April: Is it Spring yet? 20 Ways to Maintain a Healthy Level of Insanity. 1. At lunch time, sit in your parked car with sunglasses on and point a Hair Dryer at passing cars. See if they slow down. 2. Page yourself over the intercom. Don't disguise your voice. 3. Everytime someone asks you to do something, ask if they want fries with that. Read More.. In this issue... Street Smarts: Ask the right questions before you buy. Industry Focus: Turning green grass into green cash. Guest Column: Grow Your Business Using the Franchise Model.

News You Can Use Moe's Southwest Acquired by Focus Brands CKE Seeks to Refranchise 200 Restaurants Radisson's Expansion Plans McDonald's Global Sales Gain Japanese Develop Taste for Calorie-Rich Menu Items Allergen-Free Hotel Rooms Featured Supplier Signs Plus Featured Pick Eliza J Coming Soon FranchiseHelp's Top $$$ Low-Cost Franchises Subscribe | Unsubscribe to the Newsletter

You're in the market for a franchise and after months of reading brochures, watching slick videos, and poring over UFOCs, you've pared down the list of possibilities to two or three. Now what? It's time to meet with these franchisors and start asking questions. You may feel like you're already on information overload and the franchisors have been eager to spill their guts, so what more is there to know? Ask the right questions, listen closely to the responses, and you'll be surprised how much more there is to learn. The UFOC provides answers to many of these, but you should expect details and clarification.

1. Have any of your franchisees bought additional units? If so, how many?
2 . Who are the members of your training and support teams and can I meet them now?
3 . Can I get a ball-park estimate on my break-even and how long it might take me to reach that figure?
4 . Do you provide hands-on training in an existing store and/or my store?
5 . Will you provide me with a complete list of franchisees and their contact information?
6 . What makes your product or service special when compared to competitors?
7 . Will I be required to purchase supplies from you or a designated source - even if I find a better deal?
8 . What is the target market?
9 . At what stage is the market for your product: developing, stagnating, growing, or declining?
10. What happens if I want to sell my business in the future? Are there are restrictions?
11. Can you provide me with a true calculation of the start-up cost including working capital?
12. What happens if your product or service becomes obsolete?

Turning green grass into green cash

We Americans envy lush green lawns. That's one explanation for why the green industry now tops $35 billion. If the grass is always greener in your neighbor's yard, maybe it's because a Lawn Doctor franchisee has been there. Lawn Doctor has been the leading lawn care franchise in the U.S. since 1967. Scott Frith, Vice President of Marketing and Franchise Development, says, "Our core business is fertilization, weed and insect control, power seeding, core aeration, and basically anything to do with the lawn beautification with the exception of mowing. We don't mow."

Lawn Doctor's primary market is residential, though commercial is an option. Frith says, "We do a very nice job for a lot of sports fields and industrial parks, but we don't put a tremendous amount of focus on the commercial side. It's a longer process to get that work and it's not quite as profitable. It just isn't our sweet spot."

Although the company's focus is lawn care, there are two other business units that can be added onto an existing franchise at no cost. Tree and shrub care is one; the other is home pest control. "These are additional profit centers," says Frith. "The pest control is provided through barrier application and bait stations around the home that prevent entry and infestation of insects and spiders. It is a seamless service to the consumer and they never have to be home. From an operational standpoint, it's very efficient. And it's a nice value proposition for the customer."

Frith points out that Lawn Doctor is a 100% franchise business by design. "We see that as a big advantage. A franchise company with a considerable number of corporate locations can get a little focused on things that work within a corporate structure that may not work for a franchisee. If there's not a very clear separation of resources internally, you may divert some resources towards corporate that may be more appropriately geared towards franchises. Specifically, you can start to put corporate locations a little bit too close to your franchisee's locations and have either real or perceived cannibalism issues where the unit economics no longer work as well. Of course, it doesn't have to work out badly. It's a difference in philosophies. But we decided to be 100% franchise, focus on our franchisees, and work very closely with them on what works on the ground. Translate that up and that just works best for us."

Grow Your Business Using the Franchise Model
By: Harold L Kestenbaum, Esq.

