Author: Paul Segreto

Founder & CEO of Acceler8Success America | Accelerating the American Dream Through Entrepreneurship | Entrepreneurship Advisor | Franchise & Restaurant Growth Strategist | Entrepreneur | Speaker & Author

Changing Sign From Franchise to Independent and the “After-Effect”

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blank-sign“What is the effect on a business if you take down the brand name sign and put up an unknown brand?”, was a recent question for discussion in a couple of the LinkedIn franchise groups. The question turned into a good discussion as there were over fifteen responses but I was surprised there was minimal reference to legal obligations and potential ramifications under the franchise agreement. Below, please find a few of the comments submitted, including my own. As we have done in the past, the names of the responders will only be identified as their LinkedIn description and their names will not be included in this forum. Upon reading the comments please free to include your own at the end of this article.

Award Winning Franchise Sales Specialist and Business Consultant said: That is a very good question. This is purely antedotal experience but what I have noticed in two industries;

Hotels- Drop-off is immediate. However, only about 10% of the revenue typically comes from the sign itself. It is the lack of a global reservation system that has the greatest effect.

Real Estate Companies- Slower but I typically saw a decline of revenues of up to 50% over a much longer period. ie. 5-7 years. Was this because of the sign or lack of tools and systems that the brand provided.

As a zee and a zor I would never sell nor buy a brand merely on the benefits of the sign. It’s the tools, systems, and experience that the brand provides that is of most vaule to small business owners.

CEO/Founder & Managing Partner of a franchise consulting firm chimed in: The question is too broad to to have a strong singular answer.

A McDonald’s owner (just using an analogy for comparative purposes) with a six of seven figure marketing budget and with an organization that has a 55+ year history, deeply embedded in the American culture would be committing commerce suicide.

However, I have been a part of a franchise where a number of the franchisee’s left the system in a service business; having established their capability, customer service commitment and frankly a strong book of business. Still they lost sleep, hair and either gained or lost weight before having made the decision.

How much of who you are is about you, your service, your relationships, your ongoing knowledge and the trust you have developed compared to the value brought by the company branding?

Secondly, taking the sign down only one part of the thought process. You may or may not value the marketing or positioning that the franchise has established but are you gong to be able to replicate it? Are you also going to have the time and the competency to evaluate both the future of the service, its technology and it’s market while continuing as it’s operator? Do you have the professionalism, time and organization to replace the things that the franchise should be providing?

Things that make you go hmmm…or, if they don’t, they should.

Founder, Owner and President of a franchise consulting firm added: I think the best example I can provide has to do with a brand that has been with my family for 4 generations now, Dairy Queen. Most of us have seen the iconic mansard red roofs of Dairy Queen and the image box out front. Some have seen these businesses close down and become all kinds of businesses. In fact just within a few hours drive of my house these former DQ’s once serving those glorious soft serve treats are now Taco stands, Cuban sandwich shops, nail salons, and I even saw one that was a puppy store.

Not good for the brand indeed.

As a DQ franchisee, I can tell you that when this type of thing occurrs it definately DOES impact the neighboring franchisees who remain in the brand. Without question it forces consumer to question the concept. They question everything from the strength of the brand, the tastiness of the food (in this example), and even the cleanliness of the other stores.

In my opinion it is ESSENTIAL for brands to completely demark so that every traceable sign of the former brand is extinguished. Franchisors who get lazy about this hurt their concept.

Of course, I participated in the discussion and added my views accordingly: Let’s not forget the resale value as a franchised brand as opposed to selling the business as an independent and all that goes along with it including attracting more potential buyers, proven business sytem, training, support for the new franchisee, advertising commitments, etc.

All go a long way especially if having to carry some paper is the only way to make the deal happen. Which might very well be the case in today’s economic environment.

Certainly the seller would feel more comfortable financing part of the deal if the business was still a franchise as he knows there are systems to follow and reporting to home office that will somewhat keep the business in line. As an independent, there’s no telling what direction the new owner would take and for how long. What condition would the business then be in if the business needed to be repossessed and operated again by the previous seller?

…It’s just flat out suicide!

