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"

Domino's Pizza Celebrates 25 Years as an International Food Franchise

Domino's Pizza, the pizza restaurant and takeaway franchise, is celebrating its 25th anniversary of the opening of its first international outlet. According to this article, the first international Domino's Pizza location was launched in Winnipeg, Canada in 1983 as a franchise. "A few months later the first Domino's Pizza outside North America was opened in Springwood, Queensland, Australia." Mostly through franchising, the company has built up over 8,600 outlets in more than 55 countries.

New Arizona Franchise Provides Portion Controlled Meals

Seattle Sutton's Healthy Eating most recent franchise was awarded in Arizona which is building its kitchen operations near Phoenix, according to this article. The Healthy Eating franchise "provides clients with portion- and calorie-controlled meals. The franchise will gradually expand to accommodate customers with additional distributor locations throughout the Kansas City metropolitan area, western part of Missouri and all Kansas."
The company began franchising in 1996 and has approximately 250 distributor locations in those areas and "serves the remainder of the United States via its national home delivery program, shipping meals from coast to coast."

After Botched Attempt Distribution Company Turns Again to Franchising to Grow Company in Today's Economy

According to this article, "K & N Electric – through its trade name K & N Mobile Franchises – is aiming to expand by implementing an updated franchise system, more than 20 years after a botched attempt in the 1980s. We’d like to grow the company and it’s very expensive for us to put trucks out, fully stock them, pay the salesmen for a year or so until they’re actually selling enough to pay their way,” Nelson said. “So the best way for us to grow rapidly is through franchising, which is why we started the franchise company.” After years of research the company is rehauling it's basic business model to capture as many new customers as possible. "Changes include reducing the franchise royalty rate from 13 percent to 9 percent, lowering the franchise fee from $23,500 to $10,000 and updating computer systems to expedite sales and service." Nelson remains optimistic despite the state of the economy saying "“If the economy is going well, everyone is manufacturing, buying new stuff, which uses our parts.”

Extracurricular Activities for Children May Represent Franchising Opportunity

Apparently, many parents are turning to private businesses to find activities for their children. The reason appears to be that some of these activities are disappearing from schools as they try to save money on "extras" such as music or art. This has provided an opportunity for businesses who want to focus on enrichment for children. According to this article, for some entrepreneurs the franchising route is the way to do this: "For Janice and Dave Morreira, 41 and 52, respectively, it allowed them to make their foray into the children's gymnastics and fitness business even though they didn't have formal training in fitness or children's development.By choosing a franchise, "I could combine something I love doing with children and also contribute my knowledge of [HR], accounting and operations," says Janice, who started her first The Little Gym with her husband, Dave, in 2003. They've since opened another location for combined sales of $1.7 million last year, as well as two more locations in late 2007 and early 2008, all in the San Francisco Bay Area."

Phoenix Entrepreneur Considers Franchising to Expand Business in Car Crazy Phoenix

Gary Shapiro is the founder and owner of Auto Vault – a secure storage facility for cars and motorcycles. According to this article, : "Auto Vault has become very successful very quickly. "We opened in the fall of 2004 with zero customers," he said. "And now we are looking for more space because we are looking after 400 cars." He started out in the neckwear business before pursuing his passion. "I've always been a car guy, I collected cars, I always drove nice cars," he said. "Even my neckwear showroom was decorated with about 1,000 model cars." The idea for Auto Vault struck him when he was offering a customer a great deal on a Bentley. "He said to me: 'Oh, the money's no problem,' " Shapiro recalled. " 'But where would I put the damn thing?'"In summer when many of the exotic cars are being enjoyed, Shapiro can often make room for vacationers who don't want to leave their cars in the driveway while away.
As his space rapidly fills up as Auto Vault continues to grow, Shapiro is looking to expand. "He's even spoken to people about franchises in the U.S., including south Florida and Phoenix." "Phoenix is a car-crazy town," he said. "And there they have to protect their cars from the summer, not the winter."

Mothers find Franchising Balance Between Work And Family

Liz Norwood is one of many mothers who have found a place at home and in franchising. According to this article, "For a long time, women only had two choices - work or raise a family," she says. "Women who decide to have a baby often have intentions of returning to work after a certain amount of time. But there were few options." So Norwood and three other "new moms" started a new company called 10 til 2 back in 2003 in Denver. The company is a staffing and personnel organization. "As you might expect, the 10 til 2 franchise has been extremely popular with moms who are eagerly becoming franchisees and with the many part-time employees the franchise places in jobs. Norwood says the corporate staff is comprised entirely of women, most with children."

