QSR & Pizza Fueling Franchise Growth

Fast-Food-2Each year the International Franchise Association commissions a study from PwC (PricewaterhouseCoopers) on the economic impact of franchising in the U.S. Highlights from that study include the following:

  • Taking into account the indirect impact of franchised businesses, business format franchises support more than 13.2 million jobs, $1.6 trillion in economic output for the U.S. economy, and 5.8 percent of the country’s GDP.
  • Franchise businesses provided more jobs in 2016 than wholesale trade, transportation and warehousing, nondurable goods manufacturing, and information (including software and print publishing, motion pictures and videos, radio and television broadcasting, and telecommunications carriers and resellers).
  • Quick service restaurants (QSR) is the largest category, representing 25 percent of all franchise establishments and 45.5 percent of all franchise jobs.
  • Jobs supported because of franchise businesses were at least 10 percent of the private sector nonfarm workforce in 33 states, and at least 6 percent in every state.
  • The number of people employed by franchises is greatest in California, Texas, Florida, Illinois, and Ohio.
  • Franchisees own and operate 88 percent of all business format franchise establishments and franchisors own and operate 12 percent.

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Quick Serve Franchise Sector Continues to Blaze a Trail for Franchising

There is little doubt that the franchise industry is undergoing significant changes fueled in great part by the success of various PE firms that began in the QSR sector. As other franchise sectors are targeted by PE investors, the competitive environment in those sectors will become more challenging. In order to prepare for these challenges, small to medium sized franchises will need to become successful franchise systems that produces sustained system growth, successful franchisees and an efficient operating system.

Multi-unit franchisee ownership that originated in the QSR sector continues to increase as franchisors seek large multi-unit franchisees that can own and operate more franchise units.This ownership model provides organizational stability, ample financial resources, sustained growth and economies of scale to the franchisee operation.

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Who’s Winning the Pizza Wars?

Welcome to the pizza wars, where brands big and small, quick-service and fast-casual alike face two choices: pick up the pace and earn relevancy through definitive, clear marketplace differentiation or step aside.

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Franchising Supports Small Business Saturday

Small Business SaturdayYes, progress is being made and franchising is being recognized more and more by American Express in their Small Business Saturday efforts. When launched in 2010, franchises were not included in Small Business Saturday, being excluded with a specific clause in Small Business Saturday literature to merchants interested in participating in the new program. I was definitely surprised and although we still have a way to go I’m happy to say the past two years have seen franchises included in the list participating businesses. And that is great!

When I first realized franchising had been excluded I was quite surprised. Sure, as many are aware, I did flood the social media space with several blog posts about franchising being excluded. No need to regurgitate that any further and I’m not including links to those posts here as American Express did respond, and in a very positive way. They truly wanted to learn more about franchising and its role in small business today and I was more than willing to help. You see, despite the role American Express plays in business today and despite the fact that AMEX executives are very well-educated and understand business, they had huge misperceptions about franchising. Several of the AMEX executives I met with actually thought all franchises were just like McDonald’s – big and powerful! They also incorrectly thought McDonald’s and other [large] franchisors paid for all advertising on behalf of its franchisees. Thus, they excluded franchising, thinking all along that all franchisees had it made in the shade over independent small business owners.

Well, I was happy to share many statistics about franchising and the fact that many franchisees are the same Mom & Pop operators that built their businesses on Main Street USA. Just like many independent small business owners, they have invested their life savings in pursuit of the American Dream. And just like small business owners everywhere, they continue to fight off big box retailers and department stores alike for a slice of every dollars expended by today’s consumer.

Fortunately, American Express listened, and I was quite impressed. Unfortunately, and to my dismay things did not move along as quickly as I would have liked and although progress was made and franchising was included, but limited in the subsequent years since 2010, I was extremely anxious and wanted full inclusion for franchising, and I wanted it now! What I was missing and fully realize now, thanks in part to Tom Epstein, CEO at Franchise Payments Network, is that American Express, albeit a huge organization has a difficult time making abrupt changes to programs as there are many considerations… many financial ones that I had not even considered such as the sheer cost of marketing materials, just to name one of many.

