Confusion About Franchising

Over the past few months there have been a multitude of franchise events. From conferences to tradeshows, there has been no shortage of information being shared about franchising.

I’m certainly proud of the efforts to provide education about franchising. I’m a firm believer that education is essential and key to achieving long-term success within franchising.

For those within the industry, it goes a long way toward ensuring franchising remains as a leading business model. And for aspiring entrepreneurs considering franchising as the next step in business growth or as a career path, education is key especially considering required investments and the interdependent nature of franchise relationships.

Unfortunately, I’m still concerned about confusion around franchising, some of which I have addressed with American Express and their Small Business Saturday program. Of course, there are other instances, as well.

One in particular are the terms routinely used in and about franchising. I had addressed the same in a previous article at Acceler8Success Cafe. I believe it’s appropriate to share again today.

Are You Confused by Franchise Terminology? (April 2022)

Many, including myself, refer to franchising as an industry… even though we know it’s really not an industry. A business model is probably one of the better definitions, but what does that really mean?

The International Franchise Association (IFA) defines a franchise as:

A franchise (or franchising) is a method of distributing products or services involving a franchisor, who establishes the brand’s trademark or trade name and a business system, and a franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor’s name and system. Technically, the contract binding the two parties is the “franchise,” but that term more commonly refers to the actual business that the franchisee operates. The practice of creating and distributing the brand and franchise system is most often referred to as franchising.

When referring to a franchise, even many within franchising choose from a variety of terms as a point of reference – franchise organization, franchise system, franchise company, franchise brand.

The IFA definition continues:

There are two different types of franchising relationships. Business Format Franchising is the type most identifiable. In a business format franchise, the franchisor provides to the franchisee not just its trade name, products and services, but an entire system for operating the business. The franchisee generally receives site selection and development support, operating manuals, training, brand standards, quality control, a marketing strategy and business advisory support from the franchisor. While less identified with franchising, traditional or product distribution franchising is larger in total sales than business format franchising. Examples of traditional or product distribution franchising can be found in the bottling, gasoline, automotive and other manufacturing industries.

Of course, there are also the varying terms relating to the franchise relationship – franchisee, franchise partner and not to mention the slang, zee. And to the other side of the relationship – franchisor, head office, corporate office, parent company… and yes, zor.

And what’s the difference between franchisor and franchiser?

Confused yet? Maybe the IFA definition will help clear the air:

Franchising Is About Relationships

Many people, when they think of franchising, focus first on the law. While the law is certainly important, it is not the central thing to understand about franchising. At its core, franchising is about the franchisor’s brand value, how the franchisor supports its franchisees, how the franchisee meets its obligations to deliver the products and services to the system’s brand standards and most importantly – franchising is about the relationship that the franchisor has with its franchisees.

Franchising Is About Brands

A franchisor’s brand is its most valuable asset and consumers decide which business to shop at and how often to frequent that business based on what they know, or think they know, about the brand. To a certain extent consumers really don’t care who owns the business so long as their brand expectations are met. If you become a franchisee, you will certainly be developing a relationship with your customers to maintain their loyalty, and most certainly customers will choose to purchase from you because of the quality of your services and the personal relationship you establish with them. But first and foremost, they have trust in the brand to meet their expectations, and the franchisor and the other franchisees in the system rely upon you to meet those expectations.

Franchising Is About Systems and Support

Great franchisors provide systems, tools and support so that their franchisees have the ability to live up to the system’s brand standards and ensure customer satisfaction. And franchisors and all of the other franchisees expect that you will independently manage the day-to-day operation of your businesses so that you will enhance the reputation of the company in your market area.

And franchise locations are independently owned and operated. Yet, the franchise relationship is interdependent… or at least it should be interdependent and not dependent or independent upon… Well, you get it, right?

Franchising Is also a Contractual Relationship

While from the public’s vantage point, franchises look like any other chain of branded businesses, they are very different. In a franchise system, the owner of the brand does not manage and operate the locations that serve consumers their products and services on a day-to-day basis. Serving the consumer is the role and responsibility of the franchisee.

Even more confusing is the difference between a franchise and a license. The IFA explains it correctly below but it’s still confusing unless you can follow the bouncing ball:

Franchising is a contractual relationship between a licensor (franchisor) and a licensee (franchisee) that allows the business owner to use the licensor’s brand and method of doing business to distribute products or services to consumers. While every franchise is a license, not every license is a franchise under the law. Sometimes that can be very confusing.

Now let’s look at the people serving the franchise community. Yep, franchise community is another reference for the franchise list above but let’s move on. Franchise consultants, do they sell or consult? How about franchise brokers, coaches, sales agents, sales representatives, and again, franchise consultants.

Is there embarrassment in being involved in what really is a sales process? To that point, is a franchise sold or awarded? If awarded, along the lines of receiving an award at the Oscars (no Will Smith / Chris Rock jokes, please!), maybe the term should be presenter?

Of course, there are references to segments within franchising such as master franchising and sub-franchising… Which one is correct? And isn’t the sub-franchisor actually the master franchisee? I guess it all depends on which end of the relationship one is on. In any event, these terms aren’t being used as frequently as in the past. Maybe it’s because correctly defining these relationships were confusing. Again, unless you could keep up with the bouncing ball.

