Developing a franchise model requires structure, time, process and consistency.
It is not an easy process in most cases, in particular when you are a Start-Up Franchisor and have yet to sell a franchise unit. Selling franchises requires patience, objectivity and a strong value proposition - the first few franchises typically don't come easy - the buyer needs to be convinced that a new franchise organization is the right fit for them.
1. As a franchisor, you need to be ready to "throw out a big net". Franchise sales typically require 150-350 leads to close a sale depending on the initial investment required of a franchisee to open a location of the business. Be ready to talk with anyone and entertain the thought of working with any potential franchise buyer. Don't sell to anyone who walks in the door...but don't stop people from walking in the door who are interested in having a conversation with you.
2. Have a defined sales process in place. Because of the large volume of leads required to close a franchise sale, it takes a well-defined process to manage this effectively. Franchise Marketing Systems uses a Franchise specific CRM to manage this process and understand where buyers are in the sales model (http://www.franchisemarketingsystems.com/services/franchise-crm/) - whatever you use, you should use something...without an effective lead management tool, you will lose your ability to focus and drive leads from suspects to prospects to deals.
3. Segment Duties. In almost twelve years as a franchise consultant working with business owners to help franchise businesses - I have rarely seen a business owner be effective in the franchise sales process outside of closing the transaction. Franchise buyers are understandably extremely critical of everything a franchise and company has to offer in a franchise concept. The question is always going to come back to why should I buy a franchise from you when I could figure this out on my own? A franchisor should have someone who is taking the initial contacts and "screening" prospects to set them up for the close. No one in the organization is better or more effective at closing the franchise transaction than the owner/founder of the company, on the flip side, no one is worse at being objective and remaining calm, cool and professional when hit with initial questioning by a prospective franchisee. Have someone responsible for franchise sales who works the suspects...when they find a prospect, that is when you get the owner or founder of the company involved. This is a service that Franchise Marketing Systems provides with outsourced franchise sales and franchise development (http://www.franchisemarketingsystems.com/services/franchise-sales/)
4. Franchise Brokers - how or should you work with them? Yes. There are great organizations that provide structure, credibility and support to franchise brokers, you should inquire with them about which brokers to work with and how to connect with valuable broker contacts (http://www.franchiseba.com/). Why do we say yes about working with brokers? Because it goes back to the "Throw out a big net" theory - brokers can provide leads to you in your pursuit of adding new franchise partners, period. You, as the franchisor, have the option to sell to the candidates they bring to you, so you are not held to taking the partners they introduce you to unless you choose to. Good brokers are paid 40-50% of the initial franchise fee. It is worth every penny of it if you tie into a good broker relationship. Some franchise systems such as Puroclean (http://www.puroclean.com/franchise/) have sold a large amount of their 400 plus franchises through broker referrals. Brokers will market for your franchise, generate the leads, introduce the model to franchise prospects and hand you a qualified lead for you as the franchisor to close. It can be an effective marketing and lead generation model for a new franchise concept.
For more information on franchise development and franchise sales, contact Franchise Marketing Systems: (800) 610-0292 / email@example.com)
Franchise Expansion in 2012.
Franchise Marketing Systems clients have seen impressive growth in 2012 so far! With increasing growth and momentum, these organizations are taking market share and building brands in their respective industries.
The powerful vehicle of franchising has allowed these organizations to gain traction with customers in new markets far from the reach of the corporate locations while maintaining the quality and standards that made them successful.
Franchise Marketing Systems has worked with the following organizations who have realized growth in 2012 and expanded their brands this year:
(Complete Client List: www.FranchiseMarketingSystems.com/Clients)
REDRHINO (www.REDRHINOFlooring.com) – Epoxy flooring provider – works with residential and commercial clients – sold four new franchises in 2012.
Pet’s Healthy Choice (www.PetsHealthyChoice.com) – Pet food delivery operations – sold one new franchise in 2012.
Restoration 1 (www.Restoration1.com) – Full Service Restoration Service Provider – sold three new franchises in 2012, one being a master franchise.
The Weave Shop (www.TheWeaveShop.com) – Weave salons – work in the specialty hair care market – sold two new franchises in 2012.
Generate My Ads (www.GenerateMyAds.com) – Pre-owned vehicle marketing - sold one new license in 2012.
Mosquito Terminators (www.MosquitoTerminators.com) – Pest control services and sprays – sold six new franchises in 2012, one being a master franchise.
Snoopit Imports (www.Snoopit.com) – Import brokerage business – sold one master license in 2012.
Caring Matters Home Care (www.CaringMattersHomeCare.com) – Senior Care and home care business – sold three franchises in 2012.
