Avoid the Pitfalls of Franchising--the UFOC

Even someone who is not entirely business savvy can take steps that increase the chances of having a successful franchise. Sadly, many franchisees wait until they are in mid operation perhaps years after having made a heftly financial commitment before they do the legwork that is usually far less costly when performed up front. Some of the lessons learned come from reviewing numerous cases that have gone awry. Franchise lawyers can be an excellent source of information of what to do and not do prior to the purchase of a franchise. One activity that is essential is careful review of the Uniform Franchise Providing Circular (UFOC). It is important to review the entire document. Some of the key provisions may be in small print or in provisions that may not provide good guidance as to the content in the subject line header. Other provisions may appear obvious, but require clarification by a legal professional who is experienced with franchising. Thinking that you know something when you do not could be as dangerous as proceeding without even looking. It is highly unlikely that any franchisor would proceed without documenting the provisions that take care of their brand and business. A franchisee should make sure that he or she proceeds in a like manner making sure that his or her interests are also protected.

Jackson Hewitt Tax Service Selects 'Franchisee of The Year' Award

Franchise owners Mike and Debbie Jones of Brandenburg, Kentucky were selected by Jackson Hewitt Tax Service from among nearly 800 franchisees operating approximately 5,610 franchised locations as Franchisee of the Year. Jackson Hewitt Tax Service Inc. has approximately 6,600 franchised and company-owned offices throughout the United States and provides full service individual federal and state income tax preparation. According to this article, the Jones' franchise operation has "grown their office and storefront locations from one in 1996 to 45 storefronts and 23 retail locations in 13 years, helping them to prepare over 17,000 tax returns this past tax season."

Cultivating a Good Franchisee/ Franchisee Relationship

Maintain the relationship between franchisee & franchisor. One of the ways in which to maintain or cultivate a healthy franchisee/franchisor relationship is to maintain good communication. Many problems between franchisees and franchisors could have been prevented if informal communication had existed before matters became legal problems. One thing a franchisor can do is to make sure that new and existing franchisees know the organizational charts of the franchise so that a franchisee knows who to contact for a specific problem. Some advanced planning of what to do in a particular crisis can also help so that a franchisee does not sit on a problem before coming to the franchisor early.

Selecting Your Franchisee

We have posted a lot of information about how franchisees can select a good franchise, but for the overall health of a franchise, the franchisor should give consideration with respect to its selection of franchisees. Some franchisors may stop at whether the franchisee has sufficient funds and interest in the franchise, but many franchises depend on the relationship of the franchisor and franchisee and the underlying communication. So, while assets and business experience may be important for a specific franchise, the social abilities of the franchisee may also be important. Underlying most business is great customer service. Franchisees have to deal with customers, franchisor vendors as well as employees of the franchise. A healthy franchise system depends on a healthy franchise and how the franchisee interacts with the various people that make up the business is important.

One Franchisor's Focus in a Tough Market

We are always looking for news about what any business is doing in a financial downturn to stay on top. Realty World N. California and Nevada is one franchisor dedicated to providing a sound business model for its franchisees. This includes a full range of marketing and advertising tools into the corporate intranet including: virtual tours and digital marketing; virtual and paper flyers, brochures, postcards and newsletters; e-mail distribution and tracking; video production and distribution.

According to this article, the franchisor has goals in three key areas:•
- "Ensure that Brokers and Agents have Access to Best Technology: The Realty World extranet is the backbone of the franchise, delivering all the tools required for success. The Imprev platform seamlessly integrates into the company’s intranet.
- A Robust Solution at an Affordable Price: Realty World’s model centers on providing offices with everything needed to run a successful business, for one low franchise fee. Full access to the Imprev solution provides associates with the premium level marketing Realty World requires, at an affordable cost.
- Partner with Proven, Trusted Partners: Realty World’s business model depends on delivering exceptional technology, and it is imperative that the companies they partner with provide uninterrupted service for years to come. Imprev’s reputation for providing high-levels of service availability has been proven over many years, and their commitment to ongoing development is well known."

