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Franchising usa T he ma g a z ine for franchisees

Issue 10 - aug 2013

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Maidpro

putting franchisees first

Ho w To M a n ag e Yo u r R e p u tat i o n

Franchising Fo r V e t e r a n s

O p e r at i o n American Dream LATEST NEWS

P l a n n i n g To

attract investors

FINANCIAL ADVICE FROM THE BANKS

TOP LAWYERS’ ADVICE


Johnny Rockets is a dynamic lifestyle brand that offers modern Americana with a streamlined, all-American menu, a contemporary new design, full and limited alcohol options, variations of full- and self-service ordering and other in-restaurant amenities that include arcades, market specific sportsbars, breakfast menus and late-night service.

Contact Jeff Seeberger • Vice President, Franchise Sales Office: +1 (949) 625-1695 Email: jseeberger@johnnyrockets.com

©2013 The Johnny Rockets Group, Inc.

Serving Smiles Every Day!™


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Franchising usa T he ma g a z ine for franchisees

FRANCHISING USA VOLUME 1, ISSUE 10 AUGUST 2013 publisher: Colin Bradbury. colin@cgbpublishing.com

EDITOR: Christie Hall. editor@cgbpublishing.com

Assistant Editor: Jessica Spoto. editor@cgbpublishing.com

SALES DIRECTOR: Vikki Bradbury. vikki@cgbpublishing.com

Business Development Manager: Jenn Dean. jenn@cgbpublishing.com

DESIGN: Jejak Graphics. jejak@bigpond.com

COVER IMAGE: MaidPro founders Mark Kushinsky & Richard Sparacio

CGB PUBLISHING 676 Wain Rd. Sidney, BC V8L 5M5 CANADA Sales: 250 590 7116 Editorial: 778 426 2446 www.franchisingusamagazine.com

Proud member of the IFA:

SUPPLIER FORUM International Franchise Association 1501 K Street, N.W., Suite 350 Washington, D.C. 20005 Phone: (202) 628-8000 Fax: (202) 628-0812 www.franchise.org

from the

Editor Welcome to this edition of Franchising USA.

the pages of this August issue you

As with all types of new ventures, unforeseen challenges and setbacks are sure to present themselves on a daily basis and in this edition we offer some great advice to you, the potential franchisee.

on various valued subjects that contain

Franchisors try above all else to navigate franchisees easily through these challenges and guide them to a solution. The starting days of any new journey are filled with highs and lows, and fear is a discouraging restraint. But with motivation, knowledge and the dream to succeed, these difficult beginnings can become easily piloted, resulting in a rewarding new phase of your professional life. In any business venture information builds the framework for making successful decisions, we hope with each issue we arm our readers with knowledge and resources to pursue their dreams of joining the world of franchising. Knowledge is a tool that can’t be undervalued, and as you embark on your own journey, Franchising USA strives to help you gain as much relevant knowledge as possible. Throughout

will find articles written by experts

offering their experience and expertise keys to evaluating franchise options,

loss prevention, marketing advice, and motivational tools.

Don’t miss our ‘What’s New’ pages

featuring some of the latest developments within franchising and also our main feature which focusses on mobile

franchises, a vital and growing area

of franchising. The ever popular Vets supplement can be found on page 41

offering advice and information for our Veterans, along with personal profiles

on individuals, who like you, have also ventured into the world of franchising. In any business venture information builds the framework for making

successful decisions. We hope with

each issue we provide our readers with

the knowledge and resources to pursue their dreams of joining the world of franchising.

Happy Reading! Christie Hall

Editor, Franchising USA

The information and contents in this publication are believed by the publisher to be true, correct and accurate but no independent investigation has been undertaken. Accordingly the publisher does not represent or warrant that the information and contents are true, correct or accurate and recommends that each reader seek appropriate professional advice, guidance and direction before acting or relying on all information contained herein. Opinions expressed in the articles contained in this publication are not necessarily those of the publisher. The publication is sold subject to the terms and conditions that it shall not be copied in whole or part, resold, hired out, without the express permission of the publisher.

Franchising USA


41

10 Cover Story

MaidPro: Putting Franchisees First

22 How to Manage your Reputation Andre Kay, Sociallybuzz

36

In Every Issue 06 Franchising News Announcements from the industry 29 Feature Article Mobile Franchising Feature 38 Women in Franchising Mary Ann O’Connell, Franwise

Franchising USA

29

august 2013

Veterans in Franchising Supplement

53 Operation American Dream 70 Planning to Attract Investors

Lynette McKee & Coleman Sullivan

62

On the Cover

16

f ra nchising usa

Contents


f ra nchising usa

60

Expert Advice 16 The Imperfect Science: Making your First Hire Michael Alter, Surepayroll inc 22 How to Effectively Manage your Franchise’s Reputation Andre Kay, Sociallybuzz 34 Just How Exclusive is an Exclusive Territory Julie Lusthaus, Einbinder and Dunn 36 Left Foot First – How Success Driving Franchisees get out of Bed Dan Martin, IFX online 60 Keys to Evaluating a Franchise Daniel Brunell, Dearborn West LLC

68 A Closer Look at Loss Prevention Nick Margiasso, NM4PR 70 Attracting Investors through Disciplined Planning Lynette McKee & Coleman Sullivan

38

62 6 Easy Steps for Planning your Future Franchise Kate Groom, Smart Franchise

Spotlight on Service 24 The Entrepreneurs Source

Franchisor in Depth 26 Yeh! Yogurt

Franchisee in Action 65 Red Mango

Franchise Profile

26

18 Cruiseone

14 Infofree.com 58 Sun Tan City Franchising USA


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what’s new! TOGO’S Begins West Coast Expansion with First Multi-Unit Agreement “West Coast Original” to open six Togo’s restaurants in Salt Lake City, aims for 400 locations across the west coast. A “West Coast Original” since 1971, Togo’s Eateries, Inc. has recently announced the signing of its first multi-unit franchise agreement in Utah. The sandwich chain plans to develop six new restaurants over the next several years in the Salt Lake City area, with the first location scheduled to open in the first quarter of 2014. This latest agreement is part of Togo’s commitment to

grow the brand to 400 restaurants along all west coast areas. “As the best franchise opportunity in the sandwich category, our brand has made great strides in expanding to new markets along the West Coast,” said Tony Gioia, chairman and CEO of Togo’s Holdings, LLC. Togo’s, which has experienced 11 consecutive quarters of same-store sales increases, is currently seeking qualified multi-unit franchisees that have a passion

for the brand and deep connection to their community. Both new and existing Togo’s franchisees will benefit from $10 million for remodels and transfers, as well as $5 million to build new restaurants in the state. Togo’s restaurants experienced average unit sales in excess of $633,000, with 50 percent averaging over $799,000, and 25 percent averaging over $930,000. To become a part of the Togo’s team, candidates should possess liquidity of $150,000 for a single restaurant and a net worth of $300,000. Area developers looking to develop three or more restaurants should have liquidity of $450,000 and net worth of $900,000. Special incentives are available for qualified franchisees interested in opening three or more restaurants. For more information: Phone: 1.877.718.6467 or visit Website: www.togosfranchise.com.

RadioShack CEO Introduces New Concepts To Boost Sales Last month RadioShack Corp.’s CEO Joseph Magnacca, showed off their redesigned concept store in Manhattan, New York. Featuring less clutter and touch screen informational displays, Magnacca aims to turn the franchise around with its innovative new look. By eliminating more dated merchandise, Magnacca is cutting back on the number of items sold by about ten percent. The funds made available by doing so will create space for new technologies such as Fitbit, a series of devices developed to track daily activities. “I’m not exactly the cost-cutting guy coming in here,” says Magnacca who was hired last February. “That doesn’t mean

Franchising USA

we don’t want to finance what we’re doing effectively. But we want to look forward, not backwards.” All 4,400 stores in the chain will be reorganized in October to better target consumers in time for the holiday shopping season. Doing so will be at minimal expense and is already in the budget. The 94 year-old company’s stock lost 75 percent of its value over the past two years, resulting in their first recent annual loss in 2012. Magnacca, with a background in merchandizing and marketing, was hired to fill key positions.

our money. I won’t spend more than we have budgeted, but we may need to spend it differently than in the past,” he says.

“We have decisions about where to invest

www.radioshack.com

Magnacca will serve as chief marketing officer and work with RadioShack’s 1,000 franchise-owned stores in the U.S.


IFA Inducts Five Franchise Leaders Into Hall Of Fame It is common practice for the International Franchise Association’s Board of Directors to induct just one person into the Hall of Fame annually. This year the IFA has decided to expanded its oldest and most prestigious award to recognize the multiple deserving franchise leaders for their extensive contributions to the industry. Five franchise icons have been unanimously voted to be honored in the IFA Hall of Fame. These five new inductees include; Conrad Hilton, founder of Hilton Hotels, J. Willard Marriott, founder of Marriott International, Anthony “Tony” Martino, founder of MAACO and AAMCO, James Maynard, founder of Golden Corral Corporation, and Thomas “Tom” Monaghan, founder of Dominos Pizza.

sustainability of franchising in the U.S. and around the world. The elements of their success have informed franchise leaders of today and will continue to contribute to the success of franchise leaders well into the future.” Established in 1979, The Hall of Fame Award aims to publicly acknowledge leaders who have reached high levels of accomplishment in franchising and has also contributed to the development and success of the franchise community. The awards will be presented to the inductees or their representatives during the IFA Annual Convention in New Orleans Feb. 22-25, 2014. www.franchise.org

“We are honored to induct these five franchise icons into the IFA Hall of Fame,” said IFA Chairman Steve Romaniello, CFE, and Managing Director of Roark Capital Group. “Each of these leaders has made significant contributions to the growth and

Firehouse Subs Public Safety Foundation Quick to Aid Arizona First Responders Answering the call to help those affected by recent wildfires in Arizona, Firehouse Subs Public Safety Foundation is providing food and life-saving equipment to evacuees, volunteers and first responders. Firehouse Subs Public Safety Foundation has already hit the ground from their Arizona restaurants, feeding first responders, volunteers and evacuees with hearty subs. The Foundation gave 650 boxed lunches to the American Red Cross for distribution. The Foundation provides funding, life-saving equipment, and educational training to first-responders and public safety organizations. It also provides fire, police and EMS departments with the opportunity to request life-saving

equipment, replacing any equipment lost in the fires, enhancing future rescue and recovery operations. To support the Foundation’s efforts, participating restaurants are encouraging guests to “round up” their bill to the nearest dollar. Throughout the month of July, all funds raised through the Round Up program will be used toward Arizona wildfire relief.

in 38 states and Puerto Rico, including $119,600 in Arizona.

Other fundraising initiatives include restaurants recycling leftover five-gallon pickle buckets, selling them to guests for $2. Donation canisters on register counters also explain the non-profit’s mission and collect spare change.

Firehouse Subs consistently ranks No. 1 among fast casual brands in the categories of food quality, taste and flavor, and friendly service. For the past two years Franchise Business Review ranked Firehouse Subs No. 1 in franchisee satisfaction, and in 2013, Firehouse Subs was named the second fastest growing U.S. restaurant chain by Technomic.

Since its inception in 2005, Firehouse Subs has given $6.8 million to relief efforts

www.firehousesubs.com

For more information:

Franchising USA

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what’s new! Edible Arrangements Launches Edible To Go Locations, Expanding Premium Fresh Fruit Business to High Traffic Venues Edible Arrangements is making it even easier for guests to enjoy their fresh fruit treats, chocolate dipped fruits, and premium fresh fruit bouquets. Two years in development, the launch of all new Edible To Go in shopping malls and other high-traffic venues is a fruit lovers dream. “It’s all about bringing our wonderful fruit treats and service to guests in new and innovative ways,” says founder and CEO Tariq Farid. “We know both our current and first-time guests are going to love the experience.”

Edible Arrangements has been recognized as an industry leader ranking first in its category in Entrepreneur magazine’s annual “Franchise 500” for the past six years and also placing in Entrepreneur’s Top 40 of “Fastest Growing Franchises” and “America’s Top Global Franchises.” For more information: www.ediblearrangements.com

Opening this summer, the first locations are at Mall St. Matthews in Louisville, Ky., and King of Prussia Mall outside of Philadelphia. The Chandler Fashion Center in Chandler, Ariz. will follow, with plans to expand the concept to additional markets by the end of the year. With over 1,100 franchise locations open or under development worldwide, Edible Arrangements International, LLC is the leading supplier of high quality, fresh fruit arrangements. Brothers Tariq and Kamran Farid developed and launched the company in 1999 in East Haven, CT, after many years in the floral industry.

Blaze Fast-Fire’d Pizza Hires President and COO Known for fast casual artisan pizza, Blaze Fast-Fire’d Pizza has announced the appointment of Jim Mizes as President and Chief Operating Officer. Mizes will be responsible for leading the national expansion of Blaze Pizza. “The addition of Jim to our team highlights our commitment to assembling a best in class headquarter staff,” says Elise Wetzel, co-founder of Blaze Pizza. “Jim has overseen

Franchising USA

the development of over 500 restaurants in his career, and is well suited to lead our franchise expansion across the country.” Within a month Mizes has signed agreements with four separate franchise groups to develop a total of 31 Blaze Pizza restaurants in Houston TX, Baltimore MD, Washington DC, Rapid City SD, and Ontario/Riverside CA. With the addition of these agreements, Blaze Pizza now has 20 franchise groups under

contract to develop a total of 172 restaurants in 14 states. “Our long-term goal is to build a strong, enduring national brand,” says Mizes. “To that end, besides building a strong scalable store model, we are partnering with a small group of elite-level multiunit franchisees with plans to quickly build a concentration of Blaze Pizza restaurants in key markets across the country.”

partnering with established restaurant operators to support the company’s expansion.

Blaze Pizza is registered to franchise in all 50 states and is

For more information: www.blazepizza.com


40 percent off its initial fee for the first 40 agreements of 2013 — a savings of $10,000. “Smoothie King’s Jacksonville expansion is driven by consumer demand. Our guests have reached out through social media channels asking for more locations across the metro area, so they can have easier access to the products they use as part of their daily lifestyle,” says Wan Kim, CEO of Smoothie King Global. “We want to let them know we’re listening,”

SMOOTHIE KING Consumer Demand Creates Franchise Expansion Smoothie King Offers 40 Percent Discount off Franchise Fee to Drive Development Smoothie King Franchises, Inc. has recently announced it is targeting the Jacksonville, Florida metro area for franchise growth. Currently operating seven stores in the city, Smoothie King aims to open an additional ten locations over the next three years. To fuel development, Smoothie King is offering franchisees

With more than 500 locations in the U.S., Smoothie King plans to add 1,000 new locations domestically over the next five years. “The excitement and demand in Jacksonville for what Smoothie King offers creates an excellent business opportunity for entrepreneurs looking to invest in a brand that has a strong, 18-year track record of success in the market,” says Kim. To further drive growth, the companies executive team will host a discover day in Jacksonville on August 2 to share the benefits of operating a future Smoothie King with potential future franchisees. For more information: www.smoothieking.com; www.facebook.com/SmoothieKing; http://twitter.com/smoothieking.

VetFran Program Helps Veteran Become A Successful Entrepreneur Taking advantage of VetFran opportunities, Veteran Andrew Wilson has become a successful franchisee and business owner.

an opportunity with 1-800-Got-Junk, a

Wilson, franchisee for 1-800-Got-Junk, and owner of You Move Me, has plans to use his newly purchased house in Oklahoma City as a second location for his moving business.

I connected with Brian’s vision,” says

“It’s not that we need to expand, but that we want to,” he says. Wilson’s journey began while deployed with the US Army in Afghanistan in 2002. Turning the pages of a Fortune Magazine he came across an article about

franchise owned by Brian Scudamore. “At that time, the business was just

starting out; it wasn’t what it is today. But Wilson.

With the help of IFA’s VetFran special incentives program, Wilson was able

to open a 1-800-Got-Junk franchise in

Kansas, while deployed in Afghanistan.

Upon returning from Afghanistan, Wilson opened his own business, You Move Me, in Tulsa nearly a decade ago. Today he has plans to open its second location in Oklahoma City. “I love being in a service-based business,” says Wilson. “I love the feeling of wowing people.”

“As a veteran, Andrew was able to have

Wilson currently has 70 employees and is continuing to expand.

could have more capital to fund his

www.1800gotjunk.com www.youmoveme.com

half of the franchise fee waived so he growing business,” says Scudamore.

Franchising USA

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cover stroy

M aidPro

MaidPro:

deliveri

an

A story of c u stomer service s u ccess and why it pays to p u t franchisees first MaidPro consistently ranks higher than any other brand in its industry for franchisee satisfaction. The secret sauce, according to MaidPro cofounder Mark Kushinsky, is a relentless focus on delivering great service to MaidPro’s end customers and strong, individualized support to its franchise owners and their employees. MaidPro’s back story is actually rooted in an extremely poor customer-service experience. “I had always wanted to start a business,” recalls Kushinsky, “but, was continuously searching for the next big idea. I was in my twenties and had just hired a cleaning company for my

Franchising USA

apartment. I had a cat at the time (Foof) and came home one day to find him locked in my bathroom without food or water for what must have been hours. The cleaning company handled my complaint badly and was not particularly good at cleaning either. It got me thinking: ‘Wow, I could do this better.’” While house cleaning did not necessarily feel to Kushinsky like ‘the next big idea’, he was attracted to the industry’s combination of low startup costs, flexible scheduling and recurring revenue. “I knew we could jump into this market and start winning share with great customer service,” he says. Kushinsky joined forces with his friend Richard Sparacio and the two young entrepreneurs launched MaidPro in Boston’s historic Beacon Hill neighborhood in 1991.

