Washington Feature Articles

Working to restart the economy's engine of job creation, President Obama announced Monday that the Treasury Department would invest as much as $15 billion to boost lending to credit-hungry small businesses.

Looking for deals in today's economy? Look no farther than the franchise agreement--but look carefully (and bring a lawyer). Written by franchisors to protect their brand and their interests, franchise agreements have historically favored franchisors, with little room for negotiation, especially among more established brands. That not only is changing, it already has--the result of fundamental shifts within franchising itself, accelerated by today's economic upheavals.

Many franchisors have reached their limit on expanding into suburbia, but the imperative to grow remains strong. In response, an increasing number are training their sights on America's cities.The move to the suburbs has been a decades-long trend in the United States, and franchisors have followed suit. But more than half of the U.S. population live in the country's top 25 metropolitan areas, and nearly 80 percent live in the top 100 metro areas.Cities are complex, crowded places, running the gamut from blighted ghettos to luxury high-rises. Suburban commuters flood into them by the millions each day to work and shop, creating a vibrant marketplace. And the under-served inner cities are hungry for retail goods and services, jobs, and entrepreneurial opportunity, making them fertile ground for franchisors who take the time to learn, understand, and develop relationships with the people who live there.The Initiative for a Competitive Inner City (ICIC), founded in 1994 by Harvard Business School Professor Michael Porter, studies inner cities with a focus on economic development. According to ICIC, "[T]he inner city retail market offers significant profit potential for retail companies now operating in the highly competitive, over-saturated suburban markets." According to an ICIC study, the country's inner cities contain:

John Smythe says he was a typical 21-year-old when he was drafted into the U.S. Army in 1965. "I was just kind of rolling through life and not really giving it that much thought," says the 62-year-old veteran today. The Army was a good experience for him, and where he learned the skills and philosophies he's using today as a CMIT Solutions franchisee in Everett, Wash.

Technology tools have become a mainstay for every multi-unit franchisee, used for planning, budgeting, forecasting, and many other daily activities. Today franchisees are embracing technology for demographic research and site selection.

When Steve Foltz graduated from Eastern Oregon University in 1985 he thought he might be interested in city or government work. To bide his time and help pay bills while he was interviewing for jobs during the day, he took a night job at Rax Restaurant in Portland.

John Prince has done a lot in his 66 years. He's been a radio talk show host, reporter, stockbroker, and even ran a small hot dog and soup stand. He's worked at SmithBarney, Citibank, been a multi-concept owner, and even started his own franchise brand (more on that later). He's seen franchising from more than both sides now.

The Government of Afghanistan is currently reviewing a bill that would reform and modernize the country's contract law. Afghanistan is a civil code jurisdiction and, currently, contracts are governed by sections of the country's Civil Code (dating from 1976) and Commercial Code (dating from 1955). Both the 1976 Civil Code and the 1955 Commercial Code are based on the laws of Egypt, which in turn are based on French civil law. During the period following the Soviet invasion, and the subsequent civil war in Afghanistan, little attention was paid to updating or modernizing these Afghanistan statutes.

Bill Dalton owned eight Grease Monkey franchises in the Seattle metro area. Today he owns one--a five-month-old, state-of-the-art facility in his home of Montgomery, Texas.

Brian Wigutow had always dreamed of operating his own restaurant. But after more than a dozen years in the industry he realized that for him -- and his family, which includes three young daughters -- it was just not going to be the right career choice. That's when he turned to a franchise broker and discovered, to his surprise, one of the franchise matches that best suited him…Handyman Matters.

In the chronicles of franchising history, some names come immediately to mind - Ray Kroc, S. Truett Cathy, Dave Thomas. The names conjure up images of independent-minded entrepreneurs with the savvy, know-how, and vision to create successful business models replicable anywhere. As part of the celebration of Franchise UPDATE's 20th anniversary, we look back at some of these colorful, inspiring, and sometimes controversial characters.

This issue marks the 20th anniversary of Franchise UPDATE, the company and the publication.

