Franchise Jones

Top 10 Franchising Trends for 2011

2010-12-07T09:20:00.000-06:00

From pets to moving and storage services, the top 10 franchise industries you should know about.

By Tracy Stapp
Entrepreneur Magazine - December 2010

The future of franchising is looking bright: In September, the U.S. Census Bureau reported that 10.5 percent of all businesses with paid employees were franchises in 2007, the latest data year, and that they generated a staggering $1.3 trillion in annual sales.

Where is franchising headed next? We've identified 10 categories as the industries to watch in 2011. Whether they're services that people can't afford to live without, such as child care and healthcare, or luxuries made more affordable through franchising, like fitness and spa services, these are the businesses that kept growing strong right through the recession and, now that it's over, show no signs of slowing.

This list is not a ranking and is not intended to endorse any specific franchise. Look at it instead as just a first step toward your own careful research, which should include reading the company's literature and legal documents, consulting with an attorney and an accountant, and talking to current and former franchisees to find out if an opportunity is right for you.

Industries to Watch in 2011

• Child Care

• Fitness

• Green

• Health Services

• Moving & Storage Services • Pets

• Sandwiches

• Senior Care

• Spa Services

• Tutoring

Home-Based Careers You'll Love

2010-11-16T11:50:00.000-06:00

Home-based businesses are no longer limited to MLM or certain occupations. Read about serious careers/industries that can be run from home.

http://www.franchiseexaminers.com/2010/11/home-based-business-is-where-the-heart-is/

At long last, entrepreneurs are optimistic about growth

2010-11-12T10:37:00.000-06:00

Recent Constant Contact survey points to growth ahead for small businesses. Read the article at:

http://blogs.reuters.com/small-business/2010/11/11/exclusive-survey-says-small-businesses-upbeat-about-2011/

10 Tips for Small Biz Loans

2010-10-24T15:10:00.000-05:00

10 Tips for Small Biz Loans

This article is a very useful resource for how to go about finding funding for your franchise business.

You’re afraid to pull the trigger…

2010-09-20T23:20:00.000-05:00

You’re afraid to pull the trigger…

5 Reasons Why and 5 More Why Not to Start Your Own Business

2010-09-15T12:14:00.001-05:00

5 Reasons Why and 5 More Why Not to Start Your Own Business

One of the biggest mistakes first-time franchise buyers make is not understanding their own motivations for buying a business. This article contains some good questions to ask yourself and others who know you well. Being honest with yourself once you know the answers could save you from a costly mistake.

Franchisee Success Stories

2010-08-08T15:08:00.001-05:00

Success Stories

Recent franchisees are your best source of current information. Watch these videos as buyers discuss their experiences. Then call Franchise Jones for a complimentary introduction to these well-known national brands.

Financing Programs Aim to Help Franchisees

2010-08-06T19:33:00.000-05:00

Financing Programs Aim to Help Franchisees

Client Testimonial – Stefan Silverman

2010-08-06T19:20:00.000-05:00

Client Testimonial – Stefan Silverman

Tips for Working with Franchisors

2010-06-08T16:58:00.002-05:00

As your franchise consultant my role is to facilitate your process of identifying a business that’s right for you while making sure you have the right qualities to be a successful franchisee for your chosen brand.

It’s important to remember that it takes agreement on both sides for this business partnership to become a reality. Having the desire and meeting a brand’s financial requirements are just the first step.

Franchisors, especially the top brands, receive thousands of applications every year. Their task is much like that of a popular employer that may receive dozens or even hundreds of job applications a day. They use strict qualification rules to reduce the pile to a manageable size.

Nearly all franchisors use financial qualifications like liquid assets available and overall net worth. If your profile form – they all use a financial intake document of some type – doesn’t show that you meet their minimum requirements they likely won’t want to talk further with you about buying a franchise.

Franchisors appreciate working with a franchise consultant because we bring them pre-screened candidates that meet most or all of their requirements. This has many benefits for you, the buyer. In particular, it assures that when we introduce you to the appropriate personnel at the franchisor you will be considered a serious prospect, not someone who will waste their time with uninformed questions. You will have their full attention and get detailed information of value to your decision-making process.

In addition, franchisors know that you have been prepared with detailed information about the business as well as what the requirements are for becoming a franchisee. You come to the table as an informed prospect supported by a knowledgeable advisor who can act as a buffer between you and the franchise sales staff as you gather and evaluate information.

Here are some TIPS for working with me and franchisors:

1. Treat franchisor calls like a job interview.
It is important to remember that the franchisor will be sizing you up as a potential partner while you are evaluating the opportunity. Franchises are awarded based on their evaluation of your potential to generate royalty income and be an asset to the whole organization. Good preparation for this first call is very important to your future success in being awarded a franchise.