Fast forward to 2013 Kushinsky and Sparacio have turned MaidPro into a 160+ unit franchise business, stretching across 33 states and Canada. Following a standard 49-Point Checklist system, MaidPro’s trained professionals work with top-of-the-line cleaning products and stand by a 24-hour satisfaction guarantee or MaidPro recleans at no additional charge. ”MaidPro takes pride in being the most personal brand,” says Sparacio. “While our service is highly standardized for consistency and quality, we also honor peoples’ personal preferences for how they want their homes cleaned.” The company’s quirky, attentiongrabbing marketing and crisp white and blue branding targets a wide


“MaidPro’s strongest feature is consistently ing high-quality, affordable and personalized service that increases franchise revenues nd recurring clientele through word-of-mouth references.”

personalized – versus one-size-fits-all – support structure.” That support starts in the very early stages of the franchise contracting process. “We look to be a good fit for potential franchise partners,” says Lynch, ”but we also look for people who are a best fit for the MaidPro model. We don’t want to just sell a franchise; we want to help people succeed and that is a twoway street.”

variety of customer profiles. MaidPro’s strongest feature, Sparacio maintains, is “consistently delivering high-quality, affordable and personalized service that increases franchise revenues and recurring clientele through word-of-mouth references.”

Support, support, support Offering strong, individualized support to franchise owners and their employees is the other secret behind MaidPro’s consistently strong growth and high franchise satisfaction ratings. “Starting a MaidPro is a low-risk, high-reward business opportunity,” says Chuck Lynch, Vice President of Planning and Development. “Both training and support are extensive and we differentiate from other franchisors by offering a

The ideal MaidPro franchise partner is a “bright, fun, coachable individual,” says Kushinsky. “They need to understand what franchising is all about and the importance of being part of a team. It’s not ‘my way or the highway’ for us, or for them.” All potential franchise partners get an opportunity to: • Speak at length with key MaidPro leaders, • Tour MaidPro facilities individually (rather than in group tours), • Preview its advanced, proprietary operating software, and • Check out marketing materials and other resources that would be made available to them. Initial meetings and individual tours allow both MaidPro and potential franchise partners to decide mutually if the fit is just right. “We do individual rather than group

tours,” Lynch says, “because we want to get to know our potential partners really well and vice versa.” If a match is made, franchise partners sign their agreements, choose their territories and begin a multiweek training program consisting of both hands-on classroom training at MaidPro’s Boston headquarters and at-home training delivered by MaidPro support personnel. MaidPro provides each franchise with a dedicated, long-term support person and makes available a set of specialists who answer questions as they arise and provide one-to-one coaching as needed. MaidPro franchises gain access to both on- and offline marketing support and can choose to use MaidPro’s national call center for selling services. MaidPro conducts semiannual in-person conferences with its franchise owners and both parties get highly involved in helping each other. “We put the building blocks together for success,” says Jen Doyle, MaidPro’s Director of Franchise Marketing. “Our award-winning communication and support is truly unmatched.” Flexibility is another way MaidPro stands apart from its competitors. For example, the company does not force franchises to spend specific amounts on marketing or cleaning supplies. And, where other cleaning franchisors collect royalties

Franchising USA

cover stor y

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cover stroy

M aidPro

not trying to grow at any cost,” explains

Kushinsky. “We enjoy what we are doing

and will bring aboard only the people we think will do well in our system.”

The minimum capital required to invest in a MaidPro franchise is $30,000. Of that,

$7,900 is the franchise fee: a competitively lower cost than other maid service

franchise. There are two business models available to franchise partners: the select MaidPro home office and

suppor t team

model, which starts with 10,000 qualified households and requires the minimum $30,000 investment or the enterprise

computing device. “The model MaidPro provides creates a fantastic foundation and infrastructure from which to grow a business,” says Eric Ribeiro, owner of MaidPro Baltimore, MD. MaidPro’s owner community is not the only one to recognize its industry-leading franchise support. The company, which participates in both the International Franchise Association and New England Franchise Association, has received numerous awards and accolades, including: weekly or dictate how many cleaning professionals must be assigned to each home, MaidPro opts for monthly payments and leaves staff count per home up to franchise owners. Franchise owners also determine the amount of correspondence they have with MaidPro’s home office, although MaidPro does continuously analyze franchise data, metrics and practices and shares helpful information with all through its intranet. MaidPro also delivers support via advanced, proprietary technology. In fact, specialized software developed inhouse to run MaidPro was so successful that Kushinsky and Sparacio spun out a leading field-service management software company. They then proceeded to develop an even more advanced cloud system designed uniquely for the needs of MaidPro’s franchise owners. The advanced new system is simple to use and can be accessed any time from any type of

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• The only maid service franchise to be named in Franchise Business Review’s 2013 Top Overall 50 Report for franchisee satisfaction and in was included its Top Low Cost Franchises for 2013 Report. • One of seven fastest growing franchises named by MSN Money. • One of the Top 50 Franchises for Minorities according to USA Today’s Franchising Today. • A top place to work by Boston Business Journal. • A four-star rating every year for the past seven years by Franchise Business Review. • And ranked in Entrepreneur’s 2013 top 500 Franchises, Top Home-Based Franchises and 2012 Top Low Cost Franchises MaidPro added 25 new franchises last year and plans the same level of expansion for 2013. “We could add more but are

model, starting with 27,500 qualified

households and requiring a minimum investment of $75,000.

For people who already own cleaning

businesses but could use help growing, MaidPro offers a competitive package

to conversion buyers. Current cleaning-

service business owners who join MaidPro are never charged royalties on their

existing customers and pay only a 6.5% royalty fees on new customers gained

through MaidPro. “Many existing cleaning companies will turn to franchisors

because they have trouble growing their

businesses,” Doyle says. “We are experts at generating growth and franchising a great way to get new business.”

“When I was in my own cleaning business, I never had anyone to whom I could turn

and made a lot of mistakes,” says Michelle Spitzer, owner of MaidPro Naples, FL. “With MaidPro, you are never alone.

Having experts just a phone call away is

huge and really helps you to make sound business decisions.”

MaidPro also offers discounts to veterans interested in franchising. Valued at

$15,000, MaidPro’s special veterans’

franchising package includes $3,000 off

the initial franchise fee plus a $100 credit on royalties each month for the life of a ten-year contract.

To learn more about franchising with MaidPro, visit www.maidprofranchise.com/


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prof ile

infof ree.com

Fr anchise Owners Use infofree.com Sales Le ads to Find Ne w Customers

Work Smarter, Not Harder

Founded in 2011, infofree.com provides a rapidly expanding collection of sales leads and mailing lists available on the market today. Offering around-the-clock access to over 200 databases, the service empowers franchisees, sales reps and small businesses with the information they need to grow their customer base. Through simplified searches, subscribers have several options to reach their target market. An auto dealership looking for additional customers could use infofree. com search new homeowners within a set radius, and also target prospects with desired incomes or home values.

How It Works Searches are divided into four categories; business, consumer, hot weekly, and other popular leads. These categories are further divided into specific target markets. After subscribers select a category, they then choose to either conduct a search for an exact location by entering a ZIP code, or perform a broader search via city, county, state or radius. To give you an idea of the results infofree.com provides, a search in consumer leads on pet owners in Seattle yields 68,698 results of customer profiles and detailed information. Leads includes name, address, gender, age, marital status, home ownership, home value and length

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of residence. A search in business leads provides information including company names, executive titles, phone numbers, email addresses, workforce size, sales volume, credit rating and how long each company has been operating. To date, the company’s databases contain records for more than 15 million businesses and 220 million people living in the United States. Multi-sourced from phone and cable listings, magazine subscriptions, Yellow Pages, state business filings, property records and employee performed phone calls, this information is valuable in generating new customers.

How It Started Upon finishing his MBA in 1972, founder Vinod Gupta began working for a recreational vehicle manufacturer. One day his boss asked him to provide a list of every RV dealership in the country. While no such list existed, Gupta called AT&T and ordered every phone book available in the country. When 5,000 phone books showed up at his workplace, his boss threatened to fire him. Gupta took the directories home and compiled the list his employer requested. Presenting his boss with the list, Gupta gave him two options: Buy it as exclusive property; or to use it free of charge, with Gupta maintaining its ownership rights. His boss opted for the free list, so Gupta went to the bank, took out a $6,000 loan and sent direct-mail to every RV manufacturer in the country. He informed them of the list he was willing to share for a fee.

Starting his business with $100, Gupta’s company grew into what became InfoUSA. In 2010 Gupta sold the business for $680 million. In June 2011 Gupta launched the second incarnation of the idea he’d pursued 40 years earlier. Thus infofree.com was born.

Why Choose Infofree “I can’t think of a franchise that doesn’t want to grow, and there are only two ways to do so,” explains Rakesh Gupta, President and COO. “One is you get more out of existing customers, and the second is you find new customers. Our tool helps you do both.” Offering value-priced, top-quality products, infofree.com currently serves approximately 5,000 paying subscribers. By the end of 2014, the company anticipates reaching 20,000 subscribers. Setting infofree.com apart from their competitors is their focus on providing small businesses and entrepreneurs with the tools they need to succeed. This year, infofree.com is recognized in Inc. Magazine’s list of 500 fastest growing private companies in the country. Building on that distinction, infofree.com plans three major upcoming features: a lead management system to enhance subscriber productivity, a trigger-alert system to keep subscribers apprised of newsworthy changes and an interface allowing subscribers to access databases on their smartphones. In 2014, infofree.com plans to expand its databases to include Canadian businesses and consumers.


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ex per t advice

Michael Alter, President and CEO, SurePayroll Inc., A Paychex Company

T h e I m p e rf e c t S c i e n c e :

Making your first hire

“You don’t want to h expertise is so narro gears in six months

Franchising USA


be the last. Obviously your first hire should have basic abilities and qualities necessary to work for your business, however too often employers get caught up in skills and overlook fit.

Michael Alter

When starting your franchise, perhaps the most important decision you will make is who to hire first. Any entrepreneur will tell you, a great team of people is the key to a successful business. This is your first big step in making your franchise a great business for yourself. Hiring, though, can be difficult. You have to ask yourself a lot of questions. Do I want this person to stay for a while? Do I want someone with a very specific expertise or do I want a generalist? Is what I need today going to be the same as what I need tomorrow? Can this new person adapt to changes in my business? It’s not a perfect science, and hiring mistakes happen all the time, but there’s some key tips that can help you find someone who will really help you grow.

Hire for Fit, Not Just for Skill Skills may be one of the first things you look at in a candidate, but they shouldn’t

hire someone whose ow they aren’t able to switch to a year.”

What is the atmosphere of your business going to be like? Are they going to fit in? If your franchise is small and they have a background of working for big companies, is that going to create problems in terms of what they expect? Every business is different. Some are more buttoned down than others. Some are more relaxed. During the interviewing process, you need to get a feel for the type of person the candidate is, and ask them what kind of environment they thrive in. If a given candidate doesn’t have quite the level of skill as someone else, but they seem like a great fit, they’re probably the better choice. They can learn the skills as they go along.

Do Your Homework You’d be surprised how many employers fail to do background checks and call references. It’s really a must. You’re investing a lot in an employee – both time and money. If this person is interacting with clients or customers, he or she could impact your business’s reputation as well. A pre-employment screening service can handle everything from drug screening to behavioral assessments to skills testing. If you don’t want to pay for a service, at the very least call references. Failing to do so could mean missing a key piece of information that could either affirm your decision to hire or raise a red flag.

Seek Out Utility Players However you plan to run your franchise in the beginning, it is likely things will change as you grow. Keep this in mind as part of your hiring criteria. It’s probably going to benefit to hire utility players, people who can do a little bit of everything.

Their role will likely change and expand. You don’t want to hire someone whose expertise is so narrow they aren’t able to switch gears in six months to a year.

Play the Odds When you’re hiring just one person, it’s important for you to play the odds. For example, you may have a great candidate who you think could one day be a dynamite salesperson, but they don’t have a lot of experience. It’s a risky bet. It might pay off big, but it might not. You’re better off playing a safer bet and hiring someone with sales experience. Or, for instance, you’ve got a candidate with an especially long commute. Chances are they may burn out quicker than someone with a short commute. If you were hiring 60 people, you could afford to take some fliers. But with one, you should bet on the person most likely to succeed at the position.

Hire Slow, Fire Quickly The last thing to consider is if you hire someone who is clearly not working out, you may want to cut your losses sooner than later. As I mentioned earlier, you could risk doing reputational damage to your new business. Take your time in finding the right person and give yourself the best chance to have a productive employee who will stay with you for a long time. President and CEO, Michael Alter is responsible for the overall business model development, strategic planning and day-to-day operations for SurePayroll, a wholly owned subsidiary of Paychex®. Alter is a nationally recognized spokesman on small business issues. Alter is also a columnist for INC. com and appears regularly in media outlets nationwide, including Bloomberg TV, the Wall Street Journal, Crain’s Chicago Business and Entrepreneur magazine. Website: www.surepayroll.com

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f ra nchisee in action

Cr uise O ne

l Ta j Ma ha

Ea ster Isla n d

R a d i o Hosts E x p l or e N e w Hor i z o n s W i t h

CruiseOne

After spending the past 30 years in the broadcasting industry, the iconic Indianapolis radio hosts Ann Craig and John Cinnamon are now sending the city to new places. The couple’s adventurous lifestyle drew their interest to invest in a CruiseOne®

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travel franchise. However this career path was not always so clear.

“When people find out we are in the travel agency business they often say, ‘Oh I bet you travel a lot,’ assuming we travel because we are in the business. Whereas, we actually got in the business because we travel a lot,” says John. Feeling radio was a fading industry, the couple left their broadcasting careers and became active entrepreneurs, looking to pursue different business prospects. One afternoon Ann was having lunch

with a friend who had just began her job as a franchise sales representative for CruiseOne. A self-declared “travel junkie,” Ann became intrigued by the possibilities the franchise could offer. Investigating various other travel franchise opportunities, she and John decided CruiseOne their best option. John and Ann then sold their E-commerce business to buy the CruiseOne franchise in 2011, and the couple’s passion for travel was turned into an exciting new business. Admitting at that time she was not a fan of franchising due to the rules,


Ma c hu Pic hu

Eg y pt regulations and fees, Ann says that looking at the CruiseOne business model was a no brainer. “They offer so much at a very small overhead,” she explains. “And the process is simple.” After signing the paperwork, the couple attended a week training course in Florida at no additional cost. “We were taught all the software we needed to know and met the cruise line and land tour reps. It was a very smooth process,” explains John. For Ann, the love of travelling came at an early age. From Louisville, Ky., she grew up in an adventurous family of avid travelers. Marrying her first husband at the age of 19, Ann moved to Tehran, Iran, where she lived for a year-and-a-half. She has recently published a book about her time spent there, titled “Walking Naked In Tehran,” the title is based off a reoccurring nightmare. John Cinnamon grew up in from Toulon, Ill. Meeting Ann while working together in radio, the pair soon discovered their mutual love for travelling. Marrying in June 1995, the two have travelled to more than 60 countries, 50 states, seven continents and across 500,000 miles together. “Without sounding like we’re bragging,

“We have that been there done that experience to guide people to where they might want to go. We’re not just travel agents, we’re travel experts.” we’ve been virtually everywhere and we see that as a benefit to our customers. We have that been there done that experience to guide people to where they might want to go,” says John. “We’re not just travel agents, we’re travel experts.” “Instead of talking to someone who hasn’t been many places, we can talk to customers about it from our experiences and give them solid information that they can’t get just anywhere,” adds Ann. The couple describes one of their most memorable days as New Years Day, 2008. While travelling in Easter Island, the couple rented a scooter and rode around the island, passing giant stone heads and feeling as though they were the only people on earth. Reflecting on their previous entrepreneurial endeavors, Ann talks about how CruiseOne is so different. “I don’t know if I was ever really proud of what I owned before, this I’m actually proud of,” she says. “I know it, I understand it, I live

it, and I love to travel. For our lifestyle this fits very nice and it’s something I really enjoy.” Their fifth business, the couple previous owned a mortgage business, a dry cleaners, a web-based business and they still own a magazine publication. “Some we didn’t like, some we did, but nothing that we had a real passion for until we found this,” she says. The biggest challenge the couple has faced in franchising so far has been generating their business. “You need to let people know you’re there,” says Ann. “Even though you can have huge support you still have to make a name for yourself. Networking is key.” “We’ve been known as ‘the radio people’ for the past 25, 30 years. It’s an educational process to get people to think of us as ‘the travel people,” says John. “It’s frustrating, but it takes education and reminding people you’re there.” It took the couple about a year to get

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f ra nchisee in action

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f ra nchisee in action

Cr uise O ne

- Tibe t Pota la Pa la c e

An gkor Wa t

“We know what the best rates are and take advantage of it for ourselves. We get our own commission and get to travel more. It’s a very flexible lifestyle and you make own hours.” kicked in and have regular business, but now that they do, they feel good about it and the benefits are lavish. Recently returning from a European driving trip, the couple is taking more trips now than ever possible before. “We know what the best rates are and take advantage of it for ourselves. We get our own commission and get to travel more. It’s a very flexible lifestyle and you make own hours,” says Ann. The free excursions and on board credit that CruiseOne offers were selling points for the Cinnamon’s, as were the company’s support system, extensive website specific to franchise locations, back end support and emailing services, to name a few. To those interested in the franchising industry, Johns says “Do your homework and make comparisons with other franchises available so you can see that CruiseOne has absolutely the best support,

Franchising USA

processes and offers for their franchisees. You’ll see too how you can take advantage of those opportunities if you enjoy travelling yourself.” The Cinnamons both highly recommend franchising with CruiseOne., especially for those who like to travel. Offering a discount to female franchisees, they say the low investment and no overhead is refreshing compared to other businesses they invested hundreds of thousands into, in the past. Where as the business model allows room for associates, the Cinnamons are looking into different expansion options for the future. “Like any other business you have to learn what you’re doing, then you can continue to grow,” says Ann. Through CruiseOne Ann and John can sell any kind of travel. If you’re not sure of where you want to go, they’ll give advice. They know where to get the best deals,

put packages together and will personally walk you through everything. “We’re proud to be part of CruiseOne, one of the nation’s most trusted and well known travel companies with more than 20 years of experience,” says Ann. “I feel like I’m on the cutting edge of travel, which I feel is, for lack of better words, a sexy kind of thing, the travel allure. I know what’s hot, I know what the deals are, where cruise lines go and what the packages include. I feel like I’m pretty well educated on travel and the world in general and I love that, I really do.” Today the couple is working on co-writing a book. Based off their travels, the book is anecdotal in the sense that it doesn’t tell you what to do or where to go as you would expect from travel agents, but rather is a collection of their stories from the road. Titled “While We’re In The Neighborhood,” the book is named after Ann’s justification to country hop, or in some cases continent hop, while abroad. Ann’s justifications have been driving John crazy for years. For more information: www.CruiseOneFranchise.com


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FRANCHISE OPPORTUNITIES AVAILABLE IN NEW AREAS!

