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Tag: Franchises

  • White Castle Once Fed a Homeless Teen. She Just Married in One. | Entrepreneur

    White Castle Once Fed a Homeless Teen. She Just Married in One. | Entrepreneur

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    It’s a fairytale ending for one former White Castle customer who was fed by the chain when she was a teenager living on the streets.

    After turning to the chain when she had nowhere else to go, Jamie West had a full circle moment when she tied the knot with her long-term boyfriend, Drew Schmitt, inside one of the chain’s restaurants in Arizona.

    West said that she left the foster care system when she was just around 12 years old and after some time in encampments, hitchhiked around the country in an attempt to find work. After about a week of struggling to find food, West stumbled upon a White Castle — the first she had ever seen.

    “For an underage homeless kid, having any kind of safe space is life-changing,” West told People. “The first time I walked into a White Castle, the woman behind the counter goes, ‘You poor thing.’ She handed me a fresh cup of water, a stack of sliders and let me use the bathroom. I got to clean my face and wash my hands.”

    After that encounter, West said whenever she would come across a White Castle, she knew it would be a safe space for her to go.

    West and her husband tied the knot in a White Castle with over 200 guests, both donning custom-made outfits in the chain’s signature blue and gold coloring.

    White Castle touches to the event included endless sliders, cheesecake, and a giant cake designed to look just like one of the company’s signature burgers.

    “Jamie’s story serves as a reminder of the power of kindness and being there for one another as we keep focus on our purpose of feeding the souls of Craver generations everywhere,” Jamie Richardson, White Castle vice president, told Today.

    There are an estimated 345 White Castle locations in the U.S.

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    Emily Rella

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  • 7 Essential Questions to Ask Yourself Before Starting a Franchise | Entrepreneur

    7 Essential Questions to Ask Yourself Before Starting a Franchise | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    More people than ever are curious about starting a franchise business. The potential rewards seem obvious, but the risks also seem high. Even more than risk and reward, starting a franchise requires a hard look in the mirror to decide if you really have the makeup to become an entrepreneur.

    Here are seven questions you should ask yourself before starting a franchise business.

    Related: 7 Things You Need to Know Before Becoming a Franchise Owner

    1. Do I have a future vision?

    To take action and start a franchise, you need to understand your why, not necessarily the widget. Do you have a future vision of your life you’re trying to achieve? Think of that as the destination and the franchise as the car — the vehicle to help you get to the destination.

    A clear future vision should include your involvement in the business, your career and the lifestyle you visualize for yourself. This will help you select the right franchise model that fits this vision.

    2. Do I have confidence, grit, determination and resilience?

    Every business owner in America had to deal with the impact of Covid-19. There will be unknown future obstacles when you start a franchise.

    To move forward, you must bridge uncertainty with an emotional commitment and confidence to overcome obstacles. You must also have the grit and resilience to see through difficult periods. A franchise can help you launch more quickly than starting a business from scratch and will help you navigate any difficulties through best practices from a network of fellow franchise owners.

    3. Should I go it alone or engage a franchise consultant?

    Like shopping for a house, you can certainly find franchise opportunities on the internet. However, it’s a noisy environment with thousands of brands — and like everything else, some are good and some are bad. And no franchise brand shows its business model on its website, so you’re drawing conclusions purely from a consumer viewpoint.

    You cannot easily find newer emerging brands on the internet and can waste tons of time investigating brands only to find out they’re not a fit. A franchise consultant, like a good financial advisor, will reverse this process and start with you and your goals, help you set your criteria and only then match you with franchise brands that fit. They then will guide you through the investigation with education and resources.

    Related: How to Narrow Down Thousands of Franchises to Find the One That’s Right for You

    4. Do I have the capital to start a franchise?

    You should carefully consider your financial ability when starting a franchise. To understand the specific capital requirements for any particular franchise, you can consult Item 7 of the Franchise Disclosure Document, which details the Estimated Initial Investment. These are based on actual franchises and tend to be very accurate. However, make sure to build your own estimates, as these line items can vary significantly between franchisees.

    While there are always exceptions, investment ranges can commonly be broken down into three categories. These include self-employment or work-from-home models; scalable executive service models; and semi-absentee or semi-passive models:

    • Self-employment or work-from-home models with few or no employees that do not require customer-facing real estate generally range from $75,000 to $150,000 in total investment per territory or unit.
    • More scalable, equipment-intensive service brands that do not require customer-facing real estate tend to range from $100,000 to $350,000 per territory or unit.
    • Brick-and-mortar location-based franchises require more real estate investment but tend to be more semi-absentee and can range from $250,000 to $1 million or more per unit.

    5. How will I finance the franchise?

    There are many options to help you finance your new franchise. If you have a former 401(k) or IRA, you can roll over a portion of your retirement account balances in your new business’ stock tax-free. Candidates also use personal loans, such as a home equity line of credit (HELOC) or a securities-backed portfolio loan, which have the lowest debt costs and easiest access to capital.

    You can also obtain an SBA-guaranteed bank loan, which is a popular option. Many franchisors will have prearranged financing with preferred vendors. Regardless of your financing choice, it is important to consider it ahead of time to make sure your business and personal needs are covered during your business launch.

    6. What franchise industry is right for me?

    Many of my candidates are looking for a business they’re passionate about. Of course, you need to believe in your product or service, but it doesn’t need to be your hobby. It is the business model that needs to fit. For example, I owned a fitness franchise. While I’m not a fitness junkie, the business model fit and seeing the joy in our clients transforming their health was very gratifying.

    Going through a deliberate process of investigating business models that fit your criteria and comparing them with the help of an experienced consultant is often the best way to find the right industry. By focusing on the business model and your role as a franchise owner, you will find the industry can be a secondary criterion.

    Related: Check Out the Fastest-Growing Franchises In 2023

    7. Do I believe in continuous improvement or “if it isn’t broken, don’t fix it?”

    If you have a more reactive style, franchise ownership is likely not for you. Owning a franchise requires you to constantly look at the business with an eye toward continuous improvement — making each process, such as sales, marketing, operations or customer service, continuously better for your customers. Having a proactive approach versus a reactive approach is critical to success.

    While there are many considerations in starting a new business, fundamentally it is an emotional decision that starts with you doing some self-reflection. Asking yourself the hard questions will let you know if you’re emotionally ready to take the next step.

    If you’re not ready, consider what changes or milestones in your life need to be achieved so you’re ready when the time comes. If you find you are excited and ready to move forward, seek out the resources needed to explore franchising and commit to follow through the process. This will bring you the confidence you need to find success.

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    David Busker

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  • Why Laid-Off Tech Employees Make the Best Franchise Candidates | Entrepreneur

    Why Laid-Off Tech Employees Make the Best Franchise Candidates | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Layoffs are making headlines in 2023, with the tech industry feeling the biggest effects of this national trend. According to TechCrunch, layoffs in this sector, year to date, exceed the total number of tech layoffs in 2022. Other industries are streamlining employee payrolls as they look to a future of job automation through artificial intelligence. Even though getting laid off is a tough situation, there can be a bright side — a chance to embark on a meaningful path to entrepreneurship.

    This endeavor may seem daunting at first, especially if you don’t have a unique business idea, but that makes franchise ownership a particularly attractive option. With a proven, successful business model, a built-in support system and brand recognition, a franchise offers a much easier way to jumpstart an investor’s business ownership dreams.

    In order to attract this pool of potential franchisees, business concepts should highlight how their franchise, in particular, is a financially viable option and how it will continue to benefit the professional development of a prospective franchise owner. Former tech executives and aspiring entrepreneurs, in turn, should widen their lens when looking for their next career opportunity.

    Related: Aspiring Entrepreneur? Consider Perfecting Something That’s Already Built

    Franchising is a good fit for an opportunity-seeking entrepreneur

    The unique advantage franchising offers is an established business model with a blueprint that has been refined over many business units and many years of successful operation. With that comes a brand identity that is already recognizable to consumers. Building a brand-loyal customer base is one of the most difficult aspects of starting a business from scratch. With an established franchising concept, you get brand interest, excitement and trust already built in.

    The franchising business model comes with a corporate team equipped to help franchisees with support services relating to marketing, operations and business analysis, training and more. At Kiddie Academy Educational Child Care, we help our franchisees with all these aspects plus financing, real estate and construction, just to name a few. High-quality tools and technology systems afford franchisees access without the hassle of setting it all up on the front end. Finding a franchise organization that helps facilitate setup through pre-existing relationships with entities like lenders or real estate developers is key to success.

    Because of all the resources available to franchisees, they often find they have more freedom as business owners than they did in the 9-to-5 (or 24/7) job they just left. Different franchise concepts have different time requirements. Potential franchisees can choose what best suits them.

    Flexibility is always an added benefit in the workplace, and transitioning to franchise ownership offers many new options. Franchisees can build their business closer to home or start a new leaf in a place with a growing market. When you own your own business, you’re in control of your destiny — you don’t have to worry about the insecurity of working for someone else.

    Newly laid-off professionals make the best franchise candidates

    A laid-off tech professional can make a very strong franchise candidate. Franchisors who show potential franchisees how their skills can be transferred into a new career path can help grow their organization while providing an opportunity for qualified candidates who are looking to excel. It’s a mutually beneficial relationship.

    Regardless of their background, successful business professionals who have had the unfortunate experience of being laid off usually have a strong work ethic and a desire for continuous learning and development, making them a perfect fit for a franchise organization. Job-seeking entrepreneurs should consider the growth opportunities — both personal and professional — that come with opening a franchise location.

    Most franchise organizations are “no-prior-experience-necessary” opportunities because of the infrastructure and support systems in place to help their owners excel. Even if you don’t have a background in a field like educational child care, for example, with the right amount of passion and franchisor support, you can still become a successful business owner. Franchise ownership opens the door to experiencing an entirely new industry using the business expertise a potential franchisee has already developed in a previous career.

    Related: 6 Tips to Consider When Searching for a Franchise for the First Time

    Franchise ownership allows professionals to live a life they love. Entrepreneurs can seek out opportunities in unique markets where they’ve always wanted to live and consider franchising as a means to relocate. There are also significant work-life balance benefits with franchising. Maybe franchise ownership for a particular organization means only working in the mornings or afternoons — or maybe not even showing up to an office at all. These benefits differentiate the franchising experience in a positive way.

    Business professionals experiencing a layoff and franchisors can both benefit from taking a close look at how they can work together. Franchising isn’t for everyone, just like business ownership isn’t for everyone, but for those who are looking for career advancement, it’s a solid model to consider.

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    Jeff Brazier

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  • U-Haul Truck Carrying Nazi Flag ‘Intentionally’ Crashes Near White House

    U-Haul Truck Carrying Nazi Flag ‘Intentionally’ Crashes Near White House

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    A driver has been arrested on charges of threatening to kill or harm the president, vice president, or their family members after he allegedly plowed a U-Haul truck into security barriers near the White House while carrying a Nazi flag. What do you think?

    “I just hope this doesn’t perpetuate the stereotype that all Nazis are bad drivers.”