Researching the Franchise You Would Like to Buy

Deciding to purchase a franchise is a major decision. We have mentioned in other posts the importance of performing good research if you are a prospective franchisee. Research for your new franchise should include visiting franchises to help see if some of the things that made you attracted to the franchise exist in reality. This isn't always so easy to do, but not limiting yourself to the franchises selected by the franchisor for evaluation may help. Try visiting franchises in different locations. That way you have an opportunity to see how they operate in different locations and whether the franchisees have the same experience. That selection should also include franchisees who have been in operation for some time and those who are new.

Franchising During the Credit Crunch

Banks may be skittish about lending money right now, but this has not deterred those seeking a fresh start in a new business from franchising. One Kalamazoo man serves as a good example of how to turn life experience into a business opportunity even during these tough economic times. Mark Taylor has traveled the world in his work with US Airways and Pfizer Inc., and has now decided to work in education through franchising. According to this article, Mark Taylor and his wife, Sandy, have become owners of the Tutor Doctor franchise that offers one-on-one, in-home tutoring for students from kindergarten through grade 12.

Tutor Doctor is part of a 10-year-old, Toronto-based franchise that operates in Canada, North America and Great Britain. Taylor's job with Pfizer's shuttle service ended last year when the company discontinued the service for its employees. "With Tutor Doctor, Taylor, age 42, and his wife oversee 20 independent educational consultants, who provide consultation with interested students and their families, then schedule tutorial sessions consisting of one-on-one learning in their home"

Buying From an Existing Franchisee-Pros and Cons

Unfortunately, many franchise lawyers only hear from franchisees when there are problems and the franchise does not work out as planned. One such instance is when a franchisee has not bought a franchise direct from the franchisor, but has taken the franchise over from an existing franchisee. This is not always a dire circumstance, but it does require a prospective franchisee to do some due diligence as the franchisee should when buying direct from the franchisor. Indeed, there are certain advantages. Assuming that the franchise is already in operation, there may be little left to mystery and the new franchisee doesn't have to start from the ground up. For example, there is already information on the location, the real estate is in place and if the new franchisee is very fortunate, the current employees of the franchise are also in place saving the new franchisee the hassle of hiring new employees and going through an interview process. Also, hopefully, there's an existing customer base with all of its goodwill attached. But try to think of the purchase as also having the downsides of buying a used car or someone's home. As with such cases, the prospective franchisee should try to ascertain why the original franchisee is leaving. It may be for family reasons or the need for change, but you do not want it to be because there is a poor relationship with the franchisor which you may inherit. The financial history may show that the business did well, but are there changes in the market place or local demographics that suggest a trend in the opposite direction? A new franchisee should also check out the terms of the Franchise Agreement very carefully to make sure they can be in compliance for future operations and that there aren't unpleasant surprises triggered by any franchisee transfer.

Franchisee Owned Restaurants Stay Open Despite Bennigan Chapter 7 Bankruptcy

Though about 150 corporate-owned Bennigan`s restaurants are closing because the company is out of money, the franchise's Chapter 7 bankruptcy filing is not expected to affect the retaurants owned by Franchisees, according to this article. In fact, the bankruptcy is "not expected to affect plans to open up one of the restaurants in Mandan next year." The restaurant should be open by next spring.

Arby’s® Signs Development Agreements with New and Existing Franchisees

According to this article, Arby’s Restaurant Group, Inc has signed development agreements with with five new and eight existing franchisees of the giant food franchise to open an additional 35 Arby’s® restaurants throughout the U.S. These include: "Jeff Davis, CEO of United States Beef Corporation, Arby’s largest franchisee with 252 restaurants across the United States, has agreed to open 11 more Arby’s restaurants in Kansas, Missouri and Oklahoma."