Join the:

#1 Fastest Growing Pizza Chain in the World1 #1 Fastest Growing U.S. Pizza Chain2 #1 Largest Carry-Out Pizza Chain in America #1 Best Value in America, 6 consecutive years3 1 Based on net number of stores added, 2008-2012 2 Nation’s Restaurant News, June 24,2013 3“Highest Rated Chain – “Value for the Money” based on a nationwide survey of quick service restaurant consumers conducted by Sandelman & Associates, 2007-2012. ©2013 LCE, Inc. 40891

Go to LittleCaesars.com or call 800-553-5776 to contact a Franchise Licensing Advisor. Franchising USA


ex per t advice

Andre Kay, CEO and Chief Marketing Officer, Sociallybuzz

How-To Effectively Manage Your Franchise’s Reputation There are many moving parts to running a successful franchise. A piece of the puzzle which seemed irrelevant three to five years ago is now one of the biggest pieces that most business owners tend to forget about or worst, ignore: managing their reputation.

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Could it be because franchisees don’t think a bad reputation will affect their business?

your cliental, and most importantly your

Well think again.

a review about your franchise on sites

A few years ago when a customer had a bad experience at your franchise, they would tell their friends, family or sometimes call the business to let them know. Luckily then, the few number of people who would hear about the customer’s bad experience wouldn’t dramatically affect your business. Now fast forward to a world where it only takes one or two negative reviews about your business to cripple your brand,

revenue. We are living in an age where a

customer with a bad experience can leave such as Yelp, Urbanspoon, Google places, Tripadvisor or various other customer

review sites for thousands of people to read instantly.

Believe it or not, customers are using these channels to make buying decisions. If you have six reviews and four are negative,

do you think you will win new customers over? Maybe if you’re lucky; but the majority of the time you won’t.


“Once you know what your customers are saying, you can then take back control of your franchise’s reputation.” how you will respond to each review, sign up, unlock or claim your business on the specific channels. This will give you the option to be able to respond to reviews from customers as the business. It’s very important to keep in mind what to write publicly and what to write privately. If you want to offer a complimentary offer or discount, two things to keep in mind:

Here are three simple tips to effectively manage the reputation of your franchise: 1) Search: Are you aware of what customers are saying about your franchise?

Do a simple Google search using your business name and address. The first two pages will tell you a lot about how your customers feel towards your business, and how new potential customers view your business. The majority of the time Google search results will show reviews from multiple social media channels. You can then go one step further and do individual searches on each of the platforms and review sites. Knowing is the first step, so if you know what’s being said by your customers, then you can learn how to handle it. Once you know what your customers are saying, you can then take back control of your franchise’s reputation. First thing I recommend doing is to formulate a reputation strategy on how you will respond to each review. As a business owner you are passionate about your business and what people are saying might not be true. Take some time to think about how you want to respond to each review. Do not write simple generic responses, rather make sure your response addresses any issues made by the customer. When a franchise owner responds negatively to a customer’s review, this can cause even more damage. Once you determine

pleasant customers and ask them to

leave their praises on your social media platforms and review sites. By creating a personal dialogue with your cliental you are encouraging them to leave

these types of reviews. Also be sure

• Do not write it publicly because everyone will want a complimentary offer and you might get more negative reviews than you bargain for, so keep this in a private message. • Do not offer to send the customer a gift card or coupon, instead talk to them privately and get them to come back inside the business. This will give you the ultimate chance to make things right with that customer. If this is done correctly, the majority of the time the customer will update their review with the positive outcome.

2) Handle it: Don’t cry over spill milk.

Andre Kay

3) Monitor: Ask satisfied customers to leave reviews

One would hope that for every one unsatisfied customer, there are at least two satisfied customers. Utilize these satisfied customers to spread the word about the positive features of your business is. In reality, unlike your unsatisfied customer who will go to extreme lengths to make sure the whole world wide web knows about their negative experience, a person whose had a positive encounter usually won’t go the extra mile to brag about your business. But there is no harm in asking them to do so. Engage with your

to create awareness so your customers know they can find you online and

stay consistent in monitoring all the necessary platforms.

Each situation and franchise is unique

and face their own challenges, however by following the steps above you should be

able to jump start the process of managing the reputation of your franchise.

Andre Kay is CEO and chief marketing officer of Sociallybuzz, which provides social media management, campaigns and reputation management. The company is designed to help brands and businesses develop a firm foundation in social media and marketing while delivering the greatest number of options in how they define or reach their relevant audience and increase revenue. For more information: Webiste: www.sociallybuzz.com Email: andre@sociallybuzz.com

www.twitter.com/SociallyBuzz

www.facebook.com/

sociallybuzz

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spotlig ht on ser vice

T he Entrepreneu r ’s Sou rce

How Entrepreneuri Meet Technology It’s all about your possibilities, options and dre ams !

For over 30 years, The Entrepreneur’s Source (Esource) has been a premier source for selfemployment options, franchising information, and education. In fact, Esource is a franchise itself, helping curious individuals find the right franchise. Esource has shown countless people the opportunity to explore a wide range of business models, helping them to discover rewarding careers, take control of their lives, create financial freedom, and experience fulfilling lifestyles. At Esource, we often talk about achieving “ILWE: Income, Lifestyle, Wealth, and Equity.” One’s ILWE can only be fully realized by embarking down the self-employment path. Esource coaches assist our clients to go from employment to empowerment. The Esource mission is to represent our client’s interests above all others. Our Esource Purpose: We help our clients formulate and define goals to provide a clear picture of what they are trying to

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accomplish. We also introduce specific franchise business models that may be suited to those defined goals and needs, and provide guidance and coaching in the evaluation of those options. Esource works with a large variety of franchisors and various re-sale opportunities, covering a broad and diverse spectrum of business models. Esource coaches work hard on behalf of our clients, acting as their personal advocate and accommodating a wide range of investment levels, even for those with limited financial resources. The Esource view is that a business should be the “vehicle” that allows our clients to achieve their career and life goals. In our initial educational phase, we focus on assisting in defining goals, needs, and expectations: what one wants their life to look like in five plus years. Esource provides coaching and education to help one gain more knowledge and confidence about becoming self-sufficient. An excellent example of the business/franchise being the ”vehicle” to help achieve life goals, is one of my clients I worked with a few years back. This was a husband and wife who knew they were ready for a career change. When we discussed their goals, needs and expectations, it was apparent that time flexibility was a key motivator in their lives going forward. My clients described their jobs that were

so demanding of their time, that it directly affected valuable time with their children’s lives and activities. The husband explained to me that you only get one chance to say “yes” or “no” to attend your child’s piano recital or gymnastics meet. Unfortunately, too often the answer was “no” due to work demands and commitments, and sadly, you never get those moments back. The couple expressed their strong desire to play a larger and more active role in their children’s lives, and that above all other goals, they wanted free time for personal and family activities. Based on this important information shared with me as their Esource coach and advocate, one of the franchise models I introduced my clients to was a residential home cleaning business. Of course at first glance they expressed absolutely no desire to clean people’s homes. In fact, they asked if I would show them a different franchise and industry! I explained there was good reason why I selected this cleaning franchise as an option to explore, and the importance of keeping an open mind. At Esource, our 30 plus years of coaching our clients has illustrated one consistent fact: over 95 percent of our clients select a franchise they admit they would never have chosen on their own, or perhaps had even dismissed prematurely. With our help and guidance, our program is


ial Dreams “Over 95 percent of our clients select a franchise they admit they would never have chosen on their own, or perhaps had even dismissed prematurely.” designed to help individuals evaluate facts and information objectively, rather than from emotion or perception. Why did I select that home cleaning franchise to my clients to validate? Well, lifestyle and family time was top on the goals list. The husband expressed a strong desire to be home with his children everyday near 5 p.m. rather than have to work evenings, weekends, or holidays, and still be able to grow the business while being involved in the community. That is what the home cleaning franchise enabled my clients to accomplish; a true lifestyle choice! Today (10 years later) they are one of the top producing franchisees in the country. Most importantly, they can almost always say “yes” when it comes to the children’s activities and attending those important life events with family and friends. The Entrepreneur’s Source provides guidance and direction in the evaluation of the business models we select for our clients. Esource coaches serve as a sounding board to help evaluate information gathered during the Discovery Phase of our program. We help clients overcome emotional detours they may encounter that can hinder or even stop progress. I often explain to my clients that I do not believe in “roadblocks” or “barriers” in careers or life. I understand there may be “bumps” in the road when working with them, but that will not prevent one from attaining their goals. We may have to strategize on how best to maneuver around those “bumps in the road”, but if there is entrepreneurial

curiosity and interest, I can help turn entrepreneurial dreams into reality. TECHNOLOGY: Here is where The Entrepreneur’s Source has added wonderful features to our Franchise Education and Discovery Program. Esource coaches understand the vast importance of “meeting our clients where they are at,” therefore, enhancing our franchise coaching with advanced technology makes great sense. One of our exciting additions is the Franchise Match Program, exclusively available at our website: www.FranchiseMatch.com. Franchise Match is our online franchise opportunity research tool. Our five-step process helps individuals discover the ideal franchise match that will meet their unique criteria along with their goals, needs, and expectations. Franchise Match has an exclusive alliance with a global network of the top franchise coaches who will help people discover new business ideas and the best franchises, at no cost or obligation. Through the hundreds of franchisors participating in Franchise Match, Esource coaches like myself can take our clients on an exciting and rewarding franchise discovery journey as our clients learn about and validate franchise opportunities that may “match” up well to their unique criteria. The franchisors participating in Franchise Match cover a diverse set of industries and investment level ranges. In addition to single unit opportunities, many of our franchisors offer multiple unit, master franchises, and regional development

Steven Rosenkrantz

opportunities. Whether you’re looking for part-time (keep your job for now), full –time, semi absentee (manage the manager), storefront, mobile, home based, employees or no employees, service based, etc., Franchise Match will select the business models that reflect the goals and needs of each individual, all in a “virtual” environment enhanced by the “human” guidance of dedicated Esource coach. There is more on the technology front! Other “virtual” franchise education and discovery tools include Esource exclusive “YOU 2.0” and “Virtual Coaching Experience.” Curious individuals can build their Vision Board to match their goals with their vision in an easy step-by-step interactive video and audio tour. The Entrepreneur’s Source has helped curious individuals at a career crossroads learn about their self-employment and franchise options through core coaching, guidance, and support. Now with the addition of advanced technology tools and resources it’s even easier to communicate with our clients in a way that is most effective to positively impact their careers, and their lives. Steven Rosenkrantz has been a Franchise and Business Coach with The Entrepreneur’s Source since 2001, and has assisted hundreds of individuals seeking franchise information while offering no cost coaching to develop a profile of possibilities which explore business and franchise options. Web:

www.entrepreneurssource.com

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f ra nchisor in depth

Yeh ! Yogur t

Yeh! Yogurt:

P aintin g T he C ity P ink ! Launched in 2008, the original Yeh! Yogurt & Café started as a small 600 sq ft shop in the heart of Montreal. Situated on St Laurent Blvd near busy restaurants and not far from McGill University, here the brand name, signature pink color and unique frozen yogurt taste became widely known. The cool urban environment made Yeh! a hot spot for students and young people to sit back, relax, and indulge in the fresh frozen yogurt. Through word of mouth, the premium self-serve yogurt café drew attention from people all over the city. Catching their first glimpse of the frozen yogurt trend in Los Angeles, California, CEOs and twins Jon and Marvin Gurman fell in love with the concept and made it their mission to be “the freshest, healthiest and most creative frozen yogurt and crepe experience on the planet!”

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“Its always necessary to be creative and think ahead of the trend,” says Jon. “In the yogurt business it’s important for us to come up with new flavors and products to keep every season fresh and different.” Yeh!’s most recent yogurt addition is the Greek line. “It’s unbelievable,” says Marvin. “We noticed the Greek trend coming and we knew we had to hop on it.” With over 35 years experience in the branding, licensing and marketing industry, the dynamic duo shares an extensive background in out-of-the-box branding. Their trademark slogan “You Go, You Get” has been proven through their eye-catching innovative marketing. Today the focus is on their famed vibrant color. Yeh’s biggest marketing campaign yet has been the collection of Yeh! pink cars, which includes a Ferrari, Lamborghini, and Range Rover. “We’ve been getting hundreds of thousands of hits worldwide on the cars,” says Jon. “It has created a big stir.” Bringing the vehicles to store openings, shows and events, the exotic sports cars complete with the Yeh! logo, have become a huge icon for the company. “The kids think it’s cool, the women love it, and those are our customers,” says Marvin. “It’s so different that it’s attracting a lot of attention to the brand.” Yeh! Yogurt’s bold marketing doesn’t stop there. With plans to host pink carpet events and cross-promotions with taxi companies which will be painted pink, the Yeh! pink is causing a sensation. “We’ve taken a great step towards painting the city pink,” says Marvin, adding in he’d like to paint all the fire hydrants as well.

Meeting with their internal marketing team on a regular basis, the twins’ over-the-top ideas come from these brainstorming sessions. “We always said we wanted to be a lifestyle brand so we’re trying to embrace the color and spirit of pink, and bring it from our stores into everyday life,” explains Managing Director Craig Stein. Franchisee Rob Guzzo, owner of the Dollard des Ormeaux location is also a fan of the brand’s energy. “It’s a fun and vibrant place to be,” he says. The Gurmans’ experience in the branding and marketing industry started early. Working for their father’s wholesale clothing company at the age of 14, the twins spent their summers in the shipping room and later on the sales floor. By 17 the boys had started a full time business selling the apparel goods. “It started with basic products, socks, underwear,” explains Jon. “But then people started asking for more garments, jeans, shirts…so we started Jonathan G Jeans.” Servicing Canada, the jean brand is where the twins’ developed their taste for designing and marketing. From trade shows to bus shelters, the two honed their original advertising techniques with various products over the years, and today the pair is a powerful marketing force.

Introducing the first taste of the line about a year ago with Greek honey, the concept “took off like crazy.” Their newest flavor, Coconut Greek, is “Wow,” Marvin adds. Made on site daily, the Gurmans claim their product to be “the healthiest yogurt in the world!” While many competing companies use shipped in frozen supplies, Yeh! Yogurt is made on site with fresh milk and yogurt, a powder mix and their flavoring, guaranteeing it’s always fresh, explains Marvin. “There are other service yogurt stores, but they’re not as much fun. It’s not the same experience. Other yogurt shops are ice cream shops; Yeh! Yogurt is an urban, stylish, and creative experience.” The urban environment of Yeh! Yogurt is major to the company’s branding. “We are the Starbucks of the yogurt business,” says Jon. “When you walk into a Yeh!, the experience is to lounge, you want to spend time there, the atmosphere is very inviting, it’s clean, it’s a lifestyle.” Bringing music into the equation, the twins believe “Fashion, Music and Yeh! are all intertwined.” “Health, freshness, and creativity is what Yeh! stands for. We embrace, and are embraced by the creative community. We’re always on the look out for creating an environment that is fresh, new and on the up and up,” says Stein.

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f ra nchisor in depth

Yeh ! Yogur t

“We always said we wanted to be a lifestyle brand so we’re trying to embrace the color and spirit of pink, and bring it from our stores into everyday life.” “Yeh! has the best flavors, is the best tasting and the coolest design,” says Robert Taylor, area developer in Nova Scotia, Canada. Also happy with her decision to join the Yeh! family, franchisee Man Kun Fong says, “They [CEOs] care about the quality of their product, are interested in customer feedback, welcome franchisee comments, and most of all, give franchisees a great deal of support.” In 2009 Yeh! Yogurt began franchising and to date there are 15 stores open and running, three of which are corporate. Another 15 locations with signed leases are set to be open between August 24 and December 31. Yeh! franchisees receive full training and the opportunity to work hands-on in a corporate store while their shop is being built. Once their store is up and running, training crews are sent into the store to work along side new owners for a few weeks to ensure through training in all aspects of the job. Franchisees are supplied with all the marketing materials

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needed, and benefit from the Gumans’ background in the industry.

“Not only is the brand different in quality,

more delicious and fresher, and not only is marketing more creative and out there, but any franchisee who gets involved with the company is also getting involved with a

ton of experience and success,” says Stein, referring to the level of mentorship and knowledge embodied in the brand.

Active in social media, Yeh! Yogurt gets their customers involved through various contests for prizes such as free products, movie passes and even a trip to any major city in Canada. “There are three ‘Fs’ that are important to us,” says Jon. “Family, franchisees, and our friendly customers.” For more information: http://www.yehyogurt.com/


Mobile Franchises

Franchising USA

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feature

Here, There, Everywhe

The Be aut y of Mobile Fr anchise The Glass Guru Total Investment: $27, 690- $117,490 Founded in 2004 by Dan and Joy Frey in Granite Bay, CA, The Glass Guru has since become one of the fastest growing franchise organizations in the home services industry today.

Among the many benefits of mobile franchising, there is one benefit that stands out the most: the fact that it’s mobile. To many, the idea of bringing your product or service right to the customer’s door, or providing them with supreme convenience in an area of expertise that you’re genuinely interested in, sounds like a dream job. There are no building codes to follow and no leasing expenses, you can bring your business wherever you need to, whenever you need to. Whether you’re working out of your home or a vehicle, it keeps your overhead low and your profit margin high. With an endless list of investments available, the mobile franchise industry is a growing phenomenon. The concept of offering highly desired services or selling appealing products has sparked interest in American business owners and potential franchisees nationwide.

