Health insurance is a hot button for franchisees. Most expect the franchisor to do something about getting them coverage. But this is one area where a franchisor’s hands are tied. They can’t initiate health benefit programs for franchisees because franchisees are independent businesses – they can’t be put together in a group medical plan. So how does a franchise operator get coverage? We asked Richard Fuchs, President of Strategic Franchise Services, a firm that develops health benefits for franchises. Fuchs offers these tips:

1. Educate yourself. Most new franchisees are coming out of corporate America where someone in HR makes the decisions about health insurance. Now the franchisee has to be the one to do the research and figure out the best plan. There are lots of options, but if you don’t know a PPO from an HSA, you’re not going to make the best decisions.

2. Avoid the local insurance agent. A typical local agent is more interested in life, accident, and auto insurance because the commission is higher. Look for someone who has experience providing health benefits to small businesses and understands the franchise industry.

3. Assess your needs. Coverage and costs will be determined by three factors: number of persons to be covered, ages, and health issues.

4. Don’t buy a group plan. Most franchise operations have a handful of employees, which isn’t enough to demand a good deal. Instead, shop for individual health plans and let employees select the plans that will suit their own needs.

5. Consider discount medical plans. For under $20 a month, you can supplement a major medical or limited insurance plan by getting discounts on doctors’ visits, dental, vision, etc. It’s a good way to help part-time personnel, too.

6. Stick with the best insurers. Choose benefit plans offered by A and A+ rated insurance carriers. They’re the most likely to pay claims in a timely manner and they have the financial assets required to meet their obligations.

Contact info:
Richard Fuchs
214-236-0419
www.myfranchiseinsurance.com

Franchising in the Healthcare Industry

Healthcare is one of the only industries that you can count on to keep growing no matter what. Currently, this $2.3 trillion industry is outpacing all other industries and it’s projected to grow to $4.1 trillion by 2016. Franchising is a latecomer to the field, but there are some interesting concepts finding success with niche services.

Consider Any Lab Test Now, an Atlanta-based company founded in 1992. After 16 years in business, the company had only 11 locations. But a year ago, it started franchising and there are now already 80 units sold with commitments to open nearly 300. “The demand for our services started to outpace our ability to grow without franchising,” says Sean Neely, Vice President of Franchise Sales.

Any Lab Test Now specializes in the collection of blood, urine and other human specimens for complete laboratory analysis. Neely says there are plenty of reasons people might want to bypass the doctor’s office for lab tests. One is privacy. “Let’s say that you have a DNA test that shows you have the breast cancer gene. If you went to your primary physician and got that test it would be on your permanent record. And if it came back positive, there’s a chance the insurance companies could rate you as high risk or cancel your insurance altogether. It’s happened.”

Franchise locations are situated mostly in strip malls, operating as retail fronts. “People expect us to be where doctors and hospitals are clustered, but we want to be next to Starbucks. It’s convenient,”says Neely.

Despite the name, Any Lab Test Now isn’t a laboratory. It’s a collection center. “We use major labs to process the tests,” Neely explains. “The franchisee’s focus is marketing. On the retail side, their job is to educate the public, letting them know that we do allergy testing, DNA, cholesterol, and a thousand other tests.”

There’s also a B2B side to this business. “A big part of the franchisee’s job is to set up corporate accounts with businesses and government agencies to do their new-hire drug screenings and random drug tests. There’s a lot of that business to be had. A person can’t get a job at Home Depot, Office Depot, the police or fire department without a drug test,” says Neely.

Any Lab Test Now has big plans, including nationwide expansion. “We’re constantly adding new tests and new services. For example, in October we’ll introduce a wellness program for companies that want to help their employees manage their cholesterol, weight, diabetes, etc.”

Contact info:
Any Lab Test Now
Sean Neely, Vice President of Franchise Sales
404-915-5170
http://anytest.biz

You thought you knew: What Does Granting A Franchise Mean?

By: Bob Gappa

Most franchisers are under the misconception that franchises can be sold.  To effectively build a strong foundation for growth and to use the true power of franchising, franchisers must understand what franchising is, why franchises can't be sold, and how granting franchises establishes a proper context for building a strong relationship with and between franchisees.