    Lance Boor, Unemployed

    Quiz: Could You Pass A Police Officer Entrance Exam?

    “Weirdly, that’s the only thing fully covered under U-Haul’s insurance.”

    Debbie Harkonnen, Freelance Folder

    “So now anyone with a Nazi flag trying to kill the president is automatically a Nazi?”

    Jonas Rangel, Pet Haberdasher

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  • How Making This Critical Hire Will Improve Your Franchise | Entrepreneur

    How Making This Critical Hire Will Improve Your Franchise | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Many franchise founders (and even multi-unit franchisees) hope to one day sell their businesses to private equity. PE’s significant interest in the franchise sector is undeniable. Sellers have benefitted from the activity of these well-capitalized buyers through added deal competition and increasing prices. Even in our current market where valuations have cooled from the heady prices of late 2021 and early 2022, multiples for great franchise businesses are still strong and often exceed middle-market averages for similar-sized companies.

    No matter what your long-term objectives are, it is important to maintain a sale-ready stance as much as possible. This doesn’t just mean keeping your documentation up to date and refreshing an online data room with updated financials and franchise documentation — that’s a given. More important is having the right finance leader in place to be a strategic thought partner both to you as the founder and to your franchisees.

    This makes your Chief Financial Officer one of the most important roles in your business. It’s also a role that, especially for emerging brands, can be one of the weakest in the organization. Bootstrapped companies may not be able to afford top financial management. When private equity later comes calling, immaturity in that role specifically decreases buyers’ willingness to pay because of all the downstream impacts a vacuum in that key position creates in how the business itself is managed.

    Today’s franchise marketplace is extremely competitive for new brands. It is more expensive than ever to launch and create enough visibility to recruit top franchisee candidates. Emerging brands end up stuck in an expensive competition that often leads them to make heavy investments in franchise marketing and recruiting, including high-cost external sales channels. Little may be left over for support infrastructure, including the finance department.

    It is difficult to recruit top finance talent as a small franchisor. Small franchisors may not even have the capacity to collect and meaningfully analyze franchisee P&Ls. Without this visibility, the franchisor can’t properly track or support system health. How will your operations team know what they should be focused on during franchisee coaching conversations? How can your team create and share reports with franchisees demonstrating key metrics and the impact on profitability?

    Related: 4 Key Functions of a Chief Financial Officer

    How a strong CFO can improve your franchise

    Key areas where a strong CFO can improve your business value and exit options include:

    • Strategic thought partner for the entire management team

    • Maintain focus on corporate and unit-level profitability and growth

    • Guide the creation of training materials to help franchisees improve their financial acumen and manage a more profitable business

    • Financial modeling and scenario planning that ensures resources are invested in the highest pay-back initiatives

    • Ensure data reliability and create a cadence for collecting and analyzing business financials

    • Drive supply chain improvements and better vendor pricing

    • Evaluate debt options to fund growth and delay taking on a private equity partner

    • Establish lending programs to support franchisee expansion

    • Team leadership; build financial acumen across the business

    • Support for operations team; track operational KPIs back to financial impact at both the franchisor- and franchisee-level

    • Work with the operations team to establish a common chart of accounts for franchisees and support mechanism for ongoing profitability coaching

    Sometimes emerging franchisors try to “save money” by under-hiring for this key position. Don’t make this mistake! I recognize that for smaller brands, this is an expensive hire. Find the very best talent you can afford, and consider the ultimate payback. One strategy is to hire a fractional CFO and complement that talent with in-house administrative support until the business is large enough to comfortably afford a full-time hire.

    If you are positioning your business for an eventual sale to private equity, the CFO role is ironically most at risk. PE firms typically either have financial resources in-house or outside executives they know and are comfortable with. In the case of a platform, financial planning and reporting functions may already be consolidated. Either way, while the CFO is a key enabling role to help create a sale-ready stance and drive higher enterprise value, ironically, it may be the first position to be replaced or eliminated post-acquisition. You may need to get creative with compensation, such as creating a bonus structure in the event of a successful transaction, in order to recruit the best talent.

    Related: 3 Signs It’s Time to Hire a CFO

    Key attributes in emerging franchise CFO hire

    • Previous senior finance leadership experience — minimum 5 years

    • Strong references, especially as a strategic thought partner for the founder, senior team and franchisees

    • Experience working with private equity, preferably as CFO or VP of Finance for a brand that was sold to private equity or owned by private equity

    • Experience working in a startup environment

    • Franchise or multi-unit experience is a plus

    • Accounting background preferred over finance background

    • Good financial modeling skills

    • Experience at one of the large accounting firms is a plus

    • Ability to build a strong, profit-focused team

    If your franchise system is primarily first-time business owners, make financial acumen at the operating level a priority for your finance lead in partnership with your operations lead. A strong CFO can assist operations to develop tools and coaching that help franchisees understand the major financial levers in their business and key activities that improve profitability.

    Don’t wait until you’re selling the business for prospective buyers to point out all the low-hanging fruit that you could have captured and monetized yourself by helping franchisees improve their businesses. Strong attention to unit-level profitability also signals to franchisees that their profitability is a priority for your management team. This should attract better franchisees in the first place and validate well.

    Related: The CFO Of The Future (No, They Are Not Just The “Finance Guy”)

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    Alicia Miller

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  • Want Your Boss’s Job? Here’s How 8 Employees Became Franchisees. | Entrepreneur

    Want Your Boss’s Job? Here’s How 8 Employees Became Franchisees. | Entrepreneur

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    Image Credit: Zohar Lazar

    At some point in their career, every worker has probably thought: I wish I were the boss.

    In franchising, people often achieve that dream. They might start as a cashier, manager, or in some role at the corporate office, and then rise up to buy a unit of a brand themselves.

    This is no accident. Franchises are always looking for qualified franchisee candidates who appreciate their brand and are dedicated to its success, and many of them encourage their best employees to pursue that path. It’s part of the DNA of franchising. Some brands even have apprenticeship or financing programs to help their team members achieve the dream of business ownership.

    So, what’s it like to go from employee to boss? And what’s required to make the leap? On the following pages, eight people share the biggest lesson they learned — and what enabled them to finally say what so many others want to say: “I’m the boss!”

    Related: 10 Tips to Go From Employee to Boss, From Franchisees Who Did It

    Lesson 1: Ask for more.

    Sam Cleavenger’s first job, at age 16, was with Jeremiah’s Italian Ice. He worked his way up from prep boy to general manager and then marketing manager for the brand. When he turned 24, he partnered with his dad and opened a store of his own. Today, he’s working on opening more stores and has 12 partners underneath him opening stores, too.

    “Something that separated me from my peers would be always asking what you can do to excel,” he says. “I would always ask my manager what I could do to have more responsibility. Before I became a general manager, I said I felt like I was doing great, and I wanted something more. I said I wanted to take on more leadership. I think it’s the simple fact of asking. A lot of people sit back and wait and think people are going to ask them. I think you have to vocalize that you want to grow.”

    Lesson 2: Be creative, within boundaries.

    “Everybody has their own creative style,” says Bonnie Alcid. But as she’s learned, creativity alone won’t drive success. It must be focused and harnessed.

    For example, she started her career in design and printing, but really started flourishing once she became the aquatics director for British Swim School. In that role, she says, she was able to think creatively, but toward a very focused goal — helping craft lesson plans for new franchise owners and their aquatics directors. Then she became the school’s first franchisee, and creativity took on a whole new meaning.

    She learned to hire people who can have fun, and then teach them how to be instructors within the school’s boundaries. “I can teach a child how to swim, and I can teach an adult how to deliver a swim lesson,” she says, “but it’s their personality that’s going to be able to come out and connect with kids and make them successful.”

    Related: Are You Ready to be the Boss of Your Own Restaurant Franchise?

    Lesson 3: Grow alongside everyone else.

    Tracy Welsh has grown a lot since the pandemic. But she’s also realized: If she’s the only one growing, she’s failing.

    Her journey began at Massage Heights, where she was the director of two locations. Both had to shut down at the beginning of the pandemic, and she worried about losing her job. Then, to her great surprise, her boss presented her with a different opportunity: Would Welsh want to buy the franchises where she worked? “I thought, My gosh, there’s no way that this could ever happen,” Welsh says. She was worried about financing, but after meeting with a bank, she realized she could do it.

    “It made me grow in a way that I never thought was possible,” she says. Then, as she built her team, she realized she was now in a position to help others grow too. “You can’t just grow yourself,” she says. “You have to have the mindset that you want to grow other people at the same time, growing employees, growing guests, growing members. Doing the same old thing and never changing it up is not the way to go as an entrepreneur. You have to grow and evolve.”

    Lesson 4: Make smart lease deals.

    Ivette Escobar was assistant to the founder of Sweet Paris Crêperie & Café in 2012, and ultimately became the brand’s chief development officer. When she and her husband opened their own location, she knew the lease terms were a key — because if she couldn’t control the environment her business was in, she couldn’t ensure its success.

    “We will not take a location that will not let us do our facade,” she says. “If they just want us to put up a sign, we say no.” If you’re looking for a space yourself, she has advice: Ask for tenant-improvement money to upgrade the space. “If it’s a second-generation space, they give you less money, but that’s where you have to have a really good broker to negotiate and advocate for you, to show them what you’ll be doing for them and the traffic you’ll be bringing, so their investment will pay off. If it’s a first-generation space where it’s brand-new construction, or a shell with four walls and you’re going to be doing absolutely everything inside the space, that’s where you can negotiate more.”

    Image Credit: Zohar Lazar

    Lesson 5: Be the start of a virtuous cycle.

    Joe Jaros started delivering for a Marco’s Pizza in high school, became a shift manager at 18, and told the owner he wanted to become a franchisee at 21. Eventually, they became partners — and Jaros now owns five stores. Now he wants to keep the cycle going, by being the boss that helps the next generation of franchise owners thrive.

    “I decided that I was going to have my own apprenticeship program where I take great operators and turn them into franchisees,” he says. But he does it in a very particular way: He selects some of his best employees and helps them buy a piece of his own stores. To him, it’s just good business. “If it’s going to take me seven years to pay off a store, and the average general manager lasts about a year, I’m taking a lot of chances,” he says. “If I know I have a great operator to last the whole seven years, my risk factor is much lower. I figured, if I just make a little less on each store, but I mitigate my risk, I’m going to come out ahead in the end.”

    Related: Is Business Ownership Right for Me? 4 Questions to Consider Before Taking the Plunge.

    Lesson 6: Take smart risks.

    Kelli Amrein had spent years in childcare, including director positions where her job was to manage teachers and schedules. After she joined the staff of Celebree School in 2011, she eventually got to see the business side. “They gave us full access to payroll and budgeting and all the financial reports that we could analyze to see where the business was growing,” she says. “I really liked that challenge.”

    When Celebree started franchising, she was 41 with three kids — but she took a chance and became the brand’s fourth franchisee. “I really would not have taken this leap if it was in an industry that I didn’t know enough about,” she says. “I knew all of the risks that happen inside the building, outside the building, the marketing, how many hours a day it would take to do things. I knew I’d have to be available to answer questions after-hours — I knew the risks, I knew the industry.”