Franchising USA

While the franchising industry is naturally rather flexible in terms of independence and scheduling, mobile franchising takes this flexibility to new levels. Providing employment and services to even those in the most remote locations, mobile franchising opens up doors to a whole new world of possibilities, clientele and even new markets. Available in all different shapes and sizes, franchise owners have the option to explore niche markets that would not be available in an office setting. Between mobile food and beverage services, to cleaning services, pet services, and even spray tan services, there are infinite possibilities. Mobile franchises are often divided into nine major franchise categories; courier, automotive, business, food and beverage, cleaning, car hire and taxi service, home services and maintenance, pet services and other. The diversity of mobile franchises should not be understated, this article highlights are few available on the market today.

Franchise fees are based on territory size, ranging from $12.5k to $65k. Franchisees can start from home or a commercial location, and no industry experience is required. The Glass Gurus provides full training, protected territories, a custom start-up kit, vendor discounts, exclusive use of our trademarked brand name, proprietary parts and equipment, and ongoing technical, administrative and marketing support to their franchisees. The first company in the United States to offer moisture removal for failed thermal pane windows, the Glass Guru still remains the only US based national company that offers the service. http://theglassguru.com

Merry Maids Total Investment: 
$55,350 - $73,850 Founded in 1979 by Dallen Peterson in Omaha, Nebraska, Merry Maids is the result of Peterson’s family efforts to build a maid service company. With nearly 35 years of experience, Merry Maids has become a world leader in the residential industry. In 1988, Merry Maids joined the ServiceMaster family of home service companies and now have more than 900 cleaning franchises in the U.S. and Canada. The initial franchise fee of $33,500 $43,500 also includes the equipment, supplies and exclusive Merry Maids products to the franchisees equip two


ere:

es

cleaning teams. Merry Maids supplies equipment and cleaning tools are available from the Merry Maids Resource Center, which inventories and distributes more than 300 professional-quality home cleaning products.

“Available in all different shapes and sizes, franchise owners have the option to explore niche markets that would not be available in an office setting.”

www.merrymaids.com

NaturaLawn of America Total Investment: $107,000 - $144,000 Founder and President Philip Catron’s qualifications as an agronomist were the driving factors behind him starting the nation’s first natural and organic-based lawn care company, and since 1987 the company has used a unique and proprietary line of products. With a total of 65 service locations in 23 states and growing, NaturaLawn of America franchisees are trained and provided with programs built on over 100 years of combined lawn care experience. The company also offers an exclusive line of do-it-yourself retail products through their website. http://www.naturalawn.com

Maui Wowi Total Investment: $70,000 - $250,000 Founded in 1982 by Jeff and Jill Summerhays, Maui Wowi Hawaiian was built to provide their family with healthy alternatives to the sugar and fatty foods that seemed to be everywhere. Since then Maui Wowi has been growing steadily for over 30 years. They have 450 locations across nine countries, with an ability to profit in all locations due to their variety of business models.

Customers around the world can count on Maui Wowi’s commitment to offering only the highest quality products, brewing the finest Hawaiian coffees and serving smoothies made only from all natural-ingredients. “Our people are the cornerstone of our success, and we know that their commitment and connection to our family and to our customers are truly the essential elements of the Maui Wowi Hawaiian Experience,” said Michael Haith, Maui Wowi Hawaiian CEO.

by Entrepreneur, and #1 Pet Services Company in Franchise Business Reviews’ Franchisee Satisfaction Awards.

http://www.mauiwowi.com

Based on the photo booth concept reinvented for the social media age, TapSnap features a sleek, 42” interactive touch screen device designed to ‘tap, snap, draw, and share’ photos in real time to Facebook, Twitter and YouTube.

Bark Busters Dog Training Total Investment: $69,100 In 1989 by Sylvia and Danny Wilson, both expert dog trainers, founded Bark Busters in Australia. Moving to U.S. territory in June 2000, today Bark Busters has offices in 40 states with more than 400 franchise locations worldwide. Bark Busters requires all new franchise owners have a net worth of at least $100,000 to ensure they are building a business from a strong financial foundation. The goal of the company is to teach dog owners how to train dogs using voice control and body language, while also putting these owners in control through effective leadership. Bark Busters has been ranked the #1 Pet Service Franchise in American

http://www.barkbusters.com

Tap Snap Total Investment: $32,000 - $163,000 Founded in 2012 by CEO Scott McInnes, TapSnap was created after years spent working in the self-service and kiosk industry.

TapSnap franchise owners attend corporate events, weddings and parties and are responsible for their own promotions and bookings. Franchisees will deliver and set up the machine, and then cater to guest’s questions and needs as they play with pictures and video. TapSnap has a proven business development program that helps franchisees build their own successful businesses. With 64 franchisees, their national marketing program generates new costumers and helps to ensure that they are already familiar with the brand. 
 http://www.tapsnap.net

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“As long as there is a demand for services, and the means available to provide it, franchising will continue to lavish.” The Pros and Cons Whether you’re a photographer or cook, enjoy being outdoors or on the road, mobile franchising has opportunities for just about everyone. The diversity of existing mobile markets makes it easy for potential investors to find an area suited to their needs and capabilities, while the vast range in franchising options connects financial needs with personal interests, making your career an enjoyable one. Catering to and building off the everyday needs and novelties of potential customers, the average mobile franchise has an initial investment of under $100, 000. This low start up cost and quick turn around are bonuses for those just getting their feet wet. As with most franchises, the mobile franchisor offers assistance with marketing and advertising, public relations, training and ongoing support. These benefits along with the low start-up cost and overhead, flexible hours, access to a wide number of customers and job stability in an area of interest is making the mobile franchise industry more appealing and less of a risk than other business opportunities. However, as perfect as investing in your favorites hobby and working from home may sound, there are still costs and reliable financial obligations required by the franchisee. When you think of the costs involved with mobile franchising, there are a few hidden ones that may not come to mind right away, but are important to be aware of and prepared for. Marketing, for instance. Marketing plays a crucial role in any kind of company, and this is no exception. While some franchisees may think that touring the town in the company vehicle sporting a flashy logo will grab all the attention they need; this usually isn’t the case. Yes, your car will be noticed, but the chances of potential customers remembering your name, or being able

Franchising USA

to find you in their times of need isn’t so likely.

Whether you are interested in food services, home care, auto care, or

While other franchises have the luxury of a stationary storefront, this is where the mobile franchise industry falls short. Without a constant presence it is harder to remind your customers that your business does in fact exist. This is why it is important to do your homework before investing in a franchise where you will go unnoticed. Research the company and find out what kinds of alternative advertising they offer. And be vocal. Making people aware of your business and services is key to generating revenue. Ask the franchisor about newspaper ads or radio commercial opportunities because this type of advertising will take you miles further than your stickered car.

something completely obscure, it is

The Future of Mobile Franchising

behind the program is to make their

The future of mobile franchising is looking bright. With the franchising industry becoming an economic powerhouse, the marketing possibilities are endless. Today mobile franchising, along with home-related franchises, is the fasted growing sector of the franchising market. With the initial risk significantly lower than storefront locations, and the ability to start out at a comfortable size, mobile franchising is more appealing and accessible to a higher portion of the population.

likely that there is a mobile franchise

opportunity out there for you. Offering

more franchisee freedom than ever before, these business opportunities are rapidly growing.

Other franchise companies are also

turning to out-of-the-box initiatives. Take The UPS Store, Inc., for example. With

a similar motive, to reach an untouched market, the company launched a new

program called “Main Street” last April. Offering small towns and rural markets a reduced franchise fee of $20,000 and

lower start up costs saving franchisees an additional $40,000-60,000, the concept

business more accessible to people in these smaller communities.

And it won’t be long before a fresh

new market is tapped into through the

franchising world, providing new services to new customers because if there is one

thing the franchising industry is good at, it’s growing with the times.

What it comes down to is that as time goes

on, and technology evolves, the franchising industry will continue to evolve with it.

As long as there is a demand for services, and the means available to provide it, franchising will continue to lavish.


DON’T MISS OUR NEXT ISSUE!

CHILDREN’S Products and Services

Want to learn more about trends and growth industries in franchising? Need help making the big decisions? Every edition we feature advice from the experts to help you on your franchising journey.

Find our more about child friendly franchising in the September issue of Franchising USA. Franchising USA

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ex per t advice

Julie Lusthaus, Einbinder & Dunn

J u s t Ho w Ex c l u s i v a n Ex c l u s i v e T e r r i

“The franchise agreement should be reviewed carefully to see what precisely the franchisor is reserving for itself.” Many franchisees assume that when they acquire a franchise they will be given an exclusive territory by their franchisor. Before even delving into the question how exclusive an exclusive territory

Franchising USA

really is, franchisees should be aware of the fact that many franchisors simply do not provide for any exclusivity at all. In those instances, franchisors provide for what is sometimes referred to as a “four walls territory,” that is, the territory simply encompassed by the four walls of the franchisee’s retail establishment. When a franchise agreement provides for exclusivity, it is necessary to understand

the exact terms of the franchisee’s territorial rights.

In almost all instances where a territory

is provided for at all, franchisors routinely exclude from the territorial grant

certain types of competition against the

franchisee. A typical clause may include the following exceptions:

• Franchisor may sell or allow others


e is itory? to sell products or services in nontraditional locations, including kiosks, mobile units, concessions or “shop in shops” located within mass gathering venues such as sports arenas, airports, theatres, schools, universities, etc.; • Franchisor may accept orders for products or services through the Internet and deliver such products within the franchisee’s territory; • Franchisor may sell products or offer services within a franchisee’s territory using alternative channels of distribution; • Franchisor may accept orders for products or services from company owned stores located outside of the franchisee’s territory and deliver such products or perform such services within franchisee’s territory; and • Franchisor may sell any products or offer any services through any channels of distribution whatsoever using trademarks and intellectual property not licensed to a Franchisee. Under the first exception, the franchisor reserves for itself and others the right to establish a competing business selling products in non-traditional locations. Thus, for example, a franchisor may reserve for itself the right to establish a kiosk in a mall, stadium or other venue, when a franchisee has a retail store located in a nearby strip mall or downtown area. The franchisor’s objective is to capture a market that would not otherwise be available to the franchisee,

those people for example, attending a sporting event, and a kiosk can help the franchisor develop brand awareness without cannibalizing a franchisee’s sales. Another possible exception, as noted, would be for sales via the Internet. Here, retail franchisors reserve for themselves the right to sell their goods through their website directly to consumers. These sales channels are often located on a website that also includes store locators, which unlike the sporting event example, can impact franchisees’ sales in a significant way. Another form of competition that a franchisor reserves for itself might be to distribute its product through retail channels that are not dedicated to the product being sold by the franchise. Thus, an ice-cream franchisor may sell its products to grocery stores, supermarkets and convenience stores. Here again, this may have a direct impact on the franchisee. For example, a franchisee located in the same strip center as a supermarket selling the franchisor’s icecream products may be competing for the same customers. Service franchisors may reserve the right to accept orders and perform services for customers located within a franchisee’s territory. For example, a home improvement franchisor may accept an order (possibly via the Internet or at a company owned store) to install an addition to a customer’s home located within a franchisee’s territory.

When a franchisor takes actions that violate the franchise agreement, such as selling franchise locations to competing franchisees who are located in close proximity to each other, it may be possible for the franchisees to take legal action. The franchisee may be able to file a claim for breach of the franchise agreement if there is a provision in the agreement that is intended to prevent encroachment. If there is no such clause, the franchisee may allege breach of the covenant of good faith and fair dealing implied in the franchise agreement. The impact of this type of competition, or in the words or a number of lawsuits filed with respect to these issues, is encroachment. Competition may harm the franchisee and may significantly impact its ability to succeed. The key is to understand your rights and obligations. Attorney Julie Lusthaus is a partner in the firm of Einbinder & Dunn, LLP. She focuses her practice in the area of franchise law, serving as counsel to both franchisors as well as franchisees. For more information contact Julie at: Phone: Email: Web:

212-391-9500 917-705-5417 jcl@ed-lawfirm.com www.ed-lawfirm.com

A franchisor may also reserve the right to establish a competing system using different trademarks. Thus, a restaurant franchisor could use its know-how to operate a competing chicken chain under distinct trademarks and trade-dress. In sum, the franchise agreement should be reviewed carefully to see what precisely the franchisor is reserving for itself.

Julie Lusthaus

Franchising USA

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ex per t advice

Dan Martin, President & CEO, IFX Online

Left Foot First: Ho w S u c c e ss Dr i v e n F r a n c h i s e e s G e t O u t of B e d E a c h D a y

“I don’t know what I don’t know.” Back when I was a franchisee for a Major North American fast food brand, I remember thinking this about every five minutes or so. Needless to say, I became overwhelmed with what I didn’t know. Arguably, a remarkably difficult theory to grasp for just about anyone let alone a firsttime franchisee. Beyond overwhelmed soon became the norm. My franchisor appeared to be focused on quantity instead of quality and detailed step-by-step processes meticulously outlined well in advance. Perhaps too “in advance.” I remember learning about 85 ways to prepare for the Easter rush. What’s so overwhelming about that? The fact that it was only August and Easter was still nine months away may have contributed to my state of mind.

“Let us know if you have any questions.”

“There were plenty of “enter” strategies, just nothing I could focus on and work towards afterwards.” Franchising USA

That’s how my franchisor’s support representative concluded virtually every one of our conversations. A noble gesture. Unfortunately, I didn’t know how to ask questions I knew I didn’t know. Most importantly, if I had known what I didn’t know, I still would not have known where I was or where I needed to be in order to succeed. For me, I began looking for reasons to not get out of bed in the morning. There seemed to be no point. I realized there was no master plan that was based on my


personal goals. When I was investigating buying a franchise, no one mentioned “exit strategy” to me. There were plenty of “enter” strategies, just nothing I could focus on and works towards afterwards.

“Bite-Sized vs. Super-Sized.” It was only after weeks of trial and error, and months of therapy that I realized it’s all about expectations and milestones. Specifically, incremental expectations and milestones. Understanding that even the longest journey begins with a first step, my journey to becoming a successful franchisee began with removing my pillow from my face and launching myself outof-bed. I learned I was overwhelmed because I could not see the tunnel, let alone the light at the end of it. I also learned I could handle bite-sized tasks that were associated with bite-sized goals. My business knowledge, my self-esteem and ultimately my success as a franchisee was based on simple math. Despite knowing there were 4,324 steps to follow to grow my business and I was only on step 8, I learned to focus on the next step and remove step 1,231 from my mind, at least for now. Before I knew it, I’d advanced ten steps and was able to pat myself on the back at each milestone.

“My ‘why’ became my light.” Applying incremental expectations and milestones, I quickly found the tracks and ultimately I found the tunnel. However, I didn’t see the light until I sat down and mapped out where I wanted to be, or what I wanted to achieve after “x” increments. This gave me perspective. This fueled my drive to succeed. Indeed, it fueled my passion. My passion was formed through achieving incremental milestones I set for myself and recognizing my “why.” Taking care of my family, achieving a level of financial security, paying off my credit cards and covering my child’s’ college tuition: these became my why.

“The theory of relativity.” Everything fell into place when I told fellow franchise owners how I got past

feeling so overwhelmed that I practically could not get out of bed each day. I found out they too felt overwhelmed. They didn’t know anymore about what they didn’t know than I did. We sat down, adopted an incremental approach and compared notes and that’s when it finally made sense. We all had a point of reference, a relative understanding of where we stood compared to each other. Previously, none of us knew if we were doing well or not. Now, we had some level of understanding of how we were doing.

“Hindsight is 20/20.” If I had to go back and do it again, find the tracks, the tunnel and the light, I would keep the following lessons in mind: 1. Develop your exit strategy. Determine what you’d like to achieve and why. Your why should be your passion. It’s what drives you to take the first step. It’s what drives you to take the last step. 2. Think in increments. A five-year exit strategy plan consists of 60 increments called months. Month three does not start until you’ve achieved your milestone for month two. Don’t get bogged down preparing for Easter when it’s still midsummer unless it’s part of the plan you’re applying at that time. Step 49 can wait until you’ve achieved step 48. There’s no sense in focusing too many steps ahead. It can be counterproductive and overwhelming. 3. Pat yourself on the back. Each incremental milestone gets you one step closer to your why. That’s worthy of a pat on the back. Take a break. Take some time for yourself. Breathe. 4. Focus on focus groups. Establish a focus group and online forum with other franchisees. Recognize that a) you are not alone; and b) that perspective and a relative understanding is critical to your setting and achieving incremental milestones. 5. Continually re-motivate. Even when you’re targeting incremental milestones, there will be times when you wonder off track. Think of your why. Think of how you felt when you

Dan Martin

first thought of your why. Write your why down. Associate your why with an image, a drawing or a photo. Place the image you associate with your “why” on your computer monitor or refrigerator; any place that will remind you what it’s all about. 6. Pay it forward. There’s almost nothing more motivating than the feeling you get when you give to others. Tell your story. Share your why with fellow franchisees. Help them to see their own light at the end of their tunnel. Dan Martin, CFE is President & CEO of IFX Online (www.ifxonline.com), a Strategic Franchise Management Firm servicing 200+ franchise brands and 30,000+ franchisees since 1996. IFX’s Strategic Division and IFX’s Technology Division work hand-in-hand to assist franchise organizations in implementing key growth management strategies and applications designed to maximize operations and boost ROI. Mr. Martin has 30 years of experience in franchising, serving in the roles of franchisee, Area Developer and Advisor. He has served on the International Franchise Assocation’s Board of Directors, Executive Committee, Membership Committee and Technology Committee. Mr. Martin was Chairman of the IFA’s Supplier Forum Advisory Board and is a Certified Franchise Executive. For more information: Website: www.ifxonline.com Email: dan@ifxonline.com Phone: 858-724-1024.

Franchising USA

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women in f ra nchising

Mary Ann O’Connell, CEO FranWise and Chair of Women’s Franchise Committee.