What Is Franchising?                                        

Franchising is a business strategy for getting and keeping customers. Franchising, for the franchiser, is a business strategy used to achieve its Brand objectives, its investor/owners financial goals, and the personal goals of its executives and team members.  Franchising, for the franchisees, is their business strategy for improving their lifestyle and income while building their personal wealth and equity.

The power of franchising is created when the franchiser and franchisees work together as a team with a mutual commitment to building market share.  Mutual commitment to building market share enables the franchise system to get and keep more and more VERY satisfied, loyal, frequent user, promoter customers, so the system grows faster than the market demand for the product or service and faster than the competition. 

Franchising is also a business relationship between franchiser and franchisee based on a legal structure.  Under this legal structure the franchiser grants to the franchisee a license to use the franchiser's brand name, operating system, and ongoing support system, in a specific area for a determined period of time, to accomplish the business purpose of the relationship, which is to get and keep VERY satisfied, loyal, frequent user, promoter customers.  When this business purpose is accomplished, the franchiser and franchisee are better able to incorporate personal goals, objectives, and dreams.

Why Can't Franchises Be Sold?

The premise that a franchise license is not sold and the franchisee does not own the franchise license is supported by the following facts:

• A franchisee cannot incorporate using the franchiser's name because the franchisee does not own the name.
• Should the franchisee want to exit the business, the franchise license is not sold; rather, the franchise license is transferred upon approval of the franchiser.  The franchisee enters into a separate transaction to sell his or her assets.
• The franchise agreement has a stated term and must be renewed if the franchisee is to continue in business under the franchiser's brand name.  If a franchisee owned the license, it would not need to be renewed.
• The market, the brand name, the operating system, and the ongoing support system are "owned" by the franchiser.  The franchisee is delegated the right to use the brand name, in a defined market, for a designated period of time, to develop market share for the franchise system.

The Effect of "Selling" Language

These are a few examples of how the words "sell" and "owner" adversely affect the franchiser/franchisee relationship, potentially dilute the franchisee's investment, and prevent the system from capitalizing on the power of franchising to get and keep customers.

Almost every problem franchisers face with franchisees originates in the way franchisees were educated to think about the relationship when they were recruited and selected in the first place.  The problems experienced by many franchise systems can, in many cases, be eliminated by establishing a proper context for understanding the franchiser/franchisee relationship during the recruitment and selection process.

New Language and Behavior

The following table outlines the differences between selling and granting franchises and offers suggestions for new language and behavior. 

Bob Gappa is the founder and President of Management 2000, which was founded 27 years ago and specializes in working with companies that use franchising to grow their business. Bob can be reached at 800-847-5763, via email at m2000@mgmt2000.com or visit website www.mgmt2000.com.

U.S. Restaurants Push Abroad

As the restaurant industry in the U.S. turns increasingly dour, major brands are turning their attention abroad, where business remains relatively robust and growing middle classes are creating large pools of consumers eager to taste affordable American-style fare. Not only do the companies encounter less competition than in the U.S., but newly arrived brands also typically enjoy a novelty aura that attracts the curious. Additionally, many franchisers sell operating rights to local businesspeople, who assume responsibility for the restaurants day to day and send royalty payments back to the chains' home offices, often giving the corporate owners a superior return on their investment.

This year, Burger King, McDonald's and Papa John's International Inc. are among the chains intending to open more restaurants abroad than at home. And in laying out plans for combining Wendy's International Inc. with its Arby's sandwich business, Triarc Cos. said it sees substantial possibilities abroad, where both brands have relatively few outlets. Yum, which owns Pizza Hut, Taco Bell and Long John Silver's, along with KFC, estimates that within 10 years seventy percent of its profits will come from outside the U.S. compared to fifty percent today. With 15,000 of its 35,000 restaurants outside the U.S., Yum continues to seek out new markets. KFC soon will enter Nigeria, its 106th country and next year Yum plans to test the popularity of its best-selling domestic brand, Taco Bell, in India.(Wall Street Journal, 6/18/08) (If you're a Franchisor and wondering if your franchise is ready for international markets, click here.)