How a Famous Franchisor Got His Start in Retirement

Kentucky Fried Chicken (KFC) is one of the most famous franchises in the world, but many may not be aware how this global franchise got its start. This article, has a great synopsis on how Harland Sanders, named an honorary Kentucky colonel, was able to build a global franchise from the humble beginnings in a modest gas station kitchen in Kentucky. "After a fire, he rebuilt with a restaurant and hotel that were popular with travelers—until a new interstate highway diverted traffic away from the spot. Sanders, then in his 50s, hung up his apron and prepared for retirement. Convinced there was a larger market for his secret-recipe chicken, he set about selling it to restaurant owners door-to-door." Sanders sold his interest in the U.S. company in 1964 when he was 74. The famous logo recently changed for the fourth time in 50 years a couple of years ago. According to this article, "The company unveiled a new brand logo Tuesday that includes bolder colors and a more well-defined visage of the late Kentucky Fried Chicken founder, who will keep his classic black bow tie, glasses and goatee. This change gives us a chance not only to make sure we stay relevant but also communicates to customers the realness of Colonel Sanders and the fact that he was a chef,” said Gregg Dedrick, president of KFC’s U.S. division.

Franchising For Young Franchisees

Franchising certainly provides those in mid life or with retirement assets an opportunity to experience entrepreneurship. However, franchising may also be a good experience for those in their twenties or thirties. Many college graduates in today's job market may find stiff competition to start a good career. Their lack of experience may make that task harder. Franchising could allow them the opportunity to gain valuable business experience and training for future business or career opportunities. Depending on the franchise, lack of experience doesn't necessarily preclude business success. Good franchises provide franchisees with ongoing training and support. In addition, the nature of franchising is that it generally offers the advantage that is lacking in a regular start-up business. A developed brand is proven and the success of the business opportunity can be explored through investigation of the franchise prior to actual investment. Early sales experience in high school or during college, while not lucrative, may be an additional edge for a young entrepreneur exploring franchising. Financing may be tricky, but there are low investment franchise opportunities and even young franchisees with good credit may not find this a major handicap.

Why Arizona Might Be A Good Place for Franchising

Kathleen Connell, PhD, a professor at Haas Business School at the University of California, Berkeley thinks that if you are burdened by taxes, city and state tax codes differ to such an extent that location should be something worth considering. According to this article, "The amount of variation is striking. Families earning the same income experience significant differences in the tax burdens they shoulder, depending on where they live." With respect to Arizona, she mentions that: "The bordering states of Arizona, California, and Nevada also create tax opportunities for residents who may choose to work in California, but reside in the lower tax states of Arizona or Nevada. Check out your state's competitive position at the website of the Tax Foundation (www.taxfoundation.org/taxdata/), a Washington-based nonprofit group." This may have little to do with the business tax consequences for the franchisor, but it may impact the decision franchisees make in determining the appeal of an Arizona or California Franchise that has individual tax appeal. "For relocating retirees, however, the tax profile of a community emerges as a primary consideration. Smart retirees seek communities with the lowest income, property, and sales taxes – levies that can add up to significant expenses on a retirement budget."

Roy Rogers Food Restaurant Tries Franchising to Boost Sales

The Roy Rogers food chain has done as well as hoped in the past several years. According to this article, Jim Plamondon the co-director of the restaurant chain hopes to try franchising as a means of bringing back loyal customers. "If things go according to plan, recovery lies ahead. The company is operating a booth during the International Franchise Show today and tomorrow at the D.C. Convention Center, a sign that Roy Rogers is trying for a comeback."

International Franchise Association and SBTV Promote Franchising Industry

Small Business Television, the Internet’s first television network (SBTV) has joined the IFA-International Franchise Association to provide small businesses with the latest in franchising news. The two organizations appeared together at the IFA’s 48th Annual Convention in Orlando. According to this article, IFA president said: “Franchising is growing rapidly, not just in the United States, but around the world,” IFA Pres. and CEO Matthew Shay said. “This joint effort serves to educate prospective small-business owners who are investigating a possible franchise purchase and help those who operate franchise systems and establishments to stay abreast of the latest news affecting the industry.”