Over my 30 years of practicing Franchise Law, many entrepreneurial companies and individuals have come to me with the dream of becoming the next McDonald's or Subway. A noble and ambitious dream, but this is only attainable by those businesses that have the beginnings of a successful franchise chain. Over the years I have seen some of these would-be-franchisors succeed and some of them fail. In essence what I have learned from these companies is what it really takes to be a successful franchisor.

I have found that without four essential elements companies typically will not succeed as a franchisor. These three elements are not hard to understand, but they are not easily accomplished by most small businesses looking to expand via franchising. But first, let’s just explore why companies want to franchise their business in the first place. That is not a difficult question to answer. First and foremost, they want to expand their brand or concept. Second, they lack the capital to accomplish this on their own and they lack the human resources to do this on their own. Now that we know why, lets explore how.

The four key elements to succeed as a franchise are the following:

#1. The right concept or brand. What the world of franchising doesn't need, for example, is another pizza or sandwich chain no different than any of the others. It does need new and innovative businesses that people want to own.

#2. Enough capital to roll out the franchise program. Developing a franchise system with very limited funds just doesn't work. Why? That is simple to answer--- because franchising is a heavily regulated method of doing business (Federal law and state laws); there is legal compliance to deal with and that takes money. But the capital needed goes beyond start-up costs, which can range anywhere from $30,000 to $100,000. Once you have your franchise program completed in terms of paper work, website, etc, you need to advertise and market the offering. While these costs have been reduced over the years by the use of the Internet, I typically advise franchisors to be prepared to spend at least $5,000 per month on advertising and marketing to launch the franchise.

#3. Depth in management team to assist in the roll-out of the franchise program. A staff is necessary to operate the system and support the franchisees. It is important that you have someone or more than one person dedicated to the franchise system. Franchising is a separate business and cannot be confused with operating your existing store or business. Ideally, you should hire a manager to run your existing unit so that you can dedicate yourself to running the franchise company.

#4. Successful operation of the business for a period of time. I have found it virtually impossible to franchise an idea or concept without a successful working model. How long must the business be operating? That is the $64,000 question. Clearly, it should be operating more than 6 months, but ideally one year.

Will having all of these elements in place assure success? Not necessarily, but without them, you cannot even play in the game, let alone have a chance to win!

About The Author: Harold L. Kestenbaum is an attorney who has specialized in franchise law and other matters relating to franchising since 1977. Mr. Kestenbaum is or has been franchise counsel to many regional, national and international companies in diverse industries. He can be reached at the law firm of Farrell Fritz, P.C., Uniondale, NY at (516) 227-0700 or at hkestenbaum@farrellfritz.com

Moe's Southwest Acquired by Focus Brands

Raving Brands has agreed to sell its Moe's Southwest Grill LLC division, franchisor of the namesake burrito chain, to Focus Brands, parent of the Schlotzsky's, Cinnabon and Carvel regional chains. Terms were not disclosed, but Focus president and chief executive Steve Romaniello said the purchase would be a cash transaction. A source close to the deal disclosed that Focus will pay between $120 million and $140 million, or 10 times Moe's earnings before interest, tax, depreciation and amortization.

The divestiture will pare Raving's stable of franchise concepts to seven restaurant brands, including Doc Green's Salads and Grill, Mama Fu's Asian House, Planet Smoothie, Shane's Rib Shack, PJ's Coffee and Flying Biscuit. Its lone non-foodservice operation is Monkey Joe's, a chain of 12 indoor play areas, and all of its restaurant brands except Flying Biscuit are quick-service concepts. Every chain but Monkey Joe's is virtually all franchised. Moe's, founded in 2000, is Raving's flagship, with 344 units. With the divestiture, Raving would franchise about 630 units in total. Focus currently franchises or operates 1,750 quick-service outlets. Cinnabon and Carvel are completely franchised. It acquired Schlotzsky's, with 367 franchises and 18 company stores, in November. (Nation's Restaurant News, 4/11/2007)

CKE Seeks to Refranchise 200 Restaurants

CKE Restaurants Inc. announced this month that it sold 25 Hardee's restaurants as part of a refranchising program where it expects to include more than 200 locations across the Midwest and Southeast. As part of the program, the company said it sold 18 eastern Atlanta restaurants and seven units in southern Alabama and Georgia to two separate groups.