I also added the following statement: Personally, the chance of total failure would be far greater as an independent. If the decision is made to take down the franchise sign, then why not solicit franchisor’s assistance to sell the business and then use the proceeds to open as an indpendent. If necessary, negotiate with the franchisor to waive non-compete, etc.

Quite frankly, I believe no one would take this route because they probably feel it’s just easier to operate the current business as an independent because the business is already up and running. In the end, most decisions to de-identify is a matter of not wanting to pay royalties. So, I say, live up to the franchise agreement and if so desired, exit with dignity and your reputation in tact.

An interesting note: The large majority of responses were submitted by franchise consultants. Although most of the consultants were former franchise company executives or franchisees. Only a couple of responses, and brief ones at that, were from current franchise company executives. As stated above, it’s another one of those things that make you go hmmm…or, if they don’t, they should.

Media Can Make or Break a Franchise

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The following is an informative article submitted by Guest Author, Gini Dietrich, Chief Executive Officer at Arment Dietrich PR. The article focuses on building relationships with the media and provides tips for communicating and interviewing with reporters. Gini fully understands franchisors’ public relations and communications needs and will be speaking at the upcoming Franchise Finance and Development Conference in Las Vegas. Recently, while participating in the International Franchise Association Convention in San Diego, Gini was interviewed on The Franchise Show, where she discussed communication tactics using social media to develop new business and networks for company growth. Arment Dietrich PR is among the country’s fastest growing boutique public relations agencies. Their motivation is a relentless drive to find new and better ways to help clients boost their businesses and bottom-line results.

Media Can Make or Break a Franchise

I have people say to me all the time, “any ink is good ink, right?”

Wrong! Please see AIG, Merrill Lynch, any of the automakers…pretty much any Wall Street company in the past year. Any ink is NOT good ink. You must think strategically through which media outlets make most sense for your franchise, build relationships with those reporters, and provide them with content, interviews, and access to executives they couldn’t otherwise get on their own.

media-interview21Media can make or break your franchise and it’s VERY important you treat every reporter you come in contact with as if they are your most important VIP, regardless of how you feel about their past or current reporting.

Paul asked me to think about some tips for helping you with your communication needs. These are some of the tips we give to our clients when we train them on how to work with, talk to, and respond to reporters.

• If a reporter calls, wanting to interview you for a story, ask them what they’d like to discuss and what their deadline is; then promise to get back to them in less than 24 hours or in enough time to meet their deadline.
• Call your PR firm for a quick key message refresher. If you don’t have a PR firm, think about what you want the story to say about your franchise after it’s told and write down two or three things you don’t want to forget to tell the reporter.
• If the reporter submitted questions (we always ask for questions in advance), write down your answers. I do this and I have years and years of experience, working with reporters every day. Don’t ever go into an interview blind.

A few interview tips that can help in any situation:

• Be honest—A lie to the media can be very damaging. If you don’t know, say so.
• Be believable—Credibility is vital to getting your message across.
• Be personal. Use the interviewer’s name once or twice in the course of the interview and look at him/her.
• Anecdotes play well, but only if you have a story that makes a good point for your side.
• Be concise—Remember that a 10-minute interview may wind up being 20 seconds on the air or three lines in a newspaper. It is essential to crystallize your thoughts in a few hard-hitting sentences.
• Eliminate extraneous words and phrases. Do not be verbose. If a reporter is silent, do not keep talking. They likely are trying to write down what you just said. Let them do that before they ask the next question.
• Do not answer hypothetical questions.

And, above all, NEVER, EVER SAY NO COMMENT! If I hear from Paul that you were quoted as saying “no comment” or that you were “unavailable to comment,” I will come to your office and yell at you myself.

What media interview tips do you have that can help readers here?

New Laws Threaten Multi-Unit Owner Growth and Expansion

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ifa2The following article was recently published in the International Franchise Association publication, Franchising World. The article addresses future franchise growth as potentially being affected by several bills expected to be considered by Congress. If the bills become law, the negative effects could be dramatic.