Back to the IFA definition:

The definition of a franchise is not uniform in every state. Some states for example, may also include a marketing plan or community of interest provision in the definition. The definition of what is a franchise can vary significantly under the laws in some states and it is important that you don’t simply rely on the federal definition of a franchise in understanding any particular state’s requirements.

Put another way, in a franchise a business (the franchisor) licenses its trade name (the brand, such as BrightStar Care or Sport Clips) and its operating methods (its system of doing business) to a person or group operating within a specific territory or location (the franchisee), which agrees to operate its business according to the terms of a contract (the franchising agreement). The franchisor provides the franchisee with franchising leadership and support and exercises some controls to ensure the franchisee’s adherence to brand guidelines.

How about now – confused yet or are things starting to appear clearer? But wait…

Moving down the chain there are franchise suppliers, service providers and vendors… What’s the difference? Preferred or approved? Is there really a difference?

Franchise services means what, and providing services to who? Franchisee to end-user? Franchisor to franchisee? Franchise service provider to franchisor and/or franchisee? Or are they suppliers as is the reference to an IFA committee of franchise service providers that are referred to as suppliers?

Same can be said of franchise marketing, right? Does marketing in a B2B or B2C scenario but within a franchise environment mean that it’s franchise marketing? Or is franchise marketing actually marketing to franchise candidates?

Speaking about franchise candidates, when is a candidate actually a candidate and not a lead, prospect or just an interested party? Does this fall under franchise sales or franchise development? Or back to the sale versus award question, should it fall under franchise awards. And who’s in charge – the VP of Franchise Sales, VP of Franchise Development, or VP of Franchising? And along the line of the many creative titles nowadays, maybe VP of Franchise Awards??

Then there’s reference to franchise professionals. Is a franchisee a franchise professional? How about if the franchisee is a multi-unit franchisee with 25, 50 or 100 locations? How about a franchise attorney (or is it franchise lawyer)? Are they franchise service providers or seemingly ridiculous to say, suppliers?

If a franchise executive is a franchise professional, at what level of management or leadership does one begin to be considered a franchise professional? How about within the franchise organization itself? How about others within the franchise corporate office if their support is purely administrative as opposed to an admin that actually communicates with franchisees?

Oh, and should the CEO or others senior executives of a franchise company be considered a franchisor as we often refer to them as such at franchise events? And if a franchisor operates corporate locations, should they also be considered franchisees? Yes, that’s a stretch… sorry, but I often hear franchisors claim their locations are treated just like franchise locations and remit the same fees for marketing and hold positions on franchise advisory boards, etc.

Let’s take a last look at the IFA definition:

Investing in a franchise or becoming a franchisor can be a great opportunity. But before you select any franchise investment and sign any franchise agreement, do your homework, understand what the franchise system is offering and get the support of a qualified franchise lawyer.

Although this author firmly believes the International Franchise Association does a great job on behalf of franchising and I’m not sure I could even think of franchising without their tireless efforts to protect franchising, I do believe some efforts must be focused on minimizing confusion around franchising rather than adding to it.

From personal experience with highly educated senior executives at American Express around their ignorance about franchising, my concern always reverts to the individuals investing their life savings not clearly understanding what it is that they’re agreeing to. I’m also concerned that because of confusion, many don’t even consider a franchise as a viable opportunity. But then again, as many franchisors claim and heavily promote, a franchise is like a family, I’m ecstatic more franchisees don’t have BurgerIm as their “family” name.

After all, isn’t it ironic how franchising is the replicating of a system with focus on consistency in image, appearance, product and service from one location to another? Yet, there’s little consistency in the terminology used to define many aspects of franchising.

Note: The IFA definitions referred to above may be accessed HERE. All kidding and sarcasm aside, it really is great information and again, I do truly appreciate all IFA efforts!

Have a great day. Make it happen. Make it count!

God, Please Hear Our Prayers!

Prayer is an essential part of every world religion, including Christianity. Most people realize it has something to do with talking to God. Many hope that it might bring much needed assistance or comfort when facing difficult circumstances.

Prayer offers new meaning, purpose, hope, and a sense of guidance or control. These perceptions may help instill a fighting spirit, which has been reported to be an important factor in healing. Prayer can enrich the quality of one’s life and also bring a feeling of peace.

Growing up, I was taught that praying for something specific, like a new bike was selfish. However, I don’t believe it’s selfish to pray for the courage AND strength necessary to face challenging times and periods of adversity.

Certainly, praying for hope, and praying for the benefit of others, for each other, for our loved ones should not be considered selfish. In fact, I believe it’s a moral obligation to think of others, to help others, and to pray for others.

In these times of economic uncertainty, public unrest, and a list of challenges too long to list, I humbly request, God, please hear our prayers.

“Prayer is the key of the morning and the bolt of the evening.” – Mahatma Gandhi

As I was researching prayer, I came across a prayer by Pastor Justin Barnett that I’d like to share with you today. Pastor Barnett wrote the following at NeuseNews.com:

I was asked recently to submit a prayer for businesses that would be a part of a National Day of Prayer series for Neuse News. I immediately thought of all the small businesses that are struggling and many that are closed right now. I am intimately acquainted with the struggles of small businesses and small business owners. My grandfather opened and ran a small family business.

