Franchising usa The magazine for franchisees
Issue 11 - sep 2013
One Unit, Or Many? ToolBox Inspiring
For Franchises LATEST NEWS
FINANCIAL ADVICE FROM THE BANKS
TOP LAWYERS’ ADVICE
Franchising usa The magazine for franchisees
FRANCHISING USA VOLUME 1, ISSUE 11 september 2013 publisher: Colin Bradbury. firstname.lastname@example.org
EDITOR: Jessica Spoto. email@example.com
SALES DIRECTOR: Vikki Bradbury. firstname.lastname@example.org
Business Development Manager: Jenn Dean. email@example.com
DESIGN: Jejak Graphics. firstname.lastname@example.org
COVER IMAGE: BACH TO ROCK
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Editor Welcome to this edition of Franchising USA. Filled with advice from some of the most brilliant minds in the industry, and stories of courageous risks and pleasant outcomes, the September issue of Franchising USA is not lacking inspiration. With a main feature focusing on Children’s Products and Services, it seems fitting to reference the man who, much like many franchise owners, took his vision and passion and turned it into something that became renown in today’s culture. Acknowledging the obstacles life can sometimes throw at us, this individual wrote down these challenges to remind us that even though things don’t always come easy, we should not give up. As you read through this issue keep in mind Dr. Seuss’ “Oh, the place you will go” philosophy to realize the possibilities available to you in the franchising industry. You will find there are two distinct qualities that stand out in this issue: courage and leadership. Featuring stories of individuals who started with a vision and found the audacity to bring their dreams to life, these entrepreneurs have built their successes from the ground up. From
athletic careers to cookie bouquets, the one commonality between each of those featured in this issue is their drive to succeed. This issue’s Veterans Supplement not only speaks to those interested in pursuing a new career post military life, but it also shares stories of individuals, who despite their challenges, have found the valor to begin again. Our woman in franchising feature also spotlights a veteran, Mary Kennedy Thompson. A true leader, her story of courage and new beginnings is both intriguing and inspiring. As mentioned, this month’s feature is on children’s products and services. Recognizing some of the best brands in the industry, these franchises are designed for those who wish to ensure our future leaders have the tools they need to grow and learn in a healthy environment. As you read through this month’s issue I hope you find the inspiration to bring your own vision to life, have the courage to overcome any obstacles, and the spirit to unleash your true leader within. Have a wonderful month, Jessica Spoto 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.
On the Cover 64 The Franchise Tool Box
Bach To Rock: An All Inclusive Music School
One Unit or Many Units?
Philip F. Zeidman, DLA Piper’s Franchise and Distribution
Richard Ashe, Veteran Franchise Centers LLC
40 Inspiring Children’s Franchises
Feature Article, Anne Wentzell
86 Funding Options for Franchises
Dallas Kerley, Benetrends
10 Cover Story
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In Every Issue 06 Franchising News Announcements from the industry 40 Feature Article Children’s Products and Services 50 Women in Franchising Mary Kennedy Thompson, Mr. Rooter
Franchise Focus 19 Soccer Shots
40 Franchising USA
45 Primrose 83 Granite Transformations
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Expert Advice 12 The Millennial Confusion Syndrome Dan Kim, Red Mango
28 The Cost Crunch Michael Alter, SurePayroll Inc. 48 What’s So Great About Franchising? Ned Levitt, Dickinson Wright LLP
16 One Unit, or Many Units? Philip F. Zeidman, DLA Piper’s Franchise and Distribution
76 What’s Next in Technology for Franchises? Jon Carlston, Process Peak 80 Franchising 101: Terms, Traits and Tools Jason Power, Shelton & Power 87 Funding Options for Franchises Dallas Kerley, Benetrends
36 Rockin’ Jump 73 Sun Tan City
Franchisee in Action
Franchisor in Depth
24 Firehouse Subs
Franchise Profile 22 British Swim Schools
Have Your Say 30 WildBirds Unlimited BlueGrace Logistics Flip Flop Shoes 78 Growing in Popularity: Children’s Education Franchises Joel Lazarovitz, International Franchise Services Franchising USA
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what’s new! Corner Bakery Cafe’s Rapid National Expansion New multi-unit agreements set to add 60 plus restaurants. Recently Corner Bakery Cafe announced that it has signed five multi-unit restaurant franchise agreements to markets in Oklahoma, California, Massachusetts, and two in Florida. The first cafes of each new market are expected to open next year, and will eventually grow to see seven new restaurants in Oklahoma, nine in San Diego, 21 in Boston, 14 in Tampa, and 10 in Northeast Florida, for a total of 61 new locations. Emphasizing the importance of multi-unit national expansion, Corner Bakery Cafe is commitment to partnering with respected franchise leaders and operators in the industry. They have recently promoted Gregg Koffler to Vice President of Franchise Sales to oversee sales and growth for the fast-casual brand. “These new markets are a perfect fit for Corner Bakery Cafe,” said Koffler. “Each community is known for its strong neighborhoods and with our neighborhood approach to development, we expect each new restaurant to quickly become a favorite gathering place
for local families and friends.” Established in 1991, Corner Bakery Cafe restaurants are owned and operated by CBC Restaurant Corp. With more than 150 company-owned and franchised locations, the company now has nearly 300 committed cafes across the country, with a goal to more than double its U.S. footprint in the next three to four years. For more information: www.CornerBakeryCafe.com/Franchise.aspx.
Jan-Pro Takes Its Place as a Franchise World Leader Jan-Pro Franchising International, Inc. has established itself as a global leader. The international growth of the Jan-Pro brand is impressive, having established a vital presence in 11 countries. Jan-Pro, an established global franchise leader in advanced commercial cleaning, was recently recognized in being selected as a Top 100 Global Franchise by Entrepreneur Magazine. In the global business marketplace, Jan-Pro has taken the impressive position as a global leader in commercial cleaning. Founded in 1991 by Jacques Lapointe in Providence, Rhode Island, the company has since expanded internationally. Today Jan-Pro has over 10,000 franchise owners worldwide, operating offices in the United States, Canada, Australia, Dominican
Republic, Brazil, Mexico, Puerto Rico, Saudi Arabia, South Africa, United Kingdom, and New Zealand. “We are delighted that Jan-Pro has been recognized as a leading franchise worldwide,” said Rich Kissane, President and CEO of Jan-Pro. “The fact that the Jan-Pro Brand is established globally makes us very proud of our systems, our products, and of course, our international team of professionals.” Entrepreneur Magazine also recently selected Jan-Pro as the #1 Commercial Cleaning Industry’s 2013 Top Franchise, the #1 Commercial Cleaning Franchise for “Top 100 Low Cost Franchises for 2013, and #1 for 2013 “Best of the Best” 2013 in Commercial Cleaning. With a record of excellence unsurpassed by others in their
category, several other media experts, including Franchise Business Review, and Start Your Own Business honored the JanPro Brand as a top 2013 franchise. “The international stage is a major proving ground for any brand,” says Kissane. “It is a distinct honor to be included among such a strong group of international leaders as the Top 100 Global Franchises.” For more information: www.jan-pro.com
Bennigan’s Franchisees Save Time with Greater Marketing Effectiveness Through Visualogistix® With more than 70 corporate and franchise locations worldwide, Bennigan’s, a high-energy neighborhood restaurant and tavern known for its casual dining, is boosting its global marketing using Visualogistix®, a marketing asset management and logistics service, saving franchisees time and money. Offering global brand consistency and ease of use for greater marketing effectiveness, Visualogistix has been cutting down the length of time it takes Bennigan’s franchisees to create their marketing materials. “Visualogistix cut the old process down by 70 percent,” Nikki Tichansky, Bennigan’s Brand Manager said. “It provides our franchisees with a hassle-free, easy-to-use
system that saves them time and allows them to focus their energy in other areas.” With Visualogistix Bennigan’s franchisees get a marketing one-stop-shop, which is easily accessible on the Bennigan’s website. They can design their collateral in an approved, branded template, and then order it immediately. The collateral gets printed and shipped directly to them, without the back and fourth time the old process offered.
pieces per month. Franchisees are now using roughly 295 pieces per location per month, up from 26 per location the previous year. For more information: www.bennigans.com www.visualogistix.com
Since adopting Visualogistix the number of items ordered per month by franchisees has increased by more than 10 times. Comparing the first six months of 2012 in which all franchisees were shipped a total of 1,900 marketing pieces per month, to the first six months of 2013, the number of marketing materials increased to 21,000
Old Chicago Undergoes Significant Brand Refresh After three decades of success as Old Chicago Pizza & Pasta, the brand has refreshed to deliver a more modern dining experience. Rebranded as Old Chicago Pizza & Taproom, the neighborhood restaurant has added a more stylish and warm feel, an enhanced service model and an updated menu with wider and deeper offerings.
The revised menu, with its made-from-scratch philosophy, includes salads, paninis, classic Italian pastas and shareable appetizers. There is also a new Tavern Thin Crust Pizza in addition to the signature deep-dish pizza offering. Guests will also have up to 85 beer choices with exclusive, local and seasonal beers rotated throughout the year. “Refreshes often come with many challenges but we are very confident in our approach because this plan was a year in the making before any changes were made to the first test restaurant,” Mike Mrlik, president of Old Chicago said. “The planning and development was thorough and thoughtful. The first test restaurant in Eden Prairie, Minn. celebrated doubled sales that continued months later, a trend that other test stores have since displayed. It proves the concept keeps our existing fans coming in while attracting a broader audience.” Being certain that a refresh achieves success is always a challenge, but Old Chicago has seen significant top-line increases, from corporate and franchisee locations, which speaks to the strategic steps taken to rollout the refreshed look and menu. For more information: www.ocfranchising.com
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what’s new! RED MANGO HITS MILESTONE ENTERING MICHIGAN Multi-unit franchise owner and pilot helps the 250th store take off. Red Mango, a coast-to-coast frozen yogurt and smoothie franchise, is celebrating the opening of its 250th location and expansion into Portage, Michigan. Opening their first US store in 2007, Red Mango has since been able to expand through their aggressive growth strategies. Paul Hornick, franchise owner of three successful Red Mango stores in the Rockford-Illinois area is looking forward to introducing the brand and his fourth store to the state of Michigan. Familiar with business takeoffs, when Hornick isn’t focused on frozen yogurt at
his Red Mango store in Portage he’s the left wing of Team Aerostars practicing inverted maneuvers high in the air from his WWII-inspired plane. With more than 20 years experience as a commercial pilot, Hornick found a new kind of balance for his career and his life when he discovered Red Mango. Used to “thinking at 550 miles an hour,” the same can be said about Hornick’s speed with establishing his Red Mango franchises, opening his four locations in a mere three years. Store number 250 in Portage hopes to capitalize on the popularity of the Red Mango brand in Chicago, IL, which is expected to have more than 30 locations by year end. The company is focusing
on continued expansion throughout the Midwest U.S and nation wide. For more information: Website: www.redmangofranchising.com Phone: 214-871-6865
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on learning experience molding, decorating and dipping their very own chocolate and candy creations. Second-generation Chocolatier and owner, Joe Whaley, builds on the long history and solid reputation established by his father. Chocolate Works, his new venture, goes beyond basics to create a uniquely well-rounded chocolate and candy extravaganza. “There’s nothing like chocolate and candy to put a smile on people’s faces and I want to share with everyone that it’s just as much fun creating chocolate as it is eating it,” says Whaley.
Chocolate Works is Now Franchising Through overwhelming requests from customers wanting to own a little piece of this chocolate heaven, Chocolate Works is now franchising. An extension of the family-owned and operated Manhattan Chocolatiere, Chocolate Works, a new franchise concept, is transforming the corner candy shop into an interactive chocolate factory experience. Beyond the candy bins and cases of chocolates, customers of all ages are invited to indulge in a hands-
With current locations on Long Island, Scarsdale, and in Manhattan, Chocolate Works is now beginning to franchise in New York and New Jersey, with future plans to expand throughout the US. What sets Chocolate Works apart is its unique three-tier model for satisfying the public’s sweet tooth. The winning combination of candy and chocolate retail, on-site parties, and custom corporate products is a completely new concept. In 2012 Chocolate Works was voted Best Chocolatier by the Long Island Press, and has also been recognized by Time Out New York Kids as one of the “best new birthday experiences in the city.” For more information: Phone: 516.551.2976 Email: Joseph@ChocolateWorksNYC.com www.ChocolateWorksNYC.com
Maid Right Residential Cleaning Franchise Announces First Master Franchise Owners Since the launch of the unique Maid Right Residential Cleaning Franchise concept this past April, Maid Right moves ahead, using the successful Jan-Pro “Master/Unit” structure. Premium Franchise Brands LLC, a holding company of Jan-Pro Franchising International, Inc., and Maid Right Franchising LLC, recently announced the signing of four new territory Master Owners. “The new Maid Right Masters
are experienced business owners and we anticipate a very successful launch”, says Danessa Itaya, VP Maid Right. With the first training class completed for Maid Right Master Owners, they are now moving into the practical dayto-day aspects of the business. The four Maid Right Master Owners are Steve Brodack and Gregg Prescott, Cherry Hill, NJ, Jerry Erstgaard, Portland, OR, Sue and Kevin Johnson, Minneapolis/St. Paul, MN, and Carol and Tom Richter, Salt Lake City, UT.
“We know the impact and success of the Master/Unit model, through our experience with the Jan-Pro commercial cleaning brand,” says Steve Brodack and Gregg Prescott. “And now it’s really exciting to have that successful model launched for the first time in residential cleaning with Maid Right.” Industry experts recognize the Master/Unit Franchise structure as a strong model for growth. In this model, the Master is the executive developing a territory, while Unit Franchisees do the
cleaning. A territory grows as Unit Franchisees are added. “This is an exciting time in
residential cleaning,” says Rich Kissane, President & CEO,
Premium Franchise Brands.
“We are proud to be working to establish Maid Right as a new
leader in residential cleaning!” For more information: www.maidright.com
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cover stor y
Bach To Rock
bach to rock:
A n All I n c lu s i v e Mu s i c S c h o o l Students should join group lessons to improve their individual musicianship Playing with other musicians builds teamwork, develops social skills and fosters self-esteem. As part of the curriculum, all groups perform publically, starting at the in-house performance space, and working up to coffee shops, festivals and then culminating in events at nationally renowned venues.
Bach To Rock is no ordinary music school. Offering private lessons and group sessions for students of all ages and musical tastes, B2R’s innovative and passionfueled curriculum is the basis of its unique concept. The B2R philosophy is playing music should be fun and students learn best when joined together to play music they love. Founded in 2007, B2R is the product of music teacher and school founder Jeff Levin’s innovative teaching methods and CEO Brian Gross’ business branding expertise. Gross’ company, Cambridge Information Group, acquired the music school in Bethesda, Md., from
Levin, and the group worked together to build off the existing curriculum to create a professionally branded and commercialized business, replicable by those without music degrees. Each month, over 3,000 students from six months old to adults take lessons across the eight schools. No musical experience is required and students are provided with instruments. B2R is based on three key fundamental principles.
Students should play whatever music they want to By making this possible, students are motivated and have greater engagement. “In our music schools, we use an innovative approach to music instruction based on the belief that everyone learns faster playing the music they like, whether it’s rock or Bach, and the technical foundation is the same,” Gross explains.
Original songwriting and recording are also part of the program and Battle of the Bands showcases are held. “By playing with other musicians, students learn how to take time and cues from fellow players, harmonize and develop their skills, improving their individual musicianship,” Gross says.
Students receive customized and proprietary curriculum matched to their skill level B2R’s curriculum divides songs into different arrangement levels, starting from raw beginner to the original score. By allowing students to play songs they like through simplified versions and build upon them as they grow as musicians, students feel an early sense of success. “Students who have early success are more motivated and driven to have continued success,” Gross explains. Differing from other music schools in its aggressive programming, extensive genres and age of students, B2R’s diversity means a broader revenue stream. Last year, B2R rolled out a “Mommy and Me” program for children between the ages of six months and three years called “Rock n Roll.” They also expanded on the genre
instrument base opening two schools dedicated to DJ instruction. “Music has not been more central to culture at any point in history, with the only other close decade being the 60s,” Gross says, “and you can see it playing out in a lot of different ways.”
“The most rewarding aspect is working with children in a way they love while educating them, at the same time growing and building a national business.”
Touching on top-ranking music-centric shows such as Glee and American Idol, and Apple’s revolutionized music consumption business through products like iTunes, iPods and iPhones, Gross says computer software is allowing people to record and edit songs from their homes and instrument ownership has risen 10 percentage points in the last decade. At the same time public school systems are slashing music budgets, kids who previously received music education in school no longer can, forcing parents to look elsewhere for instruction. “If you look at the factors driving the demand for consumption of music, it’s at an all-time high in our history,” Gross says. “Our expectation is we will be the branded music school of choice across the nation as we grow over the next five years.” After opening six company-owned schools, B2R became an official franchisor in 2011. Today the company has sold 10 franchises, with two open in Pennsylvania and New York and four more opening in early 2014. Located in prime real estate space, schools average 2,500 sq. ft. and are composed of an upward of 12 classrooms. Each school is also equip with a professional recording studio and performance space. B2R’s franchisees are provided with the tools and training required to be successful. Beginning the franchising procedure with a discovery process, both parties meet and get to know each other. The potential franchisee is then introduced to the school’s marketing, operations and curriculum, and visits a current B2R location. A B2R franchisee should be a successful businessperson, passionate about education, music and children. Musical experience is a bonus, but not required,
and every employee must pass an extensive background check. The franchisee must undergo three rounds of training detailing ownership, operations, staffing and management. An ongoing support staff is also assigned to the franchisee to assist when necessary. “The types of training and support we offer is where we excel,” says Gross. “The power of the brand also creates a lot of added value for franchisees.” The franchise fee for a B2R school is $35,000 with a seven percent royalty fee and two percent national advertising requirement. “The most rewarding aspect is working with children in a way they love while educating them, at the same time growing and building a national business,” states Gross.
For the third consecutive year, Inc. Magazine listed B2R as one of the fastest growing privately owned companies in the country. The Washington Business Journal deemed B2R “the company to watch for in the D.C. area,” and Washington Family Magazine called B2R “the best music school in the D.C. area.” B2R’s goal is to have 500 units within the next decade. “We have a lot of great territories available and are actively and aggressively looking to fill markets in Boston, Chicago, Atlanta, Texas and Southern California,” says Gross. Selling 10 franchises in the last 18 months, Gross believes these numbers will continue to grow significantly now that B2R is establishing itself as a national music school brand. For more information: www.b2rmusic.com/
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ex per t advice
Dan Kim, Red Mango
The Millennial Confusion Syndrome
Itâ&#x20AC;&#x2122;s impossible not to notice how frequently the word â&#x20AC;&#x153;Millennialâ&#x20AC;? is being used by all levels of business media. I admit, there is certainly a cool factor in being able to understand and apply a term that not only sounds futuristically cool, but is also closely related to social media and technology -- and we all know how intriguing those topics always are. Franchising USA
“As soon as Millennial-targeted conversations cross over into real-life business applications, it becomes difficult for those afflicted with Millennial Confusion to relate with terms like “engagement,” “flawsome,” “hashtags,” and “Snapchat,” and connect them with their understanding of how the world works... or at least used to work.” I have no issue with the ubiquitous coverage of Millennials. I support and encourage journalism that helps society understand itself, especially when such efforts are designed to help entrepreneurs and business owners to succeed. What I do find problematic, however, is how confused many of my non-Millennial business associates seem to become whenever we talk about the application of Millennial culture into business-related initiatives like branding, customer loyalty, social networks, and mobile advertising. These non-Millennials, whoconsist of Baby Boomers and members of the oncehyped-about Generation X (who I like to collectively call the “X-Boomers”), all seem to know varying degrees of facts about Millennial culture and behavior. But, these X-Boomers also appear to have a difficult time understanding how this social phenomenon all plays out in real life, especially when it comes to doing business with Millennials who undoubtedly represent -- and will continue to represent -- an increasing majority of their customers. I like to refer to this condition as the Millennial Confusion. But regardless of what it’s called, the condition’s dizzying effects become clearly evident to me whenever I discuss Millennial-targeted marketing strategies with business folks who have spent the majority of their careers under the heavy influence of classical business case studies, such as the ones that talk about why Michael Jackson was pivotal to Pepsi’s success in the 1980s, or how the “Five P’s of Marketing”
interdependently helped Proctor & Gamble become a dominant company. Indeed, discussions about Millennial culture with X-Boomers can be productive and informative, but only in isolation. As soon as Millennial-targeted conversations cross over into real-life business applications, it becomes difficult for those afflicted with Millennial Confusion to relate with terms like “engagement,” “flawsome,” “hashtags,” and “Snapchat,” and connect them with their understanding of how the world works... or at least used to work. I wrote this article to document some of the informal yet self-gratifying exploration I have always wanted to conduct to help explain why Millennial Confusion exists. The very fact that an generation has already been encapsulated into an overused word that once (and very recently) only had the sole definition of describing “a span of a thousand years” is fascinating in its own right. But the reality that our society is not only generating a rising global army of Millennials, but is also becoming strongly influenced by this movement, gives me valid reason to be concerned whenever I am immersed into situations where a misunderstanding of Millennial culture imposes unprecedented challenges for small business owners, especially those of franchised systems that rely heavily on their franchisors for guidance over marketing to, and understanding their customers. You see, we are now in an economy where a majority of small businesses are owned and operated predominantly by X-Boomers, but frequented by a
consumer population that is increasingly Millennial. Even though our society has had experience with socials gaps in the past when the Baby Boomers and Generation X represented a majority of the workforce, the difference then between the two generations was not nearly as stark as the one X-Bookers face today with Millennials. A lot of this can be explained by citing technological advances and the knowledge chasms this type of evolution naturally creates between the generations. But if you think about the previous social impact of radio and television, it’s incomparable in many ways to the global disruption of the Internet and mobile technology. Things like social networks, omnipresent communications, infinite data storage, optical networks, and mobile technology have completely uprooted the previous social norms and expectations with which our world previously navigated, so much so that businesses which are unwilling or unable to resolve their Millennial Confusion have been abandoned by their customers in ways that are similar to how rebellious teens might distance themselves from unreasonable and overbearing parents “who just don’t understand.” Examples that immediately come to mind: AOL, Kodak and Yahoo (before Marissa Mayer). Conversely, brands that were previously losing touch with their customers, but now understand and leverage Millennial culture, are being rewarded by those customers in bountiful
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Dan Kim, Red Mango
“If you think about the previous social impact of radio and television, it’s incomparable in many ways to the global disruption of the Internet and mobile technology.” “Millennial” should not be used to describe a generation of people; a common alternative term like Generation Y, or perhaps even Generation Z, might be more relevant options.