M ary A nn O ’ C onnell :

Shining A L Women In Fran “I didn’t know what franchising was, my background was in theatre,” says Mary Ann O’Connell, CFE and President of FranWise® Franchise Consulting. Born and raised on Long Island, NY, O’Connell attended State University of New York where she honed her acting skills. With the intention to pursue theatre post graduation, O’Connell quickly discovered that regardless of whether or not her talent was up to par, there were people who wanted it much more than she did, who were willing to go places she wasn’t.

Franchising USA

With the need to earn a living and an itch for warmer weather, O’Connell moved to California. Here she found a job in sales, which soon after led to real estate. But with the crash in 1979 real estate in California wasn’t in good shape. At this time O’Connell’s friend, Thomas, King was offered the first Money Mailer franchise from owner, Kris Friedrish. King and O’Connell started the franchise together. “I didn’t know what it was, I didn’t understand it, but I said sure, I’m in,” explains O’Connell. As the first franchisees for the brand, O’Connell and Thomas became business partners of two franchisees for 11 years. When their personal relationship evolved to marriage and then divorce, he kept the franchises and O’Connell went to work for Money Mailer, Inc. as their Vice President for Franchise Support Services. After about seven years as VP, she moved on to

Great Clips, a no appointment hair care franchise. Hired to develop southern California, Nevada, Arizona and Utah areas, O’Connell put her commercial real estate knowledge to use while learning lots about how companies can do well via their franchisees. Where the only revenue Great Clips generated was through royalties, the company was 100 percent devoted to making a system with good returns. However, because the system was so well thought out, O’Connell found herself “a little bored,” and after two years of executing the same daily tasks, it was time for another career change. Switching to the consulting business, O’Connell started her own company, O’Connell and Company, Inc. Seven years later she began operating under the brand name, FranWise®.


“In franchising, many companies are conceived by women, started by women, nurtured by women and go on to become major economic forces. We need to shine a light on that and keep it going.” these steps down. “I had no idea that for most people this was a difficult task,” she explains. “I’m not trying to brag, but I seem to be genetically wired to write stuff down. So I started writing manuals.”

Light On nchising The Consulting Business O’Connell’s interest in consulting developed as a result of her prior jobs. Her interaction with franchised clients at Money Mailer gave her insight to their mixed feelings towards their franchisors, and her experience of establishing Great Clips during their growth phase taught her how a company should operate to be successful. “I thought I could help companies come together and I had some really great practices for building success in their own companies, not at the expense of their franchises but in conjunction with them,” says O’Connell. In the first steps of her career as a consultant, O’Connell thought she would simply be helping clients through the necessary actions to become a successful business. It only seemed logical to write

Today FranWise® is known for their manuals. Currently catering to 18 clients, FranWise employees three in house writers and outsources their other needs.

The Women’s Franchise Committee Involved with the IFA, O’Connell is the current Chair of the Women’s Franchise Committee (WFC), a committee dedicated to inspiring and encouraging women in franchising. Prior to being appointed this position, O’Connell and Los Angeles attorney Shelley Spandorf recognized the lack of a local women’s franchising branch, and thus started the Women’s Franchise Network for southern California. The network encourages women in different markets to hold meetings driven by various subjects. It was the involvement with the network that led O’Connell to start attending WFC meetings, and after applying for a committee position a few times, O’Connell was appointed to the committee seven years ago. “I was very flattered. It’s an amazing group of women and so many women in the IFA are applying to the limited number of seats available. It really is an honor.” Meeting twice a year; once at the public affairs meeting every September, and then again at the annual convention in February, the committee host a string of conference calls to keep connected. As one of the most well attended IFA

events, The Women’s Leadership Conference is held the day before the annual convention. Open to women and men, the event begins with a luncheon. Here the committee recognizes a particular woman who has contributed greatly to other women in franchising, and presents her with the Crystal Compass award. The afternoon is spent listening to a keynote speaker, usually a CEO of one of the top companies. Afterwards a panel reviews the topic and shares ideas about what they’ve learned. Next the WFC presents a case study based on a company that has experienced hardships. The audience discusses different ideas before the actual company is revealed, then the company explains what they have tried to do, where they currently stand, and their future plans. “It is a tremendous learning opportunity for women, no matter where you are on the leadership curve,” says O’Connell. “The goal is to help more and more people become leaders in franchising.” O’Connell believes women in franchising is important as it is an opportunity for women to enter into a leadership position. Referring to an article about Facebook CEO Sheryl Sandberg few years ago where she cited the lacking progress of women in business leadership positions, O’Connell reiterates how these stats haven’t changed since the initial push. “The article got me very interested so I studied who had signed up to attend the convention in 2011,” says O’Connell. “We [women] beat the national stats by a bit, but not hugely.” Comparing women in franchising to those in the supplier sector, she says the numbers are much lower and that there are a lot more opportunities for women to be in supplier type positions. “In franchising, many companies are conceived by women, started by women, nurtured by women and go on to become major economic forces. We need to shine a light on that and keep it going,” she says. “We need to make sure that once a group of men discover the company and want to

Franchising USA

women in f ra nchising

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womem in f ra nchising

Mary Ann O’Connell, CEO FranWise and Chair of Women’s Franchise Committee.

buy it that they don’t push all the women out. We need to be given better tools so that we speak the same language men do, communicate to them and with them, and then we will have a better opportunity to not only maintain, but also gain more leadership roles. I think franchising is the avenue where we’re going be able to do that.” Recalling the Women’s Liberation Movement, O’Connell remembers her mother unable to have a credit card in her name, and how hard it would have been to get a job without advanced degrees. Finding inspiration in remembering how little women had not so long ago, she expresses the importance of staying on top of things. “I want to make sure the young women who are coming up realize how hard fought the gains were. I’m single, I own my own home, I own my own business, I have my own credit and I never take it for granted because when my mother was my age she couldn’t have those things,” stresses O’Connell. “I’ve been extraordinarily lucky and fortunate in what I’ve been able to do, and I’d like to help other women to be able to do the same. I love that we have traction, and that’s what I would like to help other women maintain. Lets keep these options open.” The desire to not go back to the old ways inspires O’Connell to encourage women to get involved with the IFA. “Once your involved you can tap into the brain trust of all the men and women who are in franchising and those who came before you. So many opportunities are laid out in front of you.” The benefits of gaining their knowledge helps franchisees build confidence and in turn, do better. By getting involved and showing up, “the rest kind of happens from there.” But being a passive joiner doesn’t help anybody. “Contribute what you’ve learned, get involved on a local level, and if nothing

Franchising USA

else, make friends,” says O’Connell. “The franchising world is amazing. I can’t figure out why it’s as unique as it is, but the people who are in franchising are an extremely giving group.”

Making Friends Some of the best moments in the business revolve around the people you meet. A prime example of this is when O’Connell met Susan Black-Beth, CFE, and COO of Superwash Inc. Meeting at one of their first conventions, the pair chatted and went their own ways. A few years later O’Connell attended another convention where Black-Beth was speaking. Reaching out to her, a great friendship began. Today the pair, along with Rose Shiflett and Thelma Ramey of Plan Ahead Events, is the brains behind Dealmakers’ Summit. The second year in action, the annual invite only event aims to match emerging franchise brands with franchise centric equity funds. Held in Chicago and set up as a “shark tank,” franchisors present in private their business to equity representatives then fund reps set up private meetings with the franchisors they are interested in. “Our job is being the match maker. We coordinate the times, find locations and hope the deals get done.”

For Potential Franchisees “Do your homework, there are no short cuts. Don’t fall in love, look at it as a business. You have to be hard with yourself. You have to sit down and know what your risk tolerances are,” says O’Connell. Emphasizing that a lot of people sign up for franchising because they want to be their own boss, O’Connell notes how it’s important to realize you’re still going to have a boss, your franchisor, telling you how to do things. “As a franchisee you have to understand

what you’re giving up and no matter how great the brand is, it’s going to be excruciatingly hard work. Know if it’s what you really want to do, and if you’re okay with someone else telling you how to do it,” explains O’Connell.

The Future of Franchising If O’Connell knew 13 years ago what she does now, she would have started things differently. Going into business undercapitalized, O’Connell has spent a good deal of time trying to figure out how to do more with less. Luckily with the economy and franchise industry on the rise, she is surmounting this obstacle. “I think franchising is going to grow more and more. As we become more of an information based economy the job opportunities are less, and for every piece of software and technology used to make things more efficient, it means more people are out of work. These people are going to have to find opportunities to fend for themselves, and since many people don’t really know how to do that with a degree of success, I think franchising is going to be turned to more and more,” says O’Connell. “We really are the answer to the information based culture.” Mary Ann O’Connell is CEO of FranWise® and Chair of the Women’s Franchise Committee. A long time volunteer for organizations such as Habitat for Humanity and Big Sisters, today the single, successful O’Connell is actively involved in local politics and Share Our Selves, a multipronged social services organization. Her sister Judith was her first role model, her fearlessness about knowing what she wanted and going for it “redefined independence.” For more information: www.franchise.org www.franwise.net www.dealmakersummit.com


Veterans in Franchising www.franchisingusamagazine.com

the ups store

packs great incentives for veterans

The Good, The Bad, And The Legal Power In Numbers Operation American Dream Franchising USA

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vice Industr r e S e h y Co t e v ver a H ed e W ownafranchise.com

Your Path to Franchise Ownership Begins Here

1-800-230-2360 Franchise Hotline

60 Years of Successful Franchising Franchising USA

Š 2013 The ServiceMaster Company. All rights reserved.


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V eterans in F ranchisin g S u pplement a u g u st 2 0 1 3 Our Veterans in Franchising special supplement has become a regular feature of Franchising USA. To share your story in the September issue, please contact Jenn Dean, Business Development Manager Phone: 250-590-7116 Email: jenn@cgbpublishing.com

Contents 44 The UPS Store Packs Great Incentives for Veterans

53 Operation American Dream Signal 88 Security

46 A Franchise How-to for Veterans

54 Empowerment through Collaboration Dorothy Arndt, giftavet.org

50 The Good , The Bad, and The Legal of Franchising Richard Ashe, Veteran Franchise Centers

56 Totally Accessible Homes Monti Marsters, Totally Accessible Homes

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V e t er a ns i n Fr a nchisi ng

Th e U PS Sto r e

The UPS Store

Packs Gre at Incentives for Ve ter ans

As the world’s largest franchisor of retail shipping, postal, printing and business service centers, The UPS Store is a rapidly growing franchise. Starting out as Mail Boxes Etc. in the 1980s as a convenient alternative to the post office, the company grew to 2,000 franchises. In 2001, UPS acquired Mail Boxes Etc., Inc., and in 2003, introduced The UPS Store® brand. Approximately 3,000 Mail Boxes Etc. locations in the United States re-branded to The UPS Store

Franchising USA

and began offering the lower UPS-direct shipping rates. In 2004, the company sold more than 500 new The UPS Store franchise locations in the U.S. – a record for the company and exceptional growth for a quarter-century-old franchise. Today, The UPS Store brand consist of nearly 4,400 independently owned locations in the United States, Puerto Rico and Canada. The company strives to provide the most convenient, high-quality business services to start-ups, small business owners and consumers. Non-traditional locations like college campuses, military bases, convention centers and hotels have also helped grow the franchise, creating opportunities to provide services to consumers, regardless

of where they live, work or travel. In 2012, the franchisor, Mail Boxes Etc., Inc., became The UPS Store, Inc. The centers remained locally owned and operated, and continued to offer their wellknown world-class service. Throughout the company’s history, there is one constant they have prided themselves on: their commitment to their franchisees. In recent years, veterans have begun to make up a large part of these franchisees. Working alongside the International Franchise Association with its VetFran Program since 2004, The UPS Store reduces the franchise fee by $10,000 for qualifying veterans and spouses of active duty personnel for new locations, as well as takes 50 percent off the initial


application fee. This is their way of saying thank you to veterans for their service to the country. As part of the Operation Enduring Opportunity, a national initiative to recruit or hire as many as 75,000 military veterans and their family members by the end of 2014, The UPS Store waived the franchise fee for 20 qualified veterans last year. The UPS Store believes veterans make excellent franchisees because they are used to following an established system, they’re dedicated and hardworking. To date, more than $1 million in discounts have been given to veteran franchisees, which account for more than 250 of The UPS Store locations in the United States. Additionally, Tim Davis, President of The UPS Store, Inc., is a former United States Marine Corps captain and a Gulf War Veteran. “It is humbling to see other veterans realize their dream of opening their own business,” Davis says. “Veterans have experiences that really apply to running a small business. They are accustomed to structure and the skills taught and nurtured in the armed forces: listening, problem solving, being able to think on your feet, laying out a mission, setting goals and executing.” The UPS Store’s franchise development team is dedicated to providing its franchisees with the tools they need to be successful. By completing over 40 Web-based training modules introducing

“Veterans have experiences that really apply to running a small business. They are accustomed to structure and the skills taught and nurtured in the armed forces.” them to The UPS Store system, followed by a 10-day University Business Course at The UPS Store offices in California, new franchisees are provided with instructorled training on marketing, finances, printing and staffing management. New franchisees then spend two weeks placed in an In-Store Experience, where they will work alongside a certified trainer to learn the daily operations. The UPS Store franchisees not only benefit from a recognized top retail brand name, but they also receive national and local advertising support, dedicated support and tools, and corporate retail solutions. Records show that approximately 34 percent of The UPS Store franchisees own more than one franchise location, due partly to the company’s reduced franchise fees and world-class training. The startup costs for a franchise vary based on size and location. The total initial franchise cost to operate a new The UPS Store franchise at a traditional location ranges from $148,734 to $347,241*. Franchisees must meet The UPS Store minimum financial requirements and be in a position to provide capital for the

franchise investment, including working capital and living expenses during the

set-up period. All potential franchisees

are also required to prove a minimum of $60,000 in liquid assets.

In 2013, Entrepreneur® magazine’s

annual “Franchise 500,” a ranking of

franchise opportunities based on factors like financial strength, growth rate and

size, rated The UPS Store/Mail Boxes Etc. number one in the postal and business

services category for the 23rd consecutive year. In 2012, The UPS Store ranked in

the top ten percent of “Military Friendly Franchises” by GI Jobs Magazine, and

in 2011 Entrepreneur magazine placed

the company at number two for “10 Most

Popular Franchises for Military Veterans.” The company also has an ongoing history of award-winning marketing and public relations campaigns.

For more information, visit www.theupsstorefranchise.com. * These figures are subject to change; see Franchise Disclosure Document (FDD) for current amounts. Meeting the minimum liquid assets requirement does not guarantee approval or award of a The UPS Store franchise.

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Sea n Falk, United S tates M a r ine C or ps, f ra nchisee

A Franchising How-To For Veterans Whether you are a neophyte or experienced veteran to franchising, there are a lot of things to consider before you buy into a franchised brand. The decision points are different if you are opening your first location or your fifteenth, but you might be surprised by the similarity of the criteria. Here are some helpful steps to follow when considering a franchise transaction:

Do thorough due diligence This may sound obvious, but the best advice I can give is to read the Franchise Disclosure Document (FDD) in its entirety. The industry has changed significantly in the last 30 years. FDD’s used to be fairly short documents, but they have grown in scope as a litigious society has taken over. The FDD is there to protect you, the franchise partner, and the franchisor, therefore It is imperative you understand the partnership you are entering into. The FDD should be used to discover: key

Franchising USA

personnel in the organization, existing ownership of the franchise, the lawsuits that may be filed against the franchisor, and the location of all stores. In addition, read the Earnings Claim (and build your own business plan using the information provided), find phone numbers of existing franchisees (and call several of them) and learn how many company stores are owned. Visit stores and ask questions. Your research will help you make an educated decision. Make sure you spend an equal amount of time reviewing the Franchise Agreement (FA) when you receive it. You should have it reviewed by a lawyer or a trusted advisor who is knowledgeable about franchising. Do not be afraid to ask for advice and help., many franchise owners are eager to share their knowledge and experiences.

Evaluate the business model Sometimes people are motivated to go into business based on their previous hobbies. Be sure you are making a “business” decision and not an “emotional” choice. Let’s say a man has always loved model trains. He finally finds a franchise business that has a storefront for selling trains, tracks, little shrubs and tiny buildings.

This is what he has wanted to do since he was four years old; but, there is no profit margin in this business, the potential retail market is nonexistent, and the expenses pretty much wipeout any profit he could make. He ended up buying himself a job instead of enjoying a hobby. He will be chained to the store as he tries to cut labor costs to stay open. He will have no chance to open up multiple locations or diversify his portfolio with other brands. Typically the biggest expenses in a business are the occupancy costs, the labor costs, the costs of goods and the utilities. Look very closely at the business model and see if there is an actual profit to be made. Side Note: The Affordable Care Act. I have been to at least 15 conferences in the last 18 months where there was a presentation about the Act, yet I still lack confidence when it comes to administering the plan and knowing all its nuances. Here’s my take: I think that 25 percent of all business owners “kind of” know what’s going on, and 98 percent of employees have no idea. As a business owner, do you know that you are currently in the “measurement period?” The number of hours and employees you have right now will determine whether you must offer a


healthcare plan on January 1, 2014. Do you have any idea how to measure that yourself? Do you know how or where you are going to report your measurements by the end of 2013? I don’t! Do you know that if you take the penalty for not offering insurance that the penalty is not tax-deductible, whereas the premiums paid for your employees’ healthcare plan are? Your tax situation may help decide which route you will take! There are a lot of considerations to think about here that could determine whether you open up just one location or 20 locations.

Evaluate the “maturity” and professionalism of the franchisor There are a lot of brands in the marketplace today that have been around for 30 years or more. While they may have good brand awareness with consumers, are they offering a relevant product/service?

“The FDD is there to protect you, the franchise partner, and the franchisor, therefore It is imperative you understand the partnership you are entering into..” Are they still innovating and growing their market presence? On the flipside of that coin, there is a tsunami of new franchisors touting the “next best thing.” In theory, franchising a concept is a popular way for start-up businesses to obtain growth, recognition and market share. However, we all know that theory does not always translate to reality and many concepts struggle to support their franchisees and fulfill obligations in the early years. There are pros and cons to investing in companies that are too mature and those that are too young. Evaluate what you are looking for and then proceed with cautious optimism.