In any event, I was excited to see Tom contribute to the effort of getting franchising more involved in Small Business Saturday. He has spent a great deal of time learning as much as he could from his various contacts at American Express. I believe the efforts are paying off and will continue to do so year after year. Others within the franchise community, including the International Franchise Association have contributed as well, and I applaud their efforts. Speaking of the IFA, I’d like to take this opportunity to thank them for all they do in promoting franchising as without those ongoing efforts we’d truly be dead in the water. You see, just as American Express promotes “Membership has its Privileges” so, does membership in the IFA.

So, on this Small Business Saturday, let’s pull out those AMEX cards, whether they be green, gold, platinum, blue, plum or black and spend away at small businesses across our great nation. Happy shopping!

Franchises Excluded from Small Business Saturday – AMEX Responds!

Well, I am happy to say that I have been in touch with AMEX as one of their VPs contacted me directly and apologized for their exclusion of franchising. They just missed the boat on franchising being an integral part of small business. They never even considered franchisees as Moms and Pops investing their money in a small business of their own. All their thoughts were focused on the giants of franchising and not the smaller franchises. Although, I did communicate that even the McDonalds franchisees are small business owners themselves. The long and the short is that AMEX knows they committed a huge blunder in excluding franchising.

Rosa Alfonso, the AMEX VP that contacted me directly, wants to set up a conference call next week with several other AMEX VPs to start down the road of getting franchising involved in next year’s Small Business Saturday. I am so excited they took notice and are willing to do something about it.

As much as I would love to be front and center on this, I recognize that it should not be without the IFA. This is about franchising being recognized as an essential component to America’s economic recovery, as IFA President, Steve Caldeira has promoted since leading the IFA. It’s about continuing to educate, not only the masses, but even the giants of business like American Express. I’m sure Steve and his staff could think of many ways this can further benefit franchising.

To that end, I have reached out to Steve Caldeira and will defer to him and the IFA staff in moving forward. Of course, I look forward to being involved as I am passionate about franchising!

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Social Media – KISS for Optimum Results!

Of course I’m referring to a term we all know, Keep it Simple Stupid, when referring to KISS. Sure, social media has so many different facets that it’s difficult to simplify. Especially in its entirety. Well, so is using social media. I would not recommend attempting to work with multiple social media at one time without perfecting skills one platform at a time.

The following is an article I had published in the August 2010 issue of the IFA’s Franchising World magazine that addresses simplifying social media. And as we’re all focused on results, focus is clearly on utilizing social media to achieve optimum results. An easy path? You be the judge. But, remember to keep it simple!

Simplifying Social Media for Optimum Results
Franchising World – August 2010

Social-media technology is evolving at a rapid pace. New tools enabling increased communication with various constituencies are being introduced on a frequent basis. While the franchising community is not yet embracing social media at the levels of the public-at-large, its members are beginning to understand the multi-tiered value that social-media participation can provide to their firms. This value includes:

• Creating or improving brand awareness that drives business to franchise locations,

• Creating interest in franchise opportunities or franchise-candidate lead generation, and

• Establishing or improving communications and information-sharing throughout the franchise organization.

A frequently-cited impediment to the franchising industry’s adoption of social media is the perceived time commitment required to achieve optimum results. There are many implementation methods and technology tools that can be utilized to execute a firm’s social-media program in a way that will maximize ROI, minimize time requirements and achieve complete integration into its overall marketing strategy, all of which will serve to achieve optimum results.

Read the full article in Franchising World, August 2010

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Franchise Growth or Future Problems?

After what many franchise professionals claim was a tough couple of years, franchising seems to be gaining momentum once again. This is very encouraging news! But, franchisors must be prepared, not only to handle the increase in inquiries, but in working effectively with today’s franchise candidates who many have indicated are more diligent and cautious than ever before. Many of today’s candidates are voluntarily or involuntarily unemployed, soon to be unemployed, or, may just want to control their own destiny, and are approaching business ownership with the attitude that failure is not an option. In dealing with these candidates, it is essential to exercise extreme diligence in presenting the franchise opportunity all the way through to executing the franchise agreement, and beyond.