ways. Example: Old Spice and Hanes Underwear (who, recently on Twitter, asked customers to mention the color of their, well, underwear). I have come to conclude that the reason why Millennial Confusion exists has nothing to do with unchangeable generational differences in things like norms, values, expectations, and manners. If these differences were really to blame, I believe our society would already have attributed them to normal generational gaps that always become easier to work through over time because we are naturally (albeit reluctantly) accepting of them. Millennial culture is different. It continues to excite us. Millennials seem to have created a consistently chaotic social fabric that is characteristically whimsical, fast moving, technologically savvy and truth seeking, in which honest, self-deprecating and/or humorously sarcastic attitudes are easier to believe than boastful and grandiose statements, and in which being perfectly impersonal (which includes one’s ability to determine things like when it is better to text somebody instead of calling them) is actually the preferred way to be personal. I believe that the root cause of Millennial Confusion is the product of our own doing. What I mean by that is our society (and particularly the media) work diligently to define and label the characteristics of Millennial attitudes, but performs this task in the traditional demographically driven frame of mind that tries to correlate
these attitudes with ages. One view, albeit unpopular, suggests that only those born on a true millennial date (2000’s) are considered Millennials. More popular views establish birth years that range from mid 1970 to 2000, which would mean that the youngest Millennial today would be 13 years old (now, the age of 13 is to social networks what 16 is to driving, and what 21 is to drinking). While it is true that the Millennial population today is predominantly comprised of young teens to 30-something professionals who cannot live without their iPhones, the Millennial way of life is not one that is shared only by these age groups. Rather, by its very nature, “Millennialism” is a movement that is open to, and can be seamlessly embraced by people of all ages, and not just those who are X-Boomers. “Millennial” should not be defined as the evolutionary offspring of Generation X and Baby Boomers. Millennial represents a fundamental shift in human behavior, driven by technology that not only spans age groups but also crosses every continental border on Earth. And yes, I believe Millennials include people who were born in the 1950s and 1960s, but only if they have openly embraced the Millennial culture. Millennial culture represents a way of life that has been created by the abundant and fluid ways with which technology allows us to communicate, stay connected to each other, and find and share information that helps us live better lives. The word
In my opinion, any person who is alive today is a Millennial. (Millennial by its very definition references all of the years between 1999 and 3000, and not only those who may have come to age during that time). Any person who uses a Smartphone or accesses the Internet is a Millennial. Yes, there are different degrees of how “Millennial” one might be, and one’s propensity to learn new things may dictate that variable. But the Millennial culture that continues to captivate the attention of worldwide media is the one we all live in today. The continued excitement over Millennials is merely a sign of how much our world has changed. And it is only by understanding this reality that Millennial Confusion will cease to exist. Once more and more people begin to accept the fact that we are all Millennials, there will be less fear of departing from the traditions of our past, and more collective energy focused on things that will help us in the future. Dan Kim is the Founder and Chief Concept Officer of Red Mango, a leading national frozen yogurt and smoothie franchise with over 200 units. He regularly engages with his 1.7+ million followers with his Twitter accounts @ dankimredmango and @redmango, and has a combined Facebook fan base of nearly one million fans for /redmango and /dankimredmango. He is also active on his personal Facebook account, fb.com/frozenyogurt. For more information: www.redmangousa.com
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T H E
I N E M A G A Z
F O R
Franchising U S A
H I S E E S F R A N C
THE MAGAZ INE
AND and NEW ZEAL AUST RALI A R 2013 VOL 07 ISSUE
FOR FRANC HISE
ONE UNIT, OR MANY? TOOLBOX INSPIRING
AVOIDING A TRAIN WRECK
CHILDREN’S FRANCHISE S
N WHEN MEDIATIO WORKS FINAN CIAL
THE BANK S ADVIC E FROM
TOP LAWY ERS’
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ex per t advice
Philip F. Zeidman, Senior Partner, DLA Piper’s Franchise and Distribution
One Unit, or Many Units?
“Today multi-unit owners control 54 percent of all franchise units in the United States, but that doesn’t mean it’s the right decision for the franchisor, or for the franchisee.”
Philip F. Zeidman
So you’re getting ready to franchise your business, and you have a critical threshold decision to make. Are you going to franchise to one franchisee at a time? Or are you going to franchise to “multi-unit” operators, those who will be committed and obligated to open a certain number of units in a certain geographic area over a certain period of time?
You’ve decided you’re going to become a franchisee and you too have a fundamental decision to make: are you in the market for a single unit, probably to operate yourself? Or are you looking for opportunities to invest a larger sum of money for the rights to open a number of units, necessitating the creation of a quite different structure (both financially and in personnel terms), but with the promise of potentially greater returns? That’s right, counter-intuitive as it may seem, this decision, inherent in the planning of both a franchisor and a franchisee, will require a strikingly similar analysis.
route to a committed, dedicated operation of the unit itself. His resources…maybe all of them…are tied up in the success of that location, and he will do whatever it takes to ensure its success: work inhuman hours, establish personal relationships with customers and prospective customers, seek out sources of supply to lower costs and increase customer satisfaction, bring in the high school son or daughter to stay afloat when an employee doesn’t show up for work, etc. After all, that’s the way McDonald’s started, and that thinking remains at the heart of that system.
From the franchisor’s perspective, let’s try to draw out what’s going through his mind:
But that’s an awfully slow process, isn’t it? Every franchise sale must start from scratch, with recruitment, qualification and training. And there are few economies of scale that can be realized in, for example, supervision. The same visits, handholding, assistance and control must be planned and executed for each unit.
The single-unit franchise, assuming the selection of the franchisee is sound and based on sensible criteria, is the surest
So it might be better to initiate a “multiunit” approach, either on a relatively small scale (e.g., three units to a franchisee,
or granting rights to additional units conditioned upon the successful operation of the first); or on a larger scale (an “area development” model, in which the area developer, usually for a substantial up-front payment, acquires the exclusive rights to a territory, within which he is obligated to open an agreed upon minimum number of locations in an agreed upon period of time). That seems to be the way an increasing number of franchise systems are headed, and the franchise projections can be compelling. It’s not an easy decision, and it will require weighing one set of benefits against another. The single-unit model may well produce exactly the sort of personal commitment you are seeking, but the multi-unit model may produce speed of market penetration, and income potentially far greater. The single-unit model requires greater personal supervision, but the multiunit approach almost certainly will place you one step further removed from the
development and operation of the customer experience, itself.
Which route will you take? While you’re mulling that over, let’s turn for a moment to put yourself in the shoes of the prospective franchisee. If you’re working for someone else, the appeal of the franchise is likely to be the prospect of being your own boss. If you’re operating a retail unit in your own name, the appeal is likely to be the access which affiliation with a franchise organization offers: access to professional training, marketing and advertising beyond what you could possibly afford, access to mass purchasing, and the like. The single-unit franchised operation can, under the right circumstances, yield all of these. But, you reflect, isn’t this just “buying another job?” The most I can hope to do is increase the yield from a single unit, isn’t it? Isn’t there something more?
Well, maybe. If you can assemble adequate financing you could acquire the rights to open a number of units, at a cost and effort that is certainly greater, but perhaps not in a linear fashion. You will have to become an employer of numbers of people, perhaps in locations at some distances from one another. You will be able to achieve some economics of scale yourself. The reality is that you will have largely moved from “behind the counter” to behind a desk, supervising the operations of a network of units…but the financial rewards can obviously be greater, perhaps far greater. The franchisor who is focused on control may well opt for a single-unit model. The franchisor who is intent on achieving market penetration with speed may well opt for a multi-unit approach. The franchisee that thinks in terms of running his business with direct and personal contact with his customers will find the single-unit appealing. The franchisee that
ex per t advice
ex per t advice
Philip F. Zeidman, Senior Partner, DLA Piper’s Franchise and Distribution
is prepared to sacrifice that experience, and take on a layer of administrative obligations, for the prospect of greater financial return, will likely opt for the multiple unit. Let’s pause for a moment and consider what franchisors that have utilized multiunit franchising have to say about it. In my experience, those franchisors that have utilized multi-unit franchising successfully cite these principal advantages: • Greater and more reliable speed in penetrating markets • The use of “leverage” i.e., expanding through the human and financial contribution of others • A new source of ideas from someone who is similarly situated • A greater rapid cash flow • Increased local credibility, greater knowledge of local conditions and local competition, than could have been provided by a single unit franchisee • The capacity to attract larger and more sophisticated operators • Increased operating marketing efficiencies On the other hand (there is always another hand), in my experience those who have tried multi unit franchising less satisfactorily cite these characteristics of the system which were not compatible with their own vision: • To some degree, a loss of control to a person or entity, which may be large (indeed, even larger than the franchisor itself) • As a consequence, some greater difficulty in managing and leading the operation in the direction the franchisor wished • To some degree, greater complexity because of the entities, the contracts, etc. • Especially for those who may have harbored the notion of stepping in at some point and running the businesses
themselves, the sense that that ship has sailed: “Once its gone, its gone.” One thing is clear, the trend appears to inexorably toward the multi-unit approach. Today multi-unit owners control 54 percent of all franchise units in the United States, but that doesn’t mean it’s the right decision for the franchisor, or for the franchisee. When a franchisor and a franchisee undertake the kind of analysis that is suggested here, they may find to their surprise that the weighing of one set of advantages against another is a strikingly similar process for both. In other words, they are likely to find that, as in so many other aspects of life, the determining factor will be an oldfashioned concept: values. Philip Zeidman is a Senior Partner with DLA Piper’s Franchise and Distribution practice in Washington, DC. Principally devoting his practice to distribution, licensing and franchising law, Mr. Zeidman received his
undergraduate degree with honors from Yale University and law degree from Harvard University, and also studied at the Harvard graduate School of Business Administration. He served as a Trial Lawyer for the Federal Trade Commission, General Counsel to the Small Business Administration and Special Assistant to the Vice President of the United States. He is counsel to a number of U.S. and foreign companies and trade associations. . Mr. Zeidman is also the former Chairman of the International Bar Association’s International Franchising Committee. He has also served as General Counsel to the International Franchise Association. He has been named Global Franchise Lawyer of the Year by Who’s Who Legal for nine consecutive years every year this award has been made. For more information: Email: Philip.email@example.com
Soccer Shots Score With Fr anchising Goals
A New Concept Soccer Shots is a high-energy soccer program featuring principled instruction dosed in fun. Founded in 1998 by Jeremy Sorzano and Jason Webb, the pair first met while playing soccer at Messiah College in Grantham, PA. Moving on to play semi professionally for the Charlotte Eagles in Charlotte, NC, this is where they developed their fresh concept. With a mutual love of soccer, brains in business, and a passion to inspire children to live fit, healthy lives, the two athletes developed a program to cater to a non-marketed niche group. Launching the first businesses in their hometowns of Charlotte, NC and Harrisburg, PA, both found quick success.
The idea of providing children ages two to eight with a creative curriculum that focuses on soccer skills as well as character development held appeal to many. With a growing interest from parents and former teammates to become involved, in 2005 Soccer Shots began franchising. In May 2009, a former college teammate of Sorzano and Webb, Justin Bredeman, became the third Soccer Shots partner, bringing with him eight years of franchising experience from Auntie Anne’s, Inc., a hand-rolled soft pretzel franchising company.
The Mission The mission of Soccer Shots is to be the
premier intro-to-soccer provider across the globe. The appeal of an introductory soccer program for kids ages two to eight comes from the impact children receive in both fitness education and character development. Last year over 100,000 kids enrolled in Soccer Shots to learn the fundamentals of the sport in locations across the country. This year the company is looking to grow by 50,000 more. When Sorzano and Webb started Soccer Shots they set a goal they called “40-4040.” This meant by the time they turned 40 they would have 40 franchisees, each making $40,000 annually. This past year Sorzano turned 40 and currently has over 90 franchisees, with last year’s highest grossing franchisee earning significantly
“Soccer Shots gives franchisees the opportunity to do something they are passionate about, a highlight that is often rare in the business world.” as they wish. As a franchise grows so does the number of its employees, thus creating jobs within its community. Some multifranchise owners have up to 25 employees. Most importantly, Soccer Shots gives franchisees the opportunity to do something they are passionate about, a highlight that is often rare in the business world. The work a franchisee puts into the program reaps rewards that can be seen in the positive impact made on the kids.
The Franchisee Profile For Soccer Shots, the most important thing when considering a potential franchisee is finding someone who loves kids and has a passion for impacting them positively. While this requirement may come in many different forms, what’s crucial is finding people who genuinely enjoy the concept and see the fulfillment in it.
more. It’s safe to say they have well surpassed that goal.
The Benefits of Franchising with Soccer Shots Franchisees benefit from the low start up capital required to launch a franchise, the total investment ranging from just $18,740 to $25,500. While most franchises require expensive equipment, numerous employees and leases with hefty bills attached, Soccer Shots goes to where the kids are, running the sessions at daycares, pre-schools and in local parks. When starting out it is recommend franchisees hire two part time coaches to run sessions during the week, though a franchisee can coach as much or as little
Individuals with an athletic background, who understand the value of using sport as a platform for change and growth are also favored. Experience in sales, marketing, or operating in a small business is another asset.
Giving Back to the Community In August 2009 Soccer Shots founded Global Goals™, the non-profit arm of the company that aims to provide opportunities to disadvantaged youth within the U.S. and around the world through soccer. Aware of their inability to reach every child in every community, they partnered with the U.S. Soccer Foundation to raise funds as a means of bringing the game to underserved areas. In turn, it has created awareness for children who live in these communities so they too can have access to affordable, quality soccer programs. As an issue that is near and dear to the Soccer Shots family, the company
regularly donates a portion of every child’s registration fee to Global Goals in an effort to build SportCourt playing surfaces. To date they have built one in New Jersey, and another in California, giving kids a safe place to play. Soccer Shots also supports the Urban Soccer Symposium, a four-day national event that brings together leaders from different urban soccer areas to train and equip them with the resources and networking needed in under-resourced communities.
Establishing a National Brand Soccer Shots continues to grow and is currently targeting areas including New York, City, Chicago, Boston, and Houston. With upcoming innovative plans in the works, the company hopes to expand nationwide. Having established itself in the franchising industry, this year Soccer Shots ranked number one for Children’s Fitness Franchises by Entrepreneur Magazine for the second consecutive year. They have also been recognized in Inc. Magazine’s 5000 list, and ranked number three for Franchisee Satisfaction by Franchise Business Review. Activity Tree awarded Soccer Shots with The Best Buzz Award, an honor based on parent feedback regarding activities their children are involved in.
Providing Support Every Step of the Way Soccer Shots’ support team is immense. Providing help every step of the way, new franchisees are prepped with an intense three-day New Operator training program. Once completed, franchisees undergo an on-site sales day with a dedicated support staff member who travels to their location to visit schools and walk them through these aspects of running the business. Franchisees are provided with ongoing assistance in various areas of the business from specialized staff including a web support person and staff members readily available to help grow the franchisee’s business plan over time. For more information: http://www.soccershotsfranchising.com
B r itish S w im Schools
British Swim Schools
Dive Into International Water Established in 1981, British Swim Schools has become a leader in teaching children as young as three months old the fundamentals of swimming through a gradual, gentle and fun process. Founder and CEO, Rita Goldberg, a former national swimmer, has created a proven system that has been launched to franchisees in America and is now expanding to international waters. Retiring from swimming after getting married and having children, Goldberg quickly fell back in love with the sport when asked to help organized a swimming club in Manchester, England. Meeting with an old coach, a proverbial light switch went off in her head when she saw the pool he had built in his garage for giving lessons. Goldberg then took it upon herself to do the same, and thus her rendition of swimming lessons began. Moving to the US in 1991, Goldberg
opened her first British Swim School in 1993. Catering to young children and less experienced adults, the courses provide the basics of swimming with patience and care. Growing from one concession in a fitness center to opening her own building and additional pools in shopping malls and warehouses, Goldberg built four indoor pools before moving her concept into preexisting facilities.
Once British Swim Schools began spreading throughout the states, Goldberg started thinking about franchising. However, rather than have franchisees build their own pools, she’d encourage them to use underused community pools, making it possible for them to invest without the expenses involved in building an indoor pool. In October 2012 British Swim Schools became an official franchisor and today has 11 franchisees, across five states, operating in 35 to 40 pools, teaching around six thousand pupils a week. Purchasing a demographical area that fits the school’s requirements; 10,000 to 15,000 children in the necessary income bracket, franchisees decide how many pools in their area they wish to occupy. Looking for franchisees that are energetic and friendly, these individuals need
to recognize the business’ potential to achieve maximum reward. Last year British Swim Schools’ highest grossing franchisee reached over $625,000. Most importantly, franchisees need to have a passion for what they are doing.
Along with a quick return period and high profit margin, British Swim Schools’ franchisees benefit from a proven system and the simple enjoyment of the business itself. Provided with finite training, lesson planning and scheduling, franchisees are taught how to run their business, market it, and computerize it using specialized software. Continuous follow-ups, annual conferences and bi-weekly phone calls are all forms of the company’s ongoing support. While excited about their growth in the US, what has Goldberg most thrilled is their recent invitation to join an elite group of franchises through merger company ULUSLARARASI ÇOCUK ÜNİVERSİTESİ in Turkey. Approached last June at the International Franchise Expo, British Swim Schools has agreed to open their first international franchise in Adana, Turkey this October. For more information: www.britishswimschool.com
Br itish Swim School Swim School In-A-Box Just Add Water
• High Profit Potential • No Experience Necessary • Designated Territory •Rapidly Growing Industry Market •Multiple Ma Potential
•No Pool Construction Required •Operation in 90 days • Low Investment (Total Investment under 40k)
• Low Overhead •Year-Round Income
f ra nchisee in action
From Football To Franchising, don d av e y s c o r e s w i t h
There are few things that can prepare someone to become a successful franchisee. For Don Davey, franchisee of multiple Firehouse Sub locations, playing nine seasons of professional football in the National Football league was it. Franchising USA
Davey, former Defensive Tackle for the Green Bay Packers and Jacksonville Jaguars, has learned that hard work and well thought out game plans can help to achieve success in both football and the world of business. “Football is a great microcosm for life. It teaches you how to handle both highs and lows, take coaching, be a good teammate, hold yourself accountable, be disciplined, and work hard,” he says.