    Lesson 7: Ask for help when others won’t.

    Matt Peters was 16 when a friend got him a job knocking on doors, offering homeowners a free estimate for Weed Man’s fertilizer and weed control. At first, it was a bust — he was too socially awkward and didn’t know how to sell. “I had to fall flat on my face a number of times,” he says.

    Instead of giving up, he started asking others for help. That included talking a lot to the supervisor who drove him and his fellow salespeople around. By taking their advice, Peters blossomed into a winning salesman — and at 24, he bought his first franchise. Today he’s 32 and owns two locations. “I still see other people that I think are much more talented than I am,” he says, “but I learned from good people who were patient enough to teach me and cared enough to give me advice and feedback and coaching. They either saw potential in me or encouraged me to do it and supported me.”

    Lesson 8: Make data-driven decisions.

    Austin Clark was playing college football and had just finished his kinesiology degree when he had a career-ending wrist injury. So he changed paths: He got an MBA, became general manager at D1 Training’s headquarters, and then eventually went on to become a D1 multi-unit franchisee.

    How does he grow his business? By constantly tracking key performance indicators: “Say, marketing: I know what my cost per lead is, my cost per 1,000 impressions, my funnel converts, the percentage of my customers that come through the marketing funnel and end up scheduling with us. By tracking those KPIs in the data, and being in a franchise system with other people tracking those same things, I can see the areas where we’re struggling. I can lean into the franchise and see who has figured those marketing pieces out. Who’s done a really good job generating more leads for less dollars on Facebook and Instagram? I can then go and look for people who are great at that.”

    Related: Find Out Which Brands Have Ranked on the Franchise 500 for Longest, Earning a Spot In our New ‘Hall of Fame’

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    Kim Kavin

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  • How to Create and Implement an Effective Contingency Plan | Entrepreneur

    How to Create and Implement an Effective Contingency Plan | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    In today’s ever-changing business environment, business owners, entrepreneurs and franchise owners need to be prepared for the unexpected. Contingency planning is a critical component of business growth, enabling organizations to minimize disruptions and recover quickly from unforeseen events.

    In this article, we will discuss the importance of contingency planning, the key elements of a comprehensive plan and how to implement a contingency plan effectively. By taking proactive steps to prepare for potential challenges, businesses can build resilience and ensure continued growth and success.

    Related: 4 Ways to Prepare Now so Your Business Survives the Unexpected Later

    Why contingency planning matters

    Disruptions can come in many forms, from natural disasters to cybersecurity breaches, equipment failures or even changes in the competitive landscape. Without proper planning, these events can have a devastating impact on a business’s operations, finances and reputation. Contingency planning helps businesses minimize the impact of disruptions, maintain operational continuity and recover more quickly from setbacks. This resilience is crucial for business growth, as it enables organizations to adapt to changing conditions and capitalize on new opportunities.

    Elements of a comprehensive contingency plan

    Developing an effective contingency plan involves several key steps:

    Step 1: Identify potential risks and vulnerabilities

    The first step in creating a contingency plan is to identify potential risks and vulnerabilities that could impact your business. This includes both internal and external factors, such as natural disasters, equipment or network failures, supply chain disruptions, cybersecurity breaches, changes in the landscape or the loss of key personnel. By identifying potential threats, businesses can better understand their exposure and develop targeted strategies to address these risks.

    Step 2: Develop response strategies

    Once potential risks have been identified, businesses should develop response strategies to mitigate the impact of these events. This may involve developing alternative suppliers, establishing backup systems or processes or implementing new security measures. Response strategies should be tailored to the specific risks faced by the business and should take into account factors such as the likelihood of the event occurring, the potential impact on operations and the resources required to implement the strategy.

    Step 3: Establish a communication plan

    In the event of a disruption, clear communication is essential to ensure that all stakeholders, including employees, customers and suppliers, are aware of the situation and know what steps are being taken to address the issue. A comprehensive communication plan should outline how the information will be shared, who will be responsible for providing updates and what channels will be used to communicate with different stakeholders.

    Step 4: Train employees and build awareness

    For a contingency plan to be effective, employees need to be aware of the potential risks facing the business and understand their roles and responsibilities in the event of a disruption. This may involve training employees in new processes or procedures, providing guidance on emergency response protocols or conducting regular drills to ensure that all team members are prepared to act quickly and effectively in the event of a crisis.

    Step 5: Review and update the plan regularly

    As the business environment continues to evolve, it is essential that contingency plans are regularly reviewed and updated to reflect changes in the company’s operations, industry dynamics or the broader economic landscape. This may involve conducting periodic risk assessments, updating response strategies or refining communication protocols to ensure that the plan remains relevant and effective.

    Related: 5 Reasons Why You Should Create an Emergency Response Program for Your Business

    Implementing a contingency plan

    With a comprehensive contingency plan in place, businesses can take steps to minimize the impact of disruptions and maintain operational continuity. Key steps in the implementation process include:

    Developing an action plan

    An action plan should outline the specific steps that will be taken to address each identified risk, including timelines, resources and responsibilities. This plan should be clear, concise and easily accessible to all team members, ensuring that everyone understands their role in the event of a disruption.

    Allocating resources

    Contingency planning may require the allocation of resources, such as budget, personnel or equipment, to implement response strategies effectively. Businesses should prioritize resources based on the likelihood and potential impact of each identified risk, ensuring that the most critical vulnerabilities are addressed first.

    Testing and refining the plan

    Once the plan has been developed, it is essential to test its effectiveness through simulation exercises, drills or other means. This will help identify any weaknesses or gaps in the plan and enable the business to refine its strategies accordingly. Regular testing also helps ensure that employees are familiar with the plan and prepared to act in the event of a disruption.

    Monitoring the environment and adapting

    Contingency planning is an ongoing process that requires businesses to monitor changes in their operating environment and adapt their strategies accordingly. This may involve updating the plan to address new risks, adjusting response strategies in light of changing circumstances, or reallocating resources as needed. By staying attuned to the evolving business landscape, organizations can remain agile and resilient in the face of uncertainty.

    Contingency planning is a critical component of business growth, enabling organizations to navigate the unexpected and maintain operational continuity in the face of disruptions. By identifying potential risks, developing targeted response strategies and implementing a comprehensive plan, businesses can build resilience and drive continued success. As the business environment continues to evolve, contingency planning will remain a vital tool for business owners, entrepreneurs and franchise owners seeking to capitalize on new opportunities and protect their organizations from unforeseen challenges.

    Related: How to Create a Disaster Plan for Your Business

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    Greg Davis

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  • 2 Steps to Predict the Future of Your Business | Entrepreneur

    2 Steps to Predict the Future of Your Business | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Have you ever thought about the future success of your business? Have you ever wished you could predict what will happen next year based on the decisions you are making today?

    What if you could look at your business 12 months from now based on those decisions? What if I told you that you could see the future and have the ability to predict what is going to happen? Well, I have good news for you. As a part of a franchise system, you have a unique ability to time travel in your own business!

    Two things can make this happen.

    Step #1

    The first is what we call historical pattern recognition. This is the analysis of historical data from your Profit and Loss Statement (P&L). This analysis is done on a line-item basis of every variable and fixed cost in your P&L, as well as the revenue stream and net profits over a 12-24 month time frame.

    By analyzing this data, we can identify the 8-10 critical metrics driving your business. This data is then used to create a pattern of numbers based on your history.

    A simple explanation of pattern recognition works like this. I used this example in a keynote speech to a franchise organization at their annual convention in Nashville last year. I told the audience that I had two examples of tracking a set of numbers in the previous nine days and wanted to see if they could predict the following number in the pattern.

    Related: 3 Ways Your Past Wins Are Blocking Your Future Successes

    In the first example, I gave them the number 44. I then asked the audience, “Given that number, can you predict, with any level of accuracy, what the next number in the data set will be tomorrow?” The obvious answer was no. There just isn’t enough data.

    In the second example, I told them that over the last nine days, I had tracked the numbers 1-2-3-4-5-6-7-8-9. Now I asked them to predict the next number that would come up tomorrow. In this example, they all got it right. The obvious answer is 10.

    Not only did they get it right, but there is a high probability of that number being accurate. The entire audience just traveled to the next day and predicted what would happen. This is what we call basic pattern recognition. With enough data, we can figuratively time travel to the future and predict with a fair level of accuracy what will happen.

    Related: Why an Entrepreneur’s Ability to Innovate Will Make (or Break) Future Success

    Step #2

    The second step in time travel is unique to a franchise system. This is what we call the “collective knowledge” of the franchisor. This is a potent tool for predicting the future results of the decisions you make today.

    Let me break this down. Before the speech I just spoke about, I had requested and been given six P&Ls from different operators within the system.

    I got two from their top operators. I got one from a middle-of-the-pack operator, one sample data set the franchisors use in training, and two from lower-performing units. I then lined these up and did a line-item analysis of the past 24 months.

    What we found out was that most of the metrics were very similar. (With a few one-off exceptions). Two units were profitable and growing. One was profitable but with no growth, and two were stagnant and not increasing sales. Of the two units without growth, one was breaking even, and the other was losing money.

    The one glaring difference between the units that were growing and profitable, those that were stagnant and finally, the ones that were losing money was the amount and percentage of money spent on marketing. There was a stark contrast between the units.

    I then took the marketing dollars spent by each unit and showed both the short-term and the long-term return on investment from their marketing spend. The top operators were earning up to $15 in revenue for every dollar spent. This was enough to cover the natural attrition of current clients and acquire enough new clients for growth. The middle-of-the-road operators were getting around $10 in revenue for every dollar spent but only covering enough new sales to make up for the natural attrition of clients. That meant they were stagnant in revenue and profits. The bottom units were generating around $5 in revenue per dollar spent but were not spending enough marketing dollars to cover their client attrition rates. This resulted in declining revenue and profit losses.

    Related: How to Reduce What You’re Spending on Marketing (Without Losing Results)

    What we learned in this exercise was interesting. The top units were spending around 8% on marketing. The bottom units were around 4%. The only real difference in revenue and profits between these units boiled down to about 4% additional spending on marketing. A 4% difference in spending was the difference between profitable growth and stagnation to losses.

    This exercise allowed us to look at each unit from a historical pattern recognition perspective and then combine it with their decision-making around marketing spend and determine what the future revenue and profits of the units would look like.

    At this same event, I asked the crowd if they would like the opportunity to have a one-on-one with the top operators in the system to ask questions about sales, expenses, growth and profit. Almost every hand went up. At this point, I told them that they had that opportunity through the use of their FBCs (franchise business consultants) assigned to their territory.

    These FBC have all the information available on every unit within the system. They have all the data from the top units down to the ones that are not making money. They have the data to do the comparative analysis. In essence, they have the keys to the kingdom. They know the answers to all the questions. They know what works and what has been tried and failed. This is not a guess. This is something they have experienced and learned. This is the power of the collective. The historical decision-making of hundreds or thousands of franchisees is the power of franchising. Every good decision and every bad decision is available to be learned from.