Later, my dad ran this same small family business. Throughout my childhood, my father was up early to work and home late from work, trying to keep the family business going. I saw the stress in his face, the same stress that drove him to chain smoke cigarettes all day long for many years. I remember the tension that troubles with the business placed upon my family. My heart and my prayers go out to those businesses that are struggling right now.

With this in mind, I offer this prayer. I invite you to pray with me, as you read it.

Lord, thank you for the small businesses in our communities, for the hard work, the blood, sweat, and tears that have gone into them. For many, their businesses are not just stores or companies, they are the fabric of their lives and the lives of their loved ones. We pray God that You will guide these small business owners and provide for their families during this difficult and uncertain time.

We pray that every small business owner along with their family, will not be overcome by fear and worry, but that each and every one will trust in You and find wisdom and guidance in You. We pray that as they do this, that they will make wise decisions, the decisions that are best for their families, and that they will make these decisions at precisely the right moments.

In the Bible, Solomon wrote, “Commit your actions to the LORD, and your plans will succeed (Proverbs 16:3, (NLT).” We pray that small business owners will follow this Scripture, and that they will commit everything to You, and that You will bless them with success. We pray that the public will see that the small businesses that operate with honesty and integrity, and that seek to treat people, be it staff, vendors, or customers, with kindness, compassion, and respect, are something that we desperately need in our communities. We pray that people will see the great need and the special benefits of supporting local mom and pop businesses and will buy locally.

God, be with our small business owners and their families. Bless them and keep them. In Jesus name we pray. Amen.

God Bless Us All. Have a great day. Make it happen. Make it count.

We Are All Brothers And Sisters Celebrating This Time Of Year

I know it’s early but… Merry Christmas, Happy Hanukkah, Joyous Kwanzaa, Happy Holidays and any other phrases synonymous with or perceived to be wishing another person good health and well-being at this widely-recognized special time of year.

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In my mind, the following by Ben Stein from a few years ago was and still is a very powerful spot-on message… It’s actually exhilarating to read something this heartfelt as opposed to the politically-correct rhetoric written or stated by so many these days. Please Read And Share!!

Apparently the White House had referred to Christmas Trees as Holiday Trees for the first time that year, which prompted Ben Stein, to say, on CBS Sunday Morning…

My confession: I am a Jew, and every single one of my ancestors was Jewish. And it does not bother me even a little bit when people call those beautiful lit up, bejewelled trees, Christmas trees. I don’t feel threatened. I don’t feel discriminated against. That’s what they are, Christmas trees.

It doesn’t bother me a bit when people say, ‘Merry Christmas’ to me. I don’t think they are slighting me or getting ready to put me in a ghetto. In fact, I kind of like it. It shows that we are all brothers and sisters celebrating this happy time of year. It doesn’t bother me at all that there is a manger scene on display at a key intersection near my beach house in Malibu. If people want a nativity scene, it’s just as fine with me as is the Menorah a few hundred yards away.

I don’t like getting pushed around for being a Jew, and I don’t think Christians like getting pushed around for being Christians. I think people who believe in God are sick and tired of getting pushed around, period. I have no idea where the concept came from, that America is an explicitly atheist country. I can’t find it in the Constitution and I don’t like it being shoved down my throat.

Or maybe I can put it another way: where did the idea come from that we should worship celebrities and we aren’t allowed to worship God? I guess that’s a sign that I’m getting old, too. But there are a lot of us who are wondering where these celebrities came from and where the America we knew went to.

In light of the many jokes we send to one another for a laugh, this is a little different: This is not intended to be a joke; it’s not funny, it’s intended to get you thinking.

Billy Graham’s daughter was interviewed on the Early Show and Jane Clayson asked her ‘How could God let something like this happen?’ (regarding Hurricane Katrina). Anne Graham gave an extremely profound and insightful response. She said, ‘I believe God is deeply saddened by this, just as we are, but for years we’ve been telling God to get out of our schools, to get out of our government and to get out of our lives. And being the gentleman He is, I believe He has calmly backed out. How can we expect God to give us His blessing and His protection if we demand He leave us alone?’

In light of recent events… terrorist attacks, school shootings, etc. I think it started when Madeleine Murray O’Hare (she was murdered, her body found a few years ago) complained she didn’t want prayer in our schools, and we said OK. Then someone said you better not read the Bible in school. The Bible says thou shalt not kill; thou shalt not steal, and love your neighbor as yourself. And we said OK.

Then Dr. Benjamin Spock said we shouldn’t spank our children when they misbehave, because their little personalities would be warped and we might damage their self-esteem (Dr. Spock’s son committed suicide). We said an expert should know what he’s talking about. And we said okay.

Now we’re asking ourselves why our children have no conscience, why they don’t know right from wrong, and why it doesn’t bother them to kill strangers, their classmates, and themselves.

Probably, if we think about it long and hard enough, we can figure it out. I think it has a great deal to do with ‘WE REAP WHAT WE SOW.’

Funny how simple it is for people to trash God and then wonder why the world’s going to hell.

Funny how we believe what the newspapers say, but question what the Bible says.

Funny how you can send ‘jokes’ through e-mail and they spread like wildfire, but when you start sending messages regarding the Lord, people think twice about sharing.

Funny how lewd, crude, vulgar and obscene articles pass freely through cyberspace, but public discussion of God is suppressed in the school and workplace.