Davey grew up in Manitowoc, WI, a 30minute drive from Green Bay. In 1986 he headed to Madison to attend the University of Wisconsin where he received a Masters degree in Mechanical Engineering. During this time Davey was also a four-year starter for the University Badger football team, earning both All-Big Ten and All American honors as a defensive lineman. After graduating Davey, a self-proclaimed numbers geek, launched his own investment advisory firm. This endeavor taught him to read balance sheets and
crunch numbers, a skill that would later be useful in analyzing business models. In 1991 Davey was selected by the Green Bay Packers in the NFL Rookie Draft, and in 1995 he was signed by the Jacksonville Jaguars. Over the course of his NFL career Davey used his business skills to manage his own finances, and those of fellow athletes. Davey’s introduction to Firehouse Subs happened while playing in a charity golf tournament organized by the Jaguars football team, Partnered with Robin Sorensen, co-founder of Firehouse Subs, the pair hit it off instantly, finding commonalities in marrying their high school sweethearts and their children. It wasn’t long before Robin shared the story and his vision of Firehouse Subs. Headquartered in Jacksonville where both Robin and co-founder/brother Chris grew up, the brothers opened their first location here in 1994. Retiring from football in 1999, Davey
turned his focus to Firehouse Subs. Through keeping in contact with the Sorensens Davey learned the company was beginning to franchise. “I started digging into the Firehouse business model and realized it was a great concept that I wanted to get involved in,” he says. Getting approval to bring the concept to Orlando, a franchise development agreement was set in motion and in 2003 Davey opened five restaurants. Once Davey decided to join the franchise industry, he realized much like football, the key to success was having the right team in place. Fortunately for him, his friend Scott Anthony, former director of training for the Orlando Hospitality Institute, was also seeking a new opportunity. Bringing Anthony to Jacksonville, Davey introduced him to the Sorensens and their concept. Anthony quickly fell in love with the company and the pair formed a partnership. Today Anthony runs the full time operations in Orlando, while Davey manages the business office in Jacksonville. Before opening his own locations Davey insisted on learning the nuts and bolts of how the business operated. Being a hands-on guy, he asked the Sorensens if he could work at a location near his daughter’s school. Agreeing to this, Davey spent six weeks working in a restaurant learning inventory, food handling, cash register management, and ordering. Feeling comfortable with the business model, Davey then attended the two-week training program Firehouse Subs requires franchisees to complete. In 2003 he opened his first location in Mariner’s Village on the east side of Orlando; this year marks the tenth anniversary of the restaurant. Davey has since opened 13 Firehouse Subs in South Florida, and two in Wisconsin. He also has two grand openings set to take place in the next few weeks, one in Lake Buena Vista Orlando, FL, and the other in Madison, WI. Of Davey’s Firehouse Sub locations, the smallest, an 800 sq ft space, is set in the Mall of Millenia with a shared dining space, while the largest, an area developer
Wisconsin partner Eric Erwin, Barry Alvarez (University of Wisconsin Athletic Director/former coach), Don Davey
restaurant in Wisconsin, spans 3,400 sq ft. This location serves as a training restaurant for the entire state. “I wanted a big marquee store that would help sell franchises, train franchisees, and be the catering hub for our restaurants in Madison,” says Davey, adding that since opening this location last February six new restaurants have opened in Wisconsin and the interest generated has been significant. The major selling point of Firehouse Subs for Davey was the product. “From the first day I tried it I fell in love with the food, the service, and the atmosphere,” he says. “People always say to do what you love and I fell in love with the brand, the
founders, the company, and the business model; but at the heart of it all is the food.” The ongoing support Firehouse Subs offers their franchisees also caught Davey’s attention. Introduced to area representatives Mike Kelly and Richard Taylor, the two have assisted Davey whenever necessary. “As local franchisees themselves, they deal with the same issues, products and pricing structure as we do. So when we have problems or questions we can go to them and get all the help we need,” explains Davey, adding that they were hugely instrumental in their initial success and how it’s been great to have them to lean on over the years.
f ra nchisee in action
f ra nchisee in action
While a balanced lifestyle can be difficult for business owners, Davey seems to have figured one out, but admits there is never really a time when he’s completely clocked out. “The difference between owning your own business and having a job is that your business is never not on your mind. As a business owner I’m never without my cell phone or laptop, because ultimately all responsibility falls on me, so I need to be able to solve problems whenever they may come up.” As with any company, challenges can be unpredictable and hard to navigate. Looking back Davey remembers the recession in 2008-2009 and how he managed the ups and downs. “We’ve had some great times and some not so great times, you have to be level headed. Just like with football, you can’t get too high when things are great, you can’t get too down when things are bad. We know we got a great product with raving fans that absolutely love us and in the long run we’ll be fine,” he says, adding this has been true throughout his ten years with Firehouse Subs. Achieving such success with partner Anthony, Davey offers advice to those interested in franchising with a partner.
“I started digging into the Firehouse business model and realized it was a great concept that I wanted to get involved in.” “Do not make the mistake of partnering with someone who has the same skill set as you. It will leave you with a gaping hole in areas where you are both weak,” he says. In their partnership Davey is great with number crunching, site selection, and lease negotiations, whereas Anthony excels in motivating their team, coaching, and day to day operations. Recommending Firehouse Subs to all potential franchisees, Davey has turned several current and retiring athletes onto Firehouse Subs, creating a potential second career for them when they retire from the NFL. “I can’t say enough about our brand and our product. The company, still family owned, is a genuine, authentic story. Robin and Chris are both third generation firefighters in their family. It’s authentic, it’s the real deal and I’m very proud to be a part of this family.” Happy with how things have and are continuing to develop, Davey’s most rewarding moment was reaching his long-term goal of introducing the beloved company to his home state of Wisconsin.
“We are the largest franchisee in the Firehouse Subs system, and we’re very proud of that. We’ve done things right from day one and we treat our team very fairly. We have several employees who have been with us for ten years now and that’s very rare in our industry.” Today, with a bright outlook on the future and his mind always on his family of five daughters, Davey is already thinking ahead. “Hopefully one of them [his daughters] will want to get involved with the business and help me run things. I would love for our company to survive into the next generation,” he says. While entering the world of franchising has required a lot of hard work, Davey quickly states he’s had it easy compared to others. “My wife Kristen has her hands full juggling our five daughters. My job is a lot easier than hers, that’s for sure,” he says with a laugh. For more information visit: www.firehousesubs.com/FranchiseOverview.aspx
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ex per t advice
Michael Alter, President and CEO, SurePayroll Inc.
The Cost Crunch Let’s be honest. One of the reasons anyone opens a franchise, or any business for that matter, is to make money. It’s often not the primary reason – certainly things like fulfilling a lifelong dream, being your own boss, changing your lifestyle play a huge role – but it’s a necessary part of the equation. Michael Alter
We all want to profit from our business venture and to do so we need to control costs. Talk to any franchise owner and they’ll tell you, costs are one of their top concerns. According to a recent survey from the National Federation of Independent Business (NFIB), the cost of health care is
a chief concern. The overall complexity of the Affordable Care Act makes it difficult to predict future costs. Not that health care costs are anything new, they’ve always been a concern. These changes just add another layer to the issue. The broader problem of uncertainty is always a hindrance for franchisors and other business owners. Because actions in Washington, D.C. and state capitols are difficult to predict, it wreaks havoc in planning rooms and causes business owners to act more cautiously than they otherwise might. The NFIB survey pointed out several other cost concerns that franchisors undoubtedly are facing: • Uncertainty over economic conditions. We’re still in a slow recovery period and recently we’ve seen consumer
“Costs are the nature of the beast in this business. However, if you’re prepared for them and have a plan in place to mitigate them, they won’t stop you from having great success.” spending lag. It’s hard to move forward confidently without seeing more growth and demand in the overall economy. • Cost of natural gas, propane, gasoline, diesel and fuel oil. In 2013, fuel prices have spiked up several times and remain high, with the exception of natural gas. However, there is uncertainty over the future regulation of natural gas too. • Federal taxes on business income. When the President and Congress spar over tax policy, business is usually dragged right in the middle of the ring. Some proposals favor big business over small business and vice versa. Others are unfavorable to all business. • Tax complexity. Correctly preparing taxes and operating within the law while paying the lowest tax possible remains a major cost to all business.
spend in a quarter or a year, and how much you expect to make, you don’t want to forget about these very real factors. There are also some practical measures you can take to reduce the burden of these costs. • Keep Cash on Hand: Remember that cash and profit is not the same thing. You want to keep a cash reserve so that when those tax bills do come, they don’t overwhelm you. • Make Sure Taxes are Handled Properly: As painful as tax payments are, paying tax penalties is even worse. Make sure all your payroll taxes are paid and filed correctly. Your account or a good payroll service can help you do this without much work on your end. • Use Technology Instead: Some of your operations may be running less
efficiently than they could be with the help of technology. Consider outsourcing in areas - marketing, IT, payroll – that are not core to your business. It may very well save you time and money in the long run. Costs are the nature of the beast in this business. However, if you’re prepared for them and have a plan in place to mitigate them, they won’t stop you from having great success. 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. For more information: www.surepayroll.com
• Frequent changes in federal tax laws and rules. Tax laws change every year and rarely do they simplify the tax code. • Property taxes. Different states and counties treat property taxes differently, but it remains a major cost for most businesses. • State taxes on business income. As state financial outlooks continue to deteriorate, state politicians look to business to bail them out in the form of more taxation. Much of this is, unfortunately, out of the individual franchisor’s control, however it’s good to have an idea of where the costs are coming from, and how they might impact your particular business. As you’re planning how much you want to
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have your say
Jim Carpenter, Founder and CEO of Wild Birds Unlimited
How an Engaging Company Culture Le ads to SystemWide Success “Decide what your culture will be and make it the best possible. When people hear how you treat your employees and your franchisees, they’ll want to become part of your company.” increase in sales and profit than those with lower engagement. A 2012 Deloitte LLP report titled “Culture in the Workplace” shows that exceptional organizations think about their business as a two-sided ledger: strategy and culture. From the study, 94 percent of executives and 88 percent of employees believe a distinct workplace culture is important to business success.
Every organization has a distinct culture which relates to the values and attitudes of employees. A healthy corporate culture values each employee in the organization regardless of job duties, which results in employees working as a team to meet the company’s needs. Research has found that companies with high employee engagement levels were up to 10 times more likely to see an
For example, Wild Birds Unlimited, the leader in backyard bird feeding and nature specialty stores with more than 275 locations nationwide, encourages all employees to connect with nature in the office and at home. Jim Carpenter, Founder and CEO of Wild Birds Unlimited, has turned his lifelong passion into a profit-making venture by sharing his love for bird feeding and watching with others. Carpenter doesn’t believe in a corporate-owned store, which includes his own store that is considered a franchise. His philosophy stems from his attitude that if you own your own store, you take more pride in ownership, have more fun
doing something you’re passionate about, and, therefore, work harder to ensure its success. The company has grown on a culture where employees are encouraged to work together to improve the system. Franchisees are trained with the best practices and ongoing training is available. “Our best accomplishment as a franchisor is knowing our franchisees are happy with the level of support they receive,” said Carpenter Encouraging employees to connect with nature provides fun opportunities. Unique bird sightings are announced over the intercom, and everyone races to the window to get a closer look. Company outings include bird watching, nature hikes, and participating in the Audubon Birdathon to raise money for the local Audubon Association. Sponsoring employee events and activities encourages team building, friendships, and allows team members to share their passion for nature with each other. An interest in the
avian world is essential for potential Wild Birds Unlimited franchisees. The franchise is committed to educating the public about the importance of the environment and preserving wildlife. Franchise owners volunteer at local environmental and wildlife organization and also hold in-store events focusing on conservation and giving back to nature. By hosting events like nature days, families can participate in activities that help them bond with nature and teach children how to respect their environment. Wild Birds Unlimited has built a company culture that enables them to bring together a community of franchise owners and employees who share the same excitement about the hobby. Another company with a unique culture is BlueGrace Logistics, the nation’s most progressive logistics, transportation and technology provider. With 30 franchise locations established across the country, BlueGrace offers customized transportation management solutions to customers throughout the United States. Company executives believe that the level of employee and franchisee happiness is a true measure of company success. Bobby Harris, CEO of BlueGrace Logistics, worked in the transportation and logistics industry for 20 years before starting his own franchise. He has spent the last five years making his company a great place to work by creating an environment employees enjoy. He even hired a full-time culture coordinator to plan company events, community service activities and other initiatives. “A strong culture is the selling point of a great brand,” Harris said. “Decide what your culture will be and make it the best possible. When people hear how you treat your employees and your franchisees, they’ll want to become part of your company.” Successful strategies and tactics implemented at BlueGrace Logistics
include a peer-to-peer bonus program, which fosters employees to nominate each other for exceptional performance. The company also takes the hiring process seriously and aims to hire sensitive and empathetic employees to maintain their motto of “We don’t care how much you know until we know how much you care.” To help support the training process, the corporate team has established a mentoring program. Employees can also enjoy ‘Free Beer Fridays,’ as well as interoffice competitions and incentives. Harris also launched a ‘cubicle swap’ where executives moved their offices to cubicles and allowed employees to move into their offices for several weeks in an effort to bring management closer to employees. Not only did this allow executives to see and hear what was going on, but it allowed employees to interact more with executives and increased the overall productivity level. BlueGrace grants paid time off for volunteer hours at the charity of their choice, allowing them to support causes they support. Additionally, BlueGrace has found social media to be an important tool for collaboration and engagement. Having an open social media policy connects the entire franchise system and corporate employees, enabling each person to learn about colleagues’ lives outside of work. This has created positive employee morale and greater retention, resulting in reduced training expenses and a strong bond between employees. Sometimes franchisors think large corporate headquarters would impress franchisees. But, for 85-plus-unit retail franchise Flip Flop Shops, the opposite is the case. For them, the term “home office” for supporting franchisees takes on a literal meaning. The CEO, COO, President and entire support staff of North America’s first retail chain exclusive to the latest styles of flip flops and sandals work from their homes, globally. They stay connected via
phone, email, and FaceTime, as well as with periodic face-to-face meetings, and believe that not having a “corporate office” provides benefits the franchisees. Why? Flip Flop Shops’ culture – which starts at the top and spreads throughout the entire franchise system in shops throughout the United States, Canada, Guam, and the Caribbean – is rooted in the idea of a flexible, care-free lifestyle. “Our culture has a mellow and freespirited nature – it’s about enjoying life and freeing your toes.,” said Brian Curin, President and Co-founder. “Our mission is to give anyone, anywhere the opportunity to ‘Live…Work…Play With Their Toes Exposed®’ and enjoy the same lifestyle the brand exudes. How can we expect our franchise owners to believe in this lifestyle if their franchisor is operating in a stuffy corporate office with closed doors and tiny cubicles?” Both Curin, company’s CEO Darin Kraetsch and COO Alan Woods, spent years building the Cold Stone Creamery franchise, spending day-in and day-out dressed in suits. The group of outdoor enthusiasts let their lifestyle considerations guide them when moving onto their next professional venture, creating a culture that allows them to work flexible hours, enjoy their passions and live their lives while still completing work and staying connected with the team. “We had already built the Taj Mahal of offices and it didn’t make us any more effective at our jobs or our companies any better,” Kraetsch said. “So, when we sought out to build Flip Flop Shops, there was no way we were going the typical corporate route. Our focus was going to be on lifestyle and quality of life. When the management team and employees are happy with their lifestyles, it benefits the entire company, and trickles down to the franchisees.” The executive team meets monthly at an industry event or Shop Day, a ‘discovery day’ showing prospective franchisees
have your say
have your say
Jim Carpenter, Founder and CEO of Wild Birds Unlimited
a Flip Flop Shops location, teaching them about the brand and its culture, and enjoying each other’s company over Mexican food and margaritas. The franchise also uses a Facebook group to keep all shop owners engaged. This platform serves as an easy way for everyone to keep in touch and share practices. “We’re looking to grow with shop owners that embody the Free Your Toes® lifestyle and share the same flip flop passion and attitude we do,” Curin added. “Potential franchisees must also have a good sense of humor and solid business acumen. They appreciate our living the culture and not having to dress ‘business casual’ to visit their franchisor. All they have to do is throw on flip flops and shorts and hang out with us.” In conclusion, having a unique company culture provides a foundation for shaping an organization’s culture and enhancing the overall success of the business. Wild Birds Unlimited, BlueGrace Logistics and Flip Flop Shops have established distinct company cultures that are driven by employee engagement along with the growth and success of each franchise system. When a company truly cares about its people, nurtures the culture, creates an environment and offers challenging work, great things happen.
CEO Bobby Harris with Executive Team
Hurley Creative Director Ryan Hurley, Flip Flop Shops Co-founder and CEO Darin Kraetsch, Hurley Founder and CEO Bob Hurley, and Flip Flop Shops Co-founder and President Brian Curin
In 1981, Jim Carpenter combined his retail experience with his enjoyment of nature to open the first Wild Birds Unlimited location in Indianapolis. Carpenter franchise the concept in 1983 to more than 280 locations throughout North America. Today Wild Birds Unlimited continues to evolve as the original and largest franchise system of backyard bird feeding and nature stores. For more information: www.wbu.com/ www.mybluegrace.com/ www.inc.com/profile/flip-flop-shops
Corporate team on company outing
FRANCHISE OPPORTUNITIES AVAILABLE IN NEW AREAS!
#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
I n t er nat iona l Fr anch ise Associat ion
WHAT INFORMATION IS FOUND IN THE FDD? The purpose of the FDD is to provide prospective franchisees with information about the franchisor, the franchise system and the agreements they will need to sign so that they can make an informed decision. THE DISCLOSURE DOCUMENT (FDD) Item 1: The franchisor and any parents, predecessors and affiliates. This section provides a description of the company and its history.
Business experience. This section provides biographical and professional information about the franchisors and its officers, directors, and executives.
payments that must be made.
Initial investment. This item is presented in table format and includes all the expenditures required by the franchisee to make to establish the franchise.
Restriction on sources of products and services. This section includes the restrictions that franchisor has established regarding the source of products or services.
Litigation. This section provides relevant current and past criminal and civil litigation for the franchisor and its management.
Franchisee’s obligations. This item provides a reference table that indicates where in the franchise agreement franchisees can find the obligations they have agreed to.
Bankruptcy. This section provides information about the franchisor and any management who have gone through a bankruptcy.
Initial fees. This section provides information about the initial fees and the range and factors that determine the amount of the fees.
Other fees. This item provides a description of all other recurring fees or
Financing. This item describes the terms and conditions of any financing arrangements offered by the franchisor.
Franchisor’s Assistance, Advertising. Computer Systems and Training. This section describes the services that the franchisor will provide to the franchisee.
Territory. This section provides the description of any exclusive territory and whether territories will be modified.
Trademarks. This section provides information about the franchisor’s trademarks, service and trade names.
Patents, copyrights and proprietary information. This section gives information about how the patents and copyrights can be used by the franchisee.
Obligation to participate in the actual operation of the franchise business. This section describes the obligation of the franchisee to participate in the actual operation of the business.
Restrictions on what the franchisee may sell. This section deals with any restrictions on the goods and services that the franchisee may offer its customers.
Renewal, termination, transfer, and dispute resolution. This section tells you when and whether your franchise can be renewed or terminated and what your rights and restrictions are when you have disagreements with your franchisor.
Public Figures. If the franchisor uses public figures (celebrities or public persons), the amount the person is paid is revealed in this section.
Financial Performance Representations. Here the franchisor is allowed, but not required, to provide information on unit financial performance.
Outlets and Franchisee Information. This section provides locations and contact information of existing franchises.
Financial statements. Audited financial statements for the past three years are included in this section.
Contracts. This item provides of all the agreements that the franchisee will be required to sign.
Receipts. Prospective franchisees are required to sign a receipt that they received the FDD.
WHAT ARE THE KEY ITEMS IN THE FDD? Item 7:
Some of these costs are averages or estimates and may vary in your area. Talk to other franchisees who have been in the system for a year or more to see: • How much money they needed in the beginning until they became profitable. • How much they were able to draw from the business to support themselves.
Franchisor’s obligations. Be sure you understand the services you will get before you open: • site selection • training • development assistance Be sure you know what services you will receive for your grand opening. • marketing • advertising • field support Be sure you know that services you will
receive after you begin operating your business.
Pay attention to the contact information of
these are people you definitely want to
• advertising • operations Pay particular attention to those services the franchisor is obligated to provide and the services they may provide.
Renewal, termination, transfer and dispute resolution. Take your time to understand what rights you will have and what rights you are giving up. Pay particular attention to any noncompete provisions and your obligations when the franchise relationship ends.
Financial performance representations. Only 30 to 40 percent of all franchisors provide prospective franchisees with information about financial performance. The next best thing to do is to talk to existing franchisees about sales and earnings potential.
Outlets and franchisee information Examine how many units the franchisor has taken back and resold. If this number is high, this could indicate churning (when the franchisor takes back failed locations and markets them over and over.)
the franchisees who have left the system, talk to.
Item 21: Financial statements. Financial
statements are the track record of the
franchisor. You should be given copies of the franchisor’s last three years financial statements.
Take them to an accountant who
specializes in franchising to evaluate. Remember that the financial condition of the franchisor not only affects its ability
to run a financially successful operation in the future, but it also determines whether it may go under and you will be left “holding the bag.”
The two key financial statements to focus on are the balance sheet and the income statement. Make sure they are audited.
Item 22: Contracts. Make sure that all the
agreements listed are attached to the FDDand read every one of them.
*All information in this article was sited with permission from the International Franchise Association website.
For more information: www.franchise.org
I n t er nat iona l Fr anch ise Associat ion
f ra nchisor in depth
Rock in’ Ju mp
Leaps Into Franchising
ROCKIN’ JUMP is a trampoline park that offers “Safe. Clean. Fun.™ For Everyone”. Established in 2010, ROCKIN’ JUMP came to be when neighbors, friends, and co-founders Drew Wilson and Marc Collopy and their families began searching the market for a fresh franchise concept. Franchising USA
Struck with a sudden ‘Eureka!’ moment while visiting a trampoline park with his kids, Collopy quickly realized the business opportunity he had stumbled upon and began thinking, ‘why don’t we do something like this.’ With the chance to change his career in corporate sales into something that as a parent he felt good about, Collopy reported back to Wilson who was also looking for a transition from his current career in real estate development. The pair then visited numerous other trampoline parks and it wasn’t long before they agreed that while the business was a great concept, they could do it better.
construction, hospitality, food and beverage, and entrepreneurship, Wilson and Collopy seized the opportunity and built their first ROCKIN’ JUMP location in 2011. The initial 20,000 sq ft park in Dublin, CA set the standard for the second location which opened in 2012 in San Carlos, CA, and a third location has recently opened its doors in San Jose, CA.