New Laws Threaten Multi-Unit Growth and Expansion
“Perfect storm” of organized-labor legislative proposals is aimed squarely at multi-unit owners.
By Matthew Shay
as published in Franchising World April 2009

Multi-unit franchise ownership continues to increase in popularity as a growth strategy for franchising. Data show that since 2004, multi-unit operators control almost half of franchised units and about 20 percent of franchisees are multi-unit operators. Industry-research firm FRANdata expects the growth to continue as more franchisors embrace multi-unit operators, and the established field of professionally-managed and sizable franchisee-owned companies gains popularity.

This growth, however, could be threatened by a “perfect storm” of three separate organized-labor-related bills expected to be considered by Congress. If enacted into law, these measures could derail the franchising industry’s ability to provide jobs and boost economic output to their local communities. The eye of this coming storm is aimed squarely at multi-unit restaurant owners.

The Employee Free Choice Act, known as “Card Check;” the Healthy Families Act; and the Re-Empowerment of Skilled and Professional Employees and Construction Tradesworkers Act, called “RESPECT” by its proponents, all sound harmless enough. However, despite the use of words like “choice,” “healthy” and “respect,” these bills, if passed, could result in the largest expansion of government interference into the free enterprise system since the New Deal.

Card Check would eliminate secret-ballot elections and require only signatures on cards to organize any segment of workers in a business, even in just one store. This means that you could walk into one of your stores on a Monday morning to find that a simple majority of your clerks had signed union cards over the weekend. Congratulations! You are now bound to a union such as the International Brotherhood of Teamsters and you only have a few weeks to negotiate a contract before a government bureaucrat imposes one.

The Healthy Families Act would require employers with as few as 15 employees to provide seven days of leave—with pay—annually to all full-time employees and a pro-rated amount of leave to part-time employees. Employees could take the leave in increments as small as six minutes with no notice and no documentation, and workers would be entitled to the leave almost immediately. Employees would be allowed to report to work an hour late in 56 different instances or be 15 minutes late for 224 days. In many cases, employees could do so without any notice, and the employer could not discipline the employee or require documentation. If this is enacted, you would either have to hire additional employees to be sure your shifts are always covered or not be able to service your customers’ needs adequately.

The RESPECT Act would change the statutory definition of “supervisor,” effectively making your managers and staff, who you rely on to manage your daily operations, members of a union. Your managers or supervisors would become part of a bargaining unit potentially making staffing decisions based on union membership rather than merit, ability or your established staffing policies.

IFA certainly supports an employee’s right to unionize and to be treated fairly and equitably, but these laws would jeopardize the basic tenets of franchising—being able to establish uniform processes and operations throughout systems. And if you own multiple units, you could very easily be affected differently from unit-to-unit, wreaking havoc on your company.

The likelihood of these laws being passed is high. To defeat their passage or make them less onerous, the franchising industry—franchisors and franchisees together—must work harder than ever to ensure that lawmakers in Congress understand the severe consequences on small businesses.

We are actively developing educational programs and other member services to better meet the needs of multi-unit operator-members of IFA in all franchising sectors. And our new Franchise Congress will be designed to step up our grassroots efforts by providing the tools and information needed to get all members more engaged politically.

It is more important than ever to have single and multi-unit franchisees involved in IFA to help defeat laws that restrict the virtues of the franchise model. As the old adage says, “there is strength in numbers.” That’s the key to success for all in franchising.

Social Media and Franchise Lead Generation

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Mark Siebert, Chief Executive Officer of the iFranchise Group, one of the leading franchise consulting companies, recently wrote an excellent article about Social Media Marketing, and how it can be used to generate franchise leads. Mark explores the world of Social Media Marketing while defining it as the fourth part of effective franchise lead generation strategies. I believe Mark is spot on in his thoughts and views of Social Media Marketing. For the benefit of all that may not have read the article as of yet, I have listed the article below.

Enter the Fourth Horseman
Social media is the next lead generation site
By Mark Siebert
As published in: Franchise Times – April 2009

franchise-timesBy virtually all accounts, the Internet represents the single biggest lead source for most franchisors. Yet despite its dominance of the franchise lead generation market, a significant number of franchisors simply do not use it effectively.