Be the brand There are significant advantages of joining a franchise brand as opposed to “doing it alone.” Franchised businesses tend to have a higher rate of success than independent small businesses. Franchise systems have figured out an operations procedure, a defined product, a marketing plan, and preferred vendors. They have also figured out proper site selection, lease negotiation, a construction guideline and a design. Although every organization admires a certain amount of out-of-the-box thinking, it is also important for franchise partners to follow the rules. Your choice to use different vendors, offer rogue products, or change

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Sea n Falk, United S tates M a r ine C or ps, f ra nchisee

“Be sure you are making a “business” decision and not an “emotional” choice.” the production procedures may be logical in your mind, but ultimately they hurt the brand. In the end, if the brand is weakened, then your business is weakened too. When I travel, I love to visit the brands I’m familiar with. It frustrates me when I observe an operator who has made a decision to offer a product completely different from the core line up. I get annoyed when I see unapproved marketing programs and altered construction finishes, which I know were both done just to save a little bit of money. The typical American consumer goes to a location because they know exactly what to expect when they get there. They enjoy the comfort of a reinforced choice. Varying from the brand standards creates uncertainty, confusion, and a lack of confidence. Consumers will choose somewhere else to go in the future. This choice will exclude your location and others in your brand. It hurts us all! Be a team player. Work with your fellow franchisees and your franchisor to bring about the change that may be needed in your system. But, do not be an independent business owner. Besides, why spend the money to buy into a system if you aren’t going to follow it? You’re paying a group of professionals to make decisions that will help you and then you’re throwing that money away when you ignore it. Invest in your research by attending professional conferences that are put on nationally almost every month. Conferences can be specific to the industry you are considering, or specific to franchising in general. At these events you will be able to talk to vendors who have significant experience adding value to your business model. You will also find franchisors that give you choice and comparison to the brand you

Franchising USA

may be interested in. Most importantly, you will find other business owners who are eager to share their experiences with you so you can start with a leg-up on the competition. Sean Falk grew up in Monroe, Michigan. Upon graduating from The University of Michigan, Falk went into the United States Marine Corps. As an Infantry Officer he spent eight months in the first Gulf War. After returning from Operation Desert Storm, he was assigned to the Recon Battalion and spent his time off the coast of Bosnia. During his time in the military he traveled extensively; training with military members from many different countries. Falk started out his franchising

experience by investing in cookie, pretzel, and children’s retail stores. Within ten years of opening his first location, Sean had 14 different franchise locations up and running. He has an agreement to open at least four more stores in the near future, with a desire to open many more! Falk has been featured in the Wall Street Journal, Business World magazine and many other periodicals. He recently testified to congress on the state of small business and was the lead feature on the Fox Business Network. Sean also enjoys doing triathlons and has completed three Ironman competitions. For more information: www.franchise.org


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#16 FASTEST GROWING

Franchising USA


V e t er a ns i n Fr a nchisi ng

Richa rd Ashe, President, Vetera n Fra nchise Center s LLC

The Good, The Bad a n d T h e L e gal

of Franchising

As with all things, there are many sides to consider in franchising. Understanding what to expect, what not to expect and what your legal and contractual obligations are is the key to both the initial decision making and your on going success in your venture.

acquiring a franchise.

One of the things I learned during my career and also from watching a lot of Judge Judy, is that if it isn’t written down it doesn’t exist. This is important to know when reviewing the documents involved in

The Federal Trade Commission (FTC) Franchise Rule requires franchise sellers to provide prospective buyers with a Franchise Disclosure Document. The FTC does not require filings of these

Franchising USA

The franchise process is similar from concept to concept. There is the initial vetting between the franchisor and the prospective buyer to determine cultural fit and financial capability. Should you and the franchisor see eye to eye and decide to move forward then the process moves forward and additional disclosures are required. On the candidate side the disclosure is usually an application and/ or a personal financial statement. On the franchisor side, the disclosure is the Franchise Disclosure Document (aka FDD and formerly known as The Uniform Franchise Offering Circular, or UFOC) and then finally the Franchise Agreement.

documents. A total of 13 states keep franchise offering circulars on file. Most states provide copies of these disclosures, usually by allowing visitors to their offices by appointment to review or copy the documents. A few private companies may make franchise disclosure documents filed in one or more states available for a fee. The FTC doesn’t support or endorse these companies. The FDD is a serious legal document, it serves as a protection for the prospective buyer against making a decision based on information not supported by fact. The franchisor is required to disclose the following information and each FDD is structured as ITEMS as follows: THE FRANCHISOR, AND ANY PARENTS, PREDECESSORS AND AFFILIATES BUSINESS EXPERIENCE


“I recommend waiting and taking both the FDD and the FA to your franchise attorney at the same time. I also recommend seeking out a good broker to assist with your franchise search.” LITIGATION BANKRUPTCY INITIAL FEES ESTIMATED INITIAL INVESTMENT RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES FRANCHISEE’S OBLIGATIONS FINANCING FRANCHISOR’S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING TERRITORY TRADEMARKS PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION OBLIGATION TO PARTICIPATE IN THE OPERATION OF THE FRANCHISED BUSINESS RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION PUBLIC FIGURES FINANCIAL PERFORMANCE REPRESENTATIONS (THIS SECTION IS OPTIONAL) OUTLETS AND FRANCHISEE INFORMATION FINANCIAL STATEMENTS CONTRACTS RECEIPT This is your first look at the unvarnished view of the franchisor minus all the marketing hype. This is the good, the bad and the legal of the franchise; its past, present and what you will be obligated in the future. It is written by the franchisors attorneys so expect it to be slanted to protect the interests of the franchisor.

Having it reviewed by a franchisee attorney is highly recommended to protect your best interest. I specifically recommend a franchisee attorney because they review these documents all the time and it is more cost effective to work with an attorney that is familiar with the language and format of these documents than one who is not and charges an hourly fee. With the cost of an FDD review ranging between $1,500 and $2,000, it can get very expensive if you take every FDD you’re considering to an attorney. Should you decide to go to an attorney that is not versed in franchising you should expect a longer turn around time and may possibly cost you more. Before you run off to the attorney, I highly recommend you do your own initial review. I have developed a process that helps my clients to get through the FDD in an efficient and practical way. First, when you receive the FDD you will be required to sign a receipt. The receipt starts a 14 day clock which franchisors are not legal able to execute a Franchise Agreement until that period has elapsed. You should read the entire FDD, however to make the most efficient use of time, here is our suggested order when reviewing the FDD. This order prioritizes the information in a way that enables you to quickly determine if they want to move forward with the franchise opportunity. Start with these sections: Items 5, 6 and 7 Initial fees, other fees and initial investment Item 5 is an overview of the initial fees required to open your franchise. Until the recession, most franchise fees were not negotiable; however, in the last three years, some franchisors have offered discounted fees that should be disclosed here. If you

Richard Ashe

see initial fees listed as a range, ask if you qualify for a lower fee. Item 6 is a chart of other fees, including royalty and advertising fees, which you will be required to pay on an ongoing basis. Be aware that not all fees are listed here, including the cost of products and inventory. Item 7 lays out the fees and expenses required to open and operate your franchise for the first three months. Businesses get into trouble when they are undercapitalized. Do not assume that the working capital listed in Item 7 is sufficient to sustain your business until you start making money. This is why validation calls with other franchisees to learn how long it took them to break even are very important. Go over these items with an accountant before signing a franchise agreement. Item 11 - Franchisors Assistance This item outlines the content and scope of the franchisor’s support services. It should include disclosures about cash registers and related information involving the use of extremely sensitive franchisee data to which the franchisor has access. Be careful of qualifying words, such as “at our discretion” or “as needed,” and know that you cannot count on receiving those services. Look to see how much of your required advertising fees actually get spent on advertising and how much mainly benefit the franchisor. If franchisees are not involved in managing the national marketing fund it can be a major red flag for investors.

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Richa rd Ashe, President, Vetera n Fra nchise Center s LLC

Item 19 - Financial Performance Representations (This section is not mandatory and is not always included) Although this is one of the most important pieces of the FDD, only 30 to 40 percent of franchisors provide information on how much their current franchisees are earning; the others must state that they choose not to make such a claim. Watch out for earnings claims based on corporate stores, because they pay no royalties and may have different costs than the franchise. Items 22 and 23 - Contracts and Receipts These items include the contracts you will be required to sign and the receipt you must sign when you receive the FDD. It is critical that you read and understand the contracts and keep copies of all documents (including the receipt); you’ll need them if you ever wish to bring an action against the franchisor. Exhibit - State Specific Addendum Some States require registration and approval of Franchise Documents prior to selling in the state or from the state and may have additional legal or disclosure requirements. Ensure the franchisor is properly registered. If you’re agreeable with these sections of the FDD move on to:

Item 3 - Litigation Item 4 - Bankruptcy Item 10 - Financing Arrangements Item 12 - Territory Item 21 - Financial Statements Exhibits - List of Franchisees - at this point the prospective buyer should select a number of franchisees they would like to speak with and notify the franchisor for permission to call to validate the business. Now that you’ve bounced around from section to section, it’s time to grab a cup of your favorite non-alcoholic libation, a yellow and red highlighter and read the entire FDD from cover to cover. As you read highlight your deal breakers in red and questions or items that need clarification in yellow. Now that you have completed your due diligence it’s time to review the FDD with the franchisor. Should you resolve any and all questions regarding the FDD and have decided to move forward the final major legal document is the Franchise Agreement (FA). The franchise agreement is a document that is signed by both parties upon completion of the decision to do business together. This is the final step to review

before making a final determination as to whether or not to become a franchisee. The FA outlines the franchisor’s terms and conditions specifically for the franchisee. These terms may include territory, size and restrictions. The franchise agreement also clearly outlines the obligations of the franchisor and the obligations of the franchisee. The franchise agreement is signed at the time an individual has made the final decision to buy the franchise. I recommend waiting and taking both the FDD and the FA to your franchise attorney at the same time. I also recommend seeking out a good broker to assist with your franchise search. If you want more info on FDD’s and FA’s please visit: www.ftc.gov/bcp/franchise/faq1.shtm Richard Ashe served in the Marine Corps from 1976 to 1983 in the infantry and then as part of a joint Marine, Navy, and Air Force top-secret intelligence project. After serving in the Marines, he worked as an electronics technician for a communications company. Over the next 30 years, he worked his way through the civilian ranks to the position of vice president of global marketing for an international software company and received his degree in marketing. During his civilian career, Ashe has worked for and helped companies such as Xerox, Compaq, and HewlettPackard expand or start new businesses. He also participated in four software startups and started two businesses on his own – a computer training firm, ComputerTutor, and a networkconsulting firm, LANDesign. Ashe is a Certified Franchise Consultant and a member of the Texas Veterans Chamber of Commerce. He serves on the VetFran committee. For More Information: Phone: Email: Web:

Franchising USA

713-849-9642 rich@ VeteranFranchiseCenters.com veteranfranchisecenters.com


M i l i ta r y V e t e r a n Ea r n s O w n F r a n c h i s e :

Operation American Dream

After a six-month search, representatives from Signal 88 Security and a panel of military veterans have chosen Gregory Murphy of Salt Lake City, Utah, as the winner of Operation American Dream: From Battlefield to Boss.

“I’ve thought about this for some time now,” says Murphy. “Being named a finalist early in the contest gave me a chance to plan my next step, should I be the winner. I’m currently putting a team together to help me open a Signal 88 franchise, and I’m feeling both happy and surprised.”

Murphy, a United States Army veteran, will be awarded either $5,000 to start his own business or $10,000 to open his own Signal 88 Security franchise.

“Signal 88 Security is a top employer of military veterans,” said Reed Nyffeler, CEO and co-founder of Signal 88 Security. “We were named on the G.I. Jobs list in 2012 among the top 10 percent of the nation’s franchises that are doing the most to recruit military veterans. Providing another deserving veteran with a chance to own his own business was a great opportunity for us to give back.”

Since January, military veterans with entrepreneurial dreams competed for start-up money to open a business through Signal 88 Security’s nationwide contest. Each entrant submitted a 500-word essay describing a desire to open his or her own business. Following monthly online voting periods, the public narrowed the field to five finalists. Each finalist received a $500 cash prize and advanced to a final selection process. Selection criteria included an evaluation of each finalist’s essay and video entry, plus a Q&A from a panel of judges that included military veterans and representatives from Signal 88 Security.

According to statistics from the Small Business Association Office of Advocacy, veterans are at least 45 percent more likely to take the plunge into entrepreneurship than people with no active-duty military experience.

In 2007 data from the U.S. Census Bureau – the most recent statistics available on the subject – veterans owned 2.4 million businesses, or nine percent of all businesses nationwide, generating $1.2 trillion in receipts and employing nearly 5.8 million people. “Veterans possess many of the traits needed in entrepreneurism,” said Nyffeler.

“Their leadership, teamwork and problemsolving skills are second-to-none in my experience and Greg Murphy is no exception. Signal 88 Security is looking forward to his future success.” Signal 88 Security is a private security company with more than 100 franchise offices across more than 30 states, offering customized solutions for residential and commercial properties. For more information about Signal 88 Security and its franchises, visit www.signal88.com/franchising/home. aspx.

Gregory Murphy joined the United States Army in 1985. After completing 22 years of active duty and 14 years of service with the Army Active Guard & Reserves, he is currently in the process of retiring. Murphy is married and has seven children. His oldest daughter recently returned from serving in Afghanistan.

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Dorothy A r ndt, President, gif tavet.org

Empowerment through Collaboration “Veterans seem to be able to allocate these traits as if they were somehow connected to basic business resources like, capital, labor and technology.” but not limited to; veterans, volunteers, contributors, donors, investors and the professional community including; trade associations, organization case managers, social workers, and non-profits. The organizations and individuals that work with us recognize that, above all else, we value experience. Giftavet.org is a place for people to honor veterans and join forces to inspire change.

My Brother the Hero

Giftavet.org is a destination where veterans and those who respect and honor their service go to connect, share, support and collaborate to create memorable experiences. Located in the heart of Silicon Valley, giftavet.org, is a Veteran Direct company. Helping veterans since March 2012, the company strives to bring together those who share the same beliefs including

Franchising USA

My brother, John Alopogianis, inspired me to become the founder of an organization that works with our nations veterans. He is a USMC veteran with service-connected disabilities. John and his fellow soldiers are the spark that fuels the team at giftavet.org. John always dreamed of serving his country. Watching him pursue and live this dream has been one of life’s most amazing experiences. He was the kid that played “Army Man” and he became the man who sacrificed civilian life and status to serve and protect us, while affording us the liberty and freedom to pursue our dreams as Americans. First there was boot camp. He told stories about the tremendous sacrifices some of our soldiers made during training. These stories reinforced that the military was preparing John to

overcome the trials and challenges of Combat as a Marine. Returning home after his first tour of duty, John told fewer stories about serving and was anxious to begin his second tour of duty. John’s desire to return to his fellow soldiers exemplified a sense of pride combined with humility that only a real hero embodies. With every breath, my brother was a man of honor, loyalty and commitment. Watching John deal with life’s challenges after his second and final tour of duty in the USMC makes me proud of him in a manner that cannot be described by words alone. He is a combat veteran in his junior year of college, with a wife and a child. His service-connected disabilities are a direct result of him giving his heart and soul to the United States Marine Corp, and his country. These injuries dismantled his vision of a career in the military, but they have not prevented him from building an honorable civilian life. He is actively engaged in treating his PTSD and physical impairments. His latest battle comes from the loss of his job in the Work Study Program, due to a congressional delay in funding for this program. John is meeting this challenge by selling his plasma and searching for a job that allows him to continue his studies and be present for his family. Giftavet.org aims to ensure that one day it will not be necessary for our veterans to sell the blood that they did not leave on the battlefield to survive as a civilian.


How We Collaborate Our research and development has been ongoing for the past 15 months and includes events with the franchising community, the airport, grocery stores, health fairs and shopping malls. We interact on a daily basis with contributors, including veterans, volunteers, donors and professionals. To date, over 15,000 collaborators have participated in the development of giftavet.org. Our events embody an open environment, meaning transparency, sharing and collaboration to initiate connections between these segments of the community. Through these connections resources are shared and maximized. In most instances the veteran is the inspiration responsible for empowering the community. Simply put, here is how it works. Veterans will create their campaign, and donors decide which campaigns they wish to support. Volunteers, donors and professionals place a high value on direct participation with the veteran and his project. Projects have included, but are not limited to; employment, business ownership, housing, transportation, education and health care. The veteran creates opportunity for everyone involved, presenting a perspective that reflects the opposite viewpoint of charity. Most charities engage in telemarketing and direct mail campaigns to spread awareness of some type of need in the community. Events are held in addition to these activities. These methods are independent of each other providing forms of assistance inspired mostly by need. Giftavet.org connects people and organizations to foster collaboration with the veteran creating a “High Value Experience”. Initially these interactions happened face to face in Santa Clara County, California. Now through giftavet.org we can reach every county in America. We are connecting communities through the use of technology, turning social media into a means of service and production through the combination of virtual volunteering, crowd sourcing, crowd-funding, sharing of experiences and information all in a transparent environment.