With their combined experience in
Ranging from 16,000 to 25,000 sq
“ROCKIN’ JUMP is fitness disguised as fun. With the obesity rates in the US and worldwide, the idea of getting involved in a business that was fun, fitness focused, and family friendly really struck a cord with these guys,” says Aaron Bakken, ROCKIN’ JUMP’s VP marketer.
Through initiative ideas and investments Wilson and Collopy developed a brand for ROCKIN’ JUMP that stands out among other competitors in the area. The famous frog logo is “an icon kids love and relate to,” says Bakken, and the company name ties together the literal jumping aspect and the music featured in the parks, a component the company focuses largely on as seen in their ROCKIN’ Friday and Saturday Nights.
ft in size, each park features (on average) 10,000 sq ft devoted solely to the trampoline jumping space. This trampoline area may include attractions such as dodge ball and basketball, a giant foam pit, and of course tons of space for jumping around. Areas can also be sectioned off for younger, less experienced jumpers to have fun without feeling intimidated by older, more skilled jumpers. Aiming to go above and beyond to ensure their guests have a great experience, the remaining space that is not for jumping features a multitude of entertainment space, party rooms, food and beverage service, lounge areas and more.
To reflect their priorities ROCKIN’ JUMP has developed a mantra that is taken very seriously and has been trademarked Safe. Clean. Fun.™ For Everyone. Since safety is one of the first things parents think about when taking their child to a trampoline park, ROCKIN’ JUMP has created their own trademarked safety program called JumpSafe™, which aims to help guests and staff ensure their experience is a safe and positive one. Seeing anywhere from 10,000 to 15,000 visitors come through their doors each month (60 percent of which are repeat visits), it is extremely important to ensure the ROCKIN’ JUMP experience is consistently enjoyable for both kids and parents. Employing 35 to 45 staff at each park, every employee is required to complete safety training and have basic first aid knowledge. They must also learn how to interact with visitors in a way which promotes safety but is still fun. It’s just as common to see their Jump Patrol staff high fiving guests for listening to instructions as well as doing an awesome flip into the foam pit.
The attention to maintenance pushes the company ahead of their competitors. By building the trampoline structures as independent beds that are linked together structurally by the framing, the trampolines have a better bounce and are easier to manage. “They [Wilson and Collopy] don’t skimp on anything,” says Bakken. “Timely maintenance is an essential part of the safety of our business.” So is cleanliness - the company uses a unique fogging system, which disinfects and eliminates 99.9 percent of germs, to clean each park multiple times per week. Ensuring the park is kept clean and comfortable ties into their focus on hospitality, another essential part of the company’s operations. “We see our parks through the prism of a restaurant or hotel owner, knowing that creating unexpected and positive customer service moments every day will help our business grow and keep guests coming back.” ROCKIN’ JUMP’s operational system is another important differentiator. Organizing aspects from cash management to employee training and labor planning, the sophisticated integration of their e-waiver, point of sale and online booking system are all ways in which the company maintains their tightly run structure. Their automated cash counting system eliminates theft and a cloud based scheduling system helps anticipate staffing needs. Since opening, the ROCKIN’ JUMP brand has expanded quickly. Officially becoming a franchisor this year, the company has already signed up six franchisees that are
f ra nchisor in depth
f ra nchisor in depth
Rock in’ Ju mp
“We see our parks through the prism of a restaurant or hotel owner, knowing that creating unexpected and positive customer service moments every day will help our business grow and keep guests coming back.”
currently scouting locations. They are also working on site selections for four more upcoming corporate parks or joint ventures. Now offering franchise opportunities through the United States and Canada, and licensing options internationally, this presents a unique and exciting opportunity for prospective franchisees looking for a new and active business challenge. The minimum asset requirements to invest and be approved for a ROCKIN’ JUMP Franchise is $400,000 in liquid cash, and $1,000,000 net worth per individual franchisee or as a franchisee partnership. In total the expected investment cost for opening a park can range from $694,850 to $1,304,700 depending on location, the readiness of the property, training and many other variables. This includes the $25,000 franchise fee. The significant investment required to open a ROCKIN’ JUMP is justified through their proven business concept and operations structure. Figures obtained from ROCKIN’ JUMP’s Dublin, CA location show $2,000,000+ gross sales, and net profits of over $800,000, or 39 percent annually. The cost structure is reasonable as compared to other
businesses and staffing with an exceptional level of safety and hospitality. Once a new franchisee is established the ROCKIN’ JUMP team offers superior support and guidance as the new location is built, opened and for the life of its operation. An online system lists every step of the process from the day a franchisee signs the franchise agreement and receives their welcome package to the day they open their park. The system also includes most of the information a franchisee will need for vendors, merchandise, trampoline equipment, and other necessary details. Assistance in designing the park, help with finding a location including site spec requirements, education on how to manage a ROCKIN’ JUMP franchise as an owner, and help in the process of planning, outfitting, and building of the trampoline park is also provided. Experience in business management, operations and/or hospitality is an asset to franchisees, and it is also important for franchisees to have experience working with children and young adults. “This is not a business geared exclusively towards kids, but the most popular demographic is kids aged five to sixteen. There are
plenty of adult jumpers but it’s not the core of the customer base, so franchisees have to understand kids – as guests and employees.” says Bakken. As a young franchisor the ROCKIN’ JUMP brand platform, including website development, email marketing, and community outreach program is professionally planned and well established. This year ROCKIN’ JUMP was voted the best indoor play-space and best indoor party location by Parenthood magazine, and Mercury News deemed the company the best kid’s birthday party location. By this time next year ROCKIN’ JUMP plans to have 13 parks up and running. The significance of their hands-on executive team means the company is prepared and able to provide advice and guidance to franchisees because they are doing it everyday, on a large scale. “It says something about a franchisor when they own and operate their own parks and are still opening new ones,” says Bakken. “They walk the walk and can talk the talk.” For more information: www.franchise.rockinjump.com
JUMP_5400_MoneyMagazine Ad_Layout 1 4/11/13 9:30 AM Page
Rapid growth market No teaching experience needed Strong training and ongoing support Protected territories No lease Ranked #1 Franchise in Child Services for 3 years JumpBunchÂŽ is a unique angle on a proven business model. We bring sports and fitness programs to a childâ&#x20AC;&#x2122;s day at preschool, daycare, after-care, camps â&#x20AC;&#x201C; and more.
ch i l dr en’s products and serv ices
A nne Went zell
Securing the Future of Fr anchising,
One Child at a Time
Children are the inheritors of the future. It’s their welfare, health and education that should be paramount for parents in the creation of a generation of responsible high achievers. Most acknowledge this and act accordingly. Products and services geared toward children’s betterment is a flourishing recession proof industry - there will
always be children. An array of franchise opportunities offer excellent return on investment, many with low overhead, and incorporate years of franchising experience that have enriched children’s lives.
Encompassing a number of business models, the children’s products and services industry is quickly growing. Parents seek the best for their children, whether through daycare, fitness instruction, or education. At the same time, franchise opportunities will always remain a vital driving force for the economy, secured in both growth and stability. It was small business owners, many franchisees, who drove the American economy during the recession in the ‘90’s. It’s predicted
that in the next 50 years, 50 percent of businesses will be franchised.
Securing a Target Market With 11 million children under five, enrolled in child care each week, the child care franchise industry is big business over $60 billion in annual revenue. Most times, parents will seek out the best in services to ensure their child’s well being. Despite the rising costs, many childcare facilities have long waiting lists and early application requirements. For franchisees numerous options offer an enticing array of business models and concepts. Home-based childcare businesses, or those operating out of the homes of the customer, are some of the
most successful. These businesses are expanding in response to market trends. The amount of investment varies depending on the franchise model. Small home based franchises will offer more in terms of profitability with lower overheads, but smaller growth potential, while bigger out of home investments will cut in to profits through greater overheads, such as the hiring of employees and facility set up. Whatever option a franchisee chooses it should be well researched in terms of growth potential, not in the short term but in five - 10 years. A franchisee should also question if they’re suited for the child care industry, always being mindful of market trends.
Encouraging Fitness Childhood obesity is a major concern in North America as indicated by the more than 15 per cent of overweight children aged six to 19. Being overweight increases the risk of not only asthma, high cholesterol and diabetes, but also mental health issues. Children’s health and fitness franchises are a popular trend not only for combating obesity, but also an answer to the many public schools that have restricted budgets for extra-curricular activities. Franchises involving after school fitness clubs, camps and sports leagues are seeing increased numbers. Parents are realizing the health benefits of regular daily exercise, encouraging the fun of movement with their children. There are a number of sports and fitness franchises that both motivate and educate children of the importance of moderate exercise and proper nutrition. Activities such as group exercise and climbing play centers offer a fun and creative way to exercise. Many franchisors offer support through specialized training of children’s fitness instructors, utilizing comprehensive ongoing training programs. In this industry a franchisee should have a sporting ability to lead staff, and the necessary social skills to communicate with children. It isn’t enough to just like children. Good
Building Creative Minds – One brick at a time Bricks 4 Kidz Required initial investment $33,800 – 51,050 Founded by Michelle Cote in 2008, the Bricks 4 Kidz model is one of the fastest growing with over 100
The model also involves learning and creative play with LEGO®bricks,
building on imagination, and curiosity. Bricks 4 Kidz is a proven home based model with no national competition. With high profit margins and low
overhead, the model is easily operated and can be taught to anyone.
franchises worldwide. The programs
Parents appreciate the educational value
in mind and include after school classes,
skills, science concepts and analytical
Enrichment, Education, Exploration
World School offers franchisees the opportunity to set up their own business in a quickly expanding market to meet the needs of infant through elementary school children. Assistance is provided in site selection, construction, financing and marketing and all facilities are designed to national accreditation standards, offering a safe learning experience. Although previous childcare experience is not a requirement to be a franchisee, it is suggested that each Owner obtains state certification as a Director for emergencies.
are structured with three to 13 year olds
of this model, which teaches social
summer camps and birthday parties.
Creative World School™ Required initial investment $300,000 - $400,000 Creative World School is an early childhood education facility founded by Billie and Duane McCabe of Missouri in 1970. They began franchising in 2000. The focus of Creative World School is on Enrichment, Education and Exploration for young children. As leaders in the field, Creative
Giving kids a sporting chance
activities to schools, daycare and
JumpBunch Inc. Required initial investment $30,600 - $69,500
activities in most schools being slashed
Founded by Tom Bunchman in 1997, JumpBunch boasts a 181 percent growth since 2006 and has been franchising since 2002. With 55 franchises in the United States and two Master Franchisees, JumpBunch brings both participation and enthusiasm for sports-related
camp facilities each week. With extracurricular and recreational
due to budget restraints, JumpBunch offers a cost effective franchise
opportunity for the outsourcing of
gym classes. JumpBunch selects and
trains local franchise owners in their philosophy and business model.
JumpBunch Inc. has won the FBR
Franchise Satisfaction Award from
Franchise Business Review for three consecutive years.
ch i l dr en’s products and serv ices
For Details: SnipitsFranchise.com firstname.lastname@example.org
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GET STARTED NOW!
Working with a member of our franchise development team, you will be guided through a comprehensive discovery process. Each of the six steps in the process provides in-depth information about our systems, programs and support.
You will have the opportunity to speak with our franchisees about their experience with Snip-its, validate [OL PUMVYTH[PVU `V\»]L NH[OLYLK HUK LZ[HISPZO ÄUHUJPHS expectations.
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Upon approval by our executive review committee, we will walk you through the agreements and execute the paperwork. Welcome to the Snip-its family!
Get Started Now at www.SnipItsFranchise.com
Providing a valuable community service Kiddie Academy Required initial investment $150,000 - $200,000 Founded in 1981, Kiddie Academy is an industry leader with over 100 franchised Kiddie Academy facilities in 22 states. The Academy’s signature building is designed to provide a branded experience while offering the freedom to design and construct a facility to meet
Pitching important life lessons Skyhawks Sports Programs for Kids Required initial investment $27,500 - $42,600 Since 1979, Skyhawks has been teaching young children important life lessons through sports participation - lessons such as respect, responsibility and leadership. Implementing a coaching philosophy and methodology that has proved successful for over 30
marketplace needs. Providing educational childcare needs from infant to age 12, Kiddie Academy works closely with franchisees in promoting growth and sustainability by creating a comprehensive business model that provides the right tools and guidance to run a successful business. Franchisees are provided with extensive training for both staff and themselves through ongoing refresher programs to ensure that the Academy’s principles of learning, nurturing and fun are constantly maintained.
years, the Skyhawks business model includes successful strategies to manage marketing, staff and events. All franchisees have exclusive territories for operating athletic programs in sports rich environments such as recreational departments and community-based organizations. Skyhawks offers programs throughout the year which provides kids the opportunity to keep active all year long.On going support through webinars, on-site visits and training programs ensure that franchisees are well equipped to deliver exceptional customer service.
business and organizational skills will help a franchisee excel in the industry.
Gaining a Competitive Edge Parents want their children to have a competitive edge, especially in education. The majority of public schools are understaffed and underfunded meaning parents will look for other outside services to ensure their child reaches their full potential. For the franchisee, the educational services market is constantly growing, by at least five percent annually. Supplemental child education dominates the children’s services industry to the tune of $30 billion annually. By 2015, it’s expected that there will be 74 million students attending grades K – 12. That’s a huge varied market of potential clients, not only for tutoring traditional subjects such as math and English, but for courses in dance, music and art. This industry is worthy of recognition and consideration. Franchisees with a keen business sense tend to be more successful. In this industry it’s imperative to compare different franchise options in terms of ROI and more importantly, the passion brought to the franchise. For more information on Children’s Products and Services as featured in this issue please see:
Athena Learning Centers................ 2
Enriching Young Minds Kumon Required initial investment $69,943 - $ 147,050 Founded 50 years ago in Japan by Toru Kumon, Kumon is the world’s largest after school learning program. The Kumon method encourages children from preschool to grade 12, to be selflearners in the fundamentals of math and reading by providing the motivation and encouragement required to be achievers.
With locations in more than 46 countries, more than 1,500 in North American alone, Kumon centers are individually owned and operated. Franchise agreements are offered upon location approval and once training requirements are met with respect to curriculum and business strategies employed. It is suggested potential franchisees have some prior business or teaching experience, as well as a genuine commitment to enriching young minds in your community.
Baby Power/Forever Kids............. 90 Bach to Rock................................10 British Swim Schools................... 22 JumpBunch................................. 39 Primrose Schools......................... 45 Rockin’ Jump............................... 36 Snip-Its.........................................42 Soccer Shots................................19 Young Remembrandts................. 86
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Diane Storkamp Franchise Owner
T H E R E WA R D S O F E XC E L L E N C E Become a Primrose Schools Franchise Owner and join The Leader in Educational Child Care.ÂŽ Our Franchise Owners recognize how excellence can make a difference in the lives of children. The demand for quality educational child care has never been higher. With over 30 years of experience, our Franchise Owners look forward to a bright future. Learn why owning a Primrose child care franchise could be an excellent choice for you.
0RIMROSE&RANCHISE COM s 800.PRIMROSE ( 800.774.6767 )
ÂŠ2013 Primrose School Franchising Company. All Rights Reserved. This advertisement does not constitute a franchise offering which may be made by Primrose Schools Franchising Company ÂŠ only after your receipt of the Franchise Disclosure Document (FDD), which is filled with certain states. A copy of the FDD may be obtained by contacting, Primrose Schools Franchising Company, 3660 Cedarcrest Road, Acworth, GA, 30101. (800) 774-6767. RESIDENTS OF NEW YORK: This advertisement is not an offering. An offering can only be made by a prospectus filed first with the Department of Law of the State of New York. Such filing does not constitute approval by the New York Department of Law. RESIDENTS OF CALIFORNIA: THIS FRANCHISE HAS BEEN REGISTERED UNDER THE FRANCHISE INVESTMENT LAW OF THE STATE OF CALIFORNIA. SUCH REGISTRATION DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION OR ENDORSEMENT BY THE COMMISSIONER OF CORPORATIONS NOR A FINDING BY THE COMMISSIONER THAT THE INFORMATION PROVIDED HEREIN IS TRUE, COMPLETE AND NOT MISLEADING.
Jo Kirchner, President & CEO of Primrose Schools®
A Q&A with Jo Kirchner
As The Leader in Educational Child Care®, this year Primrose is celebrating 30 years of service! With over 245 schools in 17 states, their goal is to help children build the right foundation for future learning and life, in an environment that helps children have fun while nurturing Active Minds, Healthy Bodies and Happy Hearts®.
Tell us about the Primrose Concept Primrose Schools are independently
owned and operated, and our unique business model combines a proprietary curriculum, qualified teachers, and a welcoming environment. This year Primrose became the first early childhood education organization in the country to receive AdvancED Corporation Systems Accreditation under the new Standards for Quality Early Learning Schools. This ensures all Primrose Schools meet the highest quality standards and that as a system we are continually improving student learning. Primrose Schools stand behind our commitment to deliver an exceptional early childhood experience with the Primrose Guarantee: a parent’s assurance of complete satisfaction. Our Balanced Learning® system, consistently delivered in all schools, is
designed to provide quality educational experiences to support children’s socialemotional, cognitive, creative, and physical development. This system is composed of an exclusive standards-based curriculum that enables teachers to help children gain the knowledge they need to move successfully from one level of development to the next as well-rounded individuals. Our schools offer developmentally appropriate materials and equipment for all classrooms, multiple forms of assessment, and extensive teacher training.
When did you become involved with Primrose Schools? I joined Primrose in 1990 as Vice President of the company, and was promoted to Senior Vice resident in 1995.
“The biggest advantage is that they’re able to make a real difference in the lives of the children and families in their communities.” In addition to owning a school we require franchisees to be involved in the everyday operations of the school. We also encourage them to be connected to and partner with the business owners, government officials, dignitaries and nonprofit organizations in their community. Since Primrose Schools are independently owned and operated, franchisees have a great deal of flexibility. Primrose continues to be a top SBA loan performer in franchising and we’re proud to say we have one of the lowest default rates in the industry.
Describe your ideal franchisee Our franchisees truly want to make a positive impact on others’ lives by providing the best educational childcare possible. Over 80 percent of our current franchisees are former Primrose parents that have been touched by Primrose in some way. Franchisees are actively involved in their school on a daily basis, interacting with children, parents, and teachers. The four key indicators we look for in ideal franchisees are: • Motive Working with Primrose Schools founders Paul and Marcy Erwin, we developed the concept of franchising a research-based educational environment for preschool children. I became President and CEO of Primrose Schools in 1999. Since then, Primrose has grown from four schools in Atlanta to more than 240 schools in 17 states today.
What are some advantages to being a Primrose franchisee? The biggest advantage is that they’re able to make a real difference in the lives of the children and families in their communities. We believe in laying the foundation to build trusted relationships with parents, and as a business we treat our franchise owners the same way.
• Character • Experience in business • Capital
Tell us more about the early childhood education industry While America is working to upgrade its public educational system, the childcare industry as a whole lags significantly in delivering quality early childhood education with validated outcomes. The majority of providers are only now being forced by federal and state guidelines to determine how they can come into alignment to raise their level of educational delivery, integrate assessment, and benchmark accountability for student outcomes. Many have begun to redesign their deliverables and add curriculum
components and assessment in an attempt to earn AdvancED accreditation. By doing so they will become more capable of delivering quality early education and childcare to the families they serve. Primrose wants to be an advocate for all children to help improve quality in the early childhood industry. Primrose has demonstrated early childhood education leadership with the assistance of AdvancED, positioning them above their competitors. Receiving AdvancED accreditation 16 years ago, Primrose was the first early childhood education organization to require all of its schools to achieve individual accreditation. Now, by earning our new AdvancED Corporation Systems Accreditation and successfully piloting the new AdvancED Standards for Early Learning Schools, we have yet another way to build brand awareness, trust, and leadership at a national level.
What advice do you have for someone looking to acquire a franchise? Know the people, the culture and the service or product. Understand the competitive landscape. Align with the best brand in the category. Be sure you’re passionate about the service or product they deliver. Be willing to follow a system and work hard. Talk with the other franchisees in the system – they will tell you whether they would do it again or not.
Why is Primrose Schools a great opportunity? Primrose franchisees have an opportunity to make an impact on the lives of children and their families, connect with their local organizations, and grow a business in an industry that has a very high demand. Continuing to expand in new markets, Primrose Schools is an organization of people who are passionate about what they do and care about delivering quality educational childcare services. For someone who wants to make a difference in the lives of others, owning a Primrose School is an excellent way to achieve that dream. For more information: www.primrosefranchise.com
ex per t advice
Ned Levitt, Partner of Dickinson Wright LLP
What’s So Great About Franchising? “The group buying power of franchises can give the franchisee the important edge over the competition and improve profitability.”
Notwithstanding the fact that there are problems to overcome, franchising can often be the best business approach. For the franchisor, it could mean putting a successful business at risk. It can require substantial capital investment and an even greater investment of time and human resources. New skills must be acquired and new duties and responsibilities assumed. The new system may lose money for years during the maturation stages. Absolute control over every aspect of the operations must be released, which can be unnerving, at best. For the franchisee, it can be a frustrating search for the one right opportunity. If a
young system is chosen, the risks can be even greater than starting an independent business. Tight control at one extreme, or being cut adrift to sink or swim on one’s own abilities on the other, can lead to major disappointments and unhappiness. It can be extremely unsettling to be too dependent on the actions of others. A substantial effort is often required to acquire new skills and adjust to a new work environment. So, why is franchising so popular and continuing to grow at such an incredible rate?