The CKE President and Chief Executive, Andrew F Puzder, said in a statement that refranchising the markets will allow the company to focus in its core markets. He said the company is in various stages of negotiations with potential and existing franchisees for the sale of the majority of the restaurant locations. As of January 29th, the company said it had a total of 3,105 franchised or company-operated restaurants in 43 states and 13 countries. (Forbes.com, 4/9/2007)

Radisson's Expansion Plans

The Radisson hotel chain is looking to get back into the hotel expansion game after a few years of retrenchment. In the past five years, the number of Radisson rooms nationwide has declined by 34 percent, a sharp contrast to the 13 percent gain by its counterparts in the upscale market where Radisson competes. However, the chain's parent company, Carlson Companies, has continued to invest in Radisson, adding some new hotels even as it got rid of others.

In 2007, Radisson began its expansion push by starting to rebuild the number of hotels in the chain. Radisson currently has 400 hotels worldwide, down from about 440 a couple of years ago. The chain expects to have more than 500 by the end of 2009 and many of them will be outside the United States as Carlson pursues its goal of making Radisson a global brand. Last year it acquired a stake in Rezidor SAS Hospitality of Belgium, a franchisee that is its primary partner in Europe, the Middle East and Africa. Rezidor already has opened several "new-breed" Radissons overseas which feature a more sophisticated, modern design. Carlson plans to put some of the high-concept Radissons in about a dozen major U.S. tourist markets, such as New York, Chicago, Miami and San Francisco. (Star Tribune, 3/30/2007)

McDonald's Global Sales Gain

McDonald's Corp. reported an 8.2-percent global same-store sales gain for March, and a 6.3-percent global jump for the first quarter. At U.S. McDonald's restaurants, same-store sales increased 6.2 percent in March and rose 4.4 percent for the quarter. The U.S. results were driven by the successful Snack Wrap menu offerings and the chain's "everyday affordability."

Comparable sales in Europe and in Asia also increased, and the positive sales gains led McDonald's to report preliminary first-quarter, per-share earnings of 62 cents per share, above analyst projections for earnings of 57 cents per share, and 26.5 percent above year-earlier earnings of 49 cents per share (Nation's Restaurant News, 4/13/2007)

Japanese Develop Taste for Calorie-Rich Menu Items

After years of a healthy diet of fish, vegetables and rice, Japanese are developing a taste for calorie-rich items such as doughnuts and hamburgers. This is providing a business opportunity for Krispy Kreme, McDonald's and other American fast-food chains. For example, since opening in December, Japan's first Krispy Kreme Doughnuts store is drawing long lines of over an hour or more just to get in.

But Krispy Kreme isn't the only American chain riding on Japan's latest binge. Earlier this year, Oak-Brook based McDonald's Corp. got such rave reviews for the Mega Mac, selling at a brisk 1.7 million in four days, it is bringing back the four-patty burger this month and next. Cold Stone Creamery, which arrived in Japan in 2005, has also been a hit and promised "the ultimate indulgence" in ice cream, tossing in fruit, cookies and nuts. The chain is opening three stores in Japan in March and two more in April, bringing the total to 13. (suntimes.com, 4/4/2007)

As many as 5,000 Hilton hotel rooms nationwide may be allergen free by next year, according to Environmental Technology Systems Inc., a Glen-Ellyn, IL-based firm that specializes in indoor air quality. Environmental Technology is in final negotiations with Hilton, the flagship brand of Hilton Hotels Corp. to convert 5 percent of rooms at 248 hotels into allergen-reduced "enviro-rooms."

The company first made a foray into hotels with the Hilton Chicago O'Hare Airport hotel in 2005, creating two-enviro-rooms at a cost of roughly $8,000 per room, according to a Hilton spokeswoman. High demand and guest feedback motivated the hotels to add 11 more rooms earlier this month. As many as 50 million Americans suffer from allergies, according to the National Institute of Allergy and Infectious Diseases, and both allergies and asthma are increasing. Room modifications include hardwood floors, all-cotton bedding, anti-microbial treatments that stunt growth on doorknobs and faucets, and wallpaper that is dotted with thousands of pin-sized holes to prevent trapped moisture from causing mold growth. (Daily Herald, 4/8/2007)