I will send you an initial set of sample questions to help you prepare for both franchisor calls and validation calls with franchisees. Don’t forget, those franchisees you talk to will report their impressions of you back to the sales people. How they perceive you as a potential partner in THEIR business is important, too. So prepare well and treat the franchisees you talk to as future business partners.

2. Be prepared and on time for all franchisor phone appointments.
Integrity in meeting obligations for phone or online appointments is especially important to them. If you miss appointments or come to calls unprepared, they won’t feel that their brand is important to you and may refuse to sell you a franchise.

3. Prepare your “home team” to support your purchase intentions.
A franchisor will want to know that your spouse or partner fully supports you and your intention to buy and operate their franchise business. So if there is any question about their ability to respond positively and even enthusiastically to questions either on the phone or during a “Discovery Day” trip to the company headquarters, best to work those out in advance. Remember that a casual lunch with the CEO and his/her spouse is really a final “test” of your commitment to the business. A few wrong words even at that late point in the process and they may not offer you the franchise.

4. Refrain from contacting brands yourself.
To avoid confusion, duplication and unnecessary phone calls, please refrain from contacting brands or entering personal information into brand websites or search portals during the period we are working together. I will represent your interests to the brands we are working with. If you have questions please direct them to me first.

5. Tell me if you are no longer interested in a particular franchise system.
I will let them know on your behalf.

What's a Master Franchise and Why Own One?

2010-02-14T19:56:00.003-06:00

For a select few, the opportunity to control an entire regional area for franchise brand can lead to great satisfaction not to mention a substantial 6-figure residual income.

As a Master Franchisee you will be associated with the brand name as the main developer of an area. Think of it like being the regional manager. The business of a Master Franchisee is to build the territory – develop new franchisees and support them in being successful in their new businesses. Master Franchisees are the elite owners in any franchise system and the support, often direct from the company President, is substantial.

Significant Rewards

This level of ownership isn’t for everyone. It takes extensive management and/or executive sales experience. Previous business ownership is helpful but not essential. Good people and presentation skills, persistence and the ability to follow a proven system are necessary along with the ability to self-finance the startup which can run from $50,000 to $250,000 or more.

But the rewards are substantial. Master Franchisees typically earn from 50% to as much as 95% of franchise fees for each new owner they bring into their territory. With many franchise fees running $25,000 or more, that can really add up quickly!

Ongoing royalties – the ultimate income source – payable to the Master Franchisee can amount to 2% to 21% of franchisees’ gross revenues. So a regional system generating average unit revenues of $1-mil per location at 3% returns $30,000 per unit to the Master. 15 units will pay a $500,000 residual income annually!

Sales of products or additional services to franchisees such as cleaning supplies in a commercial cleaning business, paper goods in a restaurant business or hair care products in a salon business can generate additional income to the Master Franchisee. No question, being a successful Master Franchisee can be a very rewarding business opportunity!

First Unit is Yours

A Master Franchisee business typically includes opening an initial franchise unit to demonstrate the concept to future buyers. Often, that unit’s franchise fee will be included in the initial Master Franchise purchase. The Master can choose to open and operate the first unit himself or form a partnership with someone else who will open the unit and eventually buy him out.

Each new business you add to your territory builds equity in your Master Franchise business. A typical unit franchise might show a value of 1.8 to 2.8 times earnings. But a Master Franchise which has very little fixed cost grows much faster and can average 4 to 9 times earnings. So even though the initial buy-in can be substantial, so are the rewards.

Low-Overhead Business

A Master Franchise is typically a home-based business with one or two employees. Salespeople to recruit new franchisees, typically paid on commission, can be added to drive growth. The owner’s role, in addition to bringing new franchisees into the system, will include negotiating leases, supporting new franchisees through startup, providing marketing coordination, coaching and support for the franchisee group.

Not all franchise businesses offer a Master Franchise opportunity and among those that do, it may be available in some areas but not others. Because of the unique requirements they are not widely advertised. Your franchise consultant will know which ones have open opportunities and can help you explore this exciting franchise investment option.

Making Sense Out Of Earnings Claims

2010-01-20T18:51:00.002-06:00

For anyone thinking of buying a franchise business, one of the first thoughts that come to mind is “How much can I make as a franchisee?”

Fortunately, there has been a growing trend to tell candidates more about the earning potential of a franchise and that’s done in the Item 19 section of the Franchise Disclosure Document (FDD). Some franchisors consider it a marketing plus to provide earnings claims (now called financial performance representations or FPR’s) while others consider it a legal liability even if they have good numbers to report. So where one brand provides extensive information another may skip over Item 19 altogether.