It is little wonder. The traditional troika of Internet lead generation – organic search, Pay-Per-Click, and portals – are all designed to keep us off balance. Organic search engine optimization techniques change almost weekly, as the major search engines try to improve their search algorithms and SEO companies strive to catch up. Pay-Per-Click advertising, by the very nature of the competitive bid process which serves ads, can require frequent strategy changes in an effort to stay a step ahead of the competition. And franchise portals, which now number more than 100, represent the primary focus for most franchisors’ Internet marketing strategy.

Read more…

Franchise Fined $300k AND Criminally Charged!

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crying-over-finesHere’s an interesting article about a franchise being fined $300k for dumping oil down a drain. In addition to the fine, the franchisee was criminally charged. Although the liability may not extend to the franchisor, this sought of thing could escalate into a public relations nightmare.

Oil Down Drain Draws $300K Fine
as posted in The Lube Report (Industry News from Lubes-n-Greases), April 15, 2009

Heartland Automotive Services Inc., the largest U.S. Jiffy Lube franchisee, issued a public apology and will pay $300,000 in fines after pleading guilty to three misdemeanor charges of discharging oil into the Austin, Texas, sewer system, the Travis County district attorney announced Thursday.

The conviction on three counts of violating the Texas Water Code followed an investigation of a Heartland Jiffy Lube store on Burnet Road in Austin, Texas. In September 2007, members of the Texas Environmental Task Force executed a search warrant at the store. A subsequent investigation revealed employees routinely discharged oil and wastewater into the city’s sewer system with the knowledge of regional and district managers. The $300,000 fine is believed to be the largest for a Texas Water Code violation in Travis County, and possibly in the state, according to the district attorney’s office.

“We’ve closed that [Burnet Road] location, not because of this situation, but it was part of our rationalization of our store base as part of our bankruptcy last year,” Ralph Tschantz, Heartland Automotive marketing vice president, told Lube Report. Heartland emerged from Chapter 11 bankruptcy early this year. Tschantz said it is “highly doubtful” Heartland would ever reopen the Burnet Road store. “We have another store maybe half a mile down the road,” he added.

Heartland Automotive has an EPA expert on staff who has been through the Austin area market about three times, according to Tschantz. “As a result of the settlement, we’re going to go through those stores one more time and make sure they’re absolutely bulletproof,” he stated. “We have 31 stores in the greater Austin area. Our learning from this is to be much more attentive and go forward.”

Sgt. Jonathan Gray, lead investigator with the Texas Parks and Wildlife Department’s Environment Crimes Unit, stated that the “pit” at the Burnet Road Jiffy Lube location would flood every time there was a major rain. “It was a nasty mixture that was discharged into the City of Austin sewer system, and oil has a great potential to damage the environment,” Gray said. “Here, we caught it early enough to avoid a more serious problem.”

“What they had set up was piping and a pump that pumped [oil and rainwater] from the pit to a sink upstairs,” Travis County assistant district attorney Patty Robertson told Lube Report.

As part of an agreement, the district attorney’s office also ordered Omaha, Nebraska-based Heartland Automotive to issue a public apology that appeared in the April 9 Austin American-Statesman newspaper. In the apology, Heartland stated that the offenses relate to disposal of a mixture of oily water in 2006 and 2007. All the incidents occurred prior to Heartland’s entry into bankruptcy in January 2008.

“In addition to the $300,000 fine agreed to as part of the settlement, Heartland has invested in remediation efforts and training in its Austin operations to ensure any similar situations do not occur,” the company continued.

Franchise Sales & Space Mountain: An Odd Comparison?

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social-networkingThe great thing about social networking, that has been missing from online franchise lead generation, is the “meeting place.” It’s a place where a candidate gets to know the people in the know as well as on the fringe; the concept’s customers. So, let’s define the “meeting place.”

The “meeting place” is anywhere online where cyber identities gather. Ok, it’s where people network on social networking sites such as LinkedIn, Facebook, Twitter, MySpace, just to name a few of the most popular sites. I just wanted to be geeky cute so forgive me for the humor.

Anyway, in these social networks, individuals meet with others, share information and learn new things. In this process, if they’re looking for a franchise or business opportunity, they’ll seek out information that may assist them in the process. Through referrals and discussion groups they may be exposed to “experts” in their particular field of interest. Experts that may have the answer to what they’re looking for.

