Category: Franchising

Exploring Twitter Basics

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The following is some great information submitted by Guest Author, Gini Dietrich, Chief Executive Officer at Arment Dietrich PR. The information explores Twitter basics and how to get started using this innovative tool in your social networking efforts. Gini fully understands franchisors’ public relations and communications needs and was a keynote speaker at the Franchise Finance and Development Conference recently held in Las Vegas. 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.

twitter cartoon 2Getting started on Twitter

As budding experts on social media, believe us when we say Twitter is not dominated by gossiping teenagers and social butterflies (though they are there). Many corporate executives, reporters, and entrepreneurs recognize social media not only as a powerful tool for communication, but also as a resource for networking and attracting new business. And though the excuses people use to avoid social media are plentiful (”I don’t get it,” or “it takes too long,” or “I don’t know how to get started”), it really isn’t painful or difficult, as long as you commit a little time to get started.

So what is Twitter?

Twitter is a social networking site where you can meet new people and exchange ideas and information. You are allowed to say whatever you want, as often as you want (in 140 characters or less), in a message called a “tweet.”

Types of Tweets

DMs, RTs, and @replies. What do all of those mean? A DM is a direct message you send to anyone in your network who is also following you (we’ll get to following later), and is not viewable by anyone else. It is like an email between you and another person. If you find a tweet of particular interest, you can RT or retweet it. All of your followers may not be connected, and retweeting a post shares the information with your network. Lastly, @replies are simply a reply to someone else’s tweet. Your followers may not see the initial message, but they will be able to read your @reply on your Twitter page.

When you’re tweeting, don’t forget that Twitter is just like any other information source, so it’s important to give credit where credit is due and reference your source when sharing other people’s tweets.

Getting started

First create a Twitter handle (also known as a screen name), upload a picture, and write a bio. Use your real name and a current picture so people recognize you. (For some quick tips on how to write an online bio, check out Gini’s recent post on the Geek Girls Guide.)

Start networking

If you want anyone to read what you are writing, you need some followers. When you subscribe to someone else’s Twitter stream, it is called following. The easiest way to build your online community is to search for people you already know using Twitter and start following them. (Follow the Arment Dietrich team here!) You can also search keywords to find like-minded people. And, start tweeting! Use DMs, RTs, and @replies to engage and connect.

Making time for TwitterCheck Twitter morning, noon, and night. Or, at least three times per day at first. Once you get used to checking it and reading your updates, you’ll see you don’t have to make a huge time investment to become involved.

There are many programs out there to make your Twitter experience as easy as possible (such as TweetDeck), and allow you to group your followers and track tweets based on interests or people. Programs like these are a big timesaver.

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.

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.

Are Relationships With Your Franchisees Strengthening Your Franchise?

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The following is an article submitted by Guest Author, Katryn Harris. Katryn is the CEO of Open Box, a company focused on helping franchisors use technology to build their franchises. She brings her background in management, business strategy and communication as well as her team of technical experts to work with franchisors, ensuring that their technology fits their business strategy and moves their franchises forward. Be sure to check out Katryn’s blog at www.growfromhere.com.

Are Relationships With Your Franchisees Strengthening Your Franchise?
as submitted by Katryn Harris

business-relationshipsAs a franchisor, you are in the business of building relationships; relationships with your franchisees, with your potential franchisees and with your end customers. Relationships build sales, build your brand and build your franchise.

The franchisor /franchisee relationship has interesting challenges that may not be seen elsewhere in the business relationship world. It’s not employer/employee, it’s not quite a partnership, and there are elements of both financial dependence, and inter-relatedness. The franchisor & franchisee depend on one another, and are both accountable to one another, and the success of each depends strongly on the success of the other.

One of the key success factors for good relationships (with both potential & existing franchisees) is to set your boundaries and expectations clearly. Some franchisors are more or less consultative, some are more or less friendly with their franchisees, some are more or less clear from the outset on expectations and accountability (and whole books have been written on which of these is right and which is wrong). I highly recommend
a) Knowing the pros and cons of leaning towards either side of the spectrum (do your homework)
b) Being clear about where you sit along the spectrum, and
c) Communicating where you sit to your franchisees and, particularly to potential franchisees.

Whether you are more or less consultative in your relationships is actually less important than knowing why you have chosen that position, being clear about where you stand, and then finding franchisees who are looking for that particular degree of consultative relationship. If you can attain these three, the franchisor/franchisee relationship will be strong and rewarding for both of you & lead to strong franchise growth.

One great resource for building your franchise through strong relationships is Greg Nathan and his books about the franchisor/franchise relationship, such as The Franchise E-Factor.

More Regulatory Structure for Franchising?

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enforcement2Real estate, insurance and financial services industries all fall into the category of highly regulated and policed industries.

Licensing, including testing, are required for all sales personnel. Continuing education is also mandatory. Each industry has some type of regulatory agency with enforcement powers whose primary focus is to maintain the integrity of the respective industry. Each industry maintains some type of bonding or minimal cash position requirements to ensure economic stability.

If franchising adopted a similar structure, or a portion thereof, what would be the pros and cons? What would the effects be over the next twenty years?

Recent discussions in various franchise groups eluded to the fact that there are too many franchisors within franchising today. There’s been talk of less than ethcial practices by various franchisors and very poor business practices by others. Would tighter controls and stricter requirements strengthen or actually weaken the franchise industry?

Mind you, before chastising me about all of the above, believing it is my intent to propose more regulation and the requirements that come along with regulation, please understand it is not my position that any of the above be entertained. Instead, I believe issues need to be discussed, problems need to be identified, and solutions need to be implemented to fortify ALL franchising sooner by the ENTIRE industry itself, rather than later when it’s out of our hands.