Never Paint Again (www.Never-Paint-Again.com) – Residential and commercial painting business – sold one franchise in 2012.
Flower Tent (www.FlowerTent.com) – Flower retail operations in temporary tent locations – sold four franchises in 2012.
Champion Cheesesteaks (www.ChampionCheesesteaks.com) – Mobile food truck operations – sold one franchise in 2012.
Splash and Dash for Dogs (www.SplashandDashforDogs.com) – Dog washing and bathing operations – sold five in 2012.
Chopple (www.Chopple.com) – Web marketing and coupon site license – sold one license in 2012.
For more information on how to franchise your business or whether franchising is the right expansion vehicle for you, contact us: http://www.franchisemarketingsystems.com/FranchiseYourBusiness/
High Unemployment = Franchise Buyers
Unemployed Professionals are lining up in today's economy. Most of the large companies are hoarding cash and cutting positions where possible. The Pharmaceutical industry, the Financial Sector and others have seen massive layoffs. It is from these industries and others where tomorrow's entrepreneurs and future business leaders are born.
Throughout history, many of the world's most successful and powerful companies have been launched during difficult economic times. It is when the competition is weak and most are running for cover when the truly innovative and forward thinking individuals shine.
Franchising is an interesting industry. It is the duplication of a successful business system through a franchisor/franchisee relationship. The franchise buyer should be someone who is enthusiastic, motivated and entrepreneurial, but also willing to follow a system and stick to a defined business program. This presents an interesting quandry for franchise sales people in that you want someone with entrepreneurial behavior....but not too much.
What is so intriguing about a market such as the one we are in today is that it presents opportunities for franchise growth. Strong, capable candidates are being forced into the "entrepreneurial marketplace" as they are laid off from full time employment by the thousands. MBA's, CPA's, JD's and other highly educated and decorated professionals have been forced to consider starting their own business. As a franchisor looking for qualified franchise buyers, this presents a wonderful franchise sales opportunity. These buyers have the experience and background of following a defined system and rigid structure of full time employment in management positions. People who in a good economy would not give a franchise investment a second look are now visiting franchise tradeshows and going through franchise discovery days.
Of course, there are down sides to a weak economy, access to capital, slower consumer sales, lower levels of confidence and others, but remember, it is the bold who build empires, not the meek.
When organizations make the decision to expand through franchise development, there are many key points involved in making the transition effectively. Having spent years in the field of franchise development work, one of the great sayings that rings true so often is, "Don't Put the Cart Before the Horse."
The first issue is to develop a concrete plan that takes into account all of the business elements involved in running not only your own business, but also the franchise system. Companies don't plan to fail, they fail to plan. Franchising is the business of leverage - so when things go wrong, they have the potential to be catastrophic. The first step is to identify whether franchising is indeed the optimal expansion method. Certain businesses make great franchise opportunities, most do not. There are professionals and franchise consultants who provide this advice and guidance at no cost to you, use them.
Once the decision has been made that franchise growth is the most efficient and effective model for business expansion, it then is time to begin developing the model. Define the business model that will be replicated through franchising first, if your business has multiple moving parts and many complex operational peices, it probably would make sense to only franchise a portion of that operation, define this. After identifying the concept, the franchise business plan should start with a thorough research study of the competing franchise systems. This should encompass all franchises that may be compared to your model based on investment, industry, business type and market growth. Other's mistakes and successes can be used to map your franchise growth.
In building the franchise business plan, it is essential to work with someone or an entity that brings experience in the field of franchising. Although I recommend working with a good franchise attorney, you should first have a business consultant help you develop the franchise business plan and then work with the attorney to document the UFDD and necessary legal documentation. A franchise model should have a well defined territory model, a well defined franchise fee, structured royalty, solid training programs and a great support program for franchisees.
Franchising can be a very effective way to expand a good business, but it is essential to plan accordingly in order to achieve impressive growth.
Franchise Development - Franchise Brokers
Franchise Marketing Systems was an organization born out of a franchise development background. The cast of team members that make up the FMS group have mostly come from a franchise consulting history. The reviews and thoughts on franchise broker groups have been mixed, generally with a tendency towards the negative.
Franchise Marketing Systems has spent the past week at a franchise broker convention in Orlando, Florida working with and spending some time learning about a prominent franchise broker organization here in the United States. The time has turned out to be well-spent. Somewhat to my surprise, there are a large group of very talented and intelligent people who comprise this broker organization. The network consists of serial entrepreneurs who offer brokerage services as one of their revenue streams to recently laid off corporate Americans who are now taking their shot at franchise brokerage. The convention was relatively well attended with maybe 75 franchise brokers in attendance, but with each conversation, my confidence in these professionals grew.