    As a rule, business success is not about having all the answers. Success is about asking the right questions. The power of the franchise system is that they have the answers to the questions. They already know what decisions will work and what decisions will fail. Your job as a franchisee is to ask questions. But here is the key: when you ask a question and get an answer, you need to follow the answers you get.

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    Brian Will

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  • Chick-fil-A Leads in Service Satisfaction (and Wait Times) | Entrepreneur

    Chick-fil-A Leads in Service Satisfaction (and Wait Times) | Entrepreneur

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    Chick-fil-A is bringing in the bucks — and slowing down traffic.

    The chicken chain brought in $18.8 billion in U.S. sales last year, marking consistent upward growth since 2019, according to the brand’s Franchise Disclosure Document released earlier this week. But Chick-fil-A also ranked last for speed of service, according to The 2022 QSR Drive-Thru Report, with the average transaction taking 325.47 seconds (for reference, Taco Bell ranked number one at 221.99 seconds).

    But this data might be a little deceiving when looking at the number of cars serviced at the drive-thru. Chick-fil-A had the most cars, 5.45 on average, based on data examining how many vehicles were in front of survey respondents before they reached the speaker. McDonald’s came in second with 3.13. When scaling speed of service with the average number of cars in line, Chick-fil-A actually comes in first with an average of 107.41 seconds, according to the report.

    The chain also came in at No. 2 for “speed of service satisfaction,” which measures customer satisfaction versus wait time, with a rating of 93% — passed only by Arby’s at 96%.

    Related: ‘We’ve Been An Elite Restaurant’: Chick-fil-A Manager Started Offering a Three-Day Workweek. It Now Has 100 Percent Management Retention.

    Still, Chick-fil-A’s popularity, particularly its drive-thrus, has caused some local communities to petition for restrictions.

    Earlier this year, the Charlotte City Council unanimously approved the motion to tear down a Chick-fil-A location and rebuild it as a two-lane drive-thru-only location in response to a petition by customers, citing long wait times and disruption to local traffic.

    In Florida, a location eliminated its drive-thru operation following a series of vehicle-related incidents in 2021. The following year, a San Diego storefront was almost declared a public nuisance due to traffic jams.

    Despite the drive-thru logistical issues, it’s still Gen Z’s favorite chain, according to Nation’s Restaurant News.

    RELATED: NYC’s 65,000 Food Delivery Workers Can Now ‘Rest, Get Warm and Recharge’ at This Fast-Food Chain’s Exclusive ‘Brake’ Room

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    Madeline Garfinkle

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  • 8 Rules to Live By in Franchise Marketing, According to Top CMOs | Entrepreneur

    8 Rules to Live By in Franchise Marketing, According to Top CMOs | Entrepreneur

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    When it comes to franchise marketing, the best CMOs find ways to strike a balance between protecting, growing and enhancing the brand at the national and global levels while still allowing for customization at the local level.

    “It’s our responsibility as a franchisor to provide tools, resources and support for our franchisees that allow them to stay within our overarching strategy but also exercise freedom in their local marketing, understanding what resonates best in their market (using the tools and guidelines set),” says Ashley Mitchell, senior vice president of marketing at Streamline Brands.

    Related: Considering franchise ownership? Get started now and take this quiz to find your personalized list of franchises that match your lifestyle, interests and budget.

    If you’re an aspiring franchise CMO or looking for new strategies to elevate your franchise’s marketing and branding, this one’s for you. We spoke with franchise marketing executives across industries to explore what it takes to succeed.

    Step one? Recognize that franchise marketing is unlike any other type of marketing. From there, it’s all about taking a hybrid approach, adapting to market conditions and creating strong personal connections.

    “Working in franchising, you also have to check your ego at the door and realize that some of the best ideas are going to come from your community — lean into that and truly partner with your franchisees to ensure you are able to hear those great ideas, polish and elevate them to the next level and share widely,” Mitchell adds.

    Related: Want to Become a Franchisee? Run Through This Checklist First.

    1. Don’t compare franchise marketing to other types of marketing

    “Your stakeholders, strategies, objectives, KPIs — they all are highly dependent on your business model, the markets you’re working in and the goals of both the franchisor and franchisee. A lot of franchise marketers learn quickly that what might have been successful in a previous, non-franchise role won’t work or will need to be heavily modified. This is what excites most of us, but also, at times, can be physically, mentally and emotionally exhausting!” — Will Fraker, vice president of marketing at FranNet

    2. Take a hybrid approach

    “Your franchisees didn’t get into business to be full-time marketers. You need to be their strength wherever their weakness lies, and for many of your franchisees, it is likely to be in marketing. At MassageLuXe, we ask ourselves ‘Does this need to be localized to their market?’ If the answer is no, we do the marketing for them. If it does need localization, we provide easy-to-use guides and templates so that they can activate easily. Take a hybrid approach to brand and local marketing in the franchisees’ favor to ensure you are taking into account the unique needs and characteristics of each local market while maintaining a consistent brand image and messaging.” — Kristen Pechacek, chief growth officer at Massage Luxe International

    Related: Everything You Need to Know About Franchise Law.

    3. Adapt to unique market conditions

    “To succeed in franchise marketing, it’s essential to navigate the tension between centralized brand control and adapting to the unique market conditions of each franchise location. Juggling these competing priorities requires a deep understanding of both franchisor objectives and franchisee requirements, as well as the ability to effectively leverage a range of marketing channels to reach and engage customers. That balance requires a combination of art and science to pull it off effectively.” — Mike Millett, vice president of marketing at Stratus Building Solutions

    4. Create a strong personal connection with customers

    “Franchise marketing is about creating a strong emotional bond between your brand and the people within your local communities — and that relationship is most effectively established at the local level, with support from national brand marketing. The franchisor should have proven local marketing programs in place for the franchisee, making it easy for them to execute (or executing it on their behalf where possible), but allowing the franchisee to customize the program so that messaging is authentic and targeting is optimized. If the franchisee is not a ‘people person,’ they should hire someone to be the face of their business in the community. The closest thing to the mythical silver bullet in marketing is having a strong personal connection with customers and prospective customers.” — Angela Z. Paules, chief marketing officer at Buzz Franchise Brands

    Related: 6 Questions to Ask Before You Begin Your Franchise Search.

    5. When in doubt, embrace simplicity

    “Focus on establishing a strong national foundation where you as the franchisor can ensure there is a consistency of message and augment with a keen insight driven by localization of elements and tactics. In essence, you use local to showcase your media expertise and connection to the community while using national to drive overall system-wide performance.” — Doug Zarkin, vice president and chief marketing officer at Pearle Vision

    Related: Busting Franchising Myths and Choosing the Right Opportunity

    6. Anticipate your customers’ needs.

    “For successful franchise marketing, it’s crucial to conduct both primary and secondary research on your customers. By becoming an expert on their preferences, you can anticipate their needs and tailor your strategy and messaging accordingly. This approach builds trust and loyalty, as customers feel heard and understood. I learned early in my career, ‘If you ask the customer, they will tell you what to do.’” — Brooke Janousek, Fractional CMO

    7. Protect and grow the brand

    “Franchise marketing is all about protecting and growing a brand at the same time. This is done most successfully by providing franchisees with an easy-to-follow system (plan or program) that they understand and believe will help them grow their business, provide a return on their investment and deliver the brand experience. Franchisees are not inherently marketers, so they need to believe in the brand promise and the marketing behind the brand so they can execute their local marketing effectively. Happy and profitable franchisees sell franchises, and ultimately, marketing programs for both growing the brand and the franchise rely on this every day.” — Marci Kleinsasser, vice president of marketing at Home Franchise Concepts

    8. Lean into the community

    “Franchising is the only industry I’ve worked in that has such open and genuine people who truly want to help each other. I have an amazing network of franchise friends that I know I can reach out to at any time with any question or challenge I’m having and they will be happy to share and provide guidance. It’s truly an amazing support system to have.” — Ashley Mitchell, senior vice president of marketing at Streamline Brands

    Related: Is Franchising Right For You? Ask Yourself These 9 Questions to Find Out.

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    Clarissa Buch Zilberman

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  • How to Maximize Each Stage of Your Franchise Sales Funnel Using Video | Entrepreneur

    How to Maximize Each Stage of Your Franchise Sales Funnel Using Video | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Over the past decade, selling franchises has become an extremely competitive business, and any advantage that one brand can develop, cultivate and deploy can make or break annual sales goals. Now more than ever, video marketing and production is beginning to fill that void. According to an internal survey from Franchise IQ, 87% of its customers indicated that the use of video — especially testimonials — was an important factor in their decision to purchase a franchise opportunity. Why is that? Because videos create lasting impressions in the minds of current and future customers.

    For franchisors, the full version of the sales funnel is an important aspect of the brand’s marketing program and initiatives. From a comprehensive standpoint, it’s important to deploy resources that have a profound effect during every stage, including the top, middle and bottom of the funnel. Visuals — whether in print or video — are an incredibly powerful tool for conveying information and creating a connection with potential customers and franchisees —which isn’t surprising considering people spend a third of their time online watching videos.

    Here, we’ll look at the specific type of video content that can help franchisors maximize their sales funnel potential at each stage of the buyer’s journey. As you’ll see, video just happens to be one aspect of the marketing mix that can be initialized in all three sectors. Here’s how:

    Related: Connecting With Your Target Audience Through Video

    Top of the funnel videos

    At the top end of your franchise sales funnel, the most valuable type of video simply introduces customers and prospects to your brand. Videos featuring the brand’s CEO or founder are great for this purpose because they give viewers an understanding of who is behind the company while creating a personal connection. But the C-suite is by no means the only recommended option for spokespersons. It can also be effective to feature current franchisees that have developed and maintained a successful operation under the brand’s watchful eye.

    Additionally, this stage is also an opportunity to create videos that respond to the most common objections prospects may have about a particular franchise opportunity. Lastly, for the top end of the funnel, it’s recommended that brands develop videos that cover the many different candidate personas, for the purpose of establishing a personal connection with prospective franchisees. Ultimately, the top of the funnel is where brands should showcase their story, explained in simple terms that are easy to comprehend and evaluate.

    Middle of the funnel Videos

    As for the middle of your sales funnel, this is a great opportunity to focus on building trust between the franchisors and potential candidates. This is precisely where franchisee testimonial videos come into play. How so? Because this is the moment to demonstrate how real entrepreneurs have benefitted from becoming part of your growing franchise family.

    The middle of the funnel can also be a suitable time to feature videos that reveal the actual level of support candidates can expect from the brand. These videos can be extremely convincing because they show exactly whom the prospective owners will be working with on a day-to-day basis once they themselves become owners.

    Another effective middle of the funnel video includes the popular “day-in-the-life” montages, featuring typical routines at the office — or home office if it’s a remote-based concept. This is an opportunity for candidates to get a sense of what their own lives might be like as owners of the brand.

    One caveat here: Don’t skimp on the storytelling aspect of this stage. You don’t exactly want a movie-length segment, but it’s important for people to see something that truly reflects franchise ownership with the brand. Done right, this video can really paint a picture, convincing a candidate that they, too, can succeed as a franchise owner and enjoy a better life and future.