Are you laughing yet?

Funny how when you forward this message, you will not send it to many on your address list because you’re not sure what they believe, or what they will think of you for sending it.

Funny how we can be more worried about what other people think of us than what God thinks of us.

Pass it on if you think it has merit.

If not, then just discard it…. no one will know you did. But, if you discard this thought process, don’t sit back and complain about what a bad shape the world is in.

My Best Regards, Honestly and respectfully,

Ben Stein

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“Imagine all the people living life in peace… And the world will be as one.” – John Lennon

Have a great day. Make it happen. Make it count!

Change is a disruption, and disruption is good. In today’s changing world, it’s necessary.

Goals not being achieved. Resolutions not being met. Life not being fulfilled. As we close in on year’s end, many will question if what they’re doing is moving them in the right direction, their desired direction.

Questions will come about whether it’s time to make changes, time to implement changes. Yet, as is typically the case for most, procrastination sets in. Doubt, as well.

It brings about the real question that should be addressed… Are you prepared to bring change into your life, into your career, into your business?

But first, let’s take a deeper dive into the premise of change in order to gain a better understanding of what motivates change and why change is necessary.

So, what does it mean to change?

verb: replace (something) with something else, especially something of the same kind that is newer or better; substitute one thing for (another).

noun: the act or instance of making or becoming different.

That said, what motivates change?

“Change happens only when the pain of remaining the same is greater than the pain of changing.” – Dr. Tom Hill

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A key to success is to learn from mistakes. Although the mistakes may not have been intentional, they’re real, nonetheless. That means change may be necessary as the result of mistakes.

Unfortunately, even when lessons are learned, the negative results attained by poor choices and ill-fated decisions sometimes take a long time from which to completely recover. These issues often have to be worked through, driven by a firm commitment to reverse course. Sure, it’d be so much easier if a quick change in direction allowed for full recovery but it’s typically not that simple.

So, if moving in the wrong direction, it’s essential to implement a strategy (change) to get back on course and then stay on track until desired results are achieved. To that end, personal accountability as well as accepting personal responsibility must be part of the equation. Doing so increases the possibility, if not the probability of desired results.

Are you confused yet? Is change an action, or is it a mindset?

Regardless, if there is a new normal today, it’s change… but is it enough or just lip service?

Let’s look at change from a business owner’s perspective.

Changes being implemented over the past two years to survive through the pandemic continue to be necessary through to full recovery. Most likely, change will be key to future success as customers and clients have become accustomed to the changes and look for them to continue even if it means the changes are to run alongside what was once considered standard operations.

For example, think about the pandemic-motivated focus on take-out & delivery in the restaurant industry. Seemingly front and center, customers expect the new approaches to take-out and delivery to continue and will consider it as a standard for restaurants today.

Actually, if embraced and committed to by restaurant operators, it will help restaurants to thrive… provided processes are perfected and improvements are made along the way, as opposed to efforts being considered a temporary or secondary solution for the times. 

So, what was once considered standard has actually changed. The standard has been disrupted albeit with disruption being a positive approach, not negative.

“Change is inevitable, and the disruption it causes often brings both inconvenience AND opportunity.” – Robert Scoble

That means a change in direction, a change in thinking about the next steps beyond what motivated change must be considered the norm.

In a world of constant change, non-adaptive behavior is a killer problem while disruptive behavior, going against the grain, questioning the status quo, and thinking outside the box is actually survival behavior.

The bottom line… Don’t be afraid of change. Embrace it, for change is good. Change is refreshing. Change is a disruption, and disruption is good. In today’s changing world, it’s necessary.

“Think big; think disruptive. Execute with full passion.” – Masayoshi Son

Have a great day. Make it happen. Make it count!

Seeking Guest Bloggers for Acceler8Success Cafe!

I was quoted at one of the franchise marketing conferences some years back…

“Content may be King, but it’s what’s done with the content that makes the Kingdom!”

Today, I believe this statement to be more the case than ever before.

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As such, I’m seeking guest bloggers – authors & subject-matter experts along with thought-leaders, academics, and the like with focus on or related to entrepreneurship, franchising, small business, and restaurants.

Interested in writing about your brand or an entrepreneurial story? That’s great, provided it’s about a distinct point of differentiation from a typical promotional piece. Maybe you’d like to provide insight into a skillset that benefits entrepreneurs and small business owners? That’s fine, as well. As is sharing perspective and opinion on issues of the day. Self-help and mental health? About a specific demographic group? Success and failure experiences? Yes! Definitely, yes! Of course, in all instances, I will approve accordingly. If not approved, it will not be the case without first discussing with the author to possibly see if an edit or two would make the article more appropriate.

Acceler8Success Cafe is the interactive arm of Acceler8Success Group. It is centered around a Daily LinkedIn Newsletter with a growing subscriber base. The articles are shared across multiple LinkedIn Groups, on the Acceler8Success Group blog, on various social media platforms of Acceler8Success Group & its Leadership Team, and on Medium.com.

Plans are in place to significantly expand the reach of Acceler8Success Cafe in 2023 including white papers, infographics, videos, and finally after several false starts, a podcast! Who knows what the future will bring as we’ve already tested local in-person meetings and have actually had discussions about a brick & mortar cafe of the same brand name. It’s all quite exciting!

