Tag: Franchising

What Do Franchises and Franchising Experts Do On Social Media?

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franchisenote-logoHere’s an article that was posted on Franchise Note on October 2, 2009, by Business Blogger and Webpreneur, Ivan Widjaya. Thank you, Ivan, for including some very flattering comments about my social media activity within franchising.

What Do Franchises and Franchise Experts Do On Social Media?
by Ivan Widjaya

Franchises are getting along well with social media. Although I cannot present you with analytical data and stats, I can see that franchises are taking benefit from the social media, in term of brand awareness and franchise information (including promos, events, polls, etc.) Eventually, all of those will be translated into more customers and revenue.

With various strategies, plans and purposes, it’s enlightening to learn and observe what franchising people are doing in major social media. Let’s do our brief exploration in three social media behemoths – Facebook, Twitter and LinkedIn.

Franchising on Facebook

Facebook offers franchises and franchise experts opportunities to build and engage network that will buzz your franchise businesses and services, creating a strong awareness on the Net that could very well get franchises more business.

Let’s take the people I connect with (a.k.a. friends) from Franchise Note’s Facebook account.

As for franchises, I consider WingZone Franchise as one of the better franchisors’ account on Facebook (WingZone also has other Web 2.0 presence, namely Twitter, MySpace and YouTube.) It is full of interesting updates, giving us the example of what franchises can do with Facebook.

For example, WingZone post a notification of free chicken wings in a certain area of operation – Of course, this will create buzz, as well as brand awareness, and eventually send people to Wing’s store to get some free wings (and buy some other stuffs.)

As for franchising experts, I consider Paul Segreto’s Facebook account to be interesting. He is using a mixture of updates, ranging from personal updates (e.g. posting a video about a dog helping one of his canine friends in need) to professional updates (e.g. informing about his another webinar series in October.)

Franchising on Twitter

Twitter is the fastest growing social media that is predicted to exceed Facebook in popularity. The appeal is on the 140-character ‘tweet’ that allow Twitter users – Including those in franchising – to share info quickly.

From my Twitter account, I usually follow those that I know, was recommended or think they are interesting. I read those I follow (for franchising topic, I recommend Joel Libava’s) for several times in a day (in fact, I check and re-check my Twitter account dozens of times a day.) The updates are basically a comment with a link to the source or reference (and yes, about 50 to 60 percent of the tweets I received are either for Internet marketing purposes or promotional efforts.)

If I can’t seem to follow the updates I like, I read franchising updates in the form of Twitter’s search widget from Franchise Note sidebar (somewhere in FranchiseNote.com’s right column.)

Similar to Facebook, but in 140 characters or less, Twitter updates you with short blurbs (That’s why Twitter is called a micro-blogging platform) of those you follow. It’s nice to see those franchises and franchise experts are having a chit-chat, allowing you to see a hint of their focus, vision and characters.

Franchising on LinkedIn

LinkedIn is pretty similar to Facebook, but to highlight, the ability to present a resume-like profile page and endorse your contact is what making LinkedIn stands out. Professional recommendations are powerful tools in getting you the buzz and new clients, especially if you are providing professional advices (i.e. franchise consultant)

If you are into franchising (or at least, want to learn about franchising) I suggest you to join one of the LinkedIn group for franchises, Franchise Networking (more than 2,800 members), where you can read articles and follow/participate in discussions on franchising topic.

You can learn more about the background of the franchise owners and experts you know or follow from the profile page – Take Paul Segreto’s profile as an example: You can learn that he attended college at Wagner College and 12 people have recommended him so far. If you are interested in his services, reading his profile page is pretty much giving you an idea or two why he is one of the authoritative voices in US franchising.

And yes, reading through Paul’s LinkedIn profile makes what’s inside my LinkedIn profile looks insignificant.

Any thoughts to share? Please share yours by commenting to this article.