    Related: Why Franchise Brands Need to Start Utilizing Video Marketing

    Bottom of the funnel videos

    When it comes to the bottom of your sales funnel, this is the time to create hype about the impending discovery day. Why is this important? Because it’s the literal crossroads where potential candidates make their final decision on whether or not to join your growing franchise family!

    What might a good hype video look like? A great way to approach this stage is a video that demonstrates all there is to learn about being a part of the franchise family — especially the nitty gritty details like systems and operations. Quick jump cuts of interrelated scenes can not only be effective but entertaining as well!

    To close out examples of good bottom of the funnel videos, it’s important to round out the whole experience. Make sure your potential customers know they’ll soon be welcomed into the franchise family. A great example is a quick “sizzle-style” highlight reel highlighting all of the corporate employees working as a team. A “welcome to the family” montage might just be the emotional closer you need to get that candidate to sign on the dotted line.

    More and more, video content is proving its worth as an effective tool for engaging customers and increasing conversions. It can be a vital part of any marketing strategy, but it’s proven exceptionally effective for franchisors. By taking a comprehensive approach that breaks down the type of videos you should be creating at each of the three sales funnel stages, you can be sure that your strategy is well thought out and well planned. Video is indeed a powerful medium. It’s quite an effective way to demonstrate to prospects that they aren’t just buying into a concept — they’re buying into a family that cares about their success as an entrepreneurial small business owner.

    Related: How to Create a Digital Marketing Funnel

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    Trevor Rappleye

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  • What Should a Franchise Agreement Contain? | Entrepreneur

    What Should a Franchise Agreement Contain? | Entrepreneur

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    If you’re in the process of becoming a franchisee or curious about what it entails, then you should familiarize yourself with the ins and outs of a franchise agreement — and that starts with what it contains.

    First, let’s review some basics: A franchise agreement is a legal contract between the franchisor and the franchisee. It outlines all the terms and conditions of the franchise relationship before it officially starts. Both parties must understand the terms of the agreement before signing — or else either side runs the risk of some serious consequences.

    Read on for everything that should be included in a franchise agreement, so you’re prepared before it’s too late.

    Related: Considering franchise ownership? Get started now and take this quiz to find your personalized list of franchises that match your lifestyle, interests and budget.

    Franchise fees and ongoing royalties

    The franchise agreement should specify the initial franchise fee, which is the upfront payment to the franchisor for the right to use its trademark and business system. Think of it as the price you pay for not having to build a business system from scratch.

    This fee might be paid in a lump sum or installments, and it typically covers the initial training and support the franchisor will provide.

    The franchise agreement should also include the ongoing royalties that the franchisee is required to pay to the franchisor. Royalty fees are typically a percentage of revenue, and they can be flat or on a sliding scale. The royalty fees can be paid weekly, monthly or quarterly and cover the franchisor’s continued support, marketing and advertising.

    Related: Is Franchising Right For You? Ask Yourself These 9 Questions to Find Out.

    Territory and exclusivity

    One of the benefits of franchising is the ability to expand into different areas, cities and even countries. To avoid conflicts between franchisees in the same area, the franchise agreement defines the territory in which the franchisee is authorized to operate the franchised business.

    This could include a specific geographic area, a particular city or a specific address or location. It should also specify whether or not:

    • The franchisee has the exclusive rights to operate the business within a territory
    • Other franchisees can operate in the same area or nearby
    • The franchisor can open additional franchises in the same territory

    Operating standards and training

    An important aspect of franchising is a uniform training and operating model. This can include product quality, customer service, advertising, training and more. The franchise agreement should specify the operating standards the franchisee must abide by to align the individual franchise with the integrity of the larger brand.

    The franchise agreement should also specify what the franchisor will provide in terms of the type and amount of training and operating support. That said, franchisors must provide appropriate training to ensure the franchisee understands and effectively implements the franchise standards.

    Related: 10 Tips to Go From Employee to Boss, From Franchisees Who Did It

    Intellectual property rights

    It might go without saying, but one of the reasons a franchisee embarks on a franchising journey is to use the franchisor’s trademarks, logos and other intellectual property. The franchisor grants the franchisee a license to use this intellectual property exclusively for the franchised business.

    These stipulations should all be in the franchise agreement. The franchise agreement should also outline the restrictions on the franchisee’s use of intellectual property to protect the franchisor’s brand.

    Term and renewal

    The franchise agreement should specify the term of the franchise relationship. The term is the length of time that the franchisee is legally allowed to operate the business. Terms can range from several years to several decades, and they can vary from location to location. The franchisor has the right to offer a renewal option that allows the franchisee to renew the franchise agreement for another term.

    The franchise agreement should contain the renewal conditions, such as meeting key performance metrics, paying all necessary fees or meeting other goals. The franchisor also has the right not to renew the agreement if the franchisee fails to meet the conditions for renewal.

    Related: The 4 Biggest Myths About Franchising

    Termination and default

    The franchise agreement should specify the conditions under which either party can terminate the franchise agreement to avoid having to wait until a term ends. Terminations can be due to contract breaches, insolvency, failure to meet performance standards or just by mutual agreement and should be defined in the franchise agreement.

    The franchisor should also include a default clause in the franchise agreement to protect itself. Default clauses outline the remedies available to the franchisor in the event of contract breaches or early terminations.

    Related: Never Buy a Franchise Without Researching These 5 Sources

    Financial disclosures and obligations

    A breakdown of financial disclosures and obligations should be listed in the franchise agreement, such as initial investment costs, ongoing expenses and financial reporting requirements. The franchisee should have a clear understanding of the costs and financial obligations associated with the ongoing operations of a franchised business.

    Advertising and marketing

    Franchises typically run national advertising campaigns, so individual franchisees are not responsible for television commercials or other marketing strategies. But to pay for this, the franchisee is required to pay ongoing advertising and marketing fees to the brand’s national advertising fund, outlined in the franchise agreement.

    There may be opportunities for franchisees to conduct their own advertising in their local territories, which can also be outlined in the agreement.

    Key takeaways and what to do next

    Franchisees should have a clear understanding of what a franchise agreement entails before signing the dotted line — and they should be wary if the contract is vague. To better understand the terms and conditions, franchisees should seek the advice of a franchise legal professional before moving forward.

    Related: Busting Franchising Myths and Choosing the Right Opportunity

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    Clarissa Buch Zilberman

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  • How Marketing Automation Can Boost Your Franchise | Entrepreneur

    How Marketing Automation Can Boost Your Franchise | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    When running a multi-location restaurant or franchise, owners and operators don’t have an excess amount of time to think about marketing. And not all franchise marketing solutions are created equal. Many “canned” marketing programs save time but are built on brand recognition only and will do little to drive revenue and increase loyalty to a specific location. It can feel challenging to implement marketing unique to one location over another when there are many surface-level similarities. Luckily, times have changed.

    Marketing through the use of integrated technologies such as WiFi, texting and digital displays provides the option for full automation while providing the delivery of highly targeted marketing messages that result in greater guest traffic and drive higher revenue at each franchise location. No, this isn’t a science-fiction hypothetical — it’s a reality with the use of innovative, integrated marketing technology.

    By gathering valuable customer data through onsite WiFi, franchises can build a fully automated and personalized experience for each customer while understanding what works and what doesn’t for a business’s marketing strategy. This article will discuss what integrated WiFi marketing automation is, how it works for multi-location restaurants or franchises and how to implement highly targeted marketing campaigns that generate more revenue.

    Related: Evaluating a Franchise’s Marketing Program

    What is marketing automation, exactly?

    Centralized multi-location restaurant or franchise marketing automation is accomplished by synching a location’s WiFi to a customer’s device (through free WiFi access) and then collecting the customer’s valuable data. From there, customers are then filtered, organized and analyzed individually by artificial intelligence (AI) to identify the behaviors of a customer and what message would most likely appeal to them.

    The data gathered and retained over this process also continues to grow as much as the business desires and as much as the customer is willing to participate — as customers can also partake in surveys or other key touchpoints for gathering qualitative information. Even if a customer decides they don’t want to participate in something such as a survey, their schedule behaviors for frequency, time of day, day of week or month, duration of their visits and other data remain to help provide them an experience tailored to their wants and needs.

    Should a customer go to several locations of the same multi-location restaurant or franchise over the course of their weekly or monthly routine, that information will also be retained. This enables the business to see which location is most efficient for that customer and incentivizes their visit to specific locations. By incentivizing their visit with a coupon or offer code for a free drink, sandwich or another item, it can direct a customer to a specific location that needs to increase guest-flow efficiency, ultimately helping the bottom line for that location as well. With marketing automation through integrated WiFi marketing technology, routine marketing tasks can be handled without the need for human supervision or hand-holding.

    To accomplish all this, it of course necessitates a willingness on the business owner’s part to accept the technology and implement it across their multi-location restaurants or franchises. This way, data can be stored and disseminated across locations and ensure a customer going to a location in North Dakota on a Monday can get the same personalized message that day as they would on a Tuesday in California. While the idea of machine learning and other buzzwords can sound intimidating, intelligent AI in automated marketing means a closer and more personal relationship with customers.

    Related: 5 Ways to Freshen Up Your Franchise Marketing in 2023

    How will I see it enhance my business?

    If a franchise or multi-location restaurant owner wants to take the next step and provide an immersive, personalized experience for their customers, integrated WiFi marketing and automation are the best option. According to a report from PWC, 82% of consumers would share some of their personal information to receive a more personalized customer experience. A personalized experience was also noted by 87% of respondents to PWC’s survey as one of the most important elements of the buying experience to them — meaning, people want to have an experience that only they can have, not the same cookie-cutter, one-size-fits-all approach many businesses take in messaging their customers.

    Using SMS messaging, email, social media and digital online displays, a business can send personalized messages that let their customers know individually that their wants and needs are seen and heard.

    For example, if a customer regularly purchases breakfast sandwiches and coffee in the mornings from a location, that franchise or multi-location restaurant can send an SMS message along the lines of, “Thanks for choosing us to start your day! Here’s a free coffee on us [link to post on social media for social gravity boost!]” Additionally, the AI in integrated WiFi marketing and automation recognizes that customer retention and re-acquisition are pivotal and will provide each customer type — including new, returning, regular and lost customers — an experience that best speaks to them.

    With lost customers vs. new customers, it’s important to remember there is a 60-70% chance of making a sale to a former customer — which, according to the book Marketing Metrics: The Definitive Guide to Measuring Marketing Performance, is much higher than the 5-20% chance a business has of converting a sale with a prospective new customer.

    Related: The Basics of Multi-Location and Franchise Marketing

    Marketing automation through integrated WiFi technology may sound and seem futuristic, but surprisingly, 76% of businesses have already adopted basic WiFi technology. However, most are missing out on the value of the integration of texting and digital displays for a comprehensive messaging solution. Inefficient spending of funds for marketing becomes a thing of the past with intuitive AI used in integrated WiFi marketing.

