New Zealand Feature Articles

"How has the capital market for franchise financing changed in the last 3 to 6 months, and what are you doing differently in franchise sales in the next 3 to 6 months?"

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.

As you may recall, in my last column I asked if the hiring managers in your organization know the answers to the 15 questions that make all the difference between success and failure in recruiting, selecting, and retaining the best employees. Here now are the answers.

On the Friday morning after Congress voted down the first, "unsweetened" $700 billion bailout package--and with credit frozen and the lending climate getting icier by the hour--franchise sales executives at Franchise Update's Leadership & Development Conference put their heads together in a Friday morning "mindshare" session to brainstorm answers to some tough questions on what they're doing to make sales.

When you have only one location, it's pretty easy to work both in your business as well as on it. When you have two locations, most often it's still doable--you can manage it. Almost without exception, however, when you get to three or more locations, you'll find yourself stretched way past your limits. You will be so busy working in your business that you won't have any time to work on it, and that's a recipe for disaster. When the disasters start piling up, it's past time to recruit the unit-level managers (ULMs) you need to keep things running smoothly and help you grow your business.

All franchisors place a high priority on gaining new recruits and responding to contacts from prospective franchisees. But who's setting the pace on performance? Once again, Franchise UPDATE's mystery shoppers hit the phones--and the websites--checking out franchisors from coast to coast to see which were doing the very best work. The best and the brightest were recognized in the 10th annual STAR (Speaking To And Responding) Awards--from the three top national performers to the companies that excelled at fielding telephone contacts or quickly getting back to website leads.

For me, adapting to the highly specialized world of franchise development was a laborious, disjointed journey. During the early 1980s, I searched for a road map for recruitment success that could jump start my performance and help avoid costly mistakes. But there was no drill-down guide detailing the key benchmarks to successful growth--no books I could buy dedicated to the business of growing a franchise business. After years of unnecessary trial and error, I learned through the school of hard knocks--as many of you have--relying heavily on peer networking and by attending development seminars and industry conferences.

If you could get better performance from your franchisees and increase the overall value of your brand at little or no cost, you'd be crazy not to. That's the business proposition of business coaching. While it may sound like vendor pitch, this assessment comes from a growing number of franchisors and franchisees.

Franchise Update Media Group, the leading industry resource for franchise development, recommends franchising as the best opportunity for success for many people looking to start their own businesses. Franchised businesses combine the most attractive aspects of both worlds: the independence of entrepreneurialism, backed by the support and proven systems of Corporate America.

In these tight economic times, many multi-unit franchisees and area developers are focusing less on continuing the remarkable unit growth they've enjoyed for the past five years, and more on improving performance at their existing units. As consumer spending drops, savvy franchisees see increased royalty streams as a more attractive prospect than spending long hours with struggling franchisees, or worse, shuttering failing ones as the U.S. economy continues to sputter.

Franchise attorney Brian Schnell said it all during a session on franchising sales fundamentals at Franchise UPDATE's Franchise Leadership & Development Conference in late September: "There's nothing fundamental about franchise sales right now."

We all know a sales process is mandatory for successful recruitment. But many continue to tilt at windmills with their marketing, not realizing that successful lead generation also demands an effective, step-by-step process. Those who embrace this methodology and performance metrics can increase prospecting success by 30 percent or more. Here's a time-tested, four-part approach to lead generation that can deliver more qualified buyers for your sales team at lower costs.

"Franchising works by combining the drive and energy of the entrepreneur with the experience and expertise of the franchisor." This wonderfully concise description of franchising comes courtesy of a franchisor from Down Under: Jesters Franchising, purveyor of Jesters Jaffle Pies (all-natural meat, vegetable, and fruit pies) with 50 units in New Zealand and Australia.

On the Friday morning after Congress voted down the first, "unsweetened" $700 billion bailout package--and with credit frozen and the lending climate getting icier by the hour--franchise sales executives at Franchise Update's Leadership & Development Conference put their heads together in a Friday morning "mindshare" session to brainstorm answers to some tough questions on what they're doing to make sales.