Franchising & Entrepreneurship: The Debate Continues…

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franchisingRecently, I posted the article “Are Franchisees Entrepreneurs?” and received plenty of comments defending both sides of the equation. Some seemed to justify their current status as a franchisee as being entrepreneurial while others were emphatic that entrepreneurs are too independent to be franchisees. Franchisors, yes! But definitely not franchisees.

Last week on Franchise Direct the following article, “Entrepreneurship vs Franchising” was posted, and the debate continues…

Entrepreneurship vs Franchising
By Donald Cranford
as posted on Franchise Direct (July 7, 2009)

Given the state of the economy, it’s perhaps a good time to reconsider some of the myths of entrepreneurship to see whether the small business dream holds the same allure it once did. Certainly the days where all you needed to get investment in an internet business was a quirky idea are gone the way of the buffalo. If anything, the death of this kind of entrepreneurship makes the best possible case for franchising.

Some of these thoughts came to us after reading a highly interesting piece in the Harvard Business Review by Walter Kuemmerle, an associate professor at the Harvard Business School in Boston. Although he was writing in 2002, most of the points Kuemmerle makes are still relevant in 2009, if not more so.

entrepreneurshipIn his piece, Kuemmerle seeks to outline the various risks and challenges that a prospective entrepreneur will have to take on to truly succeed. Kuemmerle wants to force business-people to look in the mirror and ask themselves: is this really the model I want to follow to achieve my personal business dreams? The converse to his questions are: is franchising a better business model?

Kuemmerle outlines two entrepreneurship risks/questions that we hadn’t even considered:

Are you comfortable stretching the rules?
Are you prepared to make powerful enemies?

The former is particularly compelling argument against entrepreneurship. Those first two or three years of getting a business going involve taking huge financial risks, and in many cases, hounding off creditors, juggling debt on personal credit cards and even leveraging your family home in order to keep the business afloat. This is a reality that most entrepreneurs simply accept, but it brings great risk and peril to your home life, especially in this recession. But as Kuemmerle says, most success stories for start-up’s he knows include the use of outrageous tactics. Or Kuemmerle later asks: “Do you have the stomach for subterfuge?”

He also points out the fact that having a truly successful start-up often means brushing up against powerful enemies. Kuemmerle adds three other points about the need to be flexible, decisive and incredibly patient to make it as entrepreneur.

Now while all of these skills are generally needed to run a strong small business, the fact is the franchising model eliminates many of the risks and indeed dangers that are part and parcel of launching a start-up. With a franchise, you have a proven business plan and a source of support and knowledge from the franchisor. Some entrepreneurs may disagree with the concept of a franchise fee, but really it is nominal compared to some of the outrageous leaps involved in entrepreneurship. It’s a time for hedging your bets and as Kummerle concludes:

“Being an entrepreneur isn’t for everyone, and even those who have the right stuff find the path to success much rougher, and usually, much longer than they had anticipated.”

Note: Another interesting article surrounding franchising and entrepreneurship was also recently posted on franchisEssentials, “Startups: Do We Really Need Them?”

We’re looking for your comments and insight:

Are Franchisees Entrepreneurs?
Startups: Do We Really Need Them?

Talking PR, Franchising & Social Media with Arment Dietrich CEO, Gini Dietrich

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PR Adapt or DieAs we do quite often, Gini Dietrich, CEO at Arment Dietrich PR, and I, communicate on Twitter, on Facebook, by email and by phone, about a multitude of things, both business and personal. Sure, we banter and kid a great deal along the way. But when the discussion turns to franchising, communications and social media, the kidding quickly subsides, and the conversation turns serious. Okay, not completely serious, because we’re both smart-asses. But serious to the point that we’re anxious to share our ideas with each other, and determine ways to share them with our franchise clients and the franchise community.

Recently, I turned one of our discussions into an informal interview, and asked Gini to share some of her thoughts, so I could share the same with the franchisEssentials readers. Always being shy and not wanting to be in the limelight (yeah, right!), Gini fired off her responses without hesitation, further demonstrating her passion, and conviction in her thoughts. I just loved her response when asked about the future of public relations, as we know it today. Well, decide for yourself as you read some of the Q & A below.