Franchising Your California or Arizona Business

Even in a rough economy franchise lawyers receive calls from small to mid size businesses that are doing well and are at the point where they really need to expand to continue or increase that success. There are even businesses, as strange as it may seem, that fold because the demand for their products or services exceeds their resources to meet that demand and they simply fall apart trying to meet that demand. We will revisit the topic of franchising from time to time on this blog.

Why Franchising is an Option for some Businesses:

• Cost. Franchising is not cheap, but finding the equity or capital to expand a business without franchising can be more costly. Setting up a franchise system requires the input of professionals to meet legal requirements and properly plan the expansion of the business. Franchising allows some businesses to structure the expansion in a way that some of the costs of a regular business expansion are the responsibility of the franchisee. E.g. Lease or service contracts.
• Management. If a business were to expand without franchising, it would be hard to do so without hiring additional staff to manage additional outlets. Good Franchisees essentially serve the same basic functions your ideal manager might serve in an expanded business. Because franchisees have a stake in your business, indeed, they own the unit that you sell them, with the training that you provide and the guidelines under which they operate, franchisees can spare a business the risk of finding managers who are not sufficiently motivated or finding good managers who may leave at any time they choose. It is not unusual to see franchise agreements that are 10 to 15 years.

Geeks On Call Franchising Audio Interview

Richard T. Cole, CEO of showcase company, Geeks On Call Holdings, Inc. will be presenting an audio interview describing the core strengths of Geeks On Call and the difference between Geeks on Call and Geek Squad. Geeks On Call provides on-site computer service and solutions to small business and residential customers. According to this article, Mr. Cole discusses how Geeks On Call began franchising in 2001 and the substantial growth the company has experienced since that period, both within the franchise model, as well as their corporate-owned territories in Phoenix, Tucson and Scottsdale, AZ. "We are aggressively pursuing a true national footprint for Geeks on Call" he stated.

Are School Unforms A Good Arizona Franchising Opportunity?

Yet another Arizona School has taken the plunge in adopting a school uniform policy. Mesa Junior High tried to adopt the mandatory uniforms measure three times in the past four years in an effort to curb teen crime and behavior problems. School board members have finally approved the measure which will require these Arizona students to begin wearing uniforms next school year. According to this article, Mesa Junior Principal Cathy McDaniel wrote to the board, "We believe this will decrease our number of behavior referrals, particularly dress code and gang activity." We wonder if this could be a good franchising opportunity for Arizona mom and pop small businesses. According to this article, "entrepreneurs Brian and Jamey Elrod started franchising their school uniform stores five years ago, they have gotten pretty good at it." The husband and wife team have decided to take their business success to the next level "by offering small, mom-and-pop operations the chance to buy into Educational Outfitters." If the school uniform trend continues in Arizona, this may be potential franchising opportunity here. (Though currently, " Only five neighborhood elementary schools out of 58 require them: Longfellow, Lowell, Lincoln, Holmes and Eisenhower. ") Brian and Jamey Elrod's franchising company, Educational Outfitters Franchising LLC, just completed its first conversion franchise in Louisville, Ky. "The cost to convert a store will vary, but Mr. Elrod said the average amount would be about $25,000 total, including the franchise fee and other things like signs and updating computer systems." John and Wanda Clark own a school uniform franchise in Chattanooga, TN. They opened a second franchise last year "this time taking the concept into what Mr. Clark said was a new and fast-growing market, Huntsville, Ala. Mr. Clark, who worked in the textile and apparel industries before he and his wife opened their Educational Outfitters store on Gunbarrel Road, said the couple has found great success with the franchise."

Growing California Service Franchises offer Popular Franchising Opportunities in Tough Economy

Local California franchise consultant Cheri Carroll believes that a tough economic period may be the best time to consider owning a service franchise. According to this article, "One factor in franchise choices is home equity — how many new franchisees financed their businesses in the past, she says. Since equity loans aren’t as available or as generous as they once were, service businesses with their much lower entry costs offer a path that many are taking to beat the economic blues,” said Carroll. In San Diego, consulting businesses, executive training services and businesses that offer nonmedical services to seniors appear to offer popular franchising opportunities. There seems to be some support in the numbers. According to Carroll, “While a franchised sandwich shop may cost $120,000 or more for the build-out and equipment, or $300,000 for a retail shop, a service business can cost as little as $20,000 to get started, with almost no overhead.” Franchising appears to be doing particularly well in California. According to an International Franchise Association report sponsored by the U.S. Small Business Administration, "Franchise businesses now make up $1 trillion in U.S. direct economic output."