My goal is to provide current and aspiring entrepreneurs the information and resources necessary to succeed, and especially in today’s business climate surrounded by economic uncertainty and challenges that industry segments have never seen before. As one might imagine, the sky is the limit with any and all relevant information providing value or at the very least, to spur thought and discussions.

If you’re interested in submitting articles, of any length, and graphics, quotes, etc., or would just like to have a chat about my plans, please reach out to me here on LinkedIn or by email to Paul@Acceler8Success.com. I look forward to speaking with you and exploring possibilities. Thank you!

Have a great day. Make it happen. Make it count!

Franchising as a Growth Strategy: Is it right for your restaurant business? (Part 2)

Today, I’m sharing Part 2 of the article, Is Franchising the Right Way to Grow Your Restaurant Business? An article for which I was interviewed based upon a webinar of the same title that I presented at RestaurantOwner.com approximately five years ago.

Timing is Everything

A restaurant operator knows the time is right to franchise his concept, ideally, after duplicating profitability and customer engagement at several locations. That proves systems and processes are working without the restaurateur being on the premises.

Slightly less than ideal, but certainly doable, Segreto continues, is having a single, highly successful location that runs like a well-oiled machine even when the owner is not on site. That said, the time can also be right when the restaurant owner wants to help others follow his vision to success, knowing that the business now is franchising as opposed to foodservice.

Understandably, the smaller and more efficient the restaurant, the better. The lower investment is attractive to experienced operators who may have $1 million to invest but would rather do it with five to I0 units rather than investing it all in one high-dollar operation with little to no room for error. That’s why the QSR (quick-service restaurant) model tends to be attractive, says Segreto.

Segreto also sees an excellent opportunity for successful food truck operations transitioning to brick and mortar. The key in all of this is simplicity in operations while maximizing efficiencies for higher profit margins. This is especially true of QSRs without grills or hoods, but with preparation of fresh salads and other dishes. Some don’t even have freezers, which is even cutting down space requirements.

Franchised takeout and delivery concepts will continue to proliferate, Segreto predicts. What I also see changing is a move away from single-item franchises such as French fries or dessert items. Basically, if it’s a single, complementing, or add-on item on a typical menu it won’t sustain a franchise operation. The few units that survive will be in high-foot-traffic areas albeit with high rents.

It will be a struggle, but some will survive, he suggests. I also believe we’ll see more modeled after typical pizza operations: large takeout and delivery, high percentage of online and phone orders, (and) counter-type operations of a high-margin family style product such as barbecue and fajitas.

Initial Steps

The first thing Segreto recommends would-be restaurant franchisors do is conduct a feasibility study. It’s understanding the competition, he explains. It’s understanding what’s working out in the restaurant industry in your particular food segment. It’s looking at where are the best locations. Where are the successful brands succeeding? What does the real estate footprint look like? What does the size of the space look like? What is the competition that’s out there? Who’s growing in my particular area that I anticipate going head-to-head with? So, the last thing you want to do is open up your Greek food restaurant as a franchise and go directly across the street from an actual brand that is doing the same thing.

Development of an operations manual is another necessary step, Segreto says, and this is really complex. It really is the specific development of every process, every procedure. Keep in mind, as I said before, franchising is being able to repeat the system over and over and over and over again; being able to duplicate it, to replicate it, so somebody can pick up that operations manual and actually learn from it and be able to operate that business.

“Some of the most successful brands – in any sector – are franchises. In the restaurant business, they are household names. For many independent operators, franchising their concept is the so-called Big Hairy Audacious Goal. Before you take that big leap, there are a lot of small and critical steps to consider.” – Paul Segreto

Franchisee and franchisee employee training and program development comes next. How are we going to go ahead and get individuals who are interested into your brand in a franchise situation to be trained correctly? – he asks. You have to develop a training program along with a training manual. You also have to have a train-your-trainer program, because the person who might be doing your training today might not be around (in the future), and you have to make sure you have everything documented from that.

Ongoing support, understandably, is critical. We have to support the individuals who are out there. Obviously, we don’t want to just pick up the phone and say, ‘Hey Joe, how are things going?’ There has to be an action plan. There have to be goals. There has to be a way of motivating them. There has to be a way of coaching them. There has to be a way of understanding at a glance where this franchisee might be having some issues.

Web site development must account for each new franchisee that comes on board. “They’ve got to have specific unique URLs (uniform resource locator, the address of a World Wide Web page) on your site. If you wind up selling 10, 20, 30 franchises, obviously you have to have the structure in place to be able to accommodate those location pages. Is it going to be Pizzarama Number One? Is it going to be Pizzarama, Abilene, Texas? How are we going to identify them? There must also be a franchise development web site, a page on the regular web site that also has its own unique URL that can be used as a landing page.

A franchise relations management computer application is another valuable addition. Compliance mechanisms must be put in place, he urges. How do you track royalty payments? How are you going to do it for multiple franchisees? There are different franchise relationship computer applications out there; some are very proprietary, and you can’t even get in the door at $25,000.

But there are a lot being released now which are Microsoft-dynamic, and are able to integrate QuickBooks very, very effectively. He calls this an absolute necessity in order to track what’s going on. And if you’re selling any type of supplies or goods to them, this is another way of tracking.