Paul: “How important is a communications strategy to franchise organizations today?”

Gini: “It’s not at all important. Ha! Just kidding. To use one of my favorite quotes by NPS senior news analyst Daniel Schorr, “If you don’t exist in the media, for all practical purposes, you don’t exist.” But in today’s age of digital technology, it’s not just the traditional media strategy that a franchise needs to have. I love the case study of the companies that made it through the Great Depression. Know what they all had in common? They didn’t cut their communication. In fact, they increased it. And the companies that did that then are still around today while their competitors, who cut their communication budgets, went out of business. Like Daniel Schorr says, if you’re not communicating, how will your customers know you exist now and into the future?”

Paul: “Is it important for local franchisees to have a communications strategy in place or is it sufficient to only have it at the franchisor level?”

Gini: “I’m a HUGE proponent of local franchisees having a strategy in place that is complementary to what the franchisor is doing. Consider most reporters won’t cover your business unless there is a local angle. Most local baseball teams are sponsored by local businesses. The Mayor won’t show up to your ribbon cutting if you’re not giving back to the community. Add into the mix social media and you know that people buy from people and want to have a relationship with the people they do business with…not the company or the brand. The person who buys your product or service in his/her community, wants to have a relationship with the person running that entity, not the corporate monster.”

Paul: “Is public relations, as we have known it over the years, changing to adapt to a more “connected” society?”

Gini: “There has been a lot of discussion about whether or not public relations, as an industry, is dying. Most PR people (as evidenced by a recent IABC poll) deny it’s happening and are content with doing their jobs as they’ve always known them. I contend social media is changing the way we communicate and PR, as we know it, is dying. Regardless of PR professionals thinking social media affects the way they do their jobs, someone has to own it – be it marketing, PR, or advertising. I’d rather jump on it now and own it. After all, social media is about developing and fostering relationships with customers, stakeholders, employees, influencers, and individuals. Traditional PR is about developing and fostering relationships with media and influencers. Makes sense to me that it fit in with PR.”

Paul: “What role do you see social media playing within the franchise community?”

Gini: “I love, love, love what Tasti D-Lite is doing with social media. I use this example all the time. They have a store in the Empire State Building. Whenever someone tweets that they are in or near the Empire State Building, @tastidlite sends them an offer to come into the store. In some cases, they offer a free frozen dessert. In others, a discount. This has helped them build in-store profitability, loyal customers, and their intensely passionate following. This is SO EASY to do at the franchisee level. This is just one example of how social media helps build a franchisee following. Get out there and try it. It works!”

Social Media ROI: Is It Worth The Effort?

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Many of our readers and clients have asked about quantifying social media results and determining a return on investement. The following article by Julie Keyser-Squires, APR provides a great perspective of the subject along with some suggestions that can be utilized in various franchise businesses. Ultimately, social media can improve the bottom line for franchisors and franchisees, alike.

Franchisors, Owners, Operators: Questions You Always Wanted to Ask | By Julie Keyser-Squires, APR
as posted June 3, 2009 on HospitalityNet.org

If you are a franchisor, owner or operator, you may be asking these four questions about social media:

ROI1.What is the ROI of social marketing?
2.How aggressively do we want to play on the social media front?
3.Is it enough for the brand to communicate on behalf of hotels or do franchisees want their hotels to provide individual promotions and unique offerings?
4.What kind of manpower does it take to stay in touch with “followers”? Can hotels feasibly dedicate the resources individually, or should the responsibility be with a brand marketing and eBusiness effort?

Here are the answers, with a focus on social media sites Twitter and Facebook. First, however, would you consider one more question that could jump start your participation in social media:

“How did you create your revenue management strategy and processes?”

1.What is the ROI on your revenue management program?
2.How aggressively do you deploy it?
3.Is it owned at the brand level, the property level, or both?
4.What are the manpower commitments? 100% to 25% of one — or more – person’s time?