    In the digital age, businesses have an opportunity unlike any other time in history to make deep, lasting connections with their customers. Integrated and automated solutions allow WiFi and SMS messaging to engage the customer instantly and display on their social media and other online platforms to further the lines of communication and understanding between customer and business.

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    Stephen Gould

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  • 4 Essentials for Selecting the Perfect Business Real Estate | Entrepreneur

    4 Essentials for Selecting the Perfect Business Real Estate | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    You’ve heard the old saying, “You can’t judge a book by its cover.” Actually, that’s not always true; customers judge a book by its cover all the time. In many cases, your business’s real estate and its curb appeal are the first messages being sent. Do customers notice your establishment? Do they understand the business by looking at it from 500 feet away? Is its image compelling?

    That’s why the right real estate is often the first marketing tactic to consider — certainly for any retail or restaurant enterprise. If you don’t stand out, even on the busiest roads, you’re in trouble. That’s in part why, at Fransmart, we include marketing plans in the real estate approval process, because once a lease is signed on a bad property, it’s too late to fix.

    And here’s a chance to learn from my mistakes. Early in my career, I was opening a restaurant in Silicon Valley and secured a site directly across from Google’s headquarters. I was elated: The property tested off the charts in terms of population density and disposable income. What could go wrong?

    Here’s what we never considered: Google feeds their employees for free — employs world-class chefs to make incredible food throughout the day. We had direct access to one of the largest workforces in the country, and couldn’t break through because none of them were hungry. Dumb mistake.

    A bad site can never be cheap enough, while good sites pay you, so take your time to thoroughly vet locations, including carefully assessing the trade areas and traffic patterns at different parts of the day (and on several different days).

    A few other critical factors to keep in mind before locking your brand into its next location.

    Related: How AI Will Transform the Real Estate Market

    1. Access

    Most first-time business owners don’t realize that there are two sides to every street: a breakfast side and a dinner side. Starbucks, for example, is precise with placement — often sitting on busy roads that lead directly to freeways, and always on the side of the road that leads to the freeway in the morning. If your business isn’t positioned to take advantage of a target demographic while they’re on the road, then you’ve set it up for failure. Also, customers prefer right turns over lefts, and if a site requires a left turn to access, it better be a well-lit one.

    Lastly, with the rise of third-party delivery apps, a site must be convenient for delivery drivers and take-out orders. The wrong property could cause a logjam in the parking lot, causing customers and delivery drivers to avoid it.

    2. Visibility

    My business is located on a busy street in Scottsdale, Arizona named Scottsdale Road, with more than 50,000 cars traveling each way every day. Your business is a free billboard on such busy roads, so make sure the location stands out. Think about the streets you normally drive on, now try to remember which brands on them you recall (likely a small percentage).

    Know the area where you’re opening like the back of your hand. What are the traffic patterns and major landmarks? Placing your business where it can be seen by the most possible people should always be the goal.

    Also, consider orientation. The building should be oriented so that its branding is clear and easily seen. (Being in front of a strip center’s entrance would be a goal, for example).

    Related: 4 Reasons New Franchisees Fail (and How to Succeed)

    3. Co-tenancy

    There’s a potentially fatal incongruity in, say, placing a high-end hipster café in a K-Mart-anchored shopping center. A brand needs to be congruent with nearby businesses. It’s not enough to simply be in a strip center, busy mall or crowded airport.

    Certainly, the evolution of outdoor malls or other shopping centers has opened opportunities for restaurant and retail franchises to find a home, but the downside is that competition has never been higher. So, finding the right spot with the right co-tenancies is a strategy you need to master. Centers with landmark retail anchors like Whole Foods, Home Depot or AMC Theaters are perfect — typically attracting large, diverse crowds of potential customers.

    4. Parking

    Your building can look incredible, but if you don’t have the space to accommodate visiting traffic, you’re doomed. With the rise of delivery and take-out orders, having parking space to manage sudden influxes (such as heavy dinner rushes) is essential, and properties should be planned accordingly.

    Keep in mind, too, that structured parking is a restaurant killer: It’s hard to navigate, often crowded and a hotbed for accidents and car damage. What’s worse — the common perception is that garages are unsafe: dense, dark and out of view of the public. Deliveries are also exponentially more difficult if you rely on them. Surface parking, by contrast, offers quick access and easy visibility.

    Related: 5 Mistakes Franchisees Make When Looking for Business Real Estate

    One last tip: If you’re renting in a shopping center or outdoor mall, finding space near a business with a different rush period can make all the difference. If the bulk of your business is done in the evening, finding a site near a coffee shop or breakfast restaurant can be a boon for parking.

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    Dan Rowe

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  • The 19 Covenants of a Standard Franchise Agreement | Entrepreneur

    The 19 Covenants of a Standard Franchise Agreement | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    The following excerpt is from Rick Grossman’s book Franchise Bible. Buy it now from Amazon | Barnes & Noble | iTunes | IndieBound

    The franchise agreement is the contract between the franchisor and franchisee, but it’s not a “standard” or “form” agreement. The format of the contract differs from one franchise system to another.

    While each franchise agreement will differ in style, language and content, all franchise agreements have covenants, each of which describes a promise, right or duty that the franchisee or franchisor owes to the other or that benefits the franchisor or franchisee. The following is a list of those covenants that one most often sees in a typical franchise agreement. (The franchise agreement on our companion website will have the specific language that addresses each covenant.)

    Related: Considering franchise ownership? Get started now and take this quiz to find your personalized list of franchises that match your lifestyle, interests and budget.

    1. Grant of franchise

    The “Grant” section lets franchisees know that the franchisor is granting them the limited, non-transferable, non-exclusive right to use the franchisor’s trademarks, logos, services marks (called generally the Marks) and the franchisor’s system of operation (often called the System) for the period of time defined by the franchise agreement. The franchisee receives no ownership rights to the Marks or the System, and the franchisor always retains the right to terminate the franchisee’s grant-of-license because of a breach of the franchise agreement.

    2. Opening date, territory limitations, build-out and similar rights

    This covenant describes the franchisee’s territory (be it exclusive or not) and sets up a time schedule by which the franchisee must find a brick-and-mortar location, must have the plans for the unit approved and must be built-out and opened. This section may also disclose other matters such as the computer equipment needed to operate the business and the like.

    Related: The 23 Items That Make Up the Heart and Soul of the Franchise Disclosure Document

    3. Fees and required purchases

    This section will disclose the fees more specifically described elsewhere in the agreement. The fees include the initial franchise fee, any fees paid to the franchisor prior to opening, any fees paid to the franchisor during the term of the franchise, all advertising fee obligations and the like.

    4. Advertising

    In this section, the franchisor should repeat the franchisee’s advertising obligations as they’re stated in Item 11 of the franchise agreement (and the fees for which are identified in Items 5, 6, 7, 8 and 11 — as applicable).

    5. Term and renewal

    This covenant spells out the term (length of time) of the franchise agreement measured from the date the franchise agreement is signed to the date that the franchise agreement expires. If renewal rights are granted, this section will also spell out the prerequisites of this arrangement.

    6. Services offered by franchisor

    Though not all franchisors will repeat the pre-opening and post-opening services that they offer the franchisee in the franchise disclosure documents, sound drafting principals will require that these matters be repeated in the franchise agreement. Including them in the franchise agreement, however, removes the specter of litigation as a way to insert rights into the contract that aren’t otherwise stated.

    7. Protection of proprietary information, marks and other intellectual property

    As discussed in the “Grant of Franchise” section earlier, the franchisor is granting only a temporary license to the franchisee. Most franchisors will enforce this understanding by adding specific language that identifies each item that makes up its proprietary, confidential and trade-secret information and by then stating the limitations that are placed on the franchisee’s right to use such information. It is important protection for the franchisor and is not usually a covenant missing from the franchise agreement.

    Related: When Evaluating a Franchise, Ask These Questions

    8. Training

    This section should disclose any training offered by the franchisor, including any additional training, seminars, meetings or the like that the franchisor will either require or urge the franchisee to attend.

    9. Quality control

    As the name suggests, franchisors will address the franchisee’s specific quality-control requirements. This is sound franchising and is necessary to insure that the goods and services offered throughout the system meet the franchisor’s minimum requirements.

    10. Transfers

    Virtually all franchise agreements control the franchisee’s right to transfer their interest in the franchise relationship. This section will list the prerequisites to a transfer.

    Related: The Anatomy Of A Franchise Disclosure Document

    11. Defaults, damages and complaint limitations

    All franchise agreements will contain some recitation of the violations of the franchise agreement that will be treated as a breach. These violations may be divided into those breaches that result in the immediate termination of the franchise agreement, for which no cure is given, and those violations for which cure is provided.

    12. Obligations upon expiration or termination

    Once the franchise relationship has ended — either because the term has naturally concluded and no renewal has occurred, or because the franchise agreement was terminated — it is typical for the contract to list a series of steps that the franchisee must take to “de-identify” the business and the franchisee’s association with the franchise system.

    13. Franchisor’s right of first refusal

    Most franchise agreements give the franchisor the option, but not the obligation, to exercise a first right refusal to purchase the franchisee’s business — in the case where the franchisee seeks to transfer the business, or the first right to purchase the franchisee’s assets at the time that the franchise agreement expires or is terminated.

    14. Relationship between the parties

    Franchisees are always treated as independent contractors of the franchisor. This has several important implications. An independent contractor is not an employee or agent of the principal. Instead, the independent contractor is in business for themselves. The parties to this relationship pay their own taxes, hire on their own, are responsible for their own employees and generally operate independently of the other in carrying out the contract between them.

    Related: How Franchisees and Franchisors Can Master Their Relationship

    15. Indemnification

    All franchisee agreements will contain an indemnification covenant, which means that the franchisee will reimburse the franchisor for any losses it suffers as a result of some negligent act or wrongdoing of the franchisee. These covenants are almost always one-sided in favor of the franchisor — which is fair, given that the franchisee and not the franchisor is responsible for the day-to-day operation and maintenance of the business.

    16. Non-Competition covenant and similar restrictions

    A non-competition covenant is one that seeks to prevent the franchisee from opening a business that would compete with the franchised business. Virtually all franchise agreements will have non-competition covenants. The covenant is often broken into two parts: the “in-term” covenant; and the “post-term” covenant.

    As the name suggests, the in-term covenant prevents the franchisee from competing against the franchisor and any other franchisees while the franchise agreement is in force. Typically, this covenant covers a geographic area around each franchised, company-owned and affiliate-owned business. The post-term covenant covers the former franchisee after the franchise agreement expires or is earlier terminated because of an uncured breach.

    Related: The 5 Items in Your Franchise Disclosure Document That Can Make or Break a Real Estate Deal

    17. Dispute resolution

    This covenant spells out the methods the franchisor uses to resolve disputes with franchisees.

    Most often one will see at least a nonbinding-mediation requirement followed by a binding-arbitration requirement. In other cases, these two methods of resolution will be preceded by the requirement that the parties first meet face-to-face.