But, would they trust a direct push right to a website full of information? The answer is no because they’re only “hearing” it from one source. They need to have full understanding which the website may help provide. But before that, they need to “see” and “hear” what others have to say. Others that know what’s going on. Others that have experienced the service or product as the end user. Others that are the “operational” people. Where does the candidate find that online? Is there a place online that is not intimidating and so one-sided that it creates a level of discomfort as opposed to excitement to proceed?

Yes, there is such a place. For one, a Facebook fan site of the concept, could be just the right place. A landing zone so to speak before being launched to the company website. This non-intimidating site may have a cross platform of many different individuals “talking” about their views, positions and experiences with the company as a candidate, a franchisee, a corporate executive or a customer. It’s in this zone that the franchise candidate learns about the practical side of the concept, the pros and cons as they are conveyed from different individuals, and they get to “see” the experience of the concept itself through the “eyes” (comments) of others.space-mountain2

It’s kind of like standing on a line for a ride at Disney World where the time up until the ride takes off is the Facebook site and the ride itself is the concept a franchise candidate is considering. On the long line for the ride, you kind of know what to expect and the anticipation builds as you move along. But, you just don’t jump on the ride, right? You first go through the info stage. You read the general signs at the entrance. You hear directions and watch videos along the way. Sounds a lot like Social Media, doesn’t it?

Further along, you see the caution signs. You interact with other guests on line. You share what you have heard about the ride with others and them with you. You interact with the ride personnel as they usher you to the ride itself. There, you interact with the people who just finished the ride and you see the excitement and joy on their faces. Now you’re ready for the experience yourself. Hold on tight because as the ride leaves the station, YOU”RE COMMITTED!

agreementOf course, franchise sales are not quite as easy or simple as anyone who has ever presented a franchise sales opportunity can attest. But when you consider the building and infrastructure of the ride and the time spent developing the ride concept, the design of the structure, the projected ride experience and the large financial investment, it’s easy to see how both a franchise opportunity and a ride evolve the same and ultimately have similar objectives; to encourage participation, create a positive experience, instill a desire to do it again without remorse and to share their unique experience with others.

The one key thing that Disney has that may be lacking in many franchise organizations is “attention to detail.” It’s the little things along the way that create the desire, justify the value and establish trust that the Disney name brings to the experience. Is it ironic that key components of a sale are need/desire, value and trust? Are you ready for the Disney-ish way of selling franchises? If you are, then you’re ready to sell franchises through social networking, social media and all the other goodies that make up Web2.0!

The NEW Golden Rule!

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The following article has been submitted by Guest Author, Frank Again. Frank is the Founder and President of AmSpirit Business Connections, a national franchise organization that empowers entrepreneurs, sales representatives and professionals to become more successful through networking and developing stronger business relationships.

amspiritPrior to founding AmSpirit Business Connections, Frank developed the largest territory of Network Professionals Inc., a similar organization. In addition, for ten years he operated a successful law practice in Columbus, Ohio focusing on the creation, growth and sale of small business enterprises. After completing law school and graduate business school at the Ohio State University, Frank started his career as a tax consultant with Coopers & Lybrand.

Frank has authored and published a book entitled Foundational Networking: Creating Know, Like & Trust For A Lifetime of Extraordinary Success. The premise of Foundational Networking is that the most important aspect of successful professional networking is not our skills or knowledge of the process, but rather our attitudes and habits with respect to presence, altruism, and integrity. Foundational Networking is a culmination of his life experiences, observations and research as it relates to the components of these attributes.foundational-networking

The NEW Golden Rule!
as submitted by Frank Agin

If you ask most anyone in serious networking circles what the Golden Rule of Networking is, they we reflectively respond, “Give First, Get Second.” While there is lots of truth in that answer, it is not the complete answer. It can’t be, as there is much more to successful networking than just giving.

Networking is about developing relationships with other people and then (while contributing to the lives of others) parlaying those relationships into things that benefit you …referrals … information … other contacts.

So the key to successful networking is getting lots of great people interested in you. This, however, almost begs the question, “How do I get people interested in me?”