Revenue management and marketing are two sides of the same coin. Both are integral to every area of the enterprise; each requires internal consensus and a cultural shift; and both can positively impact top line revenue. You might be able to leverage an earlier learning curve as you consider these questions about your social media involvement.

1. What is the ROI of social media (or “Want a cheap hotel? Just give up the bed.”)

In social marketing, is Return on Investment becoming Return on Engagement? Possibly. Although among franchisors, owners and operators it is still in the early adoption phase, Kimpton Hotels & Restaurants and luxury resort The Rancho Bernardo Inn already realize measurable success.

•Since engaging in social media in 1Q ’09, visits to the Kimpton website have increased 500 percent and 600 percent (year over year) from its Facebook fan page and Twitter, respectively. Look for the goldfish icon.

· General Manager John Gates (@GMGoneMad on Twitter) at the luxury destination resort Rancho Bernardo Inn realizes two to three responses per offering of his pop up specials on Twitter, including the Inn’s exciting “Survivor Packages” below:

o Posted 8:50 AM May 15th . “Check out our new “Survivor” Package: Just $219 per night,including deluxe accommodations and breakfast for 2. Stay tuned for details…”

o And eight posts later with each “tweet” shaving $20 to $30 off the rate:

o Posted 7:30 PM May 15th. “My FINAL offer: Stay for $19 without breakfast, honor bar, A/C, heat, pillows, sheets, lights, linens, toiletries or bed!”

· Fairmont Hotels & Resorts is on both Twitter and Facebook to create a greater awareness and understanding of its brand.

A quick search on Twitter.com reveals that companies like Wyndham Worldwide Corporation, Choice Hotels International, Inc., Hilton Hotels Corporation, Best Western International, Inc., and InterContinental Hotels Group are starting to have a presence as well.

2. How aggressively do we want to play on the social media front?

•Depends on your business. A personality driven sales approach like Kimpton’s, which is not a hard sell, may be a good fit.
•• Consider a balance between exploring social marketing venues and executing on your existing marketing and Internet public relations plan.

3. Is it enough for the brand to communicate on behalf of hotels or do franchisees want their hotels to provide individual promotions and unique offerings?

•Both.
•Facebook lets individual hotels share tips about their cities and local promotions.
•On Facebook, people post interesting content three to four times a week, which is manageable for most hotels (Twitter posts can stream into Facebook, too, which lets you repurpose content.).
•Twitter, where the norm is three posts per day, could be a better fit for corporate communications teams, although many properties are on Twitter as well.
•Franchisors, owners and operators that allow any employee to start a Twitter account might consider instituting corporate social computing guidelines. IBM’s social marketing guide is a good example and may be modified [http://www.ibm.com/blogs/zz/en/guidelines.html].

4. What kind of manpower does it take to stay in touch with “followers”? Can hotels feasibly dedicate the resources individually, or should the responsibility be with a brand marketing and eBusiness effort?

•Consider carving resources out of your existing communications — or revenue management — team.
•During the learning curve, maintaining a presence on Facebook and Twitter can take from 15 to 30% of one person’s time for a brand the size of Kimpton. Tools like TweetDeck, which let you categorize the people you follow on Twitter, can streamline tracking “followers.”
•Some brands, like Fairmont, have a different individual dedicated to each social media touch point. Team members can spend from 30 to 50% of their time on social media and the remainder on traditional marketing.

If you are a franchisor, owner or operator, you may be guiding your team to tighten the relationship between revenue management and marketing. You know that promotions which include precisely targeted incentives can drive incremental revenue to the top line; social media gives you tools to serve them up in engaging ways.

Julie Keyser-Squires, APR, and CFO, vice president of Softscribe Inc., is passionate about using technology to connect people and ideas. You can give her a shout at Julie@softscribeinc.com, on twitter @Juliesquires, make a comment on her business blog, “First Light, and sign up for her free quarterly video email snack at www.marketingsnacks.com.

Will the Economic Stimulus Bill Create New Franchise Opportunities?