The Franchisor’s Story Once the initial growing pains have been endured, there are substantial rewards for the business that chooses to expand through franchising. It is an expansion alternative that requires, in the final analysis, less capital, because the franchisees finance their own outlets. A successful franchisor can direct a much larger and more complex business network with fewer employees than would be the case with the same business operated as a corporate owned chain. This also provides a better return on capital, overall, in most cases, notwithstanding the fact that an individual corporate owned store
is more profitable for the franchisor than a franchised store. Franchising also permits a more rapid expansion through a selected market. This results from the combined effect of the more motivated owner managers, the use of the franchisee’s capital and the standardization of construction and business systems.
It Is Generally Recognized That An Owner Will Be More Attentive To The Business A business can more easily expand within a larger geographical area through franchising. Expansion into foreign jurisdictions is often easier, because the franchisee will take responsibility for dealing with local customs, tastes and regulations. The reduced amount of supervision required in a franchise system helps to overcome the problems of distance inherent in conducting business in other provinces or countries. Franchising is sometimes utilized, by a business which has expanded to its limit as a corporate owned network, to exploit markets which would otherwise be neglected. In business, it is generally recognized that an owner will be more attentive
than a manager. This is the central point that makes franchising so attractive. A franchisor can rest assured that the person operating his store will be “attending to business” much as he would. And, there is strength in numbers. The successful franchisor can command incredible deals with suppliers of all sorts. The sometimes difficult to obtain mall locations will be in easy reach of a business that can assure a landlord of profitable and predictable tenants in all of his developments. Advertising budgets can be generous, and there are often greater resources for research and development. In many systems, franchisees provide the greatest contribution to improving the business.
The Franchisee’s Story Franchising is the fastest and safest way to become a business owner. Rather than making all the mistakes and risking disaster at every turn of the road, a franchisee can buy the necessary experience and expertise. In many systems, franchisees get fantastic value in the knowledge they obtain for the dollars invested.
A franchise purchase is often an opportunity to acquire the use of an already established name with lots of goodwill. As an independent, the franchisee would have to invest many years and dollars to achieve the same name recognition. These days, many of the best locations are simply not available to a new independent business. However, someone without any prior business experience can obtain a lease in the largest shopping mall in the country as a franchisee of an established system. The group buying power of franchises can give the franchisee the important edge over the competition and improve profitability. The amount and quality of advertising a franchisee can obtain for his advertising contribution to the regional or national fund of the system is substantially greater than would be the case if the same dollars were spent for an independent business. Most independent businesses can only dream about the research and development programs available in many franchise systems. Such research and development
can make a big difference in competing and profitability. When it is done properly and works well, franchising is a win/win situation for all concerned - not just for franchisors and franchisees, but also for consumers, landlords and suppliers. Consumers get superior products or services more efficiently and at better prices. Landlords can predictably increase their traffic flows and reduce the incidences of lease defaults. Suppliers can be assured of a steady volume of purchases with secure receivables. Edward (Ned) Levitt is a partner of Dickinson Wright LLP, Toronto, Canada. He served as General Counsel to Canadian Franchise Association from 2000 to 2007 and, as a member of the Ontario Franchise Sector Working Team, was instrumental in the creation of Ontario’s franchise legislation. Among his many publications is Canadian Franchise Legislation published by Butterworths/Lexis Nexus. For More Information: Phone: 416-646-3823 Email: email@example.com
ex per t advice
women in f ra nchising
Mary Kennedy Thompson
M a r y K e n n e dy T h o m p s o n :
Born To Lead
“I came into franchising as a franchisee first, and that’s one of the things I love about franchising, I’ve sat on both sides of the fence. I always tell people the minute I forget what it felt like to be a franchisee is the day I’ll leave franchising because I think it’s really important to be able to see on both sides.” Born in Bedford, Massachusetts, Mary Kennedy Thompson grew up a citizen of the world. Her father, a member of the United States Army, was stationed all around the globe and brought with him his wife and children. Thompson got to experience at a young age living in places like India and Germany, as well as throughout many American States.
Fortunate to visit places such as the Taj Mahal and the Grand Canyon, Thompson feels blessed having a view of the world that doesn’t consist of only a small county or city, but rather is a collective insight based off her constant moving. “It was
nice, when we moved around my friends all came with me,” Thompson says, referring to her eight younger siblings.
Graduating high school in El Paso, TX, Thompson received a military ROTC scholarship that helped pay her way through university. While in school Thompson held jobs working in dry cleaners, waiting tables and tending bar. “I was the epitome of a poor starving student,” she laughs. “But it was worth it. I knew if I worked hard and did the best I could do I’d end up where I wanted to be.” Graduating in 1985 with an English degree, Thompson was then commissioned as second lieutenant in the Marine Corps. “I picked the Marines because I wanted to be a part of the best of the best. I’d rather be the worst person on best team, than the best person on the worst team,” she explains. Aware of the challenges she might face as seen in her father’s career, Thompson was eager to take this path. “My Dad was one of my first mentors and taught me a lot about leadership,” Thompson says, “Leadership starts with
“I always believed if you want to be a diamond, you have to surround yourself with other diamonds. The Dwyer Group is a large collection of diamonds.” listening to your gut because it brings together your head with your heart. It’s about having enough heart to care, and enough mind to think through making smart decisions.” Entering into the military at a time when they were just starting to let women do some of the things we now take for granted, Thompson attended Jump School, got her wings, and soon after was filling command positions. She was one of the first women assigned to the Beach and Port Company where she was a platoon commander assigned to lead 58 marines, all of which were men. “I never thought about gender as something that did anything but gave me a different perspective,” she says. From rappelling out of helicopters and managing an airfield in Korea, to working in recruitment for the Marine Corps, Thompson says, “It wasn’t about going down the easy road, it was about being the best person you can be and that’s about doing the right thing. I’ve found that doing the right thing is rarely about doing the easiest things. I didn’t take the comfortable path, I always believed a comfortable path is the most dangerous path you take.”
The Civilian Life After Thompson married her college sweetheart, gave birth to their daughter, and served eight years in the Marine Corps, she transitioned back into the civilian world. Earning a job as a sales representative for Baxter Scientific Products, Thompson learned a lot about selling ideas, meeting needs, and delivering persuasive presentations. “I wish more people would wrap their arms around what it means to properly sell,” Thompson says. “True selling is about figuring out what someone needs and figuring out how to meet that need. It’s a very honest and direct profession if you make it very honest and direct.”
During this time her husband Will, also a Marine veteran, was working as a stockbroker. Upon returning home one day, he brought with him a booklet from a company called Cookie Bouquet. The couple had been toying with the idea of going into business for themselves, when Thompson saw the concept she immediately decided this was what she wanted to do - the only problem was, she didn’t know how to make the company’s stunning cookies. This is when she saw the three magic words that forever changed her life: “For Franchising Information.” “This was the best thing that ever happened to me because I didn’t know a lot about business, I had not been brought up in a family involved in any kind of business, and I didn’t even know most of the terms or practices, but with franchising, they taught me.” Becoming an official franchisee in 1994, Thompson opened her first Cookie Bouquet in Austin, TX. In 1995 and 1997, she opened an additional two locations, and quickly began leading the company in market penetration and sales. As a franchisee of the company Thompson earned awards for “Top Performer, “Outstanding Customer Service” and “Masters Award.” After six years in the business Thompson sold her shops. This is when corporate office recruited her to the home office. Thompson’s first official title was Shop Facilitator as title she requested to use to show others what she wanted to to -, help others grow their businesses. In first year working in this position Thompson visited 130 sites, teaching others how to grow and operate their shops more successfully. After building the company’s field program and filling most positions within the company, in 2004 Thompson was promoted to President. All the while Thompson had also been actively involved with the International
Franchise Association, attending meetings and sitting on panels. It was here she was introduced to Mike Bidwell, President of The Dwyer Group, “He is probably the smartest person I’ve ever met,” Thompsons says. A few years later Bidwell invited her to become President of their largest brand under The Dwyer Group umbrella, Mr. Rooter. Questioning what the President of a cookie company could do for an industry leading plumbing company, Bidwell told her, “Business is business is business. Those good business principles and practices can be translated from one business to another. ” Thompson was very interested in joining the Dwyer Group as they were known from their franchising expertise and strong culture. “I always believed if you want to be a diamond, you have to surround yourself with other diamonds. The Dwyer Group is a large collection of diamonds.”
Onwards and Upwards In 2006 Thompson joined the Dwyer Group in becoming President of Mr. Rooter. Founded by Don Dwyer, what drew Thompson to the company more than anything was its instilled set of values called Live RICH, referred to as the Code of Values She also liked Mr. Rooter’s approach to giving a world-class experience to each and every customer. “It was like coming home. Plumbers are a lot like Marines, they do a messy, hard job that no one wants to do, and in doing so are protecting the health and safety of the nation,” she explains. Thompson’s role as President for Mr. Rooter entails many responsibilities.“[I] have to stay on the front of the wave, know what’s changing and growing, see around the corners, communicate plans and make sure our team knows and understands where we’re heading,” she explains. In 2013 Thompson was also appointed the Director of Veteran Affairs for the Dwyer Group, a humbling experience for someone whose heart has always been with Veterans. “Our vets serve and sacrifice for us, and we should give theme every opportunity to prosper and
women in f ra nchising
womem in f ra nchising
Mary Kennedy Thompson
have opportunities to start their own businesses.” An advocate for the VetFran program a strategic initiative for the International Franchise Association, Thompson recently retired her position as Chairwomen of the program where she had the honor of serving for two years opposed to the standard one-year term. “I love what we do in VetFran. I love that we have 580 franchisors giving discounts and opportunities to Veterans.” Partnering with the First Lady, together they lead the Joining Forces initiative and today have hired more than 65,000 veterans. Thompson is also a speaker at the annual Entrepreneurship Bootcamp for Veterans with Disabilities program hosted by Texas A&M University. Along with other experts in the field, Thompson speaks to veterans interested in starting their own businesses about the franchising industry. “Real life heroes attend this course,” Thompson says. One gentleman in particular stands out in her mind. Having lost both legs, he didn’t look at himself as being disabled, rather was enthusiastic about going out and building his business. “He had this light shining through him, it was amazing, she says. All brands of the Dwyer Group have been consistently listed as top companies to work for or be part of as a veteran. To date the company has given $1.4 million in discounts to veterans and placed more than 240 vets into small business ownership positions. “I believe in being one percent better tomorrow than today, and one percent better today than yesterday,” says Thompson, ”The Dwyer Group not only lives this belief we help others do the same.”
Creating the Vision This year Thompson was presented the Bonnie LeVine award for women in franchising. Recognizing women who serve as industry role models, through their business and professional accomplishments, this was an experience Thompson would recall as one of her proudest and humblest moments.
“So many amazing women, with amazing lives, who have done so much for franchising have been winners of this award. I’m so humbled to be in that group,” she says. On stage, Thompson used the opportunity to reflect on all the wonderful people in her life who have supported her along the way. From her husband, to her children, her parents, the Dwyer Group and her franchisees, Thompson says she is really just a reflection of everyone around her. “I’ve seen strong women in franchising on every level, I love that. There is no glass ceiling in franchising,” Thompson says. “We’re customers, business owners, employees, marketers, operators, and we often lead with our heart. In franchising when you create results people don’t care what gender, color, or creed, you are, what they think about is what you’ve done.” Thompson also says in her experiences working for both Cookie Bouquet and Mr. Rooter, her primary customers have been women. “Understanding and appreciating your customer is important. How you approach them even more so, it’s the reason we [the franchise industry] exist.” Recalling the first time she saw Dina Dwyer, who was then on stage accepting the Bonnie LeVine award and sharing her vision, Thompson remembers thinking how she wanted to be like her. “It gave me a vision, and by recognizing women who have played an influential role in the industry it helps other women who are just coming up in the field to be able to vision and see where they can go.” Thompson finds inspiration in many women in her life. On a daily basis she finds it in those she works with, when they’re working everyday to accomplish a goal. In her Mother, she sees it in how she raised her family. In her four sisters, it’s in their growing families and demanding careers. And in her grandmother, the youngest person to ever graduate from college in the 1930s, a time when most girls didn’t even attend college. Most notably however, Thompson finds inspiration in her daughter as she moves up in the ranks at ARAMARK, experiencing some the same beginnings
Mary and First Lady, November 2011
she herself once did herself. “I think of people who have come before me, they certainly laid a path for me that allowed me to be able to do the things I have done today. It inspires me to watch the next generation come up and do what they’re doing, they see an even broader horizon than I did.” To women interested in joining the franchising industry Thompson says to first find your passion and then get into a franchise in that field. “Get in on a ground level and learn from there up. The sky is the limit.”
Looking to the Future Franchising continues to grow rapidly and outpace the private sector, a trend Thompson believes will continue. “It’s a great way for consumers to have a consistency of experience but also have the personalization of knowing who the owner is,” she says. With no plans to leave Mr. Rooter anytime soon, in her spare time Thompson is working on finalizing and launching her book, titled “What Matters in Business, From Cookies to Plumbing.” Finding enjoyment in speaking to groups, she hopes to combine the two to share things from her book with her franchisees and small businesses looking to grow. For more information: Email: Mary.Thompson@dwyergroup.com Website: www.mrrooter.com/
Veterans in Franchising www.franchisingusamagazine.com
Veteran Entrepreneurs in Franchising
for Finding the Right Franchise
Franchising with Both Feet on the Ground Franchising USA
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60 Years of Successful Franchising Franchising USA
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V e t e r a n s i n F r a n c h i s i n g Suppl e m e n t s e pt e m b e r 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: firstname.lastname@example.org
Contents 56 Franchising with Both Feet on the Ground Martha Oâ&#x20AC;&#x2122;Gorman, Liberty Tax
64 The Missing Piece: Whatâ&#x20AC;&#x2122;s Not in your Franchising Toolbox Richard Ashe, Veteran Franchise Centers LLC
60 5 Tips for Military Veterans Looking for the Right Franchise Tim Courtney, CruiseOne
67 Veteran Entrepreneurs in Franchising Kevin Blanchard, VetFran
63 Finding a Fit with Young Remembrandts Don Eisenhauer, Yound Remembrandts
68 A Green Beret Finds Gold in Signarama Jim Tatem, Signarama
V e t er ans in Fr anch ising
M a r tha O’G or ma n, Chief M a r keting O f f icer O f L ib er t y Ta x Ser vices
FRANCHISING W I T H B O T H FEE T ON T HE GRO U N D veterans have the skill set needed, the ambition needed, and the fearlessness needed to be their own boss; but, are uncertain on how to start a business from scratch. For many returning heroes, franchising is a practical route because the structure is already established with a freedom to command. The key issue for former soldiers considering franchise ownership is to make an educated decision with both feet planted on solid ground (for a change). Martha O’Gorman
As a veteran, you have learned to overcome, persevere and succeed. Given a mission and a plan, you accomplish your goals without deviation. The success stories and statistics supporting the alignment with veterans and franchise ownership is in abundance everywhere you look. So are the franchises options. Finding your fit in civilian life as a franchise owner is not unlike the battlefield, careful thought and thorough enquiry must precede any action. Buying a franchise can be confusing because of the diversity of franchise models and the enormous amount of information that is available. The options may be overwhelming and finding a company with a culture that fits you is one strong component of success. Many
Owning Your Own Business The American dream of business ownership is becoming a popular route taken by transitioning veterans. However, getting to ownership seems to be an elusive and complex dream for many. The benefits should outweigh the challenges, but if they do not, perhaps owning your own business isn’t the route for you. The advantages to owning a business that can change your life: • Independence from a boss setting your schedule • Freedom from worrying about having a job tomorrow • Flexibility to work the hours you choose • Pride in the work you do because you are helping others • Stimulation from daily challenges, no dull office routine • Leadership, the ability to mentor and motivate others can be extremely fulfilling The challenges to owning a business can be the breaking point for those going it alone:
• Finding the finances to back your business • Legal issues such as contracts, trademarks, rental agreements, etc. • Hiring and training staff to run your business • Building a brand takes a lot of time and money
The Franchise Model One reason franchise ownership is growing so rapidly is due largely to the fact that a franchise model provides you with a system that has addressed the challenges of owning a business. You are instantly buying into a proven business model, typically with financial assistance, marketing plans and training available. The very basis of the franchise model addresses another challenge of business ownership – branding. When you enter a business relationship as a franchisee, you are getting permission to operate a business under the trademark of the established business (franchisor). Essentially a franchisee is running a business using the concept and success of the franchisor’s brand and operating methods. Even though the franchisor has created and set up the actual business model, the franchisee is still considered an independent business owner. Day-to-day operations of running a business are left up to the franchisee. Handling the local media, promotions, hiring, maintenance of the building, bank accounts and various multitasking are the sole responsibility of the franchisee.
Is A Franchise For You? Franchising, with its variety of options and different models may seem appealing, but that does not mean it is for everyone. There are financial risks and long-term commitments to take into account. Before going any further, you need to have a heart-to-heart with yourself to make sure you would be happy in a position as a franchisee. You will need to ask yourself – and honestly answer – some tough questions. Such as: r Are you comfortable with all of the daily decisions being left to you? r Are you comfortable with cleaning toilets and firing an employee all in one day? r Do you have confidence in yourself to handle all aspects of a business? r Are you an optimist even when things go south? r If you have a family, are they supportive? If you answered ‘yes’ to the above questions, then chances are you may be a good match for franchise ownership. Two questions that may rule you out for owning a franchise would be: r Do you consider yourself extremely
“Throw a rock in the air and you will likely hit a franchise. Shopping centers, strip malls, on neighborhood corners, franchises are everywhere.” independent or fiercely stubborn? r Do you mind answering to a superior? Because if you answered ‘yes’ to either of these two questions, you may prefer to start your own business from scratch rather than attempting to follow someone else’s proven system.
Do You Have What It Takes? Franchisees are expected to work independently but not in isolation. While every franchise model implements fixed procedures and regulations, it is a tightrope to run a business while adhering to a franchisor’s stipulations. Managing that balance takes a special individual, one who has drive and motivation countered with a good bit of unpretentiousness. After rising through the ranks in the military, incorporating teamwork to accomplish each mission, a veteran typically has what it takes to be a great franchise owner. As a former solider, you should be aware that business ownership taxes both your mental and physical fitness. Pushing through daily office frustrations while continuing to follow the concrete path to success is a constant battle. Owning your
own business will drain your energy and raise your stress level; therefore, closely consider your motivation level, your finances, and the reality of what’s expected of you. Even with those considerations, the payoff of self-fulfillment, freedom, and profitability versus being a spoke in the corporate wheel is why veteran’s turn to franchise ownership as a new career path.
Finding Your Franchise Fit Throw a rock in the air and you will likely hit a franchise. Shopping centers, strip malls, on neighborhood corners, franchises are everywhere. Finding your fit may not be as easy as it appears, particularly if your community is saturated with franchise shops. In fact, that favorite sandwich shop you’ve been eyeing could be booked in your area (and even the surrounding territories). And further investigation may expose the need to be on your feet for twelve hours straight, which may not be your idea of franchise ownership. Research is required. No sugar-coating it, you are going to have to research and then research deeper. And the first thing you
v e t er ans in fr anch ising
V e t er ans in Fr anch ising
M a r tha O’G or ma n, Chief M a r keting O f f icer O f L ib er t y Ta x Ser vices
“Franchisees are expected to work independently but not in isolation.” will need to research is yourself. Decide what will make you happy in your “new normal,” what are you looking to get out of ownership. What was the motivating factor that got you to this point? As mentioned earlier, if being on your feet for twelve hours is not what you had in mind then perhaps a service-provider business will better suit your needs. Having free time for family is high priority for many veterans that have been away from family long enough. Perhaps a more flexible schedule that a seasonal business can provide is the perfect fit. A seasonal franchise allows you to spend more of your spare time with family and enjoying other interests. Jot down a list of your wants and needs, your budget and any skills you want to utilize; this will help guide you in choosing a franchise that will fit your expectations. Do not get pigeon-holed into believing you cannot own a business because you have no experience in the industry. Just as in the military, training should be a large and ongoing part of the investment process and as long as you have the passion to succeed, the rest will come.
Questions to Ask Before You Buy Not all franchises are created equal. While it is sometimes hard to spot trouble zones, here are some basic questions to ask: • How long has the franchisor been operating and how many franchises are operational? • Has the franchise received any accolades from the industry? • Have the leaders of the franchise been involved in other franchise systems that have failed? • How many lawsuits are pending (look for a pattern here)? • Does the franchise or leaders have any prior bankruptcies?
• Do they have an FDD and are they willing to provide you one?