A Mentor May Help You Grow a Better Franchise

We don't often think of it in this context, but finding a mentor may be an excellent way of improving your franchise in a tough market. According to this article, " Successful mentorship can be in any number of forms: online or in-person, in both formal and informal settings, on a temporary or long-term basis, and between individuals or in groups. What is essential, experts say, is direction, dedication, and openness." We may be used to thinking of mentorship as a strategy for the very young. Attorney Maria Speth who is 43 went for an interview four years ago at Jaburg Wilk in Phoenix and has had a beneficial mentor relationship with the firm's founder and managing partner, Gary Jaburg for years. "It has also helped boost her efficiency: She estimates she spends 90% of her time working directly for clients, making more money for the firm." The article recommends that : "To be sure your time as a mentee is fruitful, experts recommend setting specific goals at the outset and revisiting them along the way, as well as looking for a mentor who has traveled the career path you seek and has the skills you need, instead of seeking out a mentor whom you like for personal reasons. " Franchisees may want to turn to retirees or " business leaders seeking to improve their managerial skills" as possible mentors.

Ongoing Training & Support Help Build Successful Franchises

One of the benefits of starting a franchise rather than a start-up business from scratch is that it allows the potential franchisee to start with a recognized brand name and also obtain the type of training that has proven effective over time for the chosen business. Any seasoned and successful business owner will admit to having learned from mistakes early in the business and a franchisee often has the benefit of not having to go through so much trial and error. Franchisors who don't provide good training and support to their franchisees can see their franchises wane over time and also create unnecessary ill will among existing franchisees. Good training and ongoing support benefits the franchise as a whole and individual franchises. It can also provide franchisees with peace of mind to make an investment in an established business even if they have not had much business experience. This is especially true for young entrepreneurs. Good training programs should be ongoing and provide details about the business products and services, information on accounting, services and inventory and tips for handling lease and other negotiations to make sure that local and state laws affecting the industry are followed and the proper licensing secured among other factors.

Clothing Franchisee Describes Highs and Lows of Being a Franchisee

Megan Albers is the owner of Girl Boutique, an upscale clothing store that specializes in designer labels in Overland Park and believes her network of family and friends have helped make her store a success. According to this article, being a part of a franchise in which the owner helped her get in touch with needed vendors was also an asset. The franchisor "had established relationships with many of them, and they were all willing to help me in some form or another. It would have been hard getting some of the vendors I wanted because of pre-existing boutiques around me and simply not knowing how to even approach these vendors.” She also discusses the limitations of having a franchise and how she makes her individual mark. “Since we are required to have the same walls, floor, etc., it is somewhat hard to present that flair you want. The way that I put my own personality into the store was making my own custom desk, and adding furniture pieces. … I wanted the shop to have a feel of a little rustic boutique that was funky and fresh.”

California Food Franchise Has Record Sales and Expansion in Slow Economy

Shakey's(R) USA headquartered in Alhambra, CA first opened its doors in April 1954 in Sacramento, CA. Despite a troubled economy, the restaurant franchise is remodelling several franchisee restaurants and is opening new corporate and franchisee stores. According to this article, CEO Joe Remsa's "keen understanding of the brand heritage, equity and vision coupled with his solid working relationship with the Shakey's franchisee body, deemed him a natural successor to the post. Remsa ushers in a new era of stability and brand confidence amidst a growing national demand for Shakey's presence beyond the western region." Remsa explains "Shakey's is an important part of American culture, holding a place in the lives of families over many generations and during economic crisis, consumers and franchisees take comfort in our brand because it reconnects everyone around a simple yet somehow forgotten concept called 'family meal time.'"

Restaurant Franchisor Assumes Operation of Struggling Franchisees

Father-son duo Paul and Scott Mobley who own Noble Roman’s Inc. a Restaurant Franchise have assumed the operation of six franchised restaurants in Indianapolis. According to this article, " The locations had been operated by a single franchisee, local businessman Steve Patton." Taking over these franchisee units "is a departure for a 36-year-old company that now focuses almost entirely on franchising; Noble Roman’s owns only two locations, primarily for training purposes." Paul Mobley feels that the move is the right one for the company and that they can demonstrate success. The article adds that "Noble Roman’s has reinvented itself several times over the years since launching in the 1970s as a chain of dine-in restaurants. In 1997, after intense competition and rising costs made stand-alone pizza joints difficult to operate profitably, Noble Roman’s turned to franchising nontraditional outlets like bowling alleys and gas stations—a strategy that has paid off handsomely. The chain has sold hundreds of franchise owners on features such as a fast-lunch system and a proprietary partially baked crust that ensures Noble Roman’s pizza always tastes the same and can be cooked quickly."