The best way to answer that is to ask yourself this, “Why do I want to network with certain people?” After all, it only makes sense that the reasons why you want to network with certain people are likely the same reasons why others would want to network with you.

With that simple revelation, it makes perfect sense that if you adopt the same characteristics, attitudes and habits of the people you want to network with, then others will want to network with you.

In very simple terms, you need to become the person you want to network with. This is the NEW Golden Rule of Networking.

So, answer this: Who do you want to network with? In the most general of terms, you want to network with people that you know, like and trust. However, you need to drill down into more specific questions, such as …network<

• What do you want to KNOW about others?
• What makes you LIKE others?
• What builds your TRUST in others?

If you really think about it and work to uncover the answers to these three questions, then you have found out exactly why you want to network with other people.

More importantly, however, this exercise reveals to you exactly the person you need to become to get other people to want to network with you. Again, become the person you want to network with.

To get at this, take a moment to examine each of these questions.

What do we want to KNOW about others?

For example, you cannot help but be impressed by the doers of the world, as those that go the extra mile for company, community or country always seem to have a following. Why not become one?

What other qualities in people do you admire? Sense of humor? Optimism? Courage? Endeavor to take those on.

Become the person you want to network with.

What makes us LIKE others?

As with most people, you cannot help but like people who like you and as such you want to be around people who seem to take a liking to everyone. With that little nugget, you should find a reason to like everyone and do all you can to express it as genuinely as possible.

What other characteristics in people do you find attractive? Compassion? Thoughtfulness? Generosity? You should seek to adopt those mindsets. Become the person you want to network with.

What builds our TRUST in others?

Admit it, you have a natural trust for the person who does what they say they are going to do. With that, you should become the person upon which others can rely.

What traits in other people make them trustworthy in your eyes? Conscientious? Honest? Open-Minded? You should try to mimic these behaviors. Become the person you want to network with.

Yes, giving to the world around you quietly inspires others to give that generosity back. If, however, you endeavor to mirror the characteristics, attitudes and habits of those you aspire to network with, legions of others will strive to network with you – giving you much more in the end.

Be Aware Of The Downside

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optimismThe following was my response to a recent post on Franchise Pick. The post was about franchisor, Curves International, and its actions when one of its franchisees fails and shuts down its location.

Joel Libava, The Franchise King, posted a question today on Twitter about whether or not a business plan is important when considering a franchise opportunity. My response was a firm yes, but the plan must include an exit strategy. That exit strategy must include a plan for predetermined events like retirement, as well as unforeseen events usually as a result of poor sales, employee theft, mismanagement, etc.

Unfortunately, it’s human nature only to look at the positives of a relationship, personal or business. How many couples avoid the issue of prenuptial agreements because they don’t want to start off on the wrong foot? Maybe they feel it will jinx their relationship or provide an out to the party not willing to work at the relationship? The same is certainly true in the franchise arena. However, in both cases, it is prudent to look at the potential downside and have all the issues outlined ahead of time. If nothing else, at least it keeps everyone focused on the potential consequences of failure. Something that may provide them even more incentive to succeed. I mean it is easier to fail, than it is to succeed!

In the case of franchisee failure, there’s no way it can possibly be a surprise to anyone. Trends become evident and it would take a tremendous amount of shear stupidity and ignorance for anyone to believe a franchise location closing is a surprise. I guess we could chalk it up to the “head in the sand” scenario?

My recommendation to franchisees and franchisors alike is to have a business plan in place at the beginning, complete with an exit strategy. Understand your mutual obligations upon termination. Communicate, communicate and communicate all the way from franchise disclosure to franchise closure. Notice the only thing missing is “dis.” To use the street slang of “dis”, make sure you don’t dis communications, don’t dis obligations, and don’t dis responsibility. For anyone that doesn’t know what dis means, it’s most easily defined as “ignoring and/or disrespecting.”

My advice to franchisees, don’t get all starry-eyed at your partner like you’re in love. Realize it’s a business relationship and make sure all parties to the agreement, including yourself, live up to their obligations. Further, when trouble is on the horizon, do not, I repeat, do not put your head in the sand. Keep in mind that when your head is in the sand, your most vulnerable ass-et, is exposed to the entire world to take advantage of.