Another essential step is prototype restaurant layout and design. Rarely, says Segreto, does someone open a restaurant and afterward say it is exactly what he wanted. We’re always saying, ‘I wish the bathroom was a little bit different. I wish we had a little bit more room in the server area. I wish we had a little bit more room in the kitchen because we’re kind of running into each other.’ Keep in mind; this is something that your franchisees are depending upon you for, so obviously there’s a cost involved.

Likewise, development of signage specifications is a necessity. Whatever the franchisee is going to have, you’re going to have signage specs. What is the sign going to look like from the outside, on the building itself? What does the road sign look like? If it’s on a multi-use line, what is the small side going to be? Of course, make sure your logo fits on it.”

The franchise disclosure document is really the big one, – says Segreto. Within it is a franchise agreement. Again, you could reign in the cost on this, but a lot of it depends on how good your franchise attorney is. I would never, under any circumstances, ever, ever, ever recommend an attorney do your disclosure document that doesn’t specialize – not touch on but specialize – in franchise law.

The timing for a certified financial audit varies according to state. “You won’t need this your first year, at least in the State of Texas, says Segreto. But if you’re franchising in the State of New York, you will need it in the first year.” It calls for an independent audit firm to look at and sign off on the venture. “It says, ‘These are the financials as I know them.’ State administrators look at this to make sure that you can support franchisees, that you’re not just doing this on a wing and a prayer.

According to Segreto, a franchise registry is something that’s popped up of late. It is part of the Small Business Administration (SBA) registration. It’s almost, almost impossible for a franchisee to get an SBA loan without the brand already being vetted out and listed on the franchise registry, and there’s some reason behind it. By the same token, however, it also shows the franchise candidate that this brand is serious and has actually invested in getting listed on the registry.

You Can Do It Yourself… And Other Myths

If we can take anything away from Segreto’s advice it is that franchising is a tremendously complex endeavor. Few operators – even successful franchisors – have the breadth of knowledge and skills to do even a portion of the required steps without professional advisors.

Of course, the franchisor can try to do it himself, he adds. I’ve seen many, many individuals in the restaurant industry, and otherwise, try it. They always come running back and say, ‘I’ve no idea how to handle this. There are too many things going on at one time.’ So, you’re going to need a consultant to kind of ‘hold your hand’ along the way and make sure that everything gets done in a very progressive manner.

The human factor in a franchise relationship should never be overlooked. As Segreto has found, A few individuals may just be needy and whiny about everything. Could you handle that? How about a franchisee that’s not complying, not paying royalties, causing issues in the marketplace, and as a result you must take them to court and possibly terminate the franchise agreement and get them to cease operations? Keep in mind, his lifesavings are on the line. Could you handle that?

His point is that a franchisor has to have the right personality and has to be committed to the long-term vision. There are a lot of myths about franchising: ‘If I franchise, I’ll make tons of money. If I franchise, I won’t have to work as hard as I’m working now. I can just retire.’

The vision of franchising a restaurant concept can make some over-confident, Segreto has found. Some are likely to say, ‘Once I teach a franchisee how to run the business, then I don’t have to do anything else. All they do after they sign is pay me royalties.’ That’s not true. You have obligations.

Indeed, Segreto concludes, this might be the biggest myth there is. A lot of franchisees that, all of a sudden, make an investment have an entitlement attitude that, ‘Because I invested X-amount of dollars, the business should just succeed.’ You find that all of a sudden, they’re on the golf course a lot more. They bought that new boat. You’ll be surprised what comes out of the woodwork.

Read Part 1 of this article HERE.

Assistance & Resources

If you’re interested in exploring whether franchising is right for you and your business, let’s discuss. I can share with you my 40+ years’ franchise development experience while also introducing you to resources necessary for you to make an informed decision – one that is right for you and your brand! You can reach me via a LinkedIn message, by email to Paul@Acceler8Success.com, or by phone or text at (832) 797-9851.

Have a great day. Make it happen. Make it count!

Franchising as a Growth Strategy: Is it right for your restaurant business?

A question I am always being asked is about whether franchising is the right way to grow a restaurant business. It’s certainly good to see restaurant operators and other business owners proactively planning for the long-term. Preparing to franchise a restaurant or any business for that matter, is a good project to undertake even if franchising turns out not to be in the cards, for whatever reason. A lot can be learned from the process itself.

Let me say that again:

Preparing to franchise a restaurant or any business for that matter, is a good project to undertake even if franchising turns out not to be in the cards, for whatever reason. A lot can be learned from the process itself.

It was this objective of being well informed regardless of whether franchising was the right strategy or not that I had on my mind when I was asked to conduct a seminar for RestaurantOwner.com five years ago. It’s no secret that many restaurant operators have aspirations of seeing their concept grow across a state or even across the country. Most think about franchising as the vehicle to accomplish their goals for all the obvious reasons. But is franchising right for them personally? Is their business positioned correctly for franchising? And is franchising the right or only path for growth?

After I presented my webinar, I was interviewed by RestaurantOwner.com staff for an article in their print publication. Over the next few days, I will share the article here at Acceler8Success Cafe. As it has helped a number of restaurateurs make what they’ve told me was truly the right decisions for them, two just in the past week, I feel compelled to start the conversation again in order that today’s restaurant operators that may be planning a pivot will have opportunity to explore and consider all options.