Home Inspection Franchise Makes Franchise Business Review Top 50

The Franchise Business Review (FBR) surveys thousands of actual franchise owners to evaluate their franchise systems. Every year the FBR announces its Franchisee Satisfaction Awards which highlights the franchises that received the highest praise from their franchisees. Some of the large systems making the top 50 list include The Maids Home Services, Carlson Wagonlit Travel and Sotheby's Real Estate according to the FBR list. According to this article, made the top 50 franchise list again and "broke into the top 20 on this elite top 50 list". HouseMaster was the first home inspection franchise and has been in operation since 1979.

Small Business Loan Resources for Arizona Franchisees

Once you finally find that franchise opportunity of your dreams, the issue of financing can freeze some potential franchisees from pursuing their lifelong goals. Certainly, there are many costs involved in purchasing a franchise beyond the franchise fee or royalty payment. These may include costs to purchase equipment for your franchise, advertising or training. There are various strategies or resources that franchisees use to raise money for their franchise. They may include second mortgage loans, borrowing money from the franchisor, family or friends or looking for a partner. Many franchisees also look to their local Small Business Administration or SBA as a possible source. The SBA in Arizona is located in Phoenix Arizona at 2828 North Central Ave. Telephone: 602.745.7200. Click Here for additional or updated information on the SBA's requirements for lending.

One California Franchisee's Success in a Slow Economy

Shawn Crawford's path to franchising was a result of not wanting to wait out whether his job as director of operations for a physician group was going to be eliminated as the economy took a turn for the worse. He researched opening his own gym but according to this article, "when he started looking into the costs involved in such a venture he became discouraged, that is until he came across some research that showed huge growth potential in health and fitness franchising." From among the various fitness franchises he researched, the Californa Franchisee settled on Snap Fitness, a Minnesota-based fast-growing franchisor of 24/7 fitness centers in the United States and Canada. He is pleased with his success and plans to open a second club in April of 2008. His advice to potential franchisees is to "do some investigative work. Talk to a business broker, pick up and read copies of Entrepreneur and the Wall Street Journal, and when they’re ready to proceed contact a franchisor like Snap Fitness directly. Most franchisor Web sites provide rich information about the business model, financial requirements and much more, and they grant access to executives and franchisees during your discovery process."

Franchising Entrepreneur Finds a Way to Make Millions in a Bad Economy

The Dublin Franchise Sliderobes sells made-to-fit home improvement furnishings. Its owner Mick McAleese claims that he used the "serious" mistakes that his company made which included poor location choices and inadequate management to turn the business into a multi million business in the middle of Dublin's recession in 1983. According to this article, the company underwent a process of intense assessment and "saw franchising as a low-risk road to expansion.” McAleese explains the company's appeal to potential franchisees. “Our big sell when attracting franchisees was, ‘look, we’ve got this tried-and-tested business formula and we’ve made all the mistakes for you so you don’t have to. We’ve found the best way of doing things’”. When looking for the right franchisee, McAleese says the company looks for "franchisees with solid management experience." He believes that their experience best helps them cope with the challenges of running a business.

Phoenix Arizona Franchisor Attorney

In addition to handling franchisees with litigation and transactional work, the Phoenix Law Office of Peter N. Greenfeld has recently expanded its representation of Franchisors. Before starting his own practice, Peter worked extensively with Franchisors in a large national firm well known for its Franchisor representation. With his long term experience, Peter has assisted Franchisors with litigation and disputes that arise with existing franchises. The firm also helps franchisors with setting up franchise systems. You can learn more about this Franchise Lawyer by clicking here to visit their website for Franchisees and Franchisors.