To the Curves franchisor I say “Shame on you as you tarnish the good name of franchising and all the franchise bretheren because of your greed, unprofessionalism and lack of common, decent care for individuals. The very individuals that trusted you to take them to the altar.”

Franchisors Financially Assisting Franchisees: Good Or Bad Idea?

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The following article was posted at LSJ.com and discusses franchisors assisting franchisees froma financial standpoint in order for the franchisees to withstand the current economic crisis. But, is it a good or bad idea? Does it set precedence that will become expected at the first sign of economic trouble in the future? Will franchisors’ efforts and goodwill be used to hold them hostage in the future? Read the article and then decide for yourself. We look forward to your thoughts.financial-assistance

Some franchisers taking drastic steps to weather today’s tough economy
Staff and Wire Reports • April 6, 2009 • From Lansing State Journal

Co-signing loan papers, buying out operating contracts and modifying licensing fees are among the aggressive steps some franchisers are taking to help their franchisees weather the chilly economy.

Just like small, independent business owners, many franchisees have struggled amid a lingering credit crunch and weak consumer spending.

Their survival is important. Nationally, franchises accounted for 11 million jobs, or 8.1 percent of the private workforce, and produced $880.9 billion in goods and services in 2005, according to the most recent data available from the Washington-based International Franchise Association.

Franchisers, who license the right to operate businesses in their names, have a vested interest in continuing to attract new franchise buyers and to help their current store operators survive. Fewer franchises mean less licensing – and royalty-fee revenue, on which franchisers depend to survive.

A rash of store closures also can mar a franchise’s brand.

“I think we’re going to see a fallout in our industry just like we’re going to see a fallout in other industries,” said Jeff Johnson, founder and CEO of the Franchise Research Institute. The institute, based in Lincoln, Neb., performs surveys for franchisers that gauge their franchisees’ satisfaction.

The strategies franchisers are employing now are not unheard of even when the economy is good, Johnson said. But some of the more aggressive steps, such as buying back stores from franchisees who want out of their contracts and temporarily foregoing certain fees, are rare.

Restaurant and other food service franchisees have been among the hardest hit by the economic downturn. Health care and certain technology-related franchises still are seeing strong demand, though.

Local and national franchisers say they’re still seeing demand from prospective buyers who want to open new franchises. The biggest problem is securing credit.

“It’s like a pendulum has swung,” said Bob Fish, CEO of East Lansing-based Biggby Coffee, which has 109 franchise-owned coffee shops.

A year ago, Fish said, new franchisees easily could get loans to cover the roughly $300,000 cost to open a Biggby store – even with a company stipulation that franchisees have enough cash to cover about one-third of the cost.

Now, he said, franchisees are lucky to get loans for half the cost. “It has slowed things down, absolutely,” he said.

Fish said his advice to franchisees stays the same: Shop around for a lender.

But some franchisers have stepped in to help applicants obtain financing by being a co-guarantor for loans and lines of credit.

“We have literally done a handful of those, but it is not a big number at all,” said Lee Knowlton, chief operating officer for Scotts-dale, Ariz.-based franchising company Kahala Corp. Kahala’s chains include Cold Stone Creamery, Blimpie, Samurai Sam’s Teriyaki Grill, TacoTime and other fast-food restaurants.

One of the biggest challenges for Kahala and other restaurant franchises has been real estate.

In some instances, franchisees who moved into shopping malls and neighborhood strip centers are struggling because major tenants around them closed.

But the economy has created opportunities, too. With the real estate market in decline, there are deals to be had for commercial space to open new stores, said Brent Taylor, president and CEO of East Lansing-based TT&B Inc., which franchises toy stores.

Taylor owns TreeHouse Toys & Books in Lansing Township’s Eastwood Towne Center and franchises under the Brilliant Sky Toys & Books name.

“We’ve been able to negotiate some real estate deals with landlords that are just unprecedented with what we’ve seen,” he said.

Some franchisers have started buying back distressed stores from their franchisees or letting them be shut down.