I know, many franchise professionals are probably thinking they already do that. Besides, it’s the law to fully disclose the opportunity, right? They’ll go on to state they’ve always done things by the book, at all times. Blah, blah, blah! It really doesn’t matter what was done in the past, how it was done, or why it was done. What matters is that the opportunities that present themselves today and in the future receive timely, diligent attention, at a high level of professionalism, in order for a transitioning corporate executive / business professional to even consider a company’s franchise opportunity. And, if they ultimately do sign the franchise agreement, remit the franchise fee, and commit to investing a substantial sum of money, rest assured these new franchisees will expect and command a high level of accountability from the franchisor, and from the system itself. From themselves? Not likely as they will rarely blame themselves for any part of failure. But they will hold others accountable.

Well, my fellow franchise professionals, it’s time to press those conservative suits, study your franchise documents, fine-tune your operations, and examine and perfect your franchise sales process as any shortcomings will surely raise their ugly heads in the future if today’s new franchisees become dismayed, discontented, and or fail in their businesses. They will not hold themselves accountable. Instead, they will blame the person who “sold” them their franchise, or the operations department that they perceive to have provided little or no support, or the franchise executive that they feel showed no compassion in “forcing” them into paying royalties and advertising fees.

So, why did I turn what started out to be a positive of increased franchise interest after a year of disappointing results, and turn it into a picture of potential problems complete with gloom and doom? To encourage and motivate every franchise professional to be on his or her A-game and to put their house in order. Not only to bring new franchisees and revenue into the system, but to continue to grow their system with franchisees that, when attaining a relative level of success, will refer new franchise candidates, validate the franchise system, and possibly look to purchase additional locations in the future. The alternative of course, is dedication of resources to dispute resolution, and possible litigation. Remember the old Fram oil filter commercial? You can pay now, or pay later!

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How to Use Social Media to Enhance Your Franchise – Podcast

Adam J. Siegelheim, member of Stark & Stark’s Franchise Group, attended the 2011 International Franchise Association’s Annual Convention February 13-16, 2011 in Las Vegas, Nevada. 

In this podcast, Mr. Siegelheim meets with Paul Segreto of franchisEssentials. Mr. Siegelheim and Mr. Segreto discuss social media and how franchisors can utilize social networking applications, such as Facebook, Foursquare, LinkedIn and Twitter, to enhance their brand.

You can listen to the full podcast online here.

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Franchise Sales & Development Challenges [Revisited]

This was originally posted in March 2010. However, based upon recent discussions on LinkedIn regarding franchise sales, I feel it’s prudent to post this once again.

I believe last year was the perfect storm with respect to challenges the franchise industry faced in its franchise sales and development efforts. There were three key components that equally contributed to lackluster performance. One was a “cause”. Another was “uncertainty” and the other was “unknown.”

The “cause” was the abrupt cessation of funding. Even franchise sales that were actually made fell by the wayside when financing options dried up almost overnight. It also curtailed many existing franchisees’ efforts into expanding their portfolios with new locations and compounded the problem by having to tap their capital reserves to offset the decline in sales.

The “uncertainty” was the indecisiveness of franchise candidates on whether it was the right time to take the entrepreneurial plunge or not. Many were exploring franchising as a career alternative, and out of necessity, but were unwilling to “put it all on the line.” The risk factor won out and was justified, maybe rationalized, by the tight credit markets.

The “unknown” was social media. As today’s franchise candidates quickly evolved into more sophisticated, technologically advanced and educated candidates, most franchise organizations weren’t prepared for the influx of these individuals within social media networks, exploring opportunities differently than ever before. Thus, the franchise candidates that may have been qualified and well-informed were missed in many cases and either chose a different career path or are actually still searching social media sites for the information that will lead them to the right opportunity.

Now, as the public is seeing some positive trends, like gradual decline in new unemployment claims, we should begin to see more and more individuals searching for information about career alternatives. I believe many will continue to visit social media sites, participating in discussions and sharing information. All the while, they’ll be more cautious than ever, and will insist upon absolute trust in the individuals presenting the information, and the information itself, before taking the entrepreneurial plunge.

Social media is ripe for today’s candidate to explore, identify and act upon a franchise opportunity. Franchisors are highly advised to capitalize on social media and be sure to integrate the same with their traditional franchise marketing and development strategies because social media is here to stay and is truly effective at creating and/or improving brand awareness.

