTC Rule and state franchise laws can have a profound negative impact on a franchisor, its officers, directors, and sales staff, and can even lead to jail time. We thought we would take this opportunity, more than three years after the release date, to offer you a short quiz to gauge how well you remember some of the important current requirements.

Last issue, we discussed growth through nontraditional franchises. Private equity firm investments of significant amounts of capital in franchisors and in franchisees represent another avenue for sales growth. Economic travails have led to the availability of sites with increased negotiating leverage for prospective tenants and experienced franchise talent. But in this tight financial market, where are the dollars to take advantage of those opportunities? We explore private equity firm concerns, what to expect in negotiations, and when franchisors should "just say no."

Despite the surging growth in franchisors using multi-unit development strategies over the past 20 years--especially the past decade--this approach is not always a sure bet for successful franchise growth, and certainly not for every franchisor. For example, the multi-unit model may make a great development tool for an established retail-oriented brand seeking heavy market penetration in a given territory, but it may not be right for a newer service-based brand testing a smaller market

Anil Yadav likes to think big. The multi-unit, multi-brand franchisee in Northern California owns 155 Jack in the Boxes and 26 Denny's restaurants in California and Texas. In fact, he's Jack in the Box's largest franchisee and he owns one of the largest privately held franchise companies in the country - which just happens to employ more than 4,000 people. Apparently, all that's not enough.

Franchisors seeking to grow in a tight credit environment and slow economy are turning to private equity to counter a slowdown in financing and cash flow. For struggling systems, capital "infusions" or outright acquisition by private equity firms can replace diminished royalties and franchise fees; for successful brands, this source of additional capital can be used to accelerate growth and provide a competitive advantage.

Twenty years ago, franchising meant buying the rights to and opening a single unit or business. But a changing trend has taken hold during the last two decades. Today, it's not uncommon for a single franchise operator to have 5, 6, or even dozens of units. FRANdata research notes the number of multi-unit operators now tops 34,000, and those operators control more than 155,000 franchised units in the U.S. It's a growth strategy that has proven effective but it should be approached with caution. Multi-unit operators are generally wired differently then their single-unit counterparts. Successful multi-unit operators are typically experienced, skilled, professional business executives who have chosen franchising as their business model. They possess the skills, training, capital, infrastructure, and vision to operate numerous units and have the ability to continue adding units to their portfolio--without stressing their organization or their stomach.

As savvy franchise companies continue to flourish in this challenging economy, FUSR will bring you Good News each month, highlighting brands that are adding units, increasing comp store sales, striking deals with investors, and continuing to grow despite the economy - maybe even because of it. And as the U.S. economy struggles through its "jobless recovery," growth-oriented franchisors continue to look overseas for expansion opportunities - and this month, we report on an overseas franchisor set to open its first U.S. location, as well as several new entrants to franchising.

"The world of franchise development has changed during the last year and will never be the same again," says Art Coley, vice president of global development for AlphaGraphics. "You can't just put up an ad, throw money at the portals, and sit back and wait for the leads to come in anymore." That's exactly why he has spent most of the last three years at AlphaGraphics assembling, training, inspiring, and leading his new sales development team toward system growth.

Last issue we began the discussion of how buying assets out of bankruptcy court is time-consuming but usually easy - when done properly. But if you try to pick and choose, it can become more difficult. It's hard to determine a fair value for such assets. If you're not careful you could find yourself back in court fighting angry creditors who think you've cheated them.

Take two dozen franchise CEOs and presidents, add one expert facilitator, stir for a full day, and what do you get? The second annual CEO Summit, held in Chicago this past September as part of Franchise Update's Leadership & Development Conference. Behind closed doors and the promise of confidentiality, these franchise leaders rolled up their sleeves and spoke candidly with their peers about their common problems and concerns. We can, however, share some general observations, as well as highlights from the first-ever CEO Confidence Survey.

As savvy franchise companies continue to flourish in this challenging economy, FUSR will bring you Good News each month, highlighting brands that are adding units, increasing comp store sales, striking deals with investors, and continuing to grow - despite the economy… maybe even because of it. And as the U.S. economy struggles through its "jobless recovery," growth-oriented franchisors continue to look overseas for expansion opportunities through master franchise deals.

Taking a franchise brand international is, in a sense, the final frontier for growth. It's where many franchise brands that have begun - and been successful - in the U.S turn when they seek expansion. It's a strategy that often occurs in part because of growth that has saturated domestic markets and territories. Typically, larger more established franchise brands begin looking across borders for untapped markets and potential growth. It's an expansion strategy that's not new. But during the past couple of decades as franchising has continued to grow as a popular business model, the international growth strategy has been on the rise. International franchising can also provide opportunities for new and existing franchisees looking for expansion options. There are opportunities as near as Mexico and Canada and as far as the Middle East. In one sense, international franchising can be a relatively smooth and easy process. After all, the franchise concept is built around infrastructure, simplicity, replication, and streamlined operations. What works in one place generally works in another. And many international markets are wide open and untapped and offer enormous potential for franchisors - with the right products, services, and business culture.