Tropical Smoothie Cafe, a Destin, Fla.-based franchise that sells sandwiches, wraps, salads and fruit drinks, reopened two Phoenix-area franchises in the last year. “It’s the very first time that we’ve done anything like that,” said Scott Palmateer, a regional franchise consultant for Tropical Smoothie Cafe.

Delhi Township-based Two Men and a Truck International Inc. CEO Brig Sorber said failing franchises can damage the reputation of the whole system.

So, even as growth has slowed at the moving company – which added only six franchises last year – Sorber is focusing attention on improving existing operations.

The privately owned company, with about 200 locations, has been hurt by the national decline in the housing market – which means fewer people are moving.

Two Men is working on ways to help its franchisees cut costs and to get into new markets, such as moving for businesses and interstate moving, Sorber said. “There’s less moving going on, but there also are less people doing the moving,” he said.

Lansing State Journal business reporter Jeremy W. Steele and Andrew Johnson of the Arizona Republic contributed to this story.

Content Marketing: It’s All About Distribution

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The following article has been submitted by Guest Author, Melih (“may-lee”) Oztalay. Melih is CEO of SmartFinds Internet Marketing, an internet marketing company known for developing very creative marketing strategies. Before starting SmartFinds, Melih ran one of the Detroit Metropolitan area’s premiere Internet Service Providers (ISP), SpeedLink, from the early 1990’s where he served for nearly a decade as President and CEO. In the new century he has pursued taking the creative and marketing services from his experience in the 1990’s to businesses via SmartFinds Internet Marketing. franchisEssentials is honored to have Melih as one of its Guest Authors.

Content Marketing: It’s All About Distribution
as submitted by Melih Oztalay

You may have heard that “Content Is King” on the Internet. The statement is 100% accurate. The one with the most content and backlinks to their website wins. (The “and backlinks” statement is significant.)

Of course, developing and writing content is only the first step. Where and how to distribute your content is even more important! Consider this: If you post 1,000 content items on the Internet, but they are posted in a way that lacks viral capabilities, the reach will not expand and will be constrained within the 1,000 original websites. As a result, these content items do not provide much value. If, on the other hand, those same 1,000 posted content items virally find their way onto 100,000 websites, your business achieves a much bigger impact from the outreach effort.internet-marketing

Let’s dig into this process of content marketing. First, let’s define content marketing:

“The convergence of editorial and advertising using multiple formats that allows for viral distribution to raise awareness about your business and website.”

Content Marketing is not directly about your website, but rather what is happening overall within your business and industry sector. This is a communications art and outreach effort that does not involve direct selling, but is rewarded with sales and loyalty. Content Marketing is a supportive method of selling via quality, relevant and valuable information which:

Educates your customers
Shows your authority in your field
Allows prospects to find you through multiple sources
There are a variety of types of content, including:

Articles (informative and educational, not featuring your business)
News releases
Photos
Social Media
Videos
The above tends to have the most viral impact, however, additional types of content are as follows:

E-Newsletters
Powerpoint Slides & Presentations
Podcasts
Webcasts or Webinars
…So you get the idea that there are many other items which might be included as types of content

Unfortunately, the process of physically distributing content on the Internet is far from an automated task. Instead, the process is laborious. Many of our clients simply do not have the time and resources for this important outreach effort; therefore, they outsource the management of their content marketing efforts to SmartFinds Internet Marketing. For companies who directly engage in content distribution, it is typically something to pursue at regular intervals over weeks and months. Locating websites that accept your content, specific to your business and industry is not as important as casting a wide net on the Internet. Some distribution point categories to consider include:

Article Networks
Blogs
Directories
Forums
News Networks
Wiki Communities
Photo Communities
Video Communities
…and many more

You will notice that many of the above are plural. Content marketing allows you to support your identity on the Internet and as such, acts as a public relations tool through a variety of distribution areas.

Stay tuned to this SmartFinds Digest; and we will tackle strategy, content development, benefits, measurement and search engine ranking effects of content marketing!

For now here is an exercise you can perform yourself. Do you know how much information exists on the Internet about your business? Have you performed a search at the major search engines on your company name? What about a search on your domain name? Now compare that to your competitors. Tell us what you found!