Several national and international franchisors were in attendance at the show and had taken booths there to display their concepts to the franchise brokers there for training. The presence of a 3,500 unit franchise system at the show helped prove to me further that these broker networks are no joke. It has become blatanly obvious that these franchise broker networks should not be ignored as a channel for lead development in a franchise marketing campaign. In fact, one franchisor described to me at the show as saying that they have generated over 75% of their sales through brokers as opposed to Internet Leads.
Franchise Marketing Systems will continue to evaluate other franchise brokerage groups, but the channel has certainly been validated.
Franchising as a Distribution System:
It seems interesting to some that the franchise industry or the process of franchise development is defined by the Federal Trade Commission as a method of distribution. One would typically associate a method of distribution with the actual sale of a hard good or product, when in most cases, franchisors do not manufacture the items that the franchisees are selling. This brings about the question when considering franchising a business, should you in fact have something to sell into the franchise system that is proprietary?
There are obvious benefits to being a manufacturer or a good or product and then developing a franchise system that will in turn sell more of what you produce. Franchising has for over a century been effectively used to do just this. Companies such as Ford, Singer Sewing Machine Company, Coca-Cola and many more produce what their franchisees sell. The obvious benefit in this scenario to the franchisor is that now the organizations has a dedicated distribution channel to sell and market more of what they make. They also may charge the franchisees a royalty percentage to be a part of the franchise system in addition to generating profit on the proprietary products they sell. The manufacturer also does not incur the costs of managing and developing an in-house sales or distribution team which can add dramatically to the overhead of a growing business system.
Franchisees can also benefit from the use of a manufactured or proprietary product that is sold through the franchise system. By purchasing the franchise, they have bought into a portion of the exclusive rights to sell and offer whatever it is that the franchisor produces. This could potentially have enormous monetary value. In fact, one of the royal families in the Middle East recognized this quickly when Apple iPod hysteria started to pick up, so they purchased the rights to Dubai and the rest of the UAE for Apple products. They now own and operate every one of the stores and all of the rights to sell this extremely popular product line.
The overriding question comes back to the point though, should you have a proprietary product that you can sell through a franchise distribution model before considering franchising a business? The answer is NO. McDonald’s, Taco Bell, Burger King and the large percentage of the franchise marketplace don’t make anything they sell. In fact, most franchise organizations outsource the supply of the inventory and raw goods that the franchise operators need to run their businesses. Why would they do this - because it isn’t profitable to be in a business that you aren’t proficient in operating. McDonald’s makes much more in profit when they open a new store and charge royalties, franchise fee and rent to their franchise owners as opposed to delivering frozen food goods. In evaluating whether a franchisor should manage the distribution or manufacturing of a proprietary item, a simple business evaluation should be performed. Will the cost in time and money be worth the incremental revenue that will be created?
Franchise Marketing Systems works with organizations to answer these questions in addition to how to franchise a business as well as other compelling business decisions involving franchise development. (800) 610-0292.
Posted by Jamie Downey September 28, 2010 05:13 PM
Bonus depreciation – The use of bonus depreciation had expired on December 31, 2009. This provision has been extended through the end of 2010. The use of bonus depreciation is not restricted to the size of the business. This is a real benefit for larger businesses as small businesses can use the other tax preference provisions (i.e. Code Section 179).
Section 179 deduction – Businesses that purchase qualifying property may elect to expense these items in the year of purchase. Section 179 provisions for 2010 had been set at $250,000. This has been increased to $500,000 and will be available to taxpayers in both 2010 and 2011.
Qualified small business stock – This provision excludes certain small business stock sales from capital gains tax. My understanding is that this exclusion only qualifies if the entity involved is a C-Corporation. C-Corporations are not typically the entity of choice for many small business, so I am not sure this will have a significant impact.
Health insurance deduction – Premiums paid for health insurance by many small business owners have not been a deduction in determining ones self-employment tax. This is no longer the case in 2010, but will return again in 2011.
Start-up costs – Current rules limit the amount a start-up costs that can be deducted to $5,000. This limit is doubled to $10,000 for 2010. The limit reverts to $5,000 in 2011.
Drawback: Expanded 1099 reporting for landlords - Unfortunately, individuals that receive rental income will now be required to file 1099 forms for certain service providers. This provision continues a trend of additional compliance reporting for businesses. This requirement is permanent and does not expire.
Burger King buyer names rail exec as future CEO
3G Capital names Latin American railroad executive as new Burger King CEO, pending takeover
NEW YORK (AP) -- The investment firm buying Burger King has named a former Latin American railroad executive to be CEO of the fast-food chain after it completes its $3.26 billion acquisition.