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Making the Case for Social Media Policies in Franchising

Yesterday, within the IFA Group on LinkedIn, a discussion entitled Why You Don’t Need A Social Media Policy was started regarding social media policies within franchising. Of course, I was compelled to chime in…

It is my position that franchisors would be negligent and irresponsible not to have a social media policy in place. At the very least, they should be working towards one. I could go on about protecting the trademark, system development, etc but with everyone’s experience and understanding of franchise best practices in this group, I’ll just focus on social media for now.

While I do agree “local” is where it’s at, it is still communications, marketing, pr, messages that are being put out there on socail media and just as franchises have established policies, procedures, guidelines, processes, etc for operations, marketing, advertising, etc, it is imperative the same be done for social media.

I’ve spent most of the morning trying to find any article, blog, comment taking the position of not having a social media policy within franchising. I have not found one. But, I have found many franchise professionals that have written and posted about the necessity of having social media polciies within franchising. So, if you don’t agree with my position, allow me to direct you to links from several franchise professionals that feel it is best practice to develop social media policies for franchise brands.





By the way, I don’t believe social media policies should be one-size-fits-all just as I believe a social media program should not be cookie-cutter. To arbitrarily state that all franchisees should have a facebook account and / or a twitter account is not a good or well-thought out recommendation. Determining what social media to effectively use within a franchise system is a process in and of itself. The key word here is “effectively.”

Being effective within social media takes planning. It takes identifying targets and where they congregate and communicate online. It takes determining financial and human resources to engage, monitor and manage the chosen social media platforms. It takes an understanding of the objectives to utilize social media and to have clear, concise expectations. In essence, it takes a strategy to develop, a plan to execute and results to analyze.

Once this phase is complete, a social media toolkit should be developed, franchisees (and franchisor personnel) should be trained, and the program launched. Anything less, in my opinion and from my perspective is less than best practices within franchising.

Franchising is all about uniformity and consistency from one location to another. It’s about systems that provide the foundation to uniformity and consistency. And, it’s about the policies and procedures that ensure that uniformity and consistency that makes franchising successful… And, I don’t believe that’s just my opinion!

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What is IFA Fran-Guard?

The International Franchise Association‘s new, greatly expanded franchise sales management and compliance program will help franchisors take proactive steps to reduce risks, manage growth, and build a stronger, healthier franchise system. IFA Fran-Guard covers both the legal and business aspects of compliance with a series of modules designed or CEOs and senior executives, franchise development professionals, in-house counsel and franchise attorneys, paralegals and compliance managers.

CEOs and Senior Executives

Not only does a system-wide compliance program protect your franchise it can make it more profitable. Modules cover the Business Case for Compliance, Franchise Sales Growth & Management, and Best Practices.

Franchise Development Professionals

There’s more to compliance than legal requirements. Learn how a sales management and compliance program can increase your effectiveness and help drive franchise sales.

In-house Counsel, Franchise Attorneys, Paralegals and Compliance Managers

It’s important to integrate all aspects of franchise sales management and compliance from disclosure to franchise sales, field support, and operations. IFA Fran-Guard modules cover practical steps to implement a system-wdie compliance program.

All CFEs and CFE Candidates

IFA Fran-Guard has been incorporated into ICFE’s professional development program. IFA members who successfully complete the IFA Fran-Guard program will receive an ICFE Fran-Guard Certificate. All modules are approved for CFE credits.

Where is IFA Fran-Guard Available

Programs will be offered throughout the year at various IFA meetings and conferences and in different formats to make participation more convenient. Courses will be presented online via IFA University and through a series of webinars. A schedule of upcoming sessions may be found on the IFA website.

Fran-Guard Discussed on Franchise Today

Recently on Franchise Today, Paul Segreto welcomed as his guest, David French, Vice President, Government Relations at the International Franchise Association. Paul and David discussed franchise compliance and the development of the IFA FranGuard Program previously introduced at the IFA Convention in San Antonio. Listen On-Demand

About the International Franchise Association

The International Franchise Association, the world’s oldest and largest organization representing franchising, is the preeminent voice and acknowledged leader for the industry worldwide. Approaching a half-century of service with a growing membership of more than 1,100 franchise systems, 10,000-plus franchisees and more than 500 firms that supply goods and services to the industry, IFA protects, enhances and promotes franchising by advancing the values of integrity, respect, trust, commitment to excellence, honesty and diversity. For more information, visit the IFA Web site at www.franchise.org.