    18. Insurance

    All franchise agreements will require the franchisee to obtain insurance to cover its business operations. In all cases, each of the franchisee’s insurance policies will require that the franchisor be named as an “additional insured,” meaning that the franchisor enjoys the same coverage as does the franchisee, even though the franchisor is not paying for the coverage.

    19. Additional or “miscellaneous” provisions

    This is kind of the catch-all section of the franchise agreement that contains what some call “boilerplate” language, meaning that it is “usual” that such language be included in any contract. In virtually all franchise agreements, you’ll see covenants that cover mergers, modifications or amendments, non-waiver provisions, state-specific addenda and more.

    Related: 8 Steps to Finding the Right Franchise

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    Rick Grossmann

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  • The 23 Items That Make Up a Franchise Disclosure Document | Entrepreneur

    The 23 Items That Make Up a Franchise Disclosure Document | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    The following excerpt is from Rick Grossman’s book Franchise Bible. Buy it now from Amazon | Barnes & Noble | iTunes | IndieBound

    The heart and soul of the disclosure portion of the Franchise Disclosure Document (FDD) — and indeed its very purpose — is set forth in the Items. Each Item is given a specific title (which cannot be altered), and within each Item, the franchisor is required to provide the answers to a myriad of FTC-mandated questions. For a complete list of the questions in each Item, take a look at the NASAA Guidelines on our companion website.

    Following is the list of Items, along with a brief description of the content to be found there.

    Related: Considering franchise ownership? Get started now and take this quiz to find your personalized list of franchises that match your lifestyle, interests and budget.

    Item 1: The franchisor, any parents, predecessors and affiliates

    Item 1 gives you the franchisor’s background and that of any parent company, predecessors and affiliates. A predecessor is defined as “a person from whom the franchisor acquired directly or indirectly the major portion of its assets.” An affiliate is defined as “a person controlled by, controlling, or under common control with the franchisor.”

    Item 2: Business experience

    This Item gives you the past five years’ worth of the personal business experience of the franchisor’s directors, trustees, general partners, officers and any other individuals who’ll have management responsibility relating to the offered franchises.

    Item 3: Litigation

    In this Item, the franchisor must disclose any material litigation involving the franchisor and predecessor, parent and affiliate, if the litigation involves claims about the franchisor’s sales process, their performance under the franchise documents and claims of antitrust, fraud, unfair or deceptive trade practices, or comparable allegations. The franchisor must also disclose any franchisor-initiated litigation against its franchisees and any other business litigation (even if it’s not franchise-related) if, at the end of the day, the litigation negatively impacts the franchisor’s financial condition or their ability to operate a franchise.

    Related: Why You Should Buy a Franchise Instead of Starting Your Own

    Item 4: Bankruptcy

    This Item must disclose any bankruptcy in the past ten years that involved the franchisor and any parent, predecessor, affiliate, officer or general partner of the franchisor, or any other individual who will have management responsibility relating to the sale or operation of the franchise.

    Item 5: Initial fees

    Here, the franchisor (and any of their affiliates) must disclose all of the initial fees they charge to the franchisee before opening. Such fees include the initial fee paid to purchase the franchise rights (often called the “initial franchise fee” or IFF), computer or point-of-sale equipment that must be purchased only from franchisor or their affiliates, and similar fees.

    Item 6: Other fees

    This section of the FDD advises you of any other fees you’ll have to pay to the franchisor or an affiliate as well as costs that are collected by the franchisor for third parties, or that are otherwise imposed. Line items include a statement of the royalties, advertising fees, service fees, training fees, renewal fees and other similar one-time or ongoing charges.

    Item 7: Estimated initial investment

    In this section, the franchisor must disclose a range of the minimum and maximum of all fees, costs and expenses that the franchisee will incur prior to opening the business, including the initial franchise fee, real property expenses such as rent and construction costs, the cost for computer equipment and similar line items. The expenses must include both pre-opening expenses and those incurred during the “initial phase,” which is at least three months or a reasonable period for the industry.

    Item 8: Restrictions on sources of products and services

    Franchisors require franchisees to buy the goods and services needed only from approved vendors. This section lists the approved vendors and also calls out the franchisor’s specifications for permitting a new vendor into the system. It will identify any revenue the franchisor receives from the required purchases, including rebates received by the franchisor from any supplier.

    Item 9: Franchisee’s obligations

    This Item lists your obligations as a franchisee, with references to the sections of your franchise agreement that contain the obligations. The purpose of this is to identify your principal obligations under the franchise agreement and other agreements.

    Related: Are You a Good Franchise Candidate?

    Item 10: Financing

    If the franchisor sponsors financing for new franchisees, it will be spelled out in this section.

    Item 11: Franchisor’s assistance, advertising, computer systems and training

    This is one of the more lengthy and important disclosure Items. In this Item, the franchisor must disclose:

    • The services they’ll provide to the franchisee before and after opening.
    • All advertising expenditures you’re expected to assume.
    • The average time it takes a franchisee to open.
    • The type of computer and similar electronics necessary to operate the business.
    • A detailed description of the training you can expect to receive.
    • The table of contents of the operations manuals.

    Item 12: Territory

    The franchisor must disclose whether it offers franchisees an “exclusive territory” within which to operate the business. With an exclusive territory, the franchisor promises that it won’t permit another franchisee to locate within the territory and that it will also refrain from putting a company-owned or affiliate-owned business there. This Item must also disclose whether you can relocate, and if so, what the criteria are for your move and whether you have any rights to purchase additional units.

    Related: The Anatomy Of A Franchise Disclosure Document

    One of the more important disclosures in this section is whether you’re required to meet a quota or perform in some other manner as a way of insuring either your right to an exclusive territory, or your right to continue in business at all. This Item will also disclose the franchisor’s reservation to itself of certain marketing and sales rights either within or outside any territory.

    Item 13: Trademarks

    This section must identify each principal “Mark” (trade name, trademark, service mark, service name or logotype) to be licensed to you, and must state whether the franchisee is required to modify or discontinue use of a mark under any circumstances.

    Item 14: Patents, copyrights and proprietary information

    The section spells out the patents and copyrights held by the franchisor.

    Item 15: Obligation to participate in the actual operation of the franchise business

    This section discloses whether the franchisee must personally participate in the operation of the franchise. If there’s no such requirement, this section must state whether the franchisor recommends such participation, whether the person who’s handling day-to-day operations must complete the franchisor’s training program and whether this person must own an equity interest in the franchisee entity.

    Related: 6 Questions to Ask Before You Begin Your Franchise Search

    Item 16: Restrictions on what the franchisee may sell

    In most cases, the franchisor will require the franchisee to sell only the goods and services that are part of the franchised business. This section spells out those restrictions.

    Item 17: Renewal, termination, transfer and dispute resolution

    Item 17 contains a cross-referencing table to the franchise agreement for 23 separate line items. It’s different than Item 9 in that it includes a concise statement of the content of the particular franchise-agreement covenant as well as the location of the covenant in the agreement.

    Related: 8 Steps to Finding the Right Franchise

    Item 18: Public figures

    This section requires the franchisor to disclose whether it uses a famous person to endorse the franchise. If so, it must disclose the compensation paid or promised to the person, the person’s involvement in management or control of the franchisor and the amount of the person’s investment in the franchisor.

    Item 19: Financial performance representations

    In layperson’s terms, a Financial Performance Representation (FPR) is any document, chart, arithmetic calculation, math formula or other representation that would allow a potential franchisee to determine what they could earn. The only way the franchisor or its sales staff or brokers can offer an FPR is if it’s stated in this Item 19. If no such information is found in Item 19, any claims made by the franchisor as to your potential earnings are in violation of the law.

    Related: The 6 Best Financing Options for Franchising a Business

    Item 20: Outlets and franchise information

    This section provides information regarding existing outlets in the franchise system. It covers outlet transfers — and the status of franchised and company-owned outlets — for the past three fiscal years, as well as projected openings for the next fiscal year. It must also provide information regarding any reporting changes, any confidentiality clauses signed by franchisees during the past three fiscal years (“gag clauses”), and information about certain trademark franchisee associations.

    Related: Know Before You Buy: These Are The Costs Associated With Purchasing and Operating a Franchise

    Item 21: Financial statements

    The FDD must contain an exhibit with the franchisor’s audited financial statements for the prior three fiscal years. If the franchisee has been open less than three years, the FTC allows the franchisor to phase in audits. The franchisor is also required to provide a separate, audited financial statement for a company controlling 80 percent or more of the franchisor.

    Item 22: Contracts

    This section requires the franchisor to attach to the FDD a copy of all form contracts the franchisee will sign, including the franchise agreement, leases, options and purchase agreements.

    Item 23: Receipt

    In this final section, the franchisor is required to include as the last page of the FDD a form for the prospective franchisee to sign to acknowledge receipt of the FDD.

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    Rick Grossmann

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  • 5 Items in Your FDD That Can Make or Break a Real Estate Deal | Entrepreneur

    5 Items in Your FDD That Can Make or Break a Real Estate Deal | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    A Franchise Disclosure Document (FDD) provides information about the franchisor, the franchise system and the franchise agreement terms. This legal document must be provided to potential franchisees by the franchisor and read back and forth by potential franchisees — it is recommended that a potential franchisee have a franchise attorney review.

    The FDD helps potential franchisees make informed decisions about investing in the franchise. Therefore, all items in the FDD are essential. That said, here’s my list of the sections in the FDD that can make or break getting to lease your desired real estate space.

    Related: 7 Things Not to Miss in the FDD

    Item 1: Business experience

    This section provides information about the franchisor’s key executives, including their business experience and any bankruptcy or litigation history litigation. Most landlords will ask you for details on not only your background but the franchisors as well. So make sure the franchise you purchase has a good story.

    Also, ask to see the franchisor’s marketing materials prepared for landlords. These materials should contain the company’s success stories, details on the current state of the brand, and information on the growth plans of the brand.

    Additional information should include the following:

    • Specifics on existing locations.
    • High-quality images of existing locations.
    • High-quality images of product or food photography

    Related: ‘My Brain Is Literally Going To Explode’: Viral Video Sparks Debate Over Whether or Not Renters Should Tip Landlords

    Item 7: Estimate initial investment

    Item 7 covers what the franchisor believes will be your estimated initial investment. This item will be relevant to a landlord since they want to know how much money you will spend on your build-out. Once you share that number, the landlord will want proof of funds.

    If the money comes from your savings, your bank account statements will be proof of funds. If the money comes from a loan, you must show at least a pre-approval letter from your bank.

    Item 12: Territory

    This section provides information about the territory where the franchisee will be allowed to operate the franchise. Some franchisees are particular on territory, while others are not. Having a defined territory is excellent since you have protection and the right to open where others can’t.

    If you don’t have a defined territory, it can be advantageous since you have a larger pool of real estate to search for your location. However, this often means you might compete with other franchisees for the same sites.

    Related: The 23 Items Your Franchise Disclosure Document Must Include

    Item 17: Initial franchise term, renewal, termination, transfer and dispute resolution.