Note: At the time of the webinar and article I was CEO of Franchise Foundry. Today, with 40+ years under my belt, I am the CEO & Founder of Acceler8Success Group. Franchise Management & Development is a cornerstone of Acceler8Success Group along with other disciplines including business incubation & acceleration, business brokerage and entrepreneurship coaching.

Is Franchising the Right Way to Grow Your Restaurant Business?

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Is Franchising the Right Way to Grow Your Restaurant Business? (An Interview with Paul Segreto, CEO of Franchise Foundry based on a RestaurantOwner.com webinar by the same name.)

The restaurant industry represents the largest number of franchised locations, thanks not only to established chains like McDonald’s Corp.; but also, smaller operators who use franchising to grow quickly. The IFA predicts the so-called full-service restaurant sector will account for the greatest growth, followed closely by quick-service units.

The risks are proportionate to the rewards. As with any complex business strategy, there are right ways and wrong ways to launch and maintain a franchise system. Franchising the right way is when the corporate unit from which the franchise model is being developed is already highly profitable,” says Paul Segreto, CEO of Franchise Foundry. From there it’s about having proven processes and systems that have been documented and will be easily replicable at franchise locations.”

Franchisors must understand franchisees have also made a significant investment in the business, and in the founder’s vision. We hear so much about positively memorable experiences for customers, but that should be the case for franchisees in their relationship with the franchisor. – Paul Segreto

Segreto’s company is a business accelerator focused on emerging franchise brands. Utilizing a hybrid coaching/consulting approach, he and his team develop and deploy effective short-and long-term solutions in franchise management and operations, change management, traditional and digital marketing, relationship and business management technology, and domestic and international franchise development. The company also assists franchise brands in raising capital and exploring merger and acquisition opportunities.

Segreto also stresses the importance of exemplary customer satisfaction levels” at the corporate unit prior to attempting to replicate the concept. Profitability can be a function of strong management at the corporate level. Exemplary customer satisfaction, proves not only those systems and processes are working, but are working to the finest of details.” Among the clearest evidence that a restaurant concept is delivering this level of service is a “stellar position on review sites,” says Segreto.

Successful franchisors have selected technology that support their systems across the franchise – including POS system, loyalty programs, and more. Before launching a franchise, the technology needs to be tested from all angles in the corporate stores.

Systems also require standardization of equipment and process flow. Franchising is where the restaurant business becomes as much science as art.

Last but most certainly not least, any company wishing to franchise must have solid ownership of trademarks and trade dress. In fact, securing this intellectual property is probably the prospective franchisor’s first step.

Of course, each of these aspects of creating a foundation for a successful franchise is a webinar – if not a book – in itself. The wrong way to franchise is simpler, says Segreto: ‘We’re making money, let’s franchise. We’ll make improvements and perfect things after we sell a few franchises…’

Misunderstanding Franchising

Segreto believes there is a lot of misunderstanding among restaurant operators when it comes to franchising. Franchising is regulated under federal, and in some cases state, disclosure laws, and ignorance [or these laws and regulations] is not a defense, – he warns. Franchisees are not employees and shouldn’t be treated as such. Franchisees are every bit the mom-and-pop operator with life savings invested in many cases. Consumers have confidence in a franchise brand, feeling a larger entity behind the local franchise unit. Expectations are higher than with independent operations. Conversely, consumers lose sight of it being locally owned and operated.

Prospective franchisors also need to identify the segment in which they will be competing. Franchised restaurants are currently divided into common segment categories, such as quick-service, full-service, family dining, etc. It doesn’t end there, says Segreto. Then there’s ethnicity: American, Korean, Mexican, Latin American, Asian, and many more – and top those off with fusion.

Your mission, as an operator who dreams of franchising your concept, is simpler, says Segreto. Do what you do best and focus on that. Don’t try to be everything to everyone. A ‘proven’ system is when the efficiencies can offset the royalty percentage and still churn out acceptable profit margins.”

Restaurateurs must also realize that franchise success is dependent on both franchisor and franchisee. Think marriage, Segreto says, because it is a marriage of sorts. It requires open, honest, transparent communications in both directions.

Don’t forget that you, as franchisor, are not the only party that wants to make money. Many times, an operator decides to franchise because he is pumping away at 15% to 20% profit, and with them at the restaurant 60 hours a week. For a franchisee, you must add back royalty percentage – let’s say 6% – and 2% to 3% for required brand funds. (Brand funds are payments required by the franchisor to be used in promoting the brand). So right away, if nothing changed to make operations highly efficient, the franchisee process fit is down to 8% to 12%.

The franchisor must resist the temptation to treat franchisees like employees. Franchisors must understand franchisees have also made a significant investment in the business, and in the founder’s vision. We hear so much about positively memorable experiences for customers, but that should be the case for franchisees in their relationship with the franchisor.

One of the keys to a strong interdependent relationship is for both parties to fully understand each other’s responsibilities, as well as their own. It’s all lined out in the franchise disclosure document, says Segreto. Unfortunately, it’s often overlooked, cast off as boilerplate.

Please check back tomorrow as the article continues with timing, initial steps, and myths.

In the meantime, if you have questions about franchising your restaurant (or service business) please feel free to reach out to me on LinkedIn, by text or phone to (832) 797-9851, or by email to paul@acceler8success.com. I look forward to speaking with you!