Source: International Franchise Association

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Franchise Professionals Share Objectives for Attending IFA Convention

A few weeks ago, I posted a discussion on various LinkedIn Franchise Groups about the upcoming 50th IFA Convention. I asked who was attending the event and what they were hoping to bring back to their organization. The response was great as many people not only shared what they were hoping to achieve, but also shared their thoughts about the event, past and present.

Take note of the objectives and offers of assistance as we share some of the responses…

Deb Evans, President and CEO at Computer Explorers, ICED – ” I am looking forward to connecting with the best in the franchise industry! I always return with new contacts and fresh ideas to implement. I am anxious to spend time with franchise friends I haven’t seen since last year. For anyone that is attending for the first time, feel free to connect with me. I am happy to provide some helpful tips regarding the weekend and meet in person!”

Sheryl Cassity, CIA, CPA, CMA, Director, Internal Audit – “Our firm is looking to expand our connections with the franchise community. We take advantage of this opportunity to reach new franchise concepts and re-connect with existing clients. The educational opportunities are extremely valuable. This is a great opportunity to learn what is important to franchising so we can respond better to meet the needs of the franchise community.”

Tanya Mitchell, CFE, VP Research and Development at Learning Rx – “I always come away with great new ideas for both franchisees and franchise development. I would love to learn new ways to market to qualified candidates, and how zors are using social networking and PPC to draw in qualified candidates.”

Christian Faulconer, CEO at Franchise Foundry – “We go for the networking and the education and we haven’t been disappointed. This year we are hoping to meet startup and emerging franchisors that we can invest in and help grow in 2010. ” I’m also excited to get the word out regarding what Franchise Foundry can do to help emerging franchisors so if you happen to be an emerging franchisor that is attending the conference, let’s chat.”

Christian also gave some strong reasons for young franchisors who are considering attending the event, perhaps for the first time…

1. You probably don’t know what you don’t know. The IFA conference is a great place to learn that there are a lot of smart people out there who know stuff that you don’t. The good news is that they are willing to share what they know.

2. You have a chance to network with people who’ve “been there, done that” and people in your same situation. Through our participation in the IFA, we have made connections that we will benefit from for years.

3. You may find out that you do something better than anyone else. It’s a very rewarding feeling to find out that you’ve been doing something right and to be able to share what you know with others.

Mary Ann O’Connell, CFE, President, FranWise Franchise Consulting – “I love to get together with my franchise friends. The entrepreneurial spirit makes them some of the most interesting people I know. After that, I use the networking and volunteer opportunities to market myself and my company’s services. I love to learn from everyone – what an incredible “university” of ideas we have there. From the seasoned veterans to the people with the newest ideas: there is still so much to learn.”

Scott Hoots, Director of Franchise Attractions at Ripley Entertainment – “I just confirmed I’ll be attending my first IFA convention this year. Looking forward to the interaction and the opportunity to expand my network.”

Marie A, VanDrisse, Executive Account Manager at F.C. Dadson
– “I have two goals I’m trying to achieve. Since I’ve only been in the Franchise market for about a year, I want to use the educational seminars to gain knowledge on the in’s and out’s of the business. Secondly, what makes a trade show worth your while, for both myself and our company, is when your can gain either network or new business opportunities. The more networking functions the better.”

Across five different LinkedIn Franchise Groups there were over 40 responses and subsequent comments from executives representing franchisors and professionals representing service providers. All-in-all, there was a diverse representation that makes franchising what it is today. Many are looking to network. Others are hoping to learn. While others are seeking opportunities to generate business. All valid reasons for attending the 50th IFA Convention.

Ironically, the last comment posted was by none other than Dan Durney, Principal at Powerhouse Franchising who chimed in, “All I can say is… Long live the BRICK! See y’all in San Antone!

Yes, we’ll see y’all in San Antonio. Here’s best wishes for a successful event filled with lasting memories that will give new meaning to, “Remember the Alamo!”

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