AAHOA Releases 2007 Report on Franchisor-Franchisee Relationships and Fair Franchising

The Asian American Hotel Owners Association (AAHOA) is one of the fastest-growing organizations in the hospitality industry with 8,700 members owning more than 22,000 hotels, many of which are franchised. The Association puts out a progress report that evaluates franchise companies against AAHOA's 12 Points of Fair Franchising. According to this article, the association released its 2007 report today on Fair Franchising "that offers insight into franchisor-franchisee relationships and provides a tool for holding franchise companies more accountable for their practices and agreements." Mukesh Mowji, 2006 AAHOA Chairman and visionary behind the process, said "this is a first step in a journey toward 12 Point compliance. It is imperative that AAHOA and franchise companies continue progressive dialogue to improve agreements."

Starting Your Own Business Versus Becoming a Franchisee

During other periods of economic downturn, many people who lost jobs and regular salaries found hope in starting their own business and becoming entrepreneurs. Sometimes it takes a firm shove to get people to focus on what would otherwise have remained as dreams. Starting a franchise has many pros and cons that we will revisit from time to time on this blog. Here are a few that you may want to consider:

Benefits of Franchising:

• Training, Support and Experience. Many franchisees enjoy the idea of not having to "start from scratch" with a new business.
• Established business plan.
• Proven methods and Technology.
• Marketing assistance. Many Franchisors have national campaigns that can benefit local franchisees.
• Recognized brand name.
• Collective purchasing power from vendors.

Benefits of Starting Your Own Business

• No royalty fees.
• Freedom to relocate or sell other items.
• More creativity in how you sell your product.
• Start up costs may be lower.

These are only rough generalities. Not all franchisors provide the experience and training that you might need. Some may micro-manage you to pieces. Also, much may depend on the type of franchise you purchase. Some industries are growing while others are somewhat stagnant. Also, it doesn't help to pick a franchise performing work you will not enjoy. Many franchisees find that it suits them best to pick a franchise based on a personal interest or type of personality. Those who tend to work well on a team find franchising appealing. You work for yourself, but not all by yourself.

Franchisor AlphaGraphics Continues to Grow through Franchising

AlphaGraphics is a print and visual communications franchisor with more than 260 AlphaGraphics franchises located in the United States and worldwide. AlphaGraphics continues to expand through franchising despite industry trends in a slow economy and difficulties in the printing and visual communication world to attract new clients. According to this article, Art Coley, AlphaGraphics' senior director of franchise development explains ""AlphaGraphics provides its franchisees with leading-edge programs and technologies that add significant value to their relationships with their customers." AlphaGraphics CEO, Kevin Cushing adds, "The ultimate test of any franchisor/franchisee relationship is when it comes to the expiration of the franchise agreement and both parties are free to go their separate ways. We are extremely pleased and proud that during the past few years 100 percent of our owners whose franchises were due to expire have accepted the opportunity to extend their agreements and stay in the AlphaGraphics network. Fourteen owners have been offered the opportunity to extend their agreements with us in the past two and a half years, and all fourteen have accepted. That renewal rate is unheard of in our industry and is a real testimony to our network of franchisees and our team at the AlphaGraphics Service Center. They know they are a part of a leading and winning brand."

International Franchise Association elects New Board Member

The International Franchise Association's board of directors has elected ADIR Restaurants Corp. Pres. and COO José J. Cofiño as a new member. According to this article, "Cofiño serves on the board of directors of the IFA Diversity Institute and is a member of the Minorities in Franchising Committee. Pollo Campero is a participant in the IFA Educational Foundation's MinorityFran program, which aims to increase the numbers and success of minorities in franchising at all levels." The IFA was founded in 1960 and its membership consists of franchisors, franchisees, and suppliers. The group promotes franchising and is a source of information for anyone interested in starting a franchise.