The FTC rules do not require earnings claims nor do they prohibit a franchisor from providing them. But they do spell out very specifically how this information can be communicated to interested prospects. One of those specifics, oddly enough, is that whatever information is provided it must be as accurate and representative as possible with any qualifications or assumptions clearly labeled. Given the broad range of earnings experiences within large franchise systems, gathering and providing information under these rules can be challenging and expensive. So some franchisors choose to avoid the issue rather than risk having their data challenged should a complaint end up with the FTC.

So let’s focus on what you can do to gather meaningful earnings information about franchises you are considering investing into.

First of all, when FPR’s are presented in Item 19 be sure the measures reported are meaningful and would apply in your particular investment scenario. If, for instance, a franchisor provides average gross sales numbers for units open 2 years or more and all of their stores from that period opened in Gulf Coast states, then the data won’t be particularly useful if you’re considering opening in New England.

Whether or not a franchisor provides earnings claims your best source of information will be to talk to existing franchisees. And while you can’t exactly hit them with “How much money did you make last year,” if you approach the question thoughtfully you’ll be able to arrive at that answer by the end of the call.

Start the call by showing genuine interest in learning more about their franchise and how it operates. Ask questions about the quality of training received, what the marketing support consists of and how close to original forecasts their sales and profits are to date. Then move on to questions about sales and expenses and how they compare to forecasts. If you do good planning for the calls and keep good notes you should be able to gather enough data in the course of a dozen conversations to provide percentages to use in your own forecasts.

Of course, be sure to make enough calls for the data to be valid. In particular, focus on locations that have characteristics similar to the one(s) you’ll be dealing with. Be sure to call franchisees in all performance ranges from high to low and even a few who left the business. If you find you didn’t get enough names initially, ask the franchisor for more.

Finally, there are some rules of thumb that apply to franchise earnings. A good return on passive investments – stock, bonds, real estate, etc., is typically 10 to 15 percent over time. But with a franchise you’re investing both money and your time so the return should be higher to offset the additional risk. Look for returns of 25-30% on your initial investment on an annual basis and you should be able to reach that level by your third year in business.

Introduction to Franchising Seminar

2010-01-05T00:53:00.011-06:00

Your Career:
Resolved to change in 2010? Explore Franchising at this FREE Seminar.

Regardless of where you are in the workforce – or not – the choice for a better future could be to start your own business in 2010.

While it’s true that 80% of traditional businesses fail in the first five years, 94% of FRANCHISED businesses succeed making a properly-selected franchise a truly low-risk investment as well as a career that won’t disappear. Industry experience isn’t an issue because most franchisors prefer owners with no prior experience so they can teach them their methods. You really can succeed with a franchise!

Resolved to change in 2010?
Join me for my free 90-minute Introduction to Franchising seminar.
Refreshments provided. Married or have a potential business partner?
Bring them along. Additional information on RSVP pages.

1:30pm Thursday, January 14th RSVP at:
http://introtofranchisingthujan14.eventbrite.com/

6:30 pm Thursday, January 28th RSVP at:
http://introtofranchisingthujan28.eventbrite.com/

Lake Calhoun Executive Center
Lower Level, Suite 10
3033 Excelsior Boulevard
Minneapolis, MN 55416

Presented by Stefan Silverman – Franchise Jones
30-year franchising and ownership expert with 7 businesses
Sponsored by The Franchise Authority™ and This Is My Dream Job, LLC
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Millions of Jobs Gone and There's No Turning Back

2010-01-04T23:51:00.017-06:00

All of us are concerned about where employment as an institution is going. Many of our franchise clients are considering major work life changes. Some are underemployed and others are currently in transition.

There’s a new question on everyone’s mind about how The Great Recession has impacted jobs and careers. It’s not about when things will return to normal.

It’s a growing concern that what we’re experiencing IS the new normal.

Steve Adams, a consulting client of mine, veteran journalist and author of the new book, “Back to Work! Create New Opportunities in the Wake of Job Loss” http://www.back2workbook.com/ recently wrote a thought-provoking article on the subject that appeared in the Washington Examiner December 27th, 2009.

He says, “Growing evidence suggests that something far more fundamental than just another economic cycle may be going on. The modern office/factory-model job as we know it actually could be headed for extinction. Goodbye, permanent employment. Hello, contingent work, contractual employment and "composite" careers.

He goes on to say that work in the form we’ve come to know it has been around for less than 200 years, just a blip in the human experience. What right do we have to think that our workplace reality as we’ve experienced it since then will continue indefinitely?