With the first kick-off of the pigskin this season, chicken wings were back on top of the menu once again for hungry football fans nationwide. Each autumn, migrating herds of Americans return to their favorite hot (wings) spots week after week to catch the big games on big screens, or wolf down their favorite spicy chicken wings at home on their new HDTV unit. It's a routine that's become big business, and it doesn't seem to be losing any steam.

Just as the Memorial Day holiday was about to begin, lawmakers preparing to flee Washington, D.C., for vacation, reached agreement on continuing to fund the war in Iraq. That funding bill also raised the minimum wage. Not a big deal, many business owners would say, because half the states already require minimum wages in excess of the federal level.

Despite all of the attention recently focused on income taxes, it is the property tax that is the biggest expense in most businesses - and the most difficult to manage. According to the Council on State Taxation, a Washington, DC, think tank, American businesses shell out more on property taxes than for any other type of state or local taxes.

As more franchise brands push outward from their local or regional base seeking growth on the national stage, choosing the right city or designated market area (DMA) is always a critical factor in success.

Franchising is founded on the concept of replicating success at the unit level. But Mary Rogers is taking that premise one better: she's replicating success at the franchisor level.

Getting laid off by United Airlines in the 1982 recession was perhaps the best business move Regina and Jerry Lillie ever made (even if they didn't actually make it themselves).

Pets and pet-related businesses are among today's hottest franchise opportunities--especially in the U.S., where pet owners are notorious for pampering their dogs, cats, birds (and even their rodents, reptiles, amphibians, and fish).

He always meant to quit working at Jack-in-the-Box and pursue his goal of becoming a doctor in the United States. Instead, he found success beyond his wildest dreams...in franchising.

If you're looking to add women franchisees--and according to every statistic, you should be (more are looking, and more have the means and skills), then you should know what women want (our apologies to the movie).

What was happening in the franchisor community? The Italian legislature had proposed that no franchisor be allowed to offer franchises in Italy unless it had a history of operating at least two units in the country before it began franchising. Ultimately, Italy adopted a more flexible experience standard. Then China adopted a two-unit, one year of experience standard as a precondition for franchising there in its 2004 Franchise Measures.

When Philip Nye came to the United States from Colombia 18 years ago, he carried a visa, spoke English, and had the necessary resources to buy his Sir Speedy franchise in Raleigh, N.C.

One-third of the nation's population is "minority" (U.S. Census), but only about 10 percent of franchises are minority-owned (National Minority Franchise Initiative). Or, to look at it another way, 90 percent of franchises are not minority-owned.

Unfortunately for those who take on the job of growing a franchise business, financial risk is always present. If you are like other franchisors who want to minimize risk and boost profits, you may want to take a serious look at using a more extensive corporate-ownership program than you now have in place.

John Gantes has been in the restaurant business his entire life. "From the time I was a little kid, I worked around restaurants. I'm from Greek heritage and my dad had a restaurant when I was growing up, so I knew the business. Unlike my dad, who was very content to have one restaurant, that wasn't what I really wanted to do."

While politicians wrangled over the Mexican-U.S. border situation in 2006, one thing remained certain: people on both sides of the border love Mexican food. Americans have come a long way from Taco Bell, embracing Mexican food more and more each year, in all its flavors and variations.

Chew on the numbers presented in this article and consider the implications for you and your organization from the perspective of your customers and employees--the people you hire and the people you sell to. You will see great numbers to keep in mind when positioning your company, looking for your next location, and developing your next marketing push.

For many years--like the ancient bones of "Lucy" discovered by Donald Johanson in 1974 and long thought to be mankind's first ancestor--Albert Singer, who founded the Singer Sewing Machine Company in 1851, has been credited with being the first franchisor in the United States. The designation was likely given because his was the most recognized name of the early pioneers that people still remembered.

Big money, in the form of private equity, is finding a home in franchising, and bringing big promise to area developers and multi-unit operators-and to franchisors and franchise executives as well.