Warning Signs This is a large investment, so taking your time to make the right decision is crucial. If a franchisor is rushing you, advising that you do not need an attorney, or even threatening that time is “running out,” you may want to reconsider doing business with this franchisor. Other facts that you should consider before purchasing a particular franchise: • A franchise that has less than two years in business; • A franchisor that supplies vague answers (red flags: “as needed”, “our discretion”, or any ambiguous answer); • A franchisor that holds no registered trademarks to its operating system • A franchisor that is anxious to finance your endeavors rather than helping you run a prosperous business
Talk With Other Franchisees The best advice comes from those who have been through the experience and who are current franchisees. Talking with an existing franchisee will provide more information than any website or marketing presentation. Franchisees can answer most of your questions, from support and training to fresh marketing ideas. Just be cognizant of their own interests. Some franchisees may see you as competition or, alternately, a contributor to the regional ad fund and so their answers may be slightly skewed. That being said, you still want to talk with as many franchisees as possible to get an overall feel for the day-to-day life as an owner of that particular franchise
Discovery Days Possibly the first face-to-face meeting you may have with a prospective franchise will be at an event commonly known as Discovery Days. As excited as you are to
actually shake hands with the people you hope to do business with, they should be just as excited to get to know you. These meet-and-greet seminars are held to give potential franchisees an opportunity to ask questions and learn more about the franchisor in an environment with no obligation to purchase a franchise. Usually held at the corporate headquarters or an exciting destination, Discovery Days allow the franchisor to give an overview of the history of the company, explain the business operations, explore the training, discuss real estate options, and evaluate the financial investment. Typically it is the chance to meet the corporate team as well as existing franchisees. The recommended time to attend Discovery Days is toward the end of your search. You should invest the time and money only after you have narrowed your choice to a particular franchise which stands out above the others. You want to confirm - in person - everything you have researched and learned regarding this franchise. And while you are studying the franchisor during Discovery Days, they are also ensuring you would make a good fit to their culture and team. When you go into business with someone, it is crucial that both partners know what makes a business successful. The basis for Discovery Days is to understand the company’s direction, its management’s goals, and whether your interests align with those goals.
Financing and Start Up Costs So that long-lost, millionaire relative passed away and you have inherited it all – no? You won the lottery? Not yet? Then chances are you are going to need a loan to finance your business. And the good news is many veterans don’t have to go far to find financing options. Many franchises offer Veteran packages with reduced franchise fees for qualified individuals. For example, Liberty Tax Service offers a Veteran’s Package and Minority Incentives to assist those interested in owning a Liberty Tax franchise. A quick check at www.franchiseregistry. com will provide a list of 600+ preapproved franchises that the Small Business Administration (SBA) offers loans to help get the franchise business started. A few large franchisors, like Liberty Tax Service, have financial assistance for veterans wanting to get into franchising but unable to find the resources. Even if the franchisor does not offer a loan program, they typically will offer a business plan, which lenders may require during the loan application process. For disabled veterans, the U.S. Small Business Administration offers the Patriot Express Pilot Loan Initiative which makes loans of up to $500,000 that are backed by the SBA’s maximum guarantee. These loans are a great option to borrow the startup costs needed to purchase a franchise.
franchise from that registry mentioned above early on saves headache and heartache down the road). Here are a few steps to take to qualify for a loan: • You will need to pull your credit report from each reporting agency and check the accuracy (pull all three from www. annualcreditreport.com). • Do not make any large purchases or big career moves (no new house or having your spouse quit a job). • Get your credit score above 650. One way to do that is to pay off your smaller credit cards and debts. • Save up for a down payment. The majority of lenders expect you to have a down payment to demonstrate that you are committed to the investment. If you do not qualify for a bank loan and do not have a retirement plan, you may want to consider borrowing from a relative. If this is your only option, it is best to treat family loans as a professional transaction, with a loan agreement documenting the terms of the loan. Present the same paperwork to your family lender in the same manner that you would present to a bank you were borrowing from. Have a professional accountant draw up loan papers and have an attorney review its terms.
Your Decision So you have researched, dreamed, planned and talked it over with your loved ones. Now it is time to move forward and actually open the doors to your new business. The most wonderful thing about owning a franchise is that you are never alone – you have comrades. You are participating in something larger than yourself and growing your business and personal success with other like-minded business owners. You have taken many risks for your country – maybe even taken a bullet or two. Why not take a risk on yourself. Believe in yourself and invest in yourself. Now is your time to plan your mission for the future, you’ve earned it. Martha O’Gorman, Chief Marketing Officer of Liberty Tax Services is one of the founders of Liberty Tax Service, the fastest growing company in the tax preparation industry. She has created marketing and sales strategies for both franchise development and consumer programs that have led to Liberty’s rapid growth and development. The company currently operates over 4,500 locations in the United States and Canada. For more information: www.libertytax.com/own-a-taxfranchise.html
You may want to establish a relationship with a local bank. Having a long-term relationship with a bank may help you get financial assistance in some cases. Find a bank that will be close to your franchise location as well. The bank will still look at important details regarding the franchise, such as the length of time the franchise has been in existence, the number of franchises that are currently open, the number that closed, and the overall stability of the franchise market. The bank will also take a close look at you to ensure you are a sound investment as well. Your credit score and personal financial history will be examined. The bank may want your small business loan to have an SBA guarantee (picking a
v e t er ans in fr anch ising
V e t er ans in Fr anch ising
T im C our tney, Director of Fra nchise Develop ment, Cr uise O ne ®
F o r M i l i ta r y V e t e r a n s Looking for the Right Franchise International Franchise Association, selecting a franchise is a difficult decision. However, matching your passion with your skill set makes it easier to find the right franchise. Here are five tips for selecting the right franchise to turn your passion into profits:
Determine your passion
Franchising is a popular career choice for military veterans who are leaving the armed forces and joining the civilian workforce. A recent study by the International Franchise Association’s Educational Foundation found that one out of every seven franchise opportunities is owned and operated by military veterans. With more than 4,000 different franchising opportunities in multiple industries and enticing incentives offered through VetFran, a strategic initiative of the
Being a small business owner should not feel like a job, but rather an exciting journey where you can make money doing what you love in an industry that you are passionate about. Determine what makes you happy, whether it is traveling, food, crunching numbers, shopping, music or anything else, and see what opportunities exist. Examples of industries with franchising opportunities include accounting and tax services, children’s services, food, handyman services and travel.
Take a self-assessment
Analyze what business and business types match your personality and skills. For example, if you are not a morning person and have difficulty functioning in the early hours, then you probably don’t want to own a coffee shop. Other important questions to ask include how are you going to fund your business? What are your strengths and how can you leverage them? How can you work around your weaknesses?
Match your passion to your skill set
Your military skills will translate well with operating a franchise. Which of these skills will complement your passion? You are destined for success if you match your passion with your skill set and open a franchise that has a proven track record in its products and business methods. Most franchise systems include training opportunities, scalability, as well as preand post- opening support. As the saying goes, “owning a franchise allows you to go into business for yourself, but not by yourself.”
Perform due diligence
Once you have selected the industry you want to pursue based on your passions, research the different brands in that industry, weigh the pros and cons of each opportunity and discover if they are offering opportunities in the region you wish to operate. The military taught you to pay attention to detail — use this skill in your research. Obtain a Franchise Disclosure Document (FDD) from each brand to learn all you need to know about the company and concept of interest. Compare each brand’s FDD documents side-by-side and examine items such as initial fees, royalties, restrictions and any financial performance representations of existing units. This will enable you to perform a cost-volume-profit
“You are destined for success if you match your passion with your skill set and open a franchise that has a proven track record in its products and business methods.” analysis and identify if you will be able to meet your financial goals.
Interview key executives and franchise owners
The best way to get an insider’s perspective on a company is to speak to people who work there. Try to speak to as many franchise owners and operators in the system as possible about their trials and tribulations. Also try to visit the corporate headquarters and meet the key executives running the day-to-day operations of the brand. Ultimately, you have to be as comfortable with the team as they are with you in order to have a successful franchise relationship. Your military background has prepared you for this journey. As with any mission, you need to have a plan of attack. Following these five tips will give you time to discover your passion and realize the endless possibilities of turning passion into profits.
Operation Vet Winners 1 (From L to R): Isaac Ingram, Thomas Lockett, Deana Lee, Shannon Lee and Bill Smith won last year’s inaugural “Operation Vetrepreneur: Become Your Own General” contest, which awarded five military veterans a CruiseOne franchise.
A resident of Boca Raton, Fla. Tim Courtney is Director of Franchise Development at CruiseOne®, the nation’s leading home-based travel agent franchise. As part of World Travel Holdings, one of the nation’s top travel retail networks, CruiseOne offers consumers the lowest possible pricing on cruise and land vacations through its relationships with every major cruise line and many tour operators. In operation since 1992, CruiseOne is a member of VetFran and proudly supports military veterans. It is consistently recognized by leading industry publications as a militaryfriendly franchise. For more information, visit www.CruiseOneFranchise.com.
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Finding A Fit with
grow his business is something to be admired, but the passion he has for Young Rembrandts and for the students his business impacts, that is what really gets me.”
Don Eisenhauer came to Young Rembrandts with an impressive military and professional work history. After being downsized in his previous career as a civil engineer, Eisenhauer was able to take the time to consider “what’s next.” Don worked with a franchise broker and examined several options of possible businesses that fit his skill set but appealed to his more adventurous side. Thankfully enough, Young Rembrandts was one of these options and he was a perfect fit from the beginning. Don purchased the Young Rembrandts territory available in the Metro-Milwaukee area of Wisconsin in late 2011. Since then he has shown stellar growth during his inaugural year in the system. “Don’s positivity is contagious,” says Bette Fetter, Founder and CEO of Young Rembrandts Franchise. “His ability to strategically
Eisenhauer continues to amaze everyone with his aggressive sales and marketing strategies, outstanding networking skills, and extreme passion for Young Rembrandts. In addition to leading other first-year franchisees in revenue and exceeding required benchmarks Don works continuously with the Home Office team to build a successful and profitable business. “I love this business,” said Eisenhauer, “I love what I do and I am so thankful for this opportunity to make an impact in the lives of children.”
Don’s military background: Marine Corps reserve 1982-1988 *Honorable Discharge*
Don’s words on how military experience impacts owning a business: “Discipline is huge, if it wasn’t for that it would be very hard… You have to be selfmotivated and disciplined to get out there every day and push yourself.”
Young Rembrandts Franchise Inc. is actively seeking individuals with military backgrounds as franchisees. We recognize that those with military experience are familiar with structured environments, possess self-discipline and have a process oriented method of completing tasks- skills that can help you become a successful entrepreneur. As a special thank you for your service, we are offering U.S. Veterans a 10 percent discount on the franchise fee. If you’re a U.S. military Veteran, become a part of the top franchise system in child services; join the Young Rembrandts franchise community today. Our franchise training and support, together with our proprietary curriculum, that provides educational and drawing skills for children aged three to 12, will help you thrive as a business owner and make you a satisfied entrepreneur. Getting started is easy because Young Rembrandts provides you with a turnkey process allowing you to effectively start up and operate a successful, family-friendly and home based business, bringing education to children and jobs to your community. As part of our affordable franchise package, we offer unbeatable curriculum- part of our franchise formula that has proven successful for over 23 years. In addition to the proprietary curriculum and turn-key operation, Young Rembrandts offers each new franchisee a dedicated mentor and personal business coach enabling you to reach your personal and financial goals.
Don’s advice to unemployed Veterans:
Make Young Rembrandts your next mission.
“Give it [franchising] as much consideration as you do a normal job.”
For more information: www.youngrembrandts.com
v e t er ans in fr anch ising
Don Eisenhauer, You ng Remb ra ndts
V e t er ans in Fr anch ising
Richa rd Ashe, President, Vetera n Fra nchise Center s LLC
THE MISSING PIECE:
W H AT ’ S N O T I N Y O U R FRANCHISING TOOLBOX The beauty of purchasing a franchise is that it comes with a toolbox. The guesswork usually associated with starting a business is taken care of. Your toolbox can include trademarks, easy access to an established product, proven marketing method, (method being the key word here), equipment, inventory, and of course the operating manual. The missing ingredient is someone to make it work and what makes business work is marketing and sales. One of the misperceptions of franchising is the thought that all that one has to do is build it and they will come. In my conversations with potential franchise buyers, I sometimes hear, “I want to own my own business; however, I don’t want to sell. I want a franchise where the customers to come to me.” Owning a franchise or any business is all about marketing and sales. Even before buying the business you are engaged in marketing and sales. You have to sell the franchisor on the fact that you will be a good steward of its brand, you have to sell the bank on your ability to successfully run the business and repay the loan, and when the doors of your business open, you have market your business to bring in the customers and then sell your customers on buying your products and services verse going to your competitor. The franchise toolbox provides a leg up over starting a business from scratch,
however, if you’re not prepared to market and sell, than your franchise is doomed from the start and you’re really not ready to start a business on your own.
Embracing Marketing and Sales I come from a technical background, I studied electronics and my early roles consisted of fixing broken products, not facing customers. The first company I worked for in a customer service role in which my responsibilities included selling, I dreaded the thought. However, I was lucky to have a CEO that helped me understand and get comfortable with marketing and sales. The first thing he told me is you have to be passionate about the products and services you sell...you have to believe. Then he presented me a great analogy that made marketing and sales click. He told me, “Marketing and sales is the same as fishing. In order to be a great fisherman you have to first know what type of fish you want to catch, and then you have to know everything you can about the fish. What attracts them, what time of day are they hungry, what scares them. When you know these things you pick the right lure, location, and time and start fishing. Selling is execution of actually getting the fish in the boat. Pull too hard, too soon and you’ll scare them and they’ll escape.” Marketing and sales go hand and hand. Without marketing you do not have prospects or leads, but yet without a good sales technique your closing rate may be depressing. Marketing and sales should work simultaneously. Today marketing and selling skills are more important and more relevant than
ever before. For every franchisee chasing success, there are many competitors engaged in the same pursuit. Today, we live in a world where there are so many businesses fighting for the same dollar. Customers are much more demanding, educated and are much more informed. The advent of the Internet has put information about anything we can think of at our fingertips. As a result, we know we have choices and we are certainly not afraid to use it. As a franchisee your marketing activities include identifying customers in your market, advertising the products and services to raise awareness and build the brand. The typical goal of marketing is to generate interest and create leads or prospects. Inc. Magazine offers some excellent tips for marketing success: • Know what you want to achieve before spending a penny • Know your audience demographics and psychographics • Don’t try to be an expert at everything • Not every customer is worth keeping • Getting a new customer is five times more expensive than retaining a current customer • Select a “media mix” for success • Learn from each campaign Today, marketing is more important than ever. Your competition is not only down the block or around the corner; it’s online. Marketing requires a strategic mix of marketing methods tailored to your customers buying behaviors and takes into account a number of key elements,
“Marketing and sales is the same as fishing. In order to be a great fisherman you have to first know what type of fish you want to catch, and then you have to know everything you can about the fish.” including competition, audience, message, and budget. Small business marketing is both art and science. Done well marketing will bring the right prospect at the right time with the right need to your business. Now once you get them there its time to sell. Sales are focused on converting prospects to actual paying customers. Sales involves directly interacting with the prospects to build relationships with customers and referral sources and persuade them to purchase and generate repeat business. According to Forbes Magazine here are three powerful skills you need to succeed in sales: 1. Listening sincerely and without an agenda. The buying process is not about you and your wants and needs, it is about the customer. Too many of us come to the sales table with our own agenda. We are sometimes too busy thinking about quotas, promotions and commissions. It’s not about us; it’s about the wants, needs and expectations of the prospective buyer. A sales person with an agenda tends to push too hard and often doesn’t listen well. Leave your agenda at home. Sincerely focus on your customer and how your product can best serve their hopes, dreams and goals. Zig Ziglar said it best, “You can have everything in life that you want if you just give enough other people what they want.” 2. Don’t talk someone into something, allow them to make their own buying decision. Doing what is right for everyone involved is the ethical thing to do. I’m reminded of a phrase from Dale Carnegie’s book, How To Win Friends and Influence People, “A man convinced against his will is of the same opinion still.”
Your role in the sales process is to present your product in a clear, concise and truthful manner—with integrity. The best customer is the customer who can make an educated decision based on what is best for them. A loyal customer is an educated customer. You are not in the convincing business; you are in the sharing business. Your job is to ethically offer the product, service or idea, explain the benefits and answer questions. Your customer or client will then make a buying decision based on the information they’ve been given. Making the sale is about asking questions, answering questions and building a trustworthy win-win relationship. 3. You can serve your client/customer best by finding out what they want, need and expect from what you are offering. Sometimes we are so excited to share everything we know about what we’re offering that we forget it‘s about your potential customer’s expectations. What is important to you may not be important to them. Selling is not convincing someone to buy something they don’t want, but rather understanding what the customer wants to buy and why. Understanding where your product or service fits in the consumer’s budget and also understanding the customer’s spending pattern and decision cycle.
Understanding How Consumers Spend As the franchisee it’s your job to go out in your community and learn what your target market consumers need or want, why consumers make the purchases that they make, and what factors influence consumer purchases?
You also must be aware that consumers have a limited budget and most choose carefully how they spend their money. According to the U.S. Bureau of Labor Statistics, the average American family divides their budget in the following way: What’s left over is what you are directly and indirectly competing for. Your competition is not only other companies that sell similar products and services, but also businesses that also appeal to the customer’s discretionary dollars. Today consumers are bombarded with an endless selection of products and services, and making a good purchase decision isn’t easy. It is incredibly important for businesses to understand consumer’s behavior in order to gain and keep customers by studying and understanding the sales cycle. Understanding the process buyers go through is key to effective marketing and sales.
Consumer Buying Behavior Buyers will typically go through various stages to make the decision to purchase. Of course, depending on the purchase, the following stages will occur in varying degrees. • Awareness • Research • Options • Decision • Post Purchase
v e t er ans in fr anch ising
V e t er ans in Fr anch ising
Richa rd Ashe, President, Vetera n Fra nchise Center s LLC
How Consumers Spend Their Money
The Missing Tool in Franchise Success Is You! As a franchise owner you have to go into your start up either with these skills or be willing to learn and embrace them. The buck (literally) begins and ends with you. Now you may be thinking, “Well, I’ll just hire a great sales team.” You can hire as many employees as you want, but know that every employee is involved in sales and marketing at varying points
in the consumers buying cycle and they will look for your leadership and follow your example in how they engage with customers. If you do not learn and embrace excellence in marketing and sales, neither will they. Franchisors offer the toolbox, but it takes sales and marketing to make your business work for you. 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: 713-849-9642 Email: rich@VeteranFranchiseCenters .com Web: veteranfranchisecenters.com
MAKE YOUR NEXT CAREER MOVE . . . A BUSINESS OF YOUR OWN!
Maybe it's time to take control of your future. One way to accomplish that goal is to own a franchise. Let us help you – we provide a “Free” franchise matching service for Veterans.
To get started, visit our website: VeteranFranchiseCenters.com
No Cost – No Obliga�on
Veteran Entrepreneurs in Franchising The severity of the injuries some veterans suffer in Iraq and Afghanistan are immense, but with every tragedy there seems to be an equal opportunity. The trick is seeing clearly enough to find it. Veterans, and especially the severely wounded, find themselves to be outcasts when faced with transitioning into civilian life. However, these veterans are not alone; entrepreneurs tend to be outcasts too. I am an ex-marine and served six months in Iraq before an IED explosion took me out of the fight. After barely escaping war and spending 13 months in Walter Reed Army Medical Center, I learned just how much of an outcast I had become. I’m not talking about my physical appearance, although I now wear a prosthetic. My other leg appears to barely be hanging on after 30 reconstructive surgeries. Mostly, I consider myself an outcast because of my tolerance for risk, need for adventure, and drive to execute a mission. Military training and managing the uncertainty of war can help to build great skills to use in a life of entrepreneurship. A recent study sponsored by the Small Business Administration found that, “In the private sector workforce, veterans are at least 45 percent more likely than those with no active-duty military experience to be selfemployed.” Franchising in particular can provide the perfect balance between structure, competitiveness, and freedom. From a veteran’s perspective this is an ideal
balance and path for transitioning after military service. Our personalities combined with our training prove it. Franchising provides a mutually supportive relationship between the franchisor (owner of the brand) and the franchisee (owner of the unit). This relationship tends to help reduce the risk associated with launching a business. Some say, “it’s like being in business for yourself, but not by yourself.” Furthermore, the military operates on proven systems continuously without deviation. This method of structuring is extremely similar to the franchising method of structuring. The International Franchise Association (IFA) and franchised businesses have launched Operation Enduring Opportunity, a campaign to hire, and recruit 80,000 veterans and their spouses through 2014. Since the November 2011 launch of Operation Enduring Opportunity, over 66,000 veterans started careers in franchising, including over 4,300 new franchise business owners. IFA’s video, From Honor to Owner, is a moving new film highlighting the Operation Enduring Opportunity campaign and SSG Shilo Harris (U.S. Army, Ret.), was struck by an IED in Iraq and burned on 35 percent of his body, yet he now is leading the way to rebuilding his life by becoming a WIN Home Inspection franchise owner. Click the link below to listen to Shilo’s story. IFA’s VetFran program includes over 585 franchisor offering financial incentives, training, and mentoring to veterans
interested in small business ownership and/or a career path in franchising. These financial incentives normally range from 15 to 20 percent off the franchising fee and some companies waive the fee entirely. Veterans interested in franchising can learn through the VetFran Toolkit. The VetFran toolkit includes online courses, a financial assessment, funding to help veterans without the equity to access loans, partner links, and access to the VetFran Mentor Network. Kevin Blanchard served in Marines as a Combat Engineer, deployed to Iraq in 2005. On June 30, 2005, a roadside bomb in northwest Iraq hit him. This resulted in a left leg amputation, and 13 months in Walter Reed hospital. Since then, Blanchard has studied International Business at the George Washington University, and an MBA at Catholic University. Today he works for the International Franchise Association’s VetFran Program. He is a strong supporter Veterans starting their own small business in the franchise industry. For more information: email@example.com
v e t er ans in fr anch ising
Kevin Bla ncha rd, VetFra n
V e t er ans in Fr anch ising
Jim Tatem, Sig na ra ma
A G r e e n B e r e t F in d s G ol d in S ignara m a Serving with passion. That’s what motivated Fayetteville N.C. entrepreneur Robert “Buzz Saw” DeGroff during his 28 years in the elite Special Forces. Now, he says, he’s doing it again—this time, as a Signarama franchisee. After retiring in 2010 as a Command Sergeant Major, the Army’s highest noncommissioned officer rank, DeGroff was on the hunt for a franchise opportunity, something that would be a perfect fit for a top leader in the Green Berets.