Today’s reality is that nearly 1 in 5 Americans are looking for work and millions of them will never find employment comparable to what they’ve been used to. Working harder and smarter is not going to change that. The new work paradigm is one that rewards flexibility, inventiveness and boldness, not entitlement.

So if these thoughts ring with you because you’re seeking a new path forward take a few minutes to read Steve Adam’s article, reprinted below.

Franchise Jones

Reprinted by permission of the Author:

Here's the real story on America's unemployment
By: Steve Adams
The Washington Examiner.com
Sunday Reflections Contributor
December 27, 2009

KEY DATA: Real total U.S. (U-6) unemployment exceeds 17 percent,
according to the U.S. Department of Labor Bureau of Labor Statistics.

Take-away: The modern office/factory-model job as we know it actually could be headed for extinction.

I'm one of the many casualties of the Great Recession. My position -- along with 200 others -- was eliminated 13 months ago at a major nonprofit organization in Colorado Springs. Permanently.

Oddly, I keep finding myself referring to it as a "layoff." It's not like there's going to be any callback. Is it denial? Perhaps in part. (Reality and I aren't on the best speaking terms right now.)

More likely, however, it's a kind of collective future shock. Some of our thinking just hasn't quite caught up with the realities of this Brave New Economy. We tend to assume, for example, that when recovery comes (and it's right around the corner, the partisan cheerleaders keep promising), we're going to pick right back up where we left off pre-recession.

Well, probably not. Already this recession has wiped out all job growth from the previous expansion. And when the dust finally settles, there's likely to be a net permanent loss of jobs -- jobs, at least, with the kind of pay and benefits we've become accustomed to.
One of the ways we kid ourselves is calling our unemployment rate 10 percent. In government-speak that's the "U-3" number, which counts just current job seekers. What it doesn't count are "discouraged" workers, who have given up looking, and the "involuntarily part-time" or underemployed workers, who also can't find full-time work.

That's the "U-6" number, a more recent U.S. Bureau of Labor Statistics metric. Today it's more than 17 percent, which means real unemployment is approaching one in five Americans. And, yes, that's a (post-Depression) record.

Growing evidence suggests that something far more fundamental than just another economic cycle may be going on. The modern office/factory-model job as we know it actually could be headed for extinction. Goodbye, permanent employment. Hello, contingent work, contractual employment and "composite" careers.

Many of us know people like my relative (by marriage) who's a part-time associate pastor who also delivers newspapers, does home remodeling and sells Melaleuca. It's a living -- in fact, he's been doing it for years by choice. We're also seeing more and more six-month and one-year contract jobs with employers who don't want to commit to workers beyond that. This may well be the shape of things to come.

William Bridges, the visionary executive development consultant and author who named this phenomenon "dejobbing," foresaw this years ago: "What is disappearing is not just a certain number of jobs -- or jobs in certain industries or jobs in some part of the country or even jobs in America as a whole. What is disappearing is the very thing itself, the job."

Try this experiment: If you've worked long enough to have had multiple jobs, tally up that total number. Then subtract however many of those positions no longer exist. Unless you're in health care, education or some other recession-resistant field, the number you have left may surprise you by its tininess.

In my own case, I've had (not counting freelance writing stints) six full-time jobs. Of those, only two still exist. And of the four that went bye-bye, three of those employers no longer exist (two newspapers and a public relations firm).

Actually, work in the form of jobs is merely a 200-year blip in the human experience. From time immemorial before the Industrial Revolution, the workplace was the village, the field and the home. Our forebears were largely self-employed farmers, craftsmen and merchants who worked as needed and quit when the larder was full.

The pendulum seems to be swinging back that direction. If you play the game of musical chairs long enough, eventually everybody runs out of a place to sit. More and more of us will need to learn how to make a living as self-employed professional independent contractors or as entrepreneurs who start our own businesses.

The good news is there will still be work for those who know how to get it. We can all take our cue from the many organizations that have had to make radical changes to survive -- change product lines, even rebrand their very identity. Individuals today have to do much the same thing in terms of reinventing their careers.

And let's face it. In many ways, full-time "permanent" employment by paternalistic corporations has been a very mixed blessing. It has tended to breed attitudes of dependency and entitlement in us that are quite counter to the American spirit of ingenuity and self-reliance. And when this comfort and security are taken away, we don't do well because we've been somewhat disabled.

Is it a pain to have to figure out how to market my services, provide for my own fringe benefits, manage my own tax withholding and calculate my project fee or billable hourly rate? Yes, but those are details. And if that's the price of freedom and self-respect, I'll take it.

Veteran journalist Steve Adams is author of the new book, "Back to Work! Create New Opportunities in the Wake of Job Loss" (Moody Publishers) --
http://www.back2workbook.com/
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