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The following article was written by Guest Author, Ray Haliber. By accessing his franchise website at www.azfranchises.com, you’ll find Ray offers a resource for entrepreneurs to find and research franchise opportunities for sale from A to Z. Ray has ten years’ experience as a small business broker in Arizona. His small business site may be previewed at www.azbop.comfinancialaid-photo.

Will the Economic Stimulus Bill Create New Franchise Opportunities?
as submitted by Ray Haliber

With the recent passing of the huge economic stimulus package there has been some speculation about whether some of its provisions will create or spur the development of new franchise business opportunities in certain industries like health care or renewable energy. The obvious question is whether major government incentives and investments in these 2 highlighted industry sectors will create sustainable franchise business models after the initial boost from the stimulus spending bill plays out.

In my opinion the answer is that this is a very realistic development given the scope of the stimulus bill and some of stated new policies of the current administration regarding health care and energy. In fact, potential small business opportunities emerging from the stimulus bill are becoming more obvious, (particularly in renewable energy) and appear to have a very good chance to create some viable franchising opportunities for entrepreneurs.

Heath Care: According to what I have read, the economic stimulus package includes nearly $20 billion dollars to help digitize or computerize health and medical records in the United States. I would think this could present some serious potential opportunities for small business owners and entrepreneurs because obviously private companies will become involved in providing services for this enormous and long term project.

Even with the recent news that Sam’s Club and Dell intend to enter this market by selling software to digitize medical records doesn’t mean there will not be plenty of other niche opportunities and markets available to develop and service. According to recent stats only about 17% of doctors offices are currently digitizing medical records. And with nearly 800,000 active physicians in the United States, many with small to medium size practices, their will undoubtedly be opportunities for smaller players to develop business franchising models that can service business opportunities that emerge from this program.

Renewable Energy: From what I have read and heard nearly $60 billion of the $790 billion stimulus bill will be spent on alternative and clean energy projects and other environmental related projects and research. This includes billions of dollars for greening government buildings, weatherizing homes and businesses, and providing significant tax credits and grants to help fund and subsidize renewable energy applications across the board.

Surely this type of massive government investment will almost certainly spawn a number of new franchising concepts to service the emerging business and consumer needs that will be created by this commitment. This would conceivably include the development of solar power related service franchises that would provide installation of photovoltaic panels for residential and commercial applications. Or green consulting franchises that would provide expertise to commercial businesses on how to “go green” or conserve energy. Or maybe new home improvement related franchise businesses will emerge that specializes in weatherization and residential energy efficiency.

In summary it’s going to be an interesting time to see how the franchising industry will adapt and ultimately capitalize on the potential business opportunities and new markets that will be created and supported by the stimulus bill spending. My guess is that it should ultimately produce some viable and profitable franchise companies that may someday become familiar household names and brands.

Introduction to International Franchising

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world-map-photo1The following article was submitted by Guest Author, Kathryn Rookes. Kathryn is an experienced franchise attorney and a member of FSB Legal, a virtual law firm. She is one of the very few franchise attorneys in the United States with experience in a government regulatory practice (Maryland Division of Securities), private practice, and as in-house counsel. With this diversity of experience, Kathryn understands the issues that franchisors face on a daily basis.

Introduction to International Franchising
as submitted by Kathryn Rookes, Attorney, FSB Legal

Introduction

Many franchisors perceive international expansion of their franchise concepts to be a great way to generate cash on a short term basis and do not fully appreciate the long‐term commitment that successful international franchising requires. The level of commitment and resources required to expand internationally is often greater than that required for domestic expansion. This article provides a brief overview of the requirements for international franchising and identifies a typical international deal flow process. We also have included several resources that contain additional information for further research.

Evaluate Your Resources

When making the decision to go international, you must consider the additional resources that you will need to successfully expand and support your new international franchisees. Areas of increased costs to consider include telephone and postage, travel, marketing, trademark registration, preparing international franchise agreements and disclosures, costs of goods due to export/import controls, foreign taxes, translations and document registration, to name a few.