“I didn’t want to reinvent the wheel,” says DeGroff. “I wanted something with a system in place. Soldiers know systems and how to execute a plan.” After speaking with a Signarama sales rep, he noticed something that hadn’t previously caught his attention: There were signs on businesses everywhere. “Signs have a life cycle, just like computers. They don’t last forever, so they will need replacing,” he observed. More important, he felt that Signarama offered a “tried and true” system. And that did it. DeGroff bought the existing Signarama store near Fort Bragg, California. Within ten months, he had tripled the monthly sales volume of the location, catapulting his store to one of the franchise’s leading performers in the Southeastern United States.
“I trained my whole military career to run my own business. As a Green beret, above all else, I learned how to lead,” says DeGroff. “Management is a vital part of leadership: managing personnel, resources and time.” Military Times has ranked Signarama, the world’s largest full-service sign company with nearly 900 locations in more than 50 countries, as one of the best franchises for vets. The company recently launched its VetFran program to give returning veterans greater access to franchise opportunities and support them with training and financial assistance. “As tens of thousands of service men and women return from deployment in Afghanistan and Southwest Asia, we need more opportunities to ensure that veterans and their families can transition into the civilian economy,” says company president
“Every business needs a sign or two. Signarama offers a system that works. All you have to do is execute..” “JT” Jim Tatem. “At Signarama, we’re committed to helping our veterans own their own businesses and succeed. The Signarama program discounts veterans’ franchisee fee, based on their years of service: The fee is discounted 10 percent for those with less than 11 years of service, 25 percent for 11 to 20 years and 50 percent for veterans such as DeGroff, who have served more than 20 years. According to the company, 55 vets have taken advantage of the program, to date. Since launching its program, Signarama has partnered with the International Franchise Association’s (IFA) VetFran initiative, the U.S. Chamber of Commerce and the Veterans of Foreign Wars (VFW) to host workshops and job fairs for veterans in Detroit and Washington, DC. The program’s goal is to offer opportunities to purchase franchise businesses and reduce the unemployment rate for vets, which is hovering at 18 percent. DeGroff opened his store prior to the launch of the VetFran program, but he is actively helping the company to promote the program at various events. DeGroff says he is proud to support Signarama’s effort to help fellow veterans.
For DeGroff, Signarama has been a
win-win for his customers, and he highly
recommends the franchise opportunity to of sign creation and graphic services to local businesses. DeGroff’s top sellers are banners, vehicle and fleet graphics and wraps, window graphics, building signs, electrical and lighted sign, Americans with Disabilities Act and engraved signs and neon and LED message displays. He also prints T-shirts, business cards and flyers. As part of the $30 billion-plus worldwide sign market, Signarama has been at the forefront of the sign industry for more than 20 years, providing cost-effective advertising and branding solutions for companies of all sizes. The franchise giant is a part of The United Franchise Group, a global leader consisting of award-winning business-to-business brands and franchise development services. It has been ranked 53rd on Franchise Direct’s Top 100 Global Franchises. This is the company’s third consecutive year on the list, which is a definitive and exclusive detailing of franchises that are performing best internationally.
vets. “Every business needs a sign or two.
Signarama offers a system that works. All you have to do is execute. And I can say
with great confidence that if you execute
their plan, you will be profitable and make a whole lot of people happy.”
“It gets better every day.” But, he adds,
“Be prepared financially before you go
in. Don’t expect to be profitable from the start. It’s hard work. But it’s worth it.”
Signarama currently has 15 locations in North Carolina and expects further expansion in the area, with plans to open approximately 10 additional franchised units in the state within five years. The company is targeting cities along the coast for growth. Nationwide, the company plans to open 50 more locations by the end of 2013. By December 2016, the company projects to have more than 1,200 locations. For more information: www.signarama.com
“I love Signarama corporate,” he says. “I have received 100 percent support from Signarama at every level, but especially from my operations advisor, Nick Mayo, a former Marine. Nick has done everything that I have asked, when I asked.” DeGroff says coaching and mentoring have been a phone call away. He has received assistance with staff training and sign installations, as well as help with learning a variety of products and applications necessary to create signage. Signarama uses cutting-edge industry software programs to deliver a full range
v e t er ans in fr anch ising
f ra nchisee in action
Making Friends with MaidPro Franchising USA
Searching for his next great business opportunity, Dustin Guessfeld found what he had been looking for in an unlikely way. “Why don’t you just DO something? Get off the couch and clean or something!” Guessfeld recalls his wife asking one evening. The next morning he was up early and on the Internet researching cleaning franchises. That is where he found MaidPro. When Guessfeld was growing up in Slidell Louisiana, his entrepreneurial mother started her own salon. Over time, with great attention to operations and customer service, she turned her business into a 5,000 square foot salon and day spa. “My mother inspired me,” Guessfeld says. That inspiration made Guessfeld an entrepreneur in his own right at a very young age. Saving $500 in birthday money, he financed the construction of a skateboard ramp in his backyard and began charging neighborhood kids to use it. “I have always enjoyed looking out and trying to find the next thing, trying to find a certain opportunity. This has always been with me,” he says. At 18 years of age, Guessfeld moved to Baton Rouge, Louisiana with the intention of attending school and obtaining a college degree. He enrolled in the entrepreneur program at Southeastern Louisiana University in Hammond. While studying there, Guessfeld started no fewer than three different business ventures. The first was an online eBay store selling clothing and accessories. As that venture grew to a point where it might compromise his goal of earning a college degree, Guessfeld sold. But, not long after, he was back in business selling orthopedic fitness shoes. Once again, as the shoe business grew large enough to threaten his studies, Guessfeld sold, only to soon find himself
“I have fallen in love with MaidPro and its people. Not just the people at the home office but other franchise owners too.” entering the vending-machine business, targeting buildings with 100+ employees for snack and drink machines. After selling his vending business in 2009, Guessfeld took a job with shopperschoice. com to learn more about Internet marketing. Before very long, however, Guessfeld found himself itching to find his next big opportunity. After looking into about 30 different business ventures, one small remark from his wife sparked an interest in the cleaning industry. “It was that easy,” Guessfeld says. “My wife came home one day and said something that led me straight to MaidPro.” After thoroughly researching the home cleaning company, Guessfeld filled out MaidPro’s online franchising application. MaidPro called him immediately and together they reviewed his list of questions. Pleased with the information provided and feeling the franchise was a good fit for his next venture, Guessfeld and his wife flew to MaidPro’s corporate offices in Boston where they met the staff, toured MaidPro’s facilities and were shown firsthand how the company operates. After a full day of visiting with people at MaidPro, Guessfeld and his wife returned to Baton Rouge where they were informed of their acceptance into the MaidPro family of businesses. Before long, with paperwork completed, the couple flew back to Boston for a full week of training. “We went through five days of training, which covered just about everything,” says Guessfeld, admitting there was a great deal to absorb and remember. It was on these visits to Boston that Guessfeld found the most compelling reason to join the MaidPro community – the sincerity of its people. “The people
there are just awesome. You can tell they work as a team. Nobody tried to sell me anything and we had a blast with everyone. I never thought I would end up buying into a franchise, but the people were just so nice and helpful and they were just being themselves.” After finding an approved site for his office in Baton Rouge, Guessfeld began preparing for his anticipated launch date (June 1, 2012) less than three months after buying into MaidPro. Quick to point out the various benefits he has found in working with MaidPro, Guessfeld’s key recognition is the personalized support. “It’s unbelievable support. Everyone there is always willing to help you – from the consultants all the way to the founders of the company. They offer an amazing amount of help and feel like a second family to me and my wife.” Speaking to other benefits he has encountered as a MaidPro franchise owner, Guessfeld is not short for words. “I have fallen in love with MaidPro and its people. Not just the people at the home office but other franchise owners too. Many of us stay in touch with each other.” Participating in daily workshops held via conference calls on various topics has given Guessfeld an opportunity to speak with other franchise owners that share his experiences and deal with similar issues. The workshops have been extremely helpful to his learning process, Guessfeld says. “I could have never done this by myself. I would have gone through so much money, trying this, trying that and not knowing. MaidPro’s people and other owners have already done what I am doing. They have proven systems for doing things and are great people.” Guessfeld says his work-life balance as a MaidPro franchise owner is also great. His
f ra nchisee in action
f ra nchisee in action
workday usually begins at 7 a.m. and ends around 2-3 p.m. Although his office closes at 5 p.m., MaidPro’s call center stays open until 7 p.m., ensuring Guessfeld does not miss calls from new customers wanting to sign up. “I love that I don’t have to work nights or weekends,” he says. Changing his life in only positive ways, Guessfeld feels the career switch to being a MaidPro owner has heightened his freedom and improved his personal relationships. “I don’t feel alone. I have my employees and I have my MaidPro family with who I am always in touch. I love that about franchising,” he says. While the pieces have fallen into place relatively easily for Guessfeld, he admits his biggest challenge so far has been staffing. “Trying to find good people is challenging, but as long as you follow the MaidPro plan for hiring employees, it’s pretty simple. I had a few hiccups when I first started, but have now gotten the hang of it.” With his experiences in a wide variety of business types and positive venture into franchising with MaidPro, Guessfeld often shares advice with people looking to become involved with franchising. “Having experienced and knowledgeable people to whom you can reach out is extremely important. It’s also important to get to know the area in which you will be franchising and that requires a lot of research.” Receiving calls from potential MaidPro franchise owners, Guessfeld says he always emphasizes the importance of keeping an open mind, being coachable, willing to learn and willing to take direction. “If you have these qualities, then
MaidPro is the franchise for you.” When asked about future plans for expansion, Guessfeld admits he is “not a long-term goal type of guy, but more of a short-term and being realistic type.” However, he says the market area for his business in Baton Rouge is growing very quickly. “While I would like to expand in the future, right now I am staying focused on this one area.” Today, Guessfeld has 16 employees who currently serve 140 recurring customers on either weekly, bi-weekly or monthly bases. One-time cleaning services account for about 15percent of his gross sales. Business aside, Guessfeld and his wife have recently entered the world of recreational fishing and have been looking to purchase a boat for their newfound hobby. “This is something we would not have been able to do without MaidPro,” Guessfeld says. The avid football fan is also in high spirits anticipating the coming season, stating proudly his devotion to the New Orleans Saints and LSU Tigers. “It’s my favorite time of year! I am really excited,” he says. Above all, Guessfeld finds fulfillment helping people in two ways. First, he is happy to be making peoples’ lives easier. “Our customers love to come home to clean houses. They can sit back, relax, play with their kids, watch TV and not worry about anything else. We get so many stories about how grateful people are to have us,” he says. Second, Guessfeld is pleased to be providing jobs for people in his community. “These are very rewarding things, having good employees that are happy, and having happy customers.” For more information visit: http://www.maidprofranchise.com/ franchisingusa
“My wife came home one day and said something that led me straight to MaidPro.”
f ra nchisor in depth
SU N TA N CI T Y
Shining A Light On
Sun Tan City
American video retailer, their sole focus was now on Sun Tan City. “In the first year we owned Sun Tan City we were tanning 800-1000 people a day,” Rick says, adding that although they were busy they hadn’t yet learned how to maximize productivity or total revenue, and therefore weren’t making a lot of money. This didn’t stop the business savvy brothers, and by 2004, through hard work and determination they began seeing exponential revenue growth.
Launching Sun Tan City in 1999, brothers Rick and David Kueber were no strangers to the success found in the tanning industry.
in the back of their video stores was the perfect solution to offset the down season. “We knew there was an opportunity for a business in this industry because of our success with tanning in the back of video stores. Several of our video stores had tanning beds with a seven to 14 day wait for tanning appointments,” Rick explains.
Learning how to maximize productivity and total revenue, a pivotal step was made when they began selling monthly memberships, requiring a credit card or banking information to conveniently process monthly payments automatically. This user-friendly system by Sun Tan City has lead to over 50 percent of revenue today coming from recurring customers.
Prior to opening Sun Tan City the Kuebers owned and operated a 13-unit independent video rental chain. Building a successful business in the video industry came easy to the gifted entrepreneurs, despite their vast competition and seasonal slowdowns.
Aware of the demand for the growing phenomena, the Kuebers starting looking at the current market and quickly noticed that there were no high capacity salons. “There were a lot of four to 10 bed salons, all of which had the problem that there was a demand but no capacity.”
Initially, the brothers had not intended to franchise their tanning business. However, when former colleagues from their video rental business visited to express their interest in the tanning industry, they proposed that rather than reinvent everything the Kuebers had already done, why not franchise the concept from them. After careful consideration and advice from attorneys, the Kuebers agreed to open their first franchise location in Augusta, Maine in 2007.
Seeking a way to generate revenue in the spring, a generally slow period for video stores, the pair decided on tanning beds. With spring being the busiest time for indoor tanning, installing the UV beds
In January 1999, the Kuebers opened the doors their Sun Tan City, a 30 bedtanning salon, in Elizabethtown, Kentucky. Selling the video rental store in 2002 to Movie Gallery, the second largest North
With the building blocks in place, and plenty of opportunities in the national market, their focus shifted to developing a successful franchise plan. “We want to be smart about our franchise growth. We’re
“On an average day, more than one million people tan in salons, and due to the industry’s rapidly expanding demographic, this number continues to grow.” not interested in selling to everyone and anyone, we want to make sure that we find franchisees that are a good fit because they are business partners, and what they do impacts the brand and other franchisees,” Rick says. “We want to make sure we’re absolutely certain we have the right partners.” The most important factor when assessing potential Sun Tan City franchisees is if they’re a business minded individual. While previous multi-unit franchise experience, retail management, or a real estate background can prove to be helpful in this industry, it is not required. “Anyone with previous franchise experience that is looking to diversify their portfolio [is welcome],” says Beth Ransdell, Director of Franchising for Sun Tan City, adding that the Sun Tan City concept could be a good fit for someone who is looking for something with a simple operating plan and a small footprint. A potential Sun Tan City franchisee must have a minimum net worth of $500,000 with liquid capital of at least $250,000. The franchise fee is $30,000, and investments between $457,150 and $780,700 may also be necessary to build and equip a salon, the amount varies depending upon the size of the salon and the geographical area. While the initial investments may be high, the rewards of entering a five billion dollar per year industry can quickly prove it’s worth. Indoor tanning has grown substantially in the last 25 years, and in the US, approximately 28 million people tan indoors annually. On an average day, more than one million people tan in salons, and due to the industry’s rapidly expanding demographic, this number continues to grow.
Franchising with Sun Tan City involves a seven-step approval process, beginning with submitting a franchise application to qualify the applicant financially and geographically. If the individual is approved they then participate in Discovery Day, which involves a visit to headquarters, interaction with its various departments, taking tours and visiting established salons. Once the paperwork, background and credit checks are complete, the applicant works with the Director of Franchising to finalize their Development Agreement. Sun Tan City gives franchisees the resources, training, and tools they need to be successful and provide a great tanning experience. A rigorous training program includes webinars and hands-on in salon training. Sun Tan City offers full marketing support. “We know marketing is critical to success,” Rick says. Each month franchisees receive a well-researched promotion kit. Franchisees also benefit from the assistance from three full time analysts who are devoted to helping their businesses thrive, as well as a full time call center which receives all salon level customer service calls, a feature very unique to the industry. “One thing we know about being a Sun Tan City franchisee is that we treat our franchise locations very much like corporate locations. There are a lot of things administratively we handle on our end,” Rick explains. “We have strong internal systems to automate different processes, and we build those not only for our corporate stores, but they handle our franchise locations as well.” Sun Tan City is also looking to convert independently owned tanning businesses
to their brand. In doing so they are offering special discounts including no upfront franchise fee, a reduced royalty structure, and a $13,000 credit to each location. This credit will offset the costs of exterior signage, interior-branding materials, and other conversion related expenses. A major selling point for converting to the Sun Tan City brand is that while the tanning industry average for an independent salon is $261,000 a year, Sun Tan City franchisees earn $583,000more than double the industry average. The Kuebers have grown Sun Tan City from “a few tanning beds placed in the back of an existing video store” to its current position as the fastest growing chain of indoor tanning salons in America. They have overseen the growth of their business to over 240 locations in 17 states. Focused on rapid expansion across the east coast, franchising in new states is also being considered. “Our first layer of focus will be to fill in the areas around where we’re already located,” Ransdell says. Currently researching areas in Michigan, Indiana, Ohio, Alabama, Pennsylvana, she assures, “If an opportunity presents itself more west coast, we’ll take a look.” For more information: http://www.suntancity.com/franchise
f ra nchisor in depth
ex per t advice
Jon Carlston, Vice President, Social Development of Process Peak
What’s next in technology for franchises?
Disruptive technologies are obviously here to stay, as web-based software continues to rapidly transform the competitive landscape for franchisors -- but with an important difference from the recent past. Historically, franchisors have focused on using technology to improve operational efficiencies, without much emphasis on the brand experience that customers and franchisees are having.
This has changed. The winners in the next phase will be the franchisors who take advantage of technologies that enables other parties to engage; and for the franchisor to establish and maintain a culture of continuous improvement in marketing, operations and across all brand touch points.
Empowering Unit Growth Just as business software has made functions like accounting radically more efficient, the next wave of experiencebased software will make us better at collaboration and the capture of critical knowledge. Implemented properly, these solutions will enable franchise organizations to grow closer to their customers, progressively smarter and
ultimately more competitive.
Recruiting is the foremost priority for every franchisor, and that’s why software that facilitates engagement is becoming more popular. It’s an opportunity for you to share the right information in an environment that you control, and to demonstrate your brand’s commitment to the success of your franchisees – should you elect to move forward with them. Successful unit growth is now more about providing the clarity that empowers a good decision, and less about selling them on how great you are. Of course you should do some homework before you adopt any new technology. It’s a strategic investment that will impact your organization for years to come, so
“From a leadership position, experience-based software must be framed as an opportunity for growth, rather than a threat to how we’ve always done things.” networks. For better or worse, you must know what’s being said and by whom. There’s a range of software-based tools that can help you monitor the conversation around your brand and really listen to the voice of the customer. RESPOND: Whether someone is building your brand up or tearing it down, it’s best to acknowledge them. Your supporters appreciate your love, and your detractors might be shocked into becoming supporters when you listen and make things right. With the right tools, you can respond in real time, and avert customer service disasters before they happen.
you must choose carefully. As a brand steward, what should you be looking for in experience-based software solutions? We have noticed five key business activities that the right software will enable for your brand: BE FOUND: Facebook, Google+, Twitter, Foursquare, Yelp and other social networks generate tremendous amount of peer-to-peer interaction. People who want your product or service are on these networks, and at times they are actively looking for what you offer. Be there ahead of time and you have a shot at earning their business. Look for automated solutions that cut down the manual work in posting updates; and for a solution that gives the franchisor greater control over franchisees’ social media presence. LISTEN: Odds are good that your brand is being discussed on these same social
LEARN: When you have data around every customer interaction, you have rich opportunities to learn lessons that are critical to your brand. The best practices are the ones that help you earn more profit, right? Organizations that apply analytics generate up to 1.6X revenue growth, 2X EBITDA growth and 2.5X stock price appreciation, according to a 2012 study conducted by IBM Center for Applied Insights. ADJUST: Use the insights derived from your analytics to empower people throughout your organization. You’ll be equipped to make better decisions, and react quickly to real-time situations. With a focus on your most critical outcomes, you’ll have a competitive advantage.
An Opportunity, Not A Threat Obviously the technologies we’ve discussed are more than “a trend.” Facebook and Google aren’t going anywhere. If anything, the pace of change in online marketing is only going to continue to accelerate. So it’s imperative for any competitive franchisor to have a strategic plan that will help leverage these innovations. From a leadership position, experience-based software must be framed as an opportunity for growth, rather than a threat to how we’ve always done things.