    Many essential elements can be found in Item 17, but I will focus on franchise length and renewal. Regarding the length of your initial franchise, you must pay close attention to ensure your lease mirrors the time you have confirmed rights to the franchise. Signing a lease longer than you control the franchise will be precarious. Remember that your initial franchise period needs to be considered when factoring in your total investment costs. For example, if your total build-out costs are $750,000 and the franchise will only give you the rights for five years, purchasing the franchise may not make sense. You will also want to ensure you have renewal options for the franchise and are comfortable with the renewal options.

    Related: How Your Business Can Be Its Own Landlord

    Item 19: Financial performance representation

    This section is optional, meaning franchisors are not required to provide financial performance information in the FDD. However, if a franchisor chooses to provide financial performance information, they must follow specific guidelines set forth by the Federal Trade Commission (FTC).

    The purpose of Item 19 is to help potential franchisees evaluate the potential financial benefits and risks of investing in the franchise system. Suppose a franchisor chooses to include financial performance information in Item 19. In that case, it must provide specific details about the performance of its franchisees, including any average or median sales figures, expenses, profits, or other financial metrics. It’s important to note that the financial performance information provided under Item 19 must be based on actual data from the franchisor’s franchisees. The franchisor must also clearly explain how the data was collected and any assumptions or limitations that may apply to the data.

    Related: 23 Questions to Ask a Franchisor When You Meet Face to Face

    Because Item 19 is optional, it’s not included in every FDD. However, if financial performance information is provided, it can be a valuable tool for potential franchisees in evaluating the possible return on investment and profitability of the franchise system. Many landlords will ask you to provide details on the average sales of the franchise.

    These sales help the landlord decide to lease to your franchise brand. On a side note, it is also important to understand that these sales also help the landlord know what type of rent you could pay. Thus I recommend you keep this information to yourself unless you feel it will help the landlord’s decision on picking your brand.

    When purchasing a franchise, remember that once you buy the franchise, you must sell the franchise concept to potential landlords. Most landlords think about a use for their center just as much as they factor in terms of the deal. Therefore, if your franchise has a use that landlords do not favor, or it is a brand actively closing stores, it might be difficult for you to secure a real estate location of your choosing.

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    Roxanne Klein

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  • Find Out How Kung Fu Tea Became One of Entrepreneur’s Fastest-Growing Franchises of 2023 | Entrepreneur

    Find Out How Kung Fu Tea Became One of Entrepreneur’s Fastest-Growing Franchises of 2023 | Entrepreneur

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    Bubble tea, or boba tea—a traditional Taiwanese drink filled with tapioca pearls—is exploding in popularity in America. We spoke with Kung Fu Tea‘s marketing manager Matthew Poveromo about how the franchise brand, which is ranked No. 57 on Entrepreneur’s 2023 Fastest-Growing Franchises list, is harnessing that trend to accelerate growth.

    How did Kung Fu Tea get started?

    Our four founders are from Taiwan, and they saw an opportunity to bring authentic Taiwanese bubble tea flavor to America. They opened April 30,, 2010 and took about a year for proof of concept, opening 13 stores and just working through the menu and really building out the infrastructure that allowed them to grow pretty rapidly when they opened up for franchising in 2011.

    So what exactly is bubble tea?

    Bubble tea, or boba tea, comes from Taiwan, and it’s a traditional drink with either tea and milk or tea and fruit. Its most identifiable characteristic is these tapioca pearls at the bottom of the drink, and you have a larger straw so you can chew on these while you drink, and it’s super delicious. It was created in the ’80s in Taiwan and it came over to America in the ’90’s, mainly in urban areas with more diversity. But as demographics shift in America, you’re now seeing it being embraced more and more in rural communities as well.

    Why do you think bubble tea is becoming more popular in America?

    It was traditionally very big in cities and still is, but as people are leaving those cities, they’re bringing this culture with them and sharing it with friends. It’s a very communal, social drink. And also, when you are thinking of having a treat with a friend, bubble tea is a very strong alternative to traditional desserts. With bubble tea, you can control the sugar level and the ingredients that you’re putting into it. It can be a very guilt free indulgence, so it’s kind of riding the health trend.

    With that rising popularity, there are more and more brands offering bubble tea now. How does Kung Fu Tea stand out from the crowd?

    Some of the other brands have a much larger global footprint, but maybe not necessarily in North America. Kung Fu Tea is focused on being “America’s Bubble Tea,” so everything we do, from menu design and flavor profiles to brands we partner with, has this goal in mind. We’re focused on providing an authentic Asian and Asian-American experience, while at the same time helping the drink become more mainstream in American culture.

    Related: Considering franchise ownership? Get started now and take this quiz to find your personalized list of franchises that match your lifestyle, interests and budget.

    I also think it’s our fearless brand. It’s part of our identity that we’re a little more bold and in your face, which I think a lot of people can relate to. And you see that in our social following. We’re really focused on building a community on our social platforms. Related to that community building, we founded National Bubble Tea Day on our eighth anniversary, April 30th, 2018, and it’s fun to see other brands in the space now celebrating it with us.

    What does Kung Fu Tea look for in its franchisees?

    When we onboard franchisees in our corporate office in New York, we always ask them, ‘Why Kung Fu Tea?’ and the biggest thing is just their experience with the drink. They’re very passionate about the industry, the product, and specifically our brand and the quality we put behind our fresh tea. We’re not exclusively looking for people with franchise history or business history. What we are looking for is adaptability. The industry is always changing, so having store owners who understand that this is a fast-moving industry and are there to grow with us is priority number one.

    What are your goals for 2023?

    The number [of open stores] we’re circling on our whiteboards is 410. And for systemwide sales, we’re aiming for $240 million. So those are two ambitious numbers to hit, and we’re very excited.

    What strategies do you have for hitting those numbers?

    One of the biggest is we have some partnerships lined up for 2023 which I’m very excited about. In 2022 we partnered with Nintendo to promote their newest Kirby game. We developed a custom cup and a custom flavor called Kirby’s Fruity Flurry that was available for a limited time. It got our customers super excited. People made fan art and comics based on it, and that’s how you know it’s a successful program—when people don’t just like what you created, but it inspires them to create as well. So those are the types of partnerships we’re looking to continue in 2023, with iconic brands and household names.

    We’re also excited about our app, which was essential for us these last few years, as it was launched right before Covid. Now we’re overhauling our reward system and working on just having a top tier app and streamlining the ordering process. Ordering bubble tea can potentially be intimidating because you have the ability to control the ice level, sugar level, toppings, and flavors. So having an app that breaks that down in a simple way is very important.

    Finally, we also have two other concepts, TKK Fried Chicken and Yasubee Ramen. We’re really excited about offering dual concept stores to expand our portfolio offering not just for franchisees but for our customers as well.

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    Tracy Stapp Herold

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  • Find out how The Brothers that just do Gutters Became One of the Fastest-Growing Franchises | Entrepreneur

    Find out how The Brothers that just do Gutters Became One of the Fastest-Growing Franchises | Entrepreneur

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    You can assume a few things about The Brothers that just do Gutters. First: They just do gutters. Second: They’re founded by brothers. What you might not guess is that they’re also one of Entrepreneur’s Fastest-Growing Franchises of 2023, coming in at No. 95. Ryan Parsons (who cofounded the company with his brother Ken) talked to us about how their singular focus has led to success.

    So—do you really just do gutters?

    Pretty much, yeah. Gutter cleaning, gutter maintenance, gutter repair, gutter guards. The riches are in the niches, as we like to joke. So all of our advertising, all of our marketing, everything is 100% geared towards one trade. When you’re doing everything, you need every tool in the book, and you need a lot more skilled labor. By hyperfocusing on one thing, our training program’s unbelievable. We’re able to just do one thing and do it really, really well.

    How did you get started?

    Around 1997 or 1998, my brother Ken had graduated college with a teaching degree and was trying to get a full-time job teaching, but was just getting bounced around. He met a gutter guy who said, “Hey, you should install gutters,” and he said, “Yeah right.” But then he started developing a relationship with this guy and saw his lifestyle. This guy had a plane, a nice house, four wheelers, snowmobiles. My brother likes to joke that he literally took his degree and threw it in the gutter. He worked for this guy for one summer minimum wage and no benefits, but he had the vision that if he could learn this and then go out on his own, he could improve his own lifestyle.

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    Meanwhile, I was doing graphic design and started working for my brother hanging gutter on the weekends to make some extra money. When the dot-com I was working for went out of business, I found myself working full time for my brother. And coming from graphic design, I quickly saw the opportunity we had as far as building a website. This was around 2002, when nobody in the trades had a website. We were the first by years. We were the first to stop using the Yellow Pages and concentrate on digital and paid. And we started to build a company and I bought in and became a partner, and we were growing really strong up until the recession around 2008.

    How did you do during the recession?

    Before the recession, we had diversified our services, because we had so many clients saying, “I wish you did more than gutters, because I’d hire you for everything.” So we hired somebody that could run a construction division, and before you know it, we were building homes and doing kitchen remodels… and losing a lot of money. Because if you mis-bid a kitchen remodel that takes months to finish, you’re losing money for months. If you mis-bid a gutter job, those four hours kind of suck, but you learn and move on to the next job.

    Every time payroll was getting tight for the construction company, we would basically steal it from the gutter company—because the gutter company was still doing great. So we ended up with no money in both companies and in the midst of a recession. It just hit us so fast. We were young and never saw a recession coming, and we almost went out of business. From that point forward, we closed the construction company and decided to just do gutters.

    Up until that point, we did business as Waterfall Seamless Gutters, but coming out of the recession, we wanted to concentrate on who we are, and after a brainstorming session, we came up with the name The Brothers that just do Gutters.

    How did you get started franchising?

    A lot of people thought we were a franchise already, so coming out of the recession with all we’d learned and the new branding, we decided that we should franchise. But we took our time perfecting the model. We launched two pilot locations in 2010 and they helped us improve everything, until we were ready to begin franchising in 2014.

    I also talked to colleagues I knew who were franchisees with various brands, and several of them told me that it’s all about support and the best thing you can do as a franchisor is create a win-win. And that’s why we took so long, because until we had the infrastructure to support franchisees, we didn’t feel comfortable franchising. So before we had our first official franchise open, we had a call center, a coach, and a marketing team. We were doing all these things on day one.

    Your growth has really accelerated these last few years. How?

    Starting out, we were able to get some franchisees organically, but we grew very slowly—two or three franchisees a year, and they were doing very well. We were really good at getting someone who’s never been in business from zero to a million. But we really felt the pressure that we were not growing fast enough. We realized we’re really good at this business, but we have no idea how to find franchisees. So we got introduced to the concept of an FSO, a franchise sales organization. We teamed up with an FSO, and when they looked at our infrastructure, our unit economics, our FDD, and how well our franchisees validated, they were blown away. So they were able to package who we were better than us, and they went to the consultant networks and the consultants loved our concept. And they just crushed it for us, so now we’re growing exponentially.

    Because we overbuilt our system, because we had all the support in place already, and then we teamed up with the FSO, I think it was all just perfect timing.

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    Tracy Stapp Herold

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