3G Capital named Bernardo Hees to replace John Chidsey, who will become co-chairman after the deal closes.
Hees was most recently CEO of America Latina Logistica, Latin America's largest railroad company, in which 3G Capital owns a stake of about 6 percent. He became a partner at 3G Capital in July.
Alexandre Behring, managing partner at 3G Capital, was also a prior CEO of the Brazilian railroad. Behring is set to become co-chairman as well after the deal closes.
"Bernardo is an experienced executive with an impressive track record of enhancing performance at America Latina Logistica, where he managed a team that drove strong gains in both revenues and profitability," Behring said in a statement. "I know he will be an excellent steward of the Burger King brand."
3G Capital, which made its offer last week, is expected to begin its effort to acquire the outstanding shares of Burger King for $24 per share by Sept. 17.
3G Capital has strong ties to Latin America, including ties to Jorge Paulo Lemann, a 71-year-old Brazilian billionaire.
The firm's other controlling or partial stakes include brewer Anheuser-Busch InBev and Lojas Americanas, a major Brazilian retailer and travel agency.
Hees began at America Latina Logistica in 1998 as a logistics analyst. He held a variety of executive positions there and had served as CEO since 2005.
On Aug. 31, just days before the Burger King deal was announced, the Brazilian railroad company announced that Hees would step down as CEO but remain on the board of directors. The company named chief operating officer Paulo Basilio to replace him Sept. 10.
Burger King shares were unchanged at $23.67 in early trading.
Burger King Franchise
How to Franchise – Marketing a Franchise Concept Successfully.
In the business of duplicating concepts, the process of marketing and selling the model is new and unique to most. It could be compared to dating, fishing, hunting and many other catching metaphors, but from someone who has actively marketed and sold franchises for the past ten years, it comes down to a few key factors as to what separates the successful franchise marketers from the unsuccessful ones.
The first point to be aware of is that franchise sales and franchise marketing takes a budget. In 2010, I have personally been involved in 67 new franchise sale transactions…3 of those came to my clients through referrals or contacts they had prior to franchising their business. The rest of the franchise sales came through good old fashioned advertising. Yes, that’s right, you do have to advertise to attract good franchise prospects. What I tell my clients in deciding what to budget for franchise marketing activities is twofold. One, budget something up front for a brochure, printed materials, a good website and other program pieces that are necessary to attract buyers. Then on a monthly timeframe, start out with a budget of $500 up to $1,500 per month for lead generation activities. Do not go into franchising without some kind of a budget for marketing the business.
The second point is take notice of in franchising is that you need to have a compelling story. I call this the unique selling proposition for a business concept. What the heck makes you different from every other business out there in the license/franchise/business opportunity world? If you can’t say something to yourself in the mirror that makes you smile, you’re probably going to have a hard time getting other people to find it interesting. Develop this value proposition and nail it down before you start talking to people. If there is one thing that I know about franchise buyer leads, it is that they have a short attention span….get it quick or you get hung up on.
The third issue is that if you don’t like making a lot of sales calls and “working the phones”, you need to budget for a sales person to do this for you. Franchising is a sales business, don’t let anyone fool you. People don’t walk in the door and hand checks over, it is a contact sport and takes hundreds and hundreds of phone calls to land franchise partners. A good franchise sales person will make anywhere from 75-150 phone calls per day. In many instances, I have personally called a good prospect over 40 times just to get a meeting with them regarding the franchise opportunity. Get ready to get busy, franchising takes leg work and activity. I love activity….it’s easy to monitor and 99 out of 100 times, the sales people who create the most activity are the ones who close deals. Burn up the phones and you will see revenue in your franchise system.
The fourth note is that it’s okay to be “out there”. It is important to remember that you are probably one of several franchise opportunities that any buyer is considering. If you do not leave an impression on that buyer, they will very likely forget about you. Be aggressive and tell them what you are good at and how it will benefit them! The thing I love about franchising is that it helps people become entrepreneurs, which is the most empowering thing in the world. The thing I hate about franchising, is that the people you are dealing with are not sophisticated and have not been empowered yet! So it is up to you as a franchise sales person….or franchise consultant, to lead that person through the decision making process. My shortest sales times with franchise buyers have happened in cases where my sales pitch turned into a counseling session. I found out more about the buyers on the first call, I made compelling comments about things other than what I was selling and I really personalized the relationship. The next time you call someone, try this and see what kinds of results you get!
Franchising is an effective and powerful way to grow a business. The key with any new business venture is to approach the idea and business strategy with as much information as possible. So when you approach the idea of how to franchise my business, be ready to market and sell you franchise when you get into this business and more often than not you will develop revenue streams from your new business venture.
Christopher James Conner – Franchise Marketing Systems