It’s worth noting that as you seek to be found by your new customers, rather than hunting them down, you will need to embrace greater transparency as an operating principle for your entire organization. This means sharing content that will be of interest to your prospects, across the channels where they are already active. This is how marketing is conducted now, and the good news is that there are solutions that will enable you to get there quickly. Feel free to contact me if you would like a free copy of our indexing and benchmarking studies performed exclusively for the franchising industry. Jon Carlston brings years of executive leadership experience in the franchising industry in product management, sales, and training. As Sales and Customer Service Director for Franchise.com, Jon produced revenues of $1.5 million annually through sales of advertising, electronic document disclosure, and other software solutions. Today he spearheads the continual refinement of Process Peak solutions, ensuring that the offering meets and exceeds the needs of franchisors and franchisees. For more information: Email: firstname.lastname@example.org
ex per t advice
have your say
Joel Lazarovitz, Co-Founder, International Franchise Services
Growing in Popul arit y:
Children’s Education Franchises In markets such as Saudi Arabia where 40 percent of the population is under 16 or in specific countries within Southeast Asia (Malaysia, Indonesia, the Philippines, Singapore and China), I receive inquiries daily from franchise prospects that are interested in acquiring a unique children’s based franchise concept for their country. Having had the distinct pleasure of witnessing children of all ages participate in after school programs, birthday parties, workshops and summer camps in numerous continents across the globe, I can tell you that a smile is universal. It means the same thing in every country.
As the franchising industry continues to evolve so do franchise prospects opinions on what are attractive options for business ownership. It was not that long ago that the term “franchise” meant flipping burgers. Now more than ever, prospective franchisees have a large variety of franchise sectors to choose from. One of the sectors that is probably the most misunderstood is Children’s education and entertainment franchising. Most franchise prospects reach the
premature conclusion (before extensive investigation) that children’s education\ entertainment franchise concepts do nothing more than pull on the heart strings of parents while placing a perpetual smile on children’s faces. Although you can argue that there is obvious value in both, a franchise owner should be pursuing a business opportunity with potential for growth. Children’s enrichment franchises satisfy that pursuit. As we continue to move through one of the most challenging recessions in recent memory, many would argue that children’s education franchises are recession proof. I agree wholeheartedly. Not only is it recession proof in the United States, its appeal as a franchise opportunity is growing worldwide.
Over the last decade we have seen franchisors that focus on core areas of curriculum grow their franchise system significantly, for example those focusing on engineering for kids, art, science, the culinary arts, and math. The recipe for success was simple, developing multiple streams of revenue that piggy backed off of one another. If a child signs up for an after school program and enjoys their experience, they will want a birthday party as well. The domino effect is difficult to ignore. The development of unique and rewarding programming that educates and entertains simultaneously, while adapting to the educational standards across the United States has been embraced by elementary, pre and middle schools across the nation. There is no secret that the schools
“If a child signs up for an after school program and enjoys their experience, they will want a birthday party as well. The domino effect is difficult to ignore.” our children attend have seen drastic budgetary cutbacks. The extent of these cutbacks has resulted in the removal of certain areas of curriculum from their daily studies. With parents hands virtually tied, the option of offering rewarding educational programming that keeps their children off the streets and out of trouble is incredibly attractive to parents. The development of these rewarding programs offers schools options beyond athletically inclined enrichment programs where they do not have to reach into their diminishing budget to pay for. Parents and schools alike recognize the win-win relationship. A great example of a children enrichment franchise that has taken advantage of the need for programs that focus on right brain thinking is a franchise concept out of Jackson, Michigan called KidzArt. KidzArt has grown successfully due to the quality of its curriculum and its ability to fill an obvious void. As schools budgets continue to be slashed, the first two areas of curriculum that typically suffer are the arts and music
leaders of tomorrow. By fostering their interest in various areas of curriculum these children’s based franchisors are not just growing a business, employing instructors and making a positive impact on their community, they’re harnessing a child’s interest in a field of curriculum that may lead to a career they otherwise might not have envisioned. Simply put, children’s education franchises are an attractive option for business ownership because it is scalable, affordable and recession proof. So, the next time you are looking at various sectors of franchising take a long, hard look at the children’s education sector. It is far more than birthday parties and smiles. Joel Lazarovitz is the Co-Founder of International Franchise Services, a Franchise Development firm that
specializes in introducing North American franchise brands both internationally and domestically. International Franchise Services has introduced a unique blend of franchise concepts in over 35 countries worldwide and 150 cities across the United States. Mr. Lazarovitz is a 17-year veteran of franchising with an expertise in building children’s enrichment brands globally. For more information: joel@ intlfranservices.com
KidzArt provides its franchise family with over 10 years of curriculum that focus on over 30 mediums of art. Whether it is after school programs, pre school, activities, birthday parties, special events, fundraisers, teens art or many of their other demand driven programs such as seniors art and corporate initiatives, KidzArt has found a niche that allows children and adults to engage their imagination in a supportive non threatening environment. Regardless of the field of curriculum, the children we engage in unique enrichment programs today are more than likely our
have your say
ex per t advice
Jason Power, Senior Attorney, Shelton & Power
Terms, Tr aits and Tools Part I Each year thousands of people reach for the American dream of owning their own business. Many of these people look to franchise ownership as a way to realize this dream while reducing the start-up risk. This series of articles will provide key information on how to evaluate and buy a franchise, along with the steps needed to begin your journey of business ownership. For anyone unfamiliar with franchising, you should understand some of the terminology being used before getting in too deep. First is the term franchisor. In your journey to franchise ownership, you will learn that a good franchisor is a successful business person who sells a model of his or her success and hard work so that others, like you, may reap the benefits of their experience, business savvy, time, and financial investments thereby avoiding the learning curve of mistakes.
“You are looking to start a career, not a job; so instead of defining you simply as the person who buys a franchise and follows the franchisors rules, you are due the respect that you deserve.” Next is franchisee. You are looking to start a career, not a job; so instead of defining you simply as the person who buys a franchise and follows the franchisors rules, you are due the respect that you deserve. As a franchisee, you truly are an entrepreneur who buys a business from another entrepreneur, the Franchisor, who has created a successful; proven Franchise system, creates jobs in their local economy, a career for themselves and a vehicle for their own financial future. Lastly is the infamous franchise disclosure document or FDD. Although it can be an intimidating document, the FDD is a sales and analysis tool. The FDD is the legal document that the franchisor is required by law to provide at least 14 days before they are allowed to accept from you a signed franchise agreement or any money. The FDD will teach you how much the franchise will cost, what your roles and responsibilities will be, and what the franchisor must do to help you during the franchise relationship. Now that you understand the terminology used, it’s time to look at why you should consider owning a franchise. Many people do not understand the power of franchising. Franchising as an industry does more for the U.S. economy and job rate than any other industry. Although helping the economy and job rate is a noble cause, most people go into business for themselves to be their own boss, to have job stability, and to build something to benefit themselves and their families. Franchising is a great mechanism to make this happen.
During your search for a franchise you should remember three rules: First, make sure the franchisor really does have a proven system that works; second, make sure that you are compatible with that system; and third make sure you will enjoy following and operating the system for as long as you intend to own the business! With the average franchise term being 10 years, you must choose a franchisor that you’re compatible with, in a business that you will enjoy operating for the full term. One way to determine whether the system works is to talk with other franchisees of that business. By law, the franchisor is required to list the existing franchisees and a limited list of former franchisees in the FDD. You should take full advantage of this list. Contact many of the franchisees and ask them things, such as what their opinion is of the business; whether they would recommend owning this franchise to others; and if they could do it all over again, would they? With the above rules in mind, you should perform a cost/benefit analysis of the franchise or franchises you are considering. During your analysis consider whether the cost of that particular franchise is worth it. Look not only at the cost of the franchise fee, but also the total investment necessary to get the franchise open and operating. Make sure it is not more than you can realistically handle on your own, which we will cover in more detail in our next issue. You must also consider your lifestyle and family in your cost/benefit analysis. Almost all franchises will require that you attend training at
the franchisor’s location for several days to several weeks depending upon the franchise system. Ensure you can afford to be for this time period. Additionally, owning and operating a franchise will bring new roles and responsibilities to your life. During your self-analysis, make sure that you are prepared to handle the additional responsibilities such as bookkeeping, payroll, regular communications with and reporting to the franchisor, hiring and firing, advertising and marketing, the overall day to day operations of running the business, and all other roles that may come up. If you are not strong in one of these areas, do not worry because there are franchise systems that allow you to hire managers to help with some of these roles. Now that we have a general idea of the roles to be played in a franchise, you need to consider the types of franchises available to you. Within all of franchising you will encounter two classes of franchises, the business format franchise and the product distribution franchise. Each format requires its own set of skills. In the business format franchise you will use the franchisor’s trademark, trade name, and be required to distribute the brand’s products
ex per t advice
ex per t advice
Jason Power, Senior Attorney, Shelton & Power
â&#x20AC;&#x153;Most people, when asked to name a franchise, automatically think of popular fast food restaurants; but what most do not know is that restaurants only account for about 25 percent of the types of businesses that are franchised.â&#x20AC;?
or services. You will additionally receive the methodologies and procedures that are necessary for the successful operation of the franchised business, unlike in a product distribution system. A majority of the franchises that are purchased now are classified as business format franchises. Not as common, is the product distribution franchise, which can include gas stations and car dealerships. Product distribution franchises require that you distribute the brandâ&#x20AC;&#x2122;s products and services, but normally do not require or offer the use of the trade name or the trademark. For example, there is a popular BBQ restaurant in Texas that also contains a gas station selling a popular brand of gasoline.
that are franchised. In the U.S. today, there are franchises in all types of industries, from medical to tax preparation businesses and from doggy daycare to senior care, just to list a few. Additionally, there are franchises that require commercial or retail space or those that you can run from your home. With over 70 different industries to choose from, there is a franchise out there to suit the needs, desires, and skill sets of any would be business owner.
Most people, when asked to name a franchise, automatically think of popular fast food restaurants; but what most do not know is that restaurants only account for about 25 percent of the types of businesses
In upcoming articles, I will take these discussions further and give you the tools necessary to further analyze yourself to find out whether you are fit for the franchise life. You will also learn what
additional steps are needed to complete your journey to becoming a franchise owner.
Jason Power has been helping entrepreneurs review and negotiate franchise purchases since 2009. Jason is a regular speaker at the International Franchise Expo, West Coast Franchise Expo, Franchise Expo South and various other franchise expos where he gives tips on how to analyze a franchise before purchasing. For more information: Email: Jason@SheltonPower.com Phone: 866-993-7262. Web:
Change the Way Dreams are Built. Granite Transformations is a pioneer in the home remodeling industry changing the way people remodel their homes. We believe in transforming a person’s home into a sanctuary where they will build incredible memories every day. We are a company that is passionate about building other peoples’ dreams using amazing products in a revolutionary way. OUR BUSINESS MODEL OFFERS:
• Exclusive Territories • Initial & Ongoing Training Programs • Revolutionary Products • Strong Management Team
The quality and uniqueness of our products is matched only by our obsession with the entire customer experience. If this sounds like an organization you’d like to be a part of, contact our Franchise Development Department at to discover how we will partner to build dreams.
• 25+ Years of Growth & Success • Continual New Products • Outstanding Local Advertising • An International Footprint Franchising USA
G ra nite Tra nsfor mations
Granite Transformations le ading innovation in the home renovation industry Revolutionizing the way the world is built, Granite Transformation is dedicated to remodeling kitchens and bathrooms in ways that create “no mess” and “no stress” for homeowners. Recognizing the many factors that deter homeowners from renovating, Granite Transformations has found the solution to providing customers with their dream homes in a quick and stress-free way.
The company’s stunning products are designed to be installed over existing counters, backsplashes, and other surfaces without causing messy, time consuming demolition. In contrast to traditional home renovation methods, Granite Transformation’s customers don’t have to worry about being without a kitchen for weeks on end, or relying on general contractors that aren’t familiar with modern products or design trends. Granite Transformations began in Perth, Western Australia in 1996 when company founders, Colin Mackenzie and Bob Smith recognized an opportunity to use thin, but durable, granite overlays as an exciting new alternative to traditional countertops,
backsplashes, floors and more. Granting the first franchise license in 1997 to a Perth builder relocating to Melbourne, the business grew rapidly, and they expanded their concept into the United States in 2001. With new products and ideas being consistently introduced throughout the year, homeowners, commercial and domestic interior designers, architects, builders and developers worldwide, are using Granite Transformations. Today Granite Transformations is one of the largest turnkey home renovation companies in the world with over 150 branches operating in eight countries; revenues exceed $150 million dollars annually.
“Granite Transformations is one of the largest turn-key home renovation companies in the world with over 150 branches operating in eight countries.”
s are manufactured with 72 percent post consumer recycled content.
Changing the face of the home renovation industry, Granite Transformations has found success through both unique product offerings and a solid business model. With a strong focus on the environment, Granite Transformations’ supplier and parent company, Trend, create their products from approximately 95 percent natural stone mixed with a specially formulated polymer that provides greater strength and durability than traditional granite. In addition to their granite surfaces, Granite Transformations also offers the Trend Glass and Trend Mosaic lines. Trend Glass is a unique combination of quartz, semi-precious stones and post-consumer recycled glass. Some Trend Glass colors
Since Granite Transformations understands that a material’s appearance can be altered by environmental factors such as sunlight or lack thereof, their expert design consultants bring the product from the showroom to customer’s homes to ensure they purchase the right product for their space. In-home quoting, measuring and color selection are all done on site, and when it’s time for the installation to begin, the Granite Transformations team brings the pieces pre-cut and customized, leaving the mess at their workshop, and keeping your home clean. The home improvement industry has experienced exponential growth over the past several years, with homeowners seeking ways to improve their living space and increase its value all in convenient cost-effective ways. With Granite Transformations, franchisees can easily help in fulfilling this demand, and are given the tools and resources needed to build a profitable franchise. With current franchising opportunities available all over Canada and the USA, the franchisee fee
ranges from $25,000 to $75,000 based on protected territories of 100,000 to 300,000 households. Granite Transformations’ success has been in part due to their carefully selected franchisees. Experience in sales and marketing is an important quality for potential franchisees and as with other franchises, business management skills, experience, and the proven ability to run a business are advantages. Offering two weeks of thorough training to franchises at the corporate training facilities in Dallas, TX, the program involves a classroom setting to learn the basics of operating the business, as well as hands-on learning to carefully fabricate the products, customize edge types, and install the product. Once a franchisee has signed the lease and has selected their location, Granite Transformations sends additional staff to assist with showroom construction, inside and outside sales training, in addition to IT support and training on our proprietary business management system. Marketing a brand is an important aspect of all business, and one that Granite Transformations doesn’t take lightly. This is why they have appointed media icon and author, Ita Buttrose as its Brand Ambassador. With the upcoming milestone of servicing their millionth customer globally, Buttrose will be announcing the kick off of company’s exciting November 2013 promotions. A successful past forms the foundation of an exciting future for Granite Transformations franchisees. As the company continues to offer top-notch customer service, along with The Trend Group’s consistent development of new colors and styles, they are ensuring that Granite Transformations will continue to revolutionize way the world is remodeling, keeping them on the forefront of innovation well into the future. For more information: www.granitetransformations.com
Funding Options for Franchises Long gone are the days when banks would lend money to anyone who could fog a mirror. Since the credit crises began in 2008, entrepreneurs have found it more difficult to get the funding required to purchase a new franchise.
Home equity loans, historically one of the more popular ways to fund a new business, are now seldom used due to the soft realestate market. Despite the tight credit markets, there are a variety of programs that make it possible to get the funding you need to purchase the franchise of your dreams. Recent changes in the SBA (Small Business Administration) loan parameters have made it easier to obtain smaller loans under $350K. The ability to use your retirement funds such as an IRA or 401(k), tax deferred and penalty free, has allowed many entrepreneurs to purchase a franchise without even needing a loan.
Another program that permits you to use the equity in your investment portfolio to secure a loan, allows you to purchase a franchise without having to sell your investments. Every funding program has advantages and disadvantages and itâ&#x20AC;&#x2122;s important to know that the strategy you choose is appropriate for your individual needs. Every business is unique, and every entrepreneur has a different tolerance for risk. What works for one may not be acceptable to another with the exact same set of financial circumstances. Because of these differences, itâ&#x20AC;&#x2122;s often advisable to
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Dallas Kerley, Chief Development Officer at Benetrends
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plans such as an IRA or 401(k). If an individual withdrawals money from one of these plans, they may be subject to severe penalties and tax consequences. For example, if you take an early withdrawal from a $200k IRA or 401(k), you may be required to pay a 10 percent penalty, plus as much as 30 percent in state and federal income taxes, leaving you with only $120k of your original $200k. Losing $80k of your savings to taxes and penalties before you even open your doors is not the best way to start a new business. However, a popular program known as a 401(k) ROBS (rollover for business start-up), enables you to use your retirement funds to purchase a business without paying any penalties as well as deferring the taxes. In the above example, this program would allow you to retain the full use of your $200k savings to start your business. This program has other benefits as well. Because you are not borrowing money or applying for a loan, your credit score is not a factor. If your savings are sufficient, it can eliminate the need for a loan and the associated monthly payments. It can also provide you the ability to pay yourself a salary until your business becomes profitable and it can be used to provide capital for the equity injection on an SBA loan.
have a trusted Funding Specialist review your goals and your financial situation, and then work with them to design a personalized funding strategy for your business. A well thought out long term strategy is particularly important if you are considering purchasing multiple units. Let’s look at a few of the more popular funding options.
401(k)/IRA Funding In recent years 10 percent of all franchises
sold in the US used this type of funding. Many people believe you can only
use your retirement funds to purchase
investments like publicly traded stocks, bonds or mutual funds. In fact, you can
use most retirement plans to purchase a business tax deferred and penalty free.
When it comes time to arrange funding
for a new franchise, many entrepreneurs turn to their savings, which are more
often than not, locked away in retirement
If you are considering using your retirement funds as part of your funding strategy, it’s important to work with a company that specializes in this field and has the experience and expertise to ensure your plan remains compliant with current IRS and Department of Labor codes and regulations.
SBA Loans An SBA loan is the most common type of loan for purchasing a franchise. Because the SBA provides up to an 85% guarantee to the bank, banks are more willing to assume the risk of lending money to a “start-up” business. It’s a common misconception that the SBA approves loans. The SBA only provides a guarantee
to the bank; if the bank is a PLP lender (Preferred Lender Program) then the bank is still the entity approving the loan. A bank will typically require you to provide 20 to 30 percent of the total cost of the business and the needed working capital. For example, if you need $150k to purchase your franchise and $50k in working capital, for a total project cost of $200k, the bank would want you to put $40k to $60K towards the project and the bank would provide a loan for balance. In addition to the capital injection the bank will require some form of collateral. This can be a combination of business and personal collateral such as the equity in your home, real estate or other investments. Banks all differ on what criteria they focus on when deciding whether or not to approve a loan. These parameters are known as the bank’s credit box. Some banks place more emphasis on your credit score, other banks may be more interested in the amount of collateral you can provide. Some banks may avoid certain industries because they already have enough exposure to that industry in their loan portfolios. Knowing a bank’s “Credit Box” can avoid the frustration of applying to a bank that will have little or no interest in approving your loan. This is one of the reasons many entrepreneurs choose to use a loan consultant to help them obtain an SBA loan. A good consultant will know which banks will have an interest in your loan application and will only apply to those banks, thereby increasing your chances of a quick and painless approval. When you are preparing you loan application you will need to include a comprehensive written business plan, three years of tax returns a personal financial statement and a personal resume.
Securities Backed Loan Many entrepreneurs look to their investment portfolios when comes time to buy a franchise. While selling your stocks or bonds can be a quick and easy way to
“Knowing a bank’s “Credit Box” can avoid the frustration of applying to a bank that will have little or no interest in approving your loan.” buy a business, depending on your goals it may not be the best strategy. Selling your investments will trigger taxes such as short-term capital gains, which are taxed as ordinary income or long-term capital gains that are taxed at a rate as high as 20 percent. In addition to the tax consequences, selling your investments can often disrupt carefully designed asset allocation strategies. Securities Backed loans are an attractive alternative to selling your investments. This type of loan is similar in concept to a home equity loan, the difference being that the loan is backed by securities held in your investment portfolio, rather than the equity in your home. By utilizing this type of loan, the funds needed to purchase your franchise can be obtained without disrupting a carefully constructed investment plan, asset allocation strategy or creating unexpected tax consequences. Because the investments remain in your name, you still benefit from all the portfolio’s appreciation and dividends as your portfolio grows. Because the loan is fully collateralized, your credit score is not a factor, and the interest rate is typically lower than a comparable SBA loan. Depending on the type of securities in your portfolio, you can borrow 70 to 90 percent of your portfolio’s value. With these advantages, more and more entrepreneurs are choosing not to sell their investments, and instead using this strategy to fund their business needs. These are just a few of the many options available to fund your new franchise. Whichever program you choose, you need to be sure you have enough capital to cover not only the startup costs of your business, but also enough working capital to fund the business till it reaches positive cash flow. Undercapitalization is one of
the most common reasons businesses fail. An experienced funding expert and a carefully constructed business plan can help you create a customized funding strategy that will provide you the funding you need and help ensure the success of your business. Dallas Kerley is the Chief Development Officer at Benetrends. Dallas Kerley is responsible for sales, strategic marketing plans both long and short term, as well as product development. He has been a featured speaker at numerous business and franchise conferences, where he has helped to educate entrepreneurs on successful small business funding strategies. Kerley has written several articles on small business topics for Franchising World Magazine, and is sought out for his knowledge on a variety of business subjects. Prior to his role at Benetrends, he was a Managing Director at Knott Capital Management, an equity investment advisory firm. Kerley holds a BS Degree in Economics from the University of Delaware. For more information: Web: www.benetrends.com
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