Choice to Create Upscale Hotel Collection

Choice Hotels International announced this month the launch of a program to create a collection of independent upscale properties that will have access to its reservation and distribution system as well as its rewards network. The hotel company, which operates largely in the midprice and economy tiers, now is targeting upscale boutique or historic properties in North America and the Caribbean to become a part of its Ascend Collection. Hotels that affiliate with the collection will keep their own names and identities but will get marketing support from Choice and will join its reservations and distribution system, which now handles more than 5,600 hotels worldwide. Hotels also will participate in the Choice Privileges rewards program. The collection is a shift from Choice's Clarion Collection, which also focused on branding of member hotels. North American and Caribbean properties in that collection will be moved to the Ascend Collection by Oct. 31. (Business Travel News Online, 6/23/08)

McDonald’s Rolls Out Coffee Bar Concept

Americans soon will be able to order a latte with their side of fries at McDonald's restaurants, as the fast food chain initiates coffee bar buildouts at most of its sites around the country. A spokeswoman for the chain's Southwest region said select restaurants in the region will get McCafé coffee shops prior to the national rollout, which is expected in the first half of 2009.

McDonald's restaurants in the Louisville, Ky. area were among the first to test market the McCafé Specialty Coffee line. Several Louisville-area McDonald's owner-operators are now planning renovations to add coffee bars, which will serve cappuccinos, lattes, mochas and baked foods. McDonald's expanded its coffee and beverage options with the launch of its premium roast coffee in 2006. About 80 percent of McDonald's 13,700 U.S. restaurants are independently owned and operated by local franchisees. (New Mexico Business Weekly, 7/8/08)

Hilton Plans Major Expansion in Asia

Hilton Hotels Corp. wants to add 300 hotels to the 47 it already operates in Asia over the next decade, as it seeks to catch up with rivals and cash in on the boom in business and leisure travel in India and China. Hilton, with nine brands ranging from the opulent Waldorf-Astoria Collection to the thriftier Hampton Inn, expects to manage the majority of these new hotels and leave the investment and ownership of them to others.

Hilton is focusing initially on India, where it has a joint venture with local property firm DLF Ltd. that aims to open 75 hotels within the next five years. Starting in India's big cities, where population density limits the availability of land suitable for international-standard hotels, Hilton plans to introduce its Hilton Hotels, Homewood Suites by Hilton and Hilton Garden Inn brands. In the next four years, Hilton wants to add 18 hotels to the five it already operates in China. In addition to its Hilton brand, the company plans to manage Doubletree and Conrad Hotels & Resorts properties there. Additionally, executives see "massive potential" in the budget-hotel category -- possibly for Hilton's Hampton Inn brand -- thanks to the country's growing affluence and the eagerness many Chinese are showing to travel for work and pleasure.
(Wall Street Journal, 6/25/08)

The Athlete’s Foot Gets a Makeover

As The Athlete's Foot moves forward with a major rebranding program, parent company NexCen Brands has appointed Darius Billings as director of retail brand marketing and merchandising at NexCen Franchise Management to oversee the initiative. Billings, who is based in Norcross, Ga., plans to increase the assortment of performance and fashion apparel stocked by The Athlete's Foot, and to introduce new exclusive clothing, including a possible TAF private label product.

Billings acknowledged that the franchise's full name—The Athlete's Foot—still holds considerable equity, but he stressed that the retailer will position itself more in the future under the acronym "taf." Stores are getting interior makeovers with new signage and new display racks. Franchises that will be opening have the option of using several different modernized logos and in-store layouts. TafTEC is the name of the proposed private label apparel products. There are two stores: taf performance store, which is the flagship store model; and tafUP, which stands for Urban Premium and is more of a boutique specializing in sports fashion and urban wear. The Athlete's Foot has 242 stores in 32 states. (Brandweek, 7/9/08)

CKE to Open 25 Hardee’s Locations in Pakistan

CKE Restaurants Inc. announced that they have signed development agreements with MDS Foods Pte. Ltd. and Global Food Connection, LLC to open a combined 25 new Hardee's restaurants in Pakistan over the next five years. MDS Foods will open 15 Hardee's units in Lahore over the next five years, and Global Food will open 10 Hardee's in Karachi over the next four years. The Pakistan agreements are part of CKE's overall strategic plan to accelerate franchise development in international markets. Currently, CKE Restaurants franchises 294 international units between both its Carl's Jr. and Hardee's brands. CKE is expected to open its 300th international restaurant during the second quarter of the current fiscal year. (QSR Magazine, 6/17/08)