Have a great day. Make it happen. Make it count! 

Special Thanks Are In Order!

After taking a few days off to enjoy the Thanksgiving Holiday Weekend AND to support Small Business Saturday, Acceler8Success Cafe is back. And to start the week, I’d like to do so by expressing my utmost gratitude around Small Business Saturday.

Thanks to everyone across major cities and local communities alike who showed their support through this year’s Small Business Saturday event by making the decision to #shoplocal #shopsmall #dinelocal #dinesmall #shopfranchise #dinefranchise.

Your participation and efforts in bringing more awareness to small business and franchising is greatly appreciated. Hopefully, #AmericanExpress and #AmericanExpressBusiness will take note and #franchising will continue to have a greater role in the event for years to come.

That said, I say thanks to #AMEX for their commitment to help #smallbusiness. However, I do have a request that I’m sure is also on the minds of many – please, additional focus on the restaurant sector of small business would be greatly appreciated!

The quote below definitely puts my thoughts into perspective about restaurant owners and franchisees being small business owners just the same as Mom & Pop / independent small business owners.

“Wherever you see a successful business, someone once made a courageous decision.” – Peter F. Drucker

To all who have made the courageous decision to own and operate a business, I thank you. And to all who have invested their hard-earned money, who have worked endless hours, who continue to give back to their local communities, and who have provided jobs, I cannot thank you enough.

Let’s all work toward ensuring the spirit of #smallbusinesssaturday lives on throughout the year!

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As I typically end my articles with a message of making it happen and making it count, I thought I’d share the following story by Peter Shankman that this morning popped up on my Facebook Memories. I believe it’s especially relevant considering recent news of recession, economic uncertainty, inflation, and layoffs.

If you want success, you have to accept risk!

“I was working at AOL in the 1990’s when the company let go of 300 people. I was one of them. The movie, Titanic was coming out, so I took my rent money and had 500 t-shirts printed that read, “It sank. Get over it.” If I didn’t sell those shirts, I was homeless. I sold 500 shirts in 6 hours and made five grand. Then I called USA Today and gave a reporter the story. I sold 10,000 shirts on the Web over the next two months and ultimately racked up 100 grand. That was my very first company.”

Thank you Peter Shankman for sharing you’re very inspiring story. It resonates so well in the shadows of Small Business Saturday and of course, for small business ownership.

The Home Stretch

December is no different than any other month in that it represents 1/12 of the year. So, if you’re looking to end the year on a high note, efforts must remain focused just as they were at the beginning of the year or when starting a new quarter.

Don’t count the days until the holidays, or until year’s end. Instead, make the days count – each and every one of them. There will be plenty of time to enjoy the holidays. Just think how much more you’ll enjoy them if December were a record sales month for your organization. And, think about the emotional high by starting the new year on an upswing.

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Thank you to all readers and subscribers of Acceler8Success Cafe. I greatly appreciate all of you!

Have a great day. Make it happen. Make it count!

May your blessings be many, your troubles be few and your Thanksgiving be wonderful.

Sending you my warm wishes from home to home and from heart to heart to wish you a very Happy Thanksgiving!

Father, We Thank Thee

For flowers that bloom about our feet,

Father, we thank Thee.

For tender grass so fresh, so sweet,

Father, we thank Thee.

For the song of bird and hum of bee,

for all things fair we hear or see,

Father in heaven, we thank Thee.

For blue of stream and blue of sky,

Father, we thank Thee.

For pleasant shade of branches high,

Father, we thank Thee.

For fragrant air and cooling breeze,

for beauty of the blooming trees,

Father in heaven, we thank Thee.

For this new morning with its light,

Father, we thank Thee.

For rest and shelter of the night,

Father, we thank Thee

For health and food, for love and friends,

for everything Thy goodness sends,

Father in heaven, we thank Thee.

—Ralph Waldo Emerson

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Note: Acceler8Success Cafe will resume it’s daily newsletter on Monday, November 28th.

May your blessings be many, your troubles be few and your Thanksgiving be wonderful.

Have a great weekend. Make it happen. Make it count!

“My Franchise is a Small Business”​ Say it. Scream it. Share it. Again, Again & Again!

Calling all franchise owners! Calling all franchise brands! Calling all that do business with franchises!

It’s imperative we remind the world of the role franchising plays in business.

There are more than 750,000 franchise establishments in the US alone. 7.49 million US employees work in franchise businesses. The economic output of the US franchise industry is valued at $670 billion. 10.5% of all businesses in the US are franchises.

Please make the image below your profile picture on your social media accounts from now through #SmallBusinessSaturday. It will stand as a reminder for everyone to #ShopSmall #ShopLocal at your franchise small business or restaurant on Nov. 26th. #ShopFranchise

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And please share the following images in your social media activity ahead of Small Business Saturday and even throughout the year to remind consumers that franchises are small business.

Also, if you see any of these images being posted on social media, please LIKE and SHARE to help spread the message – Franchise Are Small Business!

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If you haven’t yet read yesterday’s article at Acceler8Success Cafe, you may do so at the link below. As well, please SHARE to help others understand how this movement came about and where we are today.

Please Show Some Love to Franchising on Small Business Saturday by AMEX

Have a great day. Make it happen. Make it count!