Determine What You Will Offer

International deals are normally structured in one of three ways. First are single unit franchise sales (sometimes called direct franchising), much like many systems sell in the United States. The next option is area development rights, in which you identify 1 developer who opens multiple units of its own. The third common option is master franchising (also called sub‐franchising). In this method you identify 1 developer that has the right to open its own units, and also the right to sell additional units to other franchisees. In addition to these three methods, some international arrangements are structured as joint ventures, in which you are an equity partner with your foreign franchisee. Each method has its own risks and rewards, so you must evaluate your goals and your resources to determine which method best suits your needs.

Finding Good Research

Your research on each opportunity generally consists of two areas, research on the territory and research on your prospective franchisees. The internet provides a wealth of information on the territory. The United States Department of Commerce is a good starting point as is its included agency, the International Trade Administration. The trade promotion unit of the International Trade Association, the United States Commercial Service also provides significant help by providing market research, worldwide trade events for promoting your offering, assistance in identifying prospective franchisees, manufacturers and distributors, and individualized counseling on going international.

For research on your prospective franchisees, you are well served to retain the services of one of the many companies that provide due diligence or investigative type services. Research on people and companies in other countries is a very tricky business, as the stability, accuracy and adequacy of information in other areas of the world is often lacking. These companies will be able to evaluate the trustworthiness of the information they obtain, and can educate you on the limitations of the information so that you can make your own decisions on the risks you are assuming by choosing any particular franchisee.

Establishing a Deal Flow Process

The deal flow process for international deals will usually be significantly different from your domestic deal flow process and will necessarily require more time and resources for each deal. We generally recommend the following steps to ensure compliance with Unites States’ and the foreign country’s local law.

1. Determine whether there are any legal or practical barriers for your target country. Legal barriers include the U.S. government’s trade embargos and terrorism sanctions, in which U.S. businesses are prohibited from conducting business in certain countries. You may find this information primarily at the United States Department of the Treasury, Office of Foreign Asset Control website. The primary restrictions involve, as of January 2009, Balkans, Belarus, Burma, Cote d’Ivoire (Ivory Coast), Cuba, Democratic Republic of the Congo, Iran, Iraq, former Liberian Regime of Charles Taylor, North Korea, Sudan, Syria and Zimbabwe. Practical barriers (which also can be legal in nature) might include currency export restrictions (you won’t be able to get paid), prohibitions on foreign investment and/or ownership (you’re not allowed to invest there), lack of governmental infrastructure (you can’t register your trademarks or protect your intellectual property, trade secrets or contract interests due to lack of a stable court system), competition (both laws and actual), taxes (you can’t afford), restrictions on transfer (can’t stop your franchisee from selling out), economic conditions (won’t support your business model) and other such items.
2. Once you have determined that there is no barrier, you should determine whether there is a franchise disclosure and/or registration law in the target country. If there is, you should retain local counsel immediately to draft the necessary disclosure and handle the registration for you. We are happy to assist you with this process.
3. Identify your prospective franchisee and begin your background check on the prospect.
4. Negotiate and document a Letter of Intent that contains the material terms of the new deal. You will normally require a deposit against the initial development fee on the signing of the LOI.
5. Retain local counsel to review your proposed form of agreement to revise the agreement to ensure that it complies with all applicable local laws.
6. Negotiate with your prospective franchisee on any changes to your form of agreement. Once all terms are negotiated, you will finalize the agreement and proceed with signing.
7. Once your agreement is fully signed, you will want to proceed with registering your trademarks in the country, if you don’t already have the marks registered. If you have a large budget for your international expansion, you should ideally move this step up as early as you can afford, even up to step 2 if possible.
8. Once all of the above is accomplished, the real work begins. You now need to arrange for training, import of products or ingredients, site selection assistance, site development assistance, marketing assistance, and all of the other support services that franchisors normally provide.

Summary

With proper planning, international expansion of your franchise system can be an exciting new challenge that brings you many rewards. At FSB Legal, our attorneys are experienced in international franchising and have completed deals in over 35 countries. We are happy to help you begin this journey.