We all know a sales process is mandatory for successful recruitment. But many continue to tilt at windmills with their marketing, not realizing that successful lead generation also demands an effective, step-by-step process. Those who embrace this methodology and performance metrics can increase prospecting success by 30 percent or more. Here's a time-tested, four-part approach to lead generation that can deliver more qualified buyers for your sales team at lower costs.

No matter what the economic environment, franchisors still must sell franchises if they are to grow and thrive. To do that, the majority of franchisees must be able to borrow. But with credit and lending frozen, nobody can borrow. So what's a franchisor to do?

As the credit crisis and the economic downturn begin to bite on Main Street America, restaurant row is in for a shake-up. For the first time in nearly two decades, the $550 billion restaurant industry has suffered stagnant sales this year, creating painful cash-flow problems for restaurateurs who can't get credit lines to cover investment and operating costs even as food and labor costs have risen sharply. That's made it harder for chains and independent eateries alike to upgrade equipment, hire new staff and renovate facilities. "The credit crisis is having a devastating effect on nearly every segment of the industry," says Aaron Allen, CEO of the Quantified Marketing Group, an international restaurant-consulting firm. "This is the death knell for a number of restaurant chains."

Franchise companies, facing what many say is the toughest economic environment they've seen, are offering two-for-one deals, reduced fees and financing help to woo new buyers. They are also paying existing franchisees to help spread the word.

Franchise Update Media Group, the leading industry resource for franchise development, today announced the availability of a new business book, entitled "Grow to Greatness - How to Build a World-Class Franchise System" that identifies the five success drivers for franchise development, and can save companies thousands of dollars in costly mistakes. The book's author is Steve Olson, publisher for Franchise Update Media Group.

It is a quiet Saturday morning. If you are the average American, the downturn in the economy has started you to think about how it will impact your career and the opportunities for your children as they enter the workforce. Articles about Enron and Tyco and Global Crossing and other corporate scandals abound and some of the most respected brand names internationally are talking about layoffs and bankruptcy.

Franchise companies, facing what many say is the toughest economic environment they've seen, are offering two-for-one deals, reduced fees and financing help to woo new buyers. They are also paying existing franchisees to help spread the word.

Before I answer your question I think a bit of historical background is important. Our economy is where it is today because we chose not to learn from what we did in the past. I remember after the bubble broke following the dot-com meltdown we were faced with similar questions. And we moved through those troubled times to what became one of the best environments for the growth of small business and certainly franchising. It is a fact of life in our economic marketplace that business cycles happen. Business cycles in the United States have always produced a beneficial cleansing although living through the corrections is always painful in the short term.

In the world of franchising, expansion and growth is the name of the game; creating leads and identifying prospective franchisees is a pivotal part of the corporate operation. This means that franchise executives learn quickly to stay on top of the latest techniques for marketing, generating leads, and recruiting new franchisees.

The franchising continues to grow, not only in size, but complexity—and in recent years, a huge part of that is attributable to multiunit, multi-concept franchising. Today one of every two franchise operators has more than one location. And really, why not? If the cookie-cutter approach works in one location it will most likely work in another, and another. In fact it really boils down to a simple numbers game: the more sales and revenue generated, the more profit potential there is.

Heather Spell and her husband Gentry spent the last decade as ticket brokers, finding their customers the best seats for sports and entertainment events in the Sacramento area.

All development people dream about that perfect prospect. Someone who is interested in their concept, pre-qualified and brought to them by a highly respected third party, an introduction that carries with it a direct or implied endorsement.

When Bill McPherson was growing up in the San Fernando Valley, he dreamed of being a professional basketball player. He was good enough to get a scholarship to the University of California at Irvine.

"I love the action of the restaurants and the strategy of the real estate. This is the jackpot business for me," says Mike Scanlon, president and CEO of Thomas and King in Lexington, Ky., where he opened his first Applebee's in 1988.

The news is depressing, the economy is sinking, financing is hard to get, the market is down, gas prices are up, and competition is fierce. So why are all these multiunit franchisees smiling?