The Veteran and Franchising Today there are over 60,000 veteran owned franchises and other industry support organizations, including franchisors, suppliers, vendors, business brokers, finance companies, consultants and marketing companies. According to the US Census, nine percent of US businesses are veteran owned and they employ six million people while contributing over $1.2 trillion to the GDP. The word Franchise comes from the Anglo-french origin franc, defined as liberty, freedom and to make or be free. Military is a word that implies discipline, confidence and dignity. We believe that our process at giftavet.org combines these characteristics when supporting our “Armed Forces Veterans.” Today’s world is one that values experience above all else. Veterans are experienced risk takers that are trained to follow orders and systems, in turn making them the ideal franchisee. Trained to look out for one another on base, these practices can then be taken into the workforce to both customers, employers sand co-workers. Companies in just about every segment of the franchising industry have approached giftavet.org, hoping to engage in partnerships that will benefit our nations veterans. The massive success achieved by our veterans in the franchising industry is due to the collaboration of individuals and companies already engaged in the industry. We hope to be an agent of growth by providing a platform for advertising, marketing, recruitment and team building for every company in the franchising industry. The veteran has been trained to work with others towards a higher purpose. This industry [franchising] values skills

that are supported by leadership qualities, integrity and humility. Veterans seem to be able to allocate these traits as if they were somehow connected to basic business resources like, capital, labor and technology. Our research indicates the personal qualities addressed above are the core shared values that empower the franchising industry to reach out to our nations veterans and make the necessary connections to create and maximize experiences for an entire industry, which in turn does its duty in supporting an entire nation. (There are 23.5 million Veterans according to the US Census). Giftavet.org offers an open platform for all participants in the franchising community, all veterans and those who support veterans. The franchise community provides a welcoming environment for veterans and their support teams. In other words, veterans and franchising industry members speak the same language, are on the same page and often are in the same boat rowing in the same direction. A native of Chicago, IL, Ms. Arndt resides in Santa Clara, CA. Using her leadership and technology skills, she brings a solution to provide stability to veterans during their transition from a military world to a rewarding civilian world. She has four children. Web:

www.giftavet.org

The mission, place our veterans first through collaboration with our nations heroes Franchising USA

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M onti M a r ster s, President of Totall y Accessible H omes

Totally Accessible Homes In the late 1990’s our family’s lives changed forever. We had been living in Alaska for over 15 years when our Mom, riding her new snow mobile, hit a small snow covered rock while racing Dad. This accident left our Mom paralyzed from the waist down. We found out first hand how something like this affects the entire family. services needed to make our customers’ homes Totally Accessible. We offer a one-stop shop for in home consultations, product supply, product installation, home remodeling and new innovative products designed by our own R&D department.

As a family of carpenters, welders and machinists, we built and installed our first in home elevator, and before Mom came home from the hospital we had duplicated every piece of equipment at the physical therapist office to help her on the road to recovery. Unfortunately Mom never did gain the use of her legs and to this day she is confined to her wheelchair. Like most families, we did not realize until she was home and trying to move around the house how many changes really needed to be made. She damaged the rotator cuffs in her shoulders, due in part to fighting the wheel chair on the carpet in the living room. We

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damaged several door jambs as we did not realized that just because a wheel chair will fit through the door, does not mean it will always roll exactly in the center of the opening. Having a handicapped family member has made it painfully apparent to our family that the accessibility market is a much under-served market in America. We have learned through years of trial and error, through self-education, through seminars and through experience what is needed in the accessibility community. One of the things we have learned is that everybody in a handicap situation does not need the same solution. The needs are as varied as the individuals involved. So we started a business to help fill the needs. Totally Accessible Homes is the instrument we use to provide all the

As a Vietnam era Veteran, our Mom has been able to take advantage of the VA spinal injury center in Seattle, Washington. However the VA cannot do everything that needs to be done. The military runs over five generations deep in our family, served with both men and women. We have served in the air, on the land and on the sea. One of the owners is a Korean War vet, and another served in the Persian Gulf. Both veteran owners have served in combat units, we understand the needs of veterans and we want to help whenever we can. Right now jobs in America are hard to get. Veterans sometimes have a harder time getting jobs than the men and women who stayed behind and developed their professional networks and social circles. Because of this we have partnered with VetFran, and offer special pricing to Veterans to make sure those interested can have a shot at business ownership. As with any franchise, we offer training and support to help the new business owner succeed in their business. We believe the best way to help the most amount of veterans will be to get more veterans involved in our business.

To show our commitment to the veterans that have protected our country, we are offering to give


“I would challenge any veteran that might be looking for a business opportunity to look for a business where they can help make a difference in other people’s lives, and make a good living doing it.”

away a free franchise to a veteran in September. Veterans can sign up at www.tahpromo.com. Totally Accessible Homes is a new and innovative company, with a patent pending business model, that has been designed from the ground up to specifically service the handicap and senior citizen community. We have designed, built and installed products for accessible homes for over 12 years. Our goal is to provide unparalleled service and product to the elderly, the handicap and the mobility challenged community. All of our owners and service technicians receive training and certificate renewals for all items that we sell, as well as most accessible related items that are on the market. We are all trained to install elevators, stair climber, wheel chair lifts, home remodeling for special needs and much more. We offer not only products for sale through our Internet site, but installation services. We are our own contractors, with all of our contractors certified especially for aging in place remodeling, plus an

additional training course that picks up where the certifications leave off. We then have our own certified installers install the product. Because we sell, remodel and install ourselves there is much less chance of rework and extra cost that is associated in dealing with several companies to complete one project. One of the greatest challenges we face is educating the public as to what is available to them. For example, drop down cabinets. These have been on the market for several years, they come from Europe and they are expensive. But 99 percent of the people I talk to did not know such a thing existed. We have developed our own line of Made in America drop down cabinets that have been well received. Everybody knows about ramps and elevators, but many people do not realize that we can install a ceiling track system in their home so that family members does not have to strain themselves transferring a person from the bed to the bathtub, or anywhere else they may want to go. How many handicap people do you know that have given up working in flower gardens because they cannot reach the ground? I like to work with veteran business owners in this business because in the military we were taught to overcome obstacles and to push through. We can now help our fellow veterans, other handicap people, and even elderly people

that want to stay in their homes longer to push through. We have the opportunity to provide the means for them to reach their goals. I would challenge any veteran that might be looking for a business opportunity to look for a business where they can help make a difference in other people’s lives, and make a good living doing it. I am very fortunate in that I have always had the luxury of enjoying what I do for a living. Because I enjoy what I do, and because I get the chance to help other people, it never feels like I am going to work. I believe that we never have to quit serving the people of our country. Monti Marsters, President Totally Accessible Homes Monti Marsters served three deployments on board the USS Midway providing support to Middle East operations. After leaving the service he has spent years developing new product for handicap community as well as in the both the residential and the commercial industries. He understands the needs of service men and women as well as the needs of people with accessibility restrictions. For more information: www.totallyaccessiblehomes.com www.tahpromo.com.

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A GOLDEN OPPORTUNITY AWAITS! Sun Tan City is the nation’s fastest growing chain of privately owned tanning salons, operating over 240 locations in 17 states. We are the premier tanning franchise offering UV and sunless tanning services as well as a wide array of lotions and skincare products. Our franchise system offers you a predictable membership based revenue model. We provide our franchisees with a simple, easy-to-follow concept. We offer clients the best tanning equipment available in an impeccably clean, relaxing environment, staffed with well-trained tanning consultants at an amazing price. In other words, we do tanning differently. And, this difference is what sets us apart from the competition. Our salons go above and beyond the traditional by providing clients with a tanning “experience.”

Why the indoor tanning industry?

Beauty never goes out of style. That's why since having a gorgeous golden tan first came into fashion in the 1940s, its popularity has never diminished. It's also why the indoor tanning industry continues to be more and more profitable with each passing year. Indoor tanning is all about helping people to look and feel their best. And in a society where people are constantly on the go, with limited time to dedicate to personal wellness, indoor tanning offers a fast, relaxing and rejuvenating solution. Currently a five billion dollar per year industry, indoor tanning has grown substantially in the last 25 years. In the US alone, approximately 28 million people tan indoors annually. On an average day in the US, more than 1 million people tan in tanning salons—and due to the industry's rapidly expanding demographic, this number continues to grow. An integral part of the American small business community, the sun tanning industry is a fun, fast-paced business, in which new research and developments are always underway. New advances in tanning technology are constantly on the rise, appealing to people of all skin types and lifestyles.

Why Sun Tan City?

Sun Tan City is the nation's fastest growing tanning salon chain and widely recognized as the market leader. This experience has allowed us to perfect the franchising process and to ensure that our franchisees have the tools they need to reach success.

Purchasing Power:

Our size gives us tremendous purchasing power on products, supplies and equipment, and gives our franchisees a significant advantage over smaller competition.

A Superior Experience:

We are known for providing clients with a superior indoor tanning experience. Our salons use the industry's best tanning equipment and skin care products, and each one is staffed with a team of well-trained employees. When you combine that with a sleek, spa-like environment—it's clear that Sun Tan City lives up to its reputation.

Ongoing Support:

From day one, you'll work with dedicated management, sales and marketing teams, whose job is to help you make the most of your investment. Sun Tan City provides all of the initial training and serves as the "one-stop shop" for all of your business and operational needs. We provide the tools and guidance to build a vibrant and welcoming salon environment and focus on the customer experience. We've already built the model. All you have to do is focus on customers, employees and growth, and running your business. Single and multi-unit franchise opportunities available. For more information, visit us at www.suntancity.com/franchising.

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ex per t advice

Daniel Brunell, President, Dearborn West, LLC

Daniel Brunell

Keys to Evaluating a Franchise Opportunity There are many important elements to evaluating a franchise and which things are most important will vary among prospective buyers. While each company has its own unique discovery process, there are some common elements that you can expect with any franchisor. As a potential investor you want to be sure to carefully consider the merits of the opportunity, but it is important to know that the franchisor is

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evaluating you as a candidate every bit as much as you are evaluating them as an organization. You are potentially going to become business partners and both of you must consent to that arrangement. You are bringing valuable skills, capital and labor and they are bringing the all important business model, which is the system for producing profit. You should treat this like a job interview, not like you are buying a car. Remember, they decide ultimately if you will be allowed to invest in their franchise, so your job is to make them want you. If you achieve this, then you get to be the one who says yes or no to the deal.

Another crucial element to be aware of when assessing a business opportunity is up until you start having conversations with real people, you are not evaluating anything other than marketing information. Reading a website or brochure is not due diligence. It is a ten miles wide and half inch deep endeavor that yields very little useful information. Investing in a business model is unlike buying a new television or refrigerator. To learn anything of value about an opportunity, you have to speak with the people at the franchisor as well as the people who own or have owned their franchise units. The control document


for every franchise investigation is the Franchise Disclosure Document or FDD and you generally will not be provided it until you have a successful introductory conversation.

Introduction The first interaction between you and the franchisor begins by exchanging general information. They will give you an overview and send you initial information about the company. You will likely be asked to complete a questionnaire that gives them some baseline information to assess whether you are likely to be a good fit for their system. Keep in mind that the franchise sales person would like to sell a franchise, but the decision to do so is typically made by the executive leadership of the company. This group has to be convinced that you are the right person to operate their model effectively in a given market.

Disclosure Once each party has decided that it makes sense to continue the discovery process you will be provided the FDD. The Federal Trade Commission mandates that this disclosure document is provided to any potential investor and it gives you detailed information about the franchisor. The format is standard and all franchisors must include information on 22 points of information that clearly illustrate the business costs and define the relationship you will have with the franchisor. The primary subject areas include: • The history of the franchise and its officers and directors • A description of the business model • All costs and fees that you will be subject to under the agreement • The obligations of both parties during the term of the agreement and thereafter • All relevant litigation history of the company or its officers • Business failures, ownership transfers, terminations or other potentially adverse information relating to the success rate of the existing units in the system

“Both parties need to be excited about the relationship and should be ready to get started.” • Financial statements for the franchise company • A list of the existing franchisees and their phone numbers Some franchisors include earnings claims in Item 19 of the FDD document. This is optional and most choose not to expose themselves to liability by providing any claims, but in any case, speaking with franchisees in markets that are demographically similar to your own is the best way to get a read on your potential in this regard. Even if you are familiar with reading contracts, it is advisable to have a competent franchise attorney review the FDD and your franchise agreement. Their job is not to renegotiate the terms, simply to help you make sure you know what you are agreeing to under the contract.

Validation The franchisors are naturally excited about their own company and are obviously very positive about everything they do. This is to be expected, they should think that they are the greatest or they shouldn’t be franchising their model. This is why talking to the franchisees is so important. They will give you a very candid assessment of the franchisor and their level of happiness with the training and support that they receive. In any franchise system, you will have a small statistical percentage of failures, usually due to franchisees that were either mismatched to the opportunity or who refuse to follow the system. Unfortunately people generally do not own up to the fact that they didn’t follow procedures and will blame their failure on the franchisor. So if during validation you get a bad review of the organization from one of the franchisees, press on because that person may be unrepresentative of the group. Typically you will find that most people are reasonably happy and some

are ecstatic. If you find most people to be upset, then obviously that should be a red flag. During your conversations you will want to key on areas like; training, support, marketing, timelines, franchisor relationship and earnings.

Discovery Day It is always a good idea to physically meet with the organization that you will be investing in. Most companies now have a formal discovery day, where you will go to the corporate headquarters and meet with the senior executives and all of the department heads. You will be able to confirm what you already know, ask any residual questions and get a strong feeling of whether or not you fit into the company’s culture.

Decision You can generally complete your entire due diligence in 30 to 45 days if you are committed. Either during or shortly after discovery day, the franchisor decides if they wish to award you a franchise and then it is time to make a decision. The franchisor doesn’t want to rush anyone, but they want to move the process along. Both parties need to be excited about the relationship and should be ready to get started. At the end of the day, evaluating the opportunity is the easy part. The hard part is finding the right opportunity for your unique goals and objectives so don’t leave any stones unturned in your search. Dan Brunell is President of Dearborn West, LLC, an international business opportunity brokerage headquartered in Southern California. Have a question about business opportunities? Contact Dan at: Phone: (951) 587-6929 Email: dbrunell@dearbornwest.com Web: www.dearbornwest.com

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ex per t advice

Kate Groom, B.Ec, Smart Franchise

6 Easy Steps

For Pl anning Your Future Fr anchise To succeed in a franchise, and achieve your dreams, it takes more than a proven system and good intentions. To turn your dream into reality you’ll need to make a plan, then follow that plan. There are many different approaches to

planning, and many different formats for plans. But what they have in common

is the “thinking through” of how you’ll achieve a goal.

“No matter what your plan looks like on paper, your success will be determined by what you actually do. Once you’ve started the business, you’ll find some aspects go as you expected whereas others do not.”

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We recommend you do more than think it through though, as it always works best to write your plan down. This will provide you with a focus for your actions and a basis for you to compare your results with. Here are six key areas to consider when you are planning the future of your new franchise business. We’ve found them effective for every type of business.

1

What Does Success Mean To You?

What does success mean to you? This is a very important question to consider, because your business efforts should be directed to help you achieve what you envision. But success means different things to different people. What is it for you? A good place to start is to reflect on the reasons you want to be in business. These will probably include financial goals as well as personal ones. For instance, is it the freedom to make your own choices in business, or to achieve your own goals? Some people are excited by the opportunity to lead a team, or contribute to the community. Write your thoughts down. This will help you clarify what you really want. If you have a life partner, discuss this together, even if only one of you will be in the business.

2

Where Do You Shine?

You may not have given this much thought in the past, but it’s important to be clear on what you are good at, and what you like doing. Also identify the areas you’re not so strong in so you can want to make the most of your strengths and be able to compensate for weaknesses. For example, are you good dealing with

people, or do you need to improve your management skills? Are you good at selling, or will you need to get better at this? What new skills will you need to develop to succeed? What strengths can you make the most of, and in what areas will you need support? This exercise will help you work out which areas to focus on so you can be most effective in your new business.

3

How Much Income Do You Need?

It’s important to know the minimum income you need to meet your personal and family expenses. You need to be aware of this because in the early days, there may be less each month than you were used to. You should also be clear on how much money you would like to make as this gives you a goal to aim for. Bear in mind that most businesses take time to reach the point where you are meeting your desired income.

4

What Are Your Expenses?

Now for the tantalizing section; the money! Your plan should definitely include setting out financial targets in a budget, and also a cash flow projection. The budget helps answer two questions: What are the costs for running the business, and what level of sales are needed to pay the expenses and provide you with the income and profit you need? The information for this will come from different sources. If you are looking at a new franchise, you will need to work it out based on your own research. The Franchise Disclosure Document may include helpful information. Some costs, such as rent, equipment costs and your

Kate Groom

wages will be specific to your situation. If you’re buying an existing franchise, look at the figures from the previous owner and make your own assessment from there as to what you might achieve. Also, be sure to ask existing franchisees in relevant markets for their comments about sales and costs. Your plan should include a cash flow forecast. This will help you identify the seasonal cash flow patterns, and make sure you have the funds to support the dayto-day operation of the business. It will also let you see your upcoming financial commitments. This part of planning may seem complicated. But it’s really important because you need to understand how the business works financially. We always recommend getting advice from an accountant who is used to working with franchises.

5

How Will You Manage The Business?

Once you’ve worked out your financial goals, the question becomes how will you turn them to reality. This is where an operational plan will help. Creating this plan involves thinking through how you will achieve your goals.

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ex per t advice

Kate Groom, B.Ec, Smart Franchise

We suggest you consider three areas: Sales and Marketing, Operations, and overall Business Management.

Sales and Marketing Sales and marketing is about how you find, attract and keep customers. Even though the franchisor will have addressed many aspects of marketing, it’s important for you to be proactive and drive the sales for your own business. This part of planning is when you consider what you will do to attract and keep customers, through local marketing and selling. It’s a very good idea to prepare a monthly marketing plan as it will help you keep up regular activities to generate business.

Operations Operations are about meeting your customer’s needs. It deals with how you produce the products and services you sell and doing this cost effectively. It includes purchasing from suppliers, creating your product or service and doing so at an affordable price. Most franchise systems have worked out the operational side of business and will train you in how to follow it. Still, it’s a good idea to consider things like how the business will be staffed and how it will operate day-to-day. This will help you have a clear picture of how you’ll run the business.

Business Management Business management is about how you’ll take care of the financial, administration and overall running of the business. It includes practical matters, such as who will do the bookkeeping. You’ll also want to think through how you’ll manage and motivate your team, and the way you’ll work with your franchisor team.

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6

Putting Your Plan Into Action!

No matter what your plan looks like on paper, your success will be determined by what you actually do. Once you’ve started the business, you’ll find some aspects go as you expected whereas others do not. To help achieve your goals, we recommend you summarize your main business goals for the first 12 months, and also for three years down the road, and again for five years. For the first 12 months, break the goals down into monthly and quarterly milestones. Each month hold a business meeting with your partner, coach or adviser. This is where you’ll review the financial results compared to your goals, and decide what action is necessary to keep moving in the right direction. Then, working with your team implement the actions. If you review the results each month and

take action to improve how you do things,

you’ll be much more likely to achieve your goals.

Planning doesn’t need to be a long, complicated process, but it is very

important if you want to have the best chance of achieving your goals. By

following these six steps you should be well on your way to doing just that!

Kate Groom specializes in the financial side of franchising. In her business, Smart Franchise, she offers advisory services, training and workshops for franchisees and franchisors. Kate has worked with and run franchise businesses for almost 20 years, focusing on strategy, planning and business improvement. For more information: www.smartfranchise.com.au


Making The Switch

To Red Mango The popular nine-to-five grind isn’t for everyone. In fact, a Monday to Friday office job can quickly become all too familiar for some people, especially those looking to pursue careers in other fields.

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f ra nchisee in action

Red M a ngo

to meet, Red Mango hit the nail on the head in an area of the most importance: it was a clean and healthy concept.

marketing and accounting training, it’s no wonder they became chain leaders in record time.

In May 2011 Dan went to Dallas where he met with the senior management. After signing the franchisee agreement Red Mango set him up with a Commercial Real Estate Broker who had several locations already scouted. After deciding on his location, Dan signed the lease that August. Securing all the necessary permits, the build out began in December.

“The training is strong and thorough,” says Dan. “It’s amazing how much you learn in one week going into another store to train.”

In spring 2011, Dan made the switch to Red Mango. Having spent two years prior looking at various franchise opportunities, Dan was attracted to Red Mango because of the healthy nature of the product, its loyal following, and relatively simple operation plan.

In February 2012, Dan opened his first franchise in Wheaton, Illinois with his business partner, and wife of 25 years, Michelle. The franchise was a great fit for the husband and wife team from the beginning. “We had 100 sunny days immediately after opening, and business took off. It has [continued to] run pretty smoothly.”

First introduced to Red Mango in 2010 while visiting his oldest daughter at Indiana University in Bloomington, IN, Dan was turned onto the company after trying its product at a location nearby the campus. With Dan’s very specific criteria

Dan and Michelle received great training from Red Mango management before beginning their franchise. Spending five days undergoing operational training at an existing Red Mango location, followed by an additional three days in Dallas for

Last year, Dan and Michelle had 19 new franchise owners come through their store for hands-on training. At the time of speaking with us [Franchising USA], Dan stated they had three franchisees, five people total, currently training at their store. Each trainee will receive 40 hours of training in the course of the week, which speaks to how fast the frozen yogurt market has grown, and also how the Houskas’ store has become a respected franchise location for others to witness the daily operation first-hand.

After 20 plus years as an Insurance Broker in Illinois, this is how Dan Houska was beginning to feel. “I liked the thought of controlling my own destiny,” says Dan, adding that a change in his everyday lifestyle was an appealing factor. These factors gave Dan the push he needed to get active about making his thoughts a reality and motivated him to make a career change.

The rookie franchisees set a great example, and their store became a highly respected “follow the system” store for fellow franchisees to receive the training they had recently undertook.

With such accomplishments achieved in such a short period of time, and no previous experience in yogurt or franchising, Dan remains humble. Both Houskas are still present leaders in their store, with Dan overseeing the daily operations alongside his team, and Michelle being the “grassroots marketing star and back of the house clean freak,” says Dan. When asked how his life has changed since entering the world of franchising, he admits the job is often more demanding than his last, but he stresses how much he enjoys spending time in the workplace. “As an owner you want to embrace the panic call from your manager on the Sunday afternoon stating that you need fresh fruit. Hopefully when you get off the couch you are excited about your trip to the store, it means business has been good!” he explains. “My family is much more involved in this business than anything I’ve done in the past.” Although there are similarities between his

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“As an owner you want to embrace the panic call from your manager on the Sunday afternoon stating that you need fresh fruit. Hopefully when you get off the couch you are excited about your trip to the store, it means business has been good!” .” former career and present endeavor such as self-motivation, follow up procedures, and great customer service tactics, he also recognizes the vast differences between owning a franchise and the traditional nine-to-five job, admitting his current position requires attention seven days a week. “As an owner of Red Mango you are responsible for marketing, accounting, employee hiring and training,” says Dan. Enjoying the diversity of his job, he notes the satisfaction he gets from the large number of customers he sees who are passionate about the health benefits and great taste of the frozen yogurt. “It’s rewarding to be a part of something that people enjoy,” says Dan, admitting his favorite flavor of the brands yogurt is pomegranate with strawberries and Ghirardelli chocolate chips. Red Mango is unique in that its products appeal to a wide and diverse audience. The fitness conscious crowd enjoys the yogurt because it promotes a healthy lifestyle, while sweet lovers are drawn to the delicious flavors. It’s this appeal that has allowed Dan to witness the company win both “Best Smoothie/Frozen Yogurt” and “Top Healthy Options within the Quick Refreshments Chains” awarded by Zagat. The perks of selling a product that speaks to a large target market are only a bonus. The real positive of Red Mango for Dan is a business model that is committed to helping franchisees like himself thrive. With around 250 locations up and running, Dan sees the advantages in being a part of a growing company. “Senior management is very hands on. You can literally call anyone in the company and you will receive a quick follow up.”

Providing industry-leading site selection, highly effective marketing initiatives, and a proven training program, there is also room for individual flexibility, with many of the flavors, toppings and other products being decided upon by each franchisee. “The best part about owning your own business is so much of what happens is in your control. I find it refreshing to go from inventory, to management, to employee issues, to marketing. It always seems fresh and never boring,” explains Dan.

also quick to admit that it has taken a lot of hard work and many hours to get things where they are.

Red Mango has also supported Dan and Michelle in their tremendous community outreach efforts. Promoting their products to local schools and hosting a “good neighbor” program (fundraiser), the Houskas have given away “good student awards” and free yogurt certificates for various fundraisers.

Receiving calls from potential new franchise owners on a regular basis, Dan tells him what he believes to be true: “If you select the right location and want to work hard, this is a great company and product to be associated with.” He also suggests talking to other franchisees to make sure it’s the right thing for you.

On April 20, 2012, the Houskas’ held their grand opening, one that Dan Kim, founder and chief concept officer of Red Mango, Inc., attended. During the event, Dan and Michelle treated guests and customers to a free small yogurt with toppings, and the first 100 people to arrive received a free Red Mango t-shirt. Attendees who registered for the Club Mango loyalty program that day, and those who were already members, entered into a drawing for a chance to win an iPad.

With the Houskas’ Red Mango operating smoothly, Dan explains what he has in store for the future. For the short term he wants to have purchased a second store and have it up and operating by the end of the year. Ten years down the road from now however, he hopes to still be a part of the company and own multiple locations.

Dan is pleased at the response to his franchise among residents and businesses, adding, “We’re doing a lot of events with clubs and teams in Wheaton and surrounding communities. It’s been fun.” Though happy with where the road has taken him, Dan admits things have not always come easily, and challenges have surfaced. One of the biggest challenges he reveals is how easy it is to overspend. He’s

There’s been little looking back for Dan since leaving the insurance industry and embarking on his new life adventure. The Houskas’ hard work has already paid off with recognition within the franchise, and has also sparked a love for frozen yogurt in their community. “The great thing is my consistent and loyal customer base. The customers are nice and respectful,” Dan says. “We are extremely excited to have so many local fans of our frozen yogurt in the short time the store has been open.”

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ex per t advice

Nick Margiasso, Proprietor of NM4PR

A C l os e r Loo k At

Loss Prevention “If integrity is communicated as part of a franchisor’s core values, employees are more likely to embrace it as part of the LP process.”

Nick Margiasso

Every franchisee knows being successful is no easy task. Now more than ever, it takes proper practices key performance metrics and keeping your ducks in a row for this to be possible. Keeping track of all your ducks, bucks and other types of inventory or business property is the name of the game, as these are the challenges franchisees wrestle with when tackling loss prevention. The word “loss” alone is enough to make a franchisee cringe. But, it’s the “prevention” part of the famed industry acronym known simply as LP (Loss Prevention) that necessitates not only capitalizing on

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the lessons learned, but also evaluating business practices to implement appropriate loss prevention protocol.

variances of loss prevention programs. She explains that both the franchisor and franchisee are susceptible to loss.

Here we will take a look at the conundrum of loss prevention; what it means, how to uncover it and some keys for addressing this critical issue. With a little help from the perspective of other franchisees, quantitative and qualitative data, and some insider tips, a franchise operator can learn how to turn loss prevention from a fear into a business’ strong point.

“It’s imperative that business practices are evaluated, checks and balances implemented, and vulnerabilities explored to prioritize LP initiatives,” states Cattani. “Empirical data is instrumental in validating system-wide changes in processes and procedures. This can be done internally or outsourced.”

“LP programs are a necessary evil -period,” says Diann Cattani, a franchise industry expert who has worked with franchise compliance, including Royalty Fee Revenue Audits. The more you research it and talk to franchisees who incorporate LP programs, the more this answer is echoed throughout the business world. “The LP process is comprehensive and very rewarding,” says Bo Laterveer, Vice President of AAA Parking. Cattani, who works with A Closer Look, a professional mystery shopping company that helps franchisors and franchisees manage and execute loss prevention programs, talks about the rigors and

The internalization of this process can keep things close to the vest, but it may also bring forth an unwanted extra load to an already full plate. Companies like A Closer Look are often used to introducing LP programs and outside the box thinking that may increase the program’s overall value while streamlining its results. Loss prevention practices are just as important as a franchisee’s best customer service practices. With Mystery Shopping programs having evolved to partnering with businesses to mold the consumer experience, but also now measure compliance on more specific levels. The relationship creates a win-win for both parties. The inclusion of Mystery Shopping in the


loss prevention process can be a userfriendly way to keep up on these issues. “Specially trained field agents can look at a client’s operating procedures and evaluate it based on a checklist of policies and procedures established by the client,” says Cattani. Education can be a franchisee’s best weapon in combating loss prevention. Proper training, up-to-date analysis, cutting edge research, implementation of rewards programs, utilization of pointof-sale systems and insuring all chosen reporting processes are clearly defined and presently valid are major keys to success in loss prevention. Even simple, tried and true steps like waste management and customer receipt policies can be keys to big changes. The other important thing to remember for a loss prevention program, is the less tangible practice of changing the mood of a franchisee’s business. “Is it about compliance or culture - which is more important in loss prevention,” asks Cattani rhetorically. “Culture is an abstract concept to measure, but a solid culture and good leadership go a long way in inspiring people to act ethically, even when there is no defined protocol outlined in the proverbial ‘employee handbook.” This can trickle down from the franchisor to the franchisee and straight into the working behavior of each employee. If a franchisor is value-based, has defined core competencies that encompass integrity, and has the leadership skills to set an example, the odds increase that the franchisee and their employees will act accordingly, in the best interest of the franchise as opposed to their own selfinterests. “There is a delicate balance between the franchisor and franchisee relationship that must be maintained, as one cannot exist without the other,” says Cattani. “A good franchisor views their franchisees as

business partners, members of the team, and oftentimes one of the family -not just employees. “Good business is acknowledging the value of [those] relationships through dedication to training, development of processes, clear communication, demonstration of transparency, articulation of well-defined expectations, implementation of checks and balances and, most importantly, showing respect.” Any franchisee should know that employees are the first line of defense in a good LP program. Creating the proper atmosphere for them can ensure those employees will help rather than hinder a business in certain ways. “If integrity is communicated as part of a franchisor’s core values, employees are more likely to embrace it as part of the LP process,” stresses Cattani. “Treating employees with respect can go a long way in inspiring them to watch the store and watch your back.” Nick Margiasso, IV, has been a

professional in the entertainment, restaurant and hospitality media industry since the ’90s. The proprietor of NM4PR, a media journalism and public relations firm based in Atlanta, GA, Mr. Margiasso’s has worked with and within organizations and publications including the Atlanta Braves, NASCAR, the Associated Press, Publication Services of America, Shopping Center Business Magazine, Southeast Real Estate Business Magazine and Restaurant and Retail Facility Business Newsletter. Mr. Margiasso was a co-host of 2007’s Official NCAA Final Four Party at The Glen Hotel in Downtown Atlanta, has competed in multiple ATP Futures tennis tournaments and plans to one day run a bar and restaurant, somewhere, on a beach, where it’s always 5 o’clock. He has a wife of eight years, Sussy, and a one-year-old son, Nicholas “Nico” Margiasso, V. For more information: www.a-closer-look.com

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Lynette McKee and Coleman Sullivan

Attracting Investors Th Disciplined Planning Of the myriad potential trouble spots, none is more devastating and pervasive in its impact than a loss of confidence in the capital markets. At the same time, none can have a more positive impact on a company’s ability to fuel its growth with the capital, and many other vital resources, it needs when it needs them.

Lynette McKee

In our experience, there are several elements that enable a company to gain and maintain a high level of confidence among early-stage investors, financial institutions, private equity firms or the public markets. These are: • A disciplined approach to planning • A business model or strategy that’s defensible against competitive, pricing and margin pressures • Following best practices for financial controls and processes • Effective communication over time

Coleman Sullivan

Franchisors who have achieved a certain level of success naturally begin to think about the next phase of their company’s growth and development. Simply observing others who have gone through the various stages of growth, though, they will see that there are many ways to fall short of their objectives.

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• An ability to address issues and change course without waiting for external pressure • A strong internal culture that focuses on customer satisfaction • Significant equity ownership among leaders and employees Each of these topics deserves special attention, but we will begin with the first: a disciplined approach to planning. “Adventure is just bad planning,” said the arctic explorer Roald Amundsen. Now there’s nothing wrong with the occasional adventure. Some of us like living on the edge. For example, the world is divided into people who read directions carefully in assembling furniture, swing sets, etc.

And then there are those who don’t. No problem. You know who you are.

The problem comes in getting an organization, particularly a franchised organization, to execute, day in and day out. Any business has over time developed a personality and a way of doing things. It has an attitude toward risk; it has a framework it uses to understand its world; and it has a set of controls and guidelines that hopefully keep it out of the ditch. Every organization has these things whether or not it had used a formal planning process to put them in place. Many companies engage in what we call “planning by default,” which works fine for a while, maybe even a long while. But its weaknesses as a leadership philosophy come into sharp, and often painful, focus when there is a turn in the road; a severe economic downturn, a period of rapid expansion, an unexpected move by a competitor, or a sudden need to change leadership or sell the business. In the latter instance, a prospective buyer coming in with an extensive due diligence checklist can be a sobering experience. “We didn’t think of that” is not something you want to hear yourself saying in response to a buyer’s or an investor’s question. 
Getting to the matter at hand, this topic should be important to successful franchisors as they take their businesses to new levels. The reason is that as a franchised systems grows, things change. And not only that, new people and skills are needed, new relationships must be forged, and new sources of capital such as banks, private equity or other investors


hrough “Planning is a discipline, not a binder full of PowerPoint presentations and charts. It is not list making. It is not a story.” may be needed to support growth. The good news is that most of these demands can be anticipated. But that doesn’t mean that it’s any picnic orchestrating things. For example, let’s look at just two areas that will surely need special focus: building the company’s capabilities to prepare for the due diligence process that comes with external financing of any kind, and understanding what it takes to lead a large franchise system. A successful financing or partnering depends on having a variety of things in place well before reaching out to potential allies for growing your business: • A business plan that is fully understood and supported by the leadership team • An efficient means of scaling your business, taking into account the various costs incurred in supporting a growth program • A firm grip on all business processes including systems, risk management, controls, reporting, and clear notions of events and factors that could pose a disruptive threat to your operations • An organized paper trail for contracts, letters, real estate documents, and other such items that may not reside in one easily-accessible place In addition to these organizational matters, being a franchisor, particularly as you

grow outside of your home markets, involves a number of special concerns: • Making sure you have a profitable franchisee business model • Knowing your customer base as you expand markets to target the most appropriate markets for continuity in growth and brand development • Defining what is commonly known as Best Practices to ensure the right growth processes, procedures and systems are soundly in place to support existing franchisee expansion and a growing new population of franchisees • Having an appropriately trained staff that includes sales, admin, operations and other supportive disciplines • Knowing your “best in class” franchisee profile • Identifying your underperforming franchisees and/or “distressed” franchisees and having a plan to bring them to health or a healthy exit that can elevate the brand value and vitality as a whole • Developing a strategic growth plan that is sensible and executable to reach the targeted goals • Understanding the “new era” of sophisticated franchisee candidates and their expectations because competition will be brutal for new franchisees One more thing, planning is a discipline,

not a binder full of PowerPoint presentations and charts. It is not list making. It is not a story. Maybe the problem is that the word planning itself is dry as dust, or that it can bring to mind documents that are in fact collecting dust. It can sound bureaucratic. Using words such as “scenario”, “agenda” or “program” could help. Whatever you call it, getting better at it as a team will allow you to spend much more time playing offense than defense as you expand your franchise to its full potential. Lynette McKee, CFE, is considered an industry expert in franchising and has held executive positions with Dunkin’ Brands, Burger King, Denny’s, and Metromedia Restaurant Group, and most recently was the Executive Director of the National Restaurant Association Educational Foundation. Coleman Sullivan has advised leadership teams in a wide variety of industries, including retailing, sports management, banking, manufacturing, restaurants, and higher education. Coleman is a former senior vice president of Flagstar Companies, Inc. and Hardee’s Food Systems, Inc. Coleman graduated from Boston College with a B. A. in English Literature and an MBA in Finance, and began his career as a reporter for The Boston Globe. Add For more information: www.mckeecoservices.com

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Franchising USA- August 2013