December: Festivities and the end of a year In this issue... Humor & Game: Be very careful with your Christmas gift-giving. Read what happened with one ill-fated gift by clicking on the link. It's holiday time. Take a few minutes from your work to see if you pass the test for airforce pilots. Click Here. Here's how it works: Click on the red square; then avoid the blue squares and the walls. See how long you can survive. Try to make it to 18 seconds. Have Fun!

News You Can Use McDonald's to Pay Forty Percent of Franchisees' Beverage Overhaul Wendy's Marketing Chief Resigns Survey Finds Consumers to Cut Back on Dining Out Yum Forecasts 10% Profit Rise in 2008 Roark Capital Group Acquires Batteries Plus Record Year for Hotel Real Estate Growth Featured Supplier We Thank Our Sponsors FREE White Papers NEW! Click Here to see titles and download our free White Papers.

At this time of year, we like to reflect on the changes and events of the past year and speculate on what the new year will bring. In 2007, politicians hit the campaign trail earlier than ever before, the housing industry took a nosedive, and the value of the dollar went down—way down—in many parts of the world. For our end of the year roundup, we asked an array of franchise industry players to reflect on how these events are affecting the franchise industry. In the spirit of the season, we also had a little fun asking about personal experiences, preferences, and wishes.

We hope you enjoy and learn something in our interviews with Nancy Weingartner, Tom Scarda, Philip Zeidman, Bill Edwards and Michael Isakson.

Nancy Weingartner is the editor of Franchise Times, a news and information source for the franchise community.
Q: What is the big headline you’ll write in 2008?
A: Country Elects a Democrat for President.
Q: How do you think the upcoming election will affect the franchise market?
A: I don’t think it will right away, but I think we’ll see some changes with health care and small business issues.
Q: What was your childhood ambition?
A: I wanted to be a nurse.
Q: What was your favorite book of 2007?
A: A Thousand Splendid Suns by Khaled Hosseini, author of The Kite Runner
Q: What was the first job you ever had?
A: In college I worked at Jack In The Box.
Q: What was the best franchise event of 2007?
A: Probably the IFA convention, but I’ve really started to like expo’s lately. I just went to the West Coast Expo and that was a lot of fun, seeing the people with all the new concepts.
Q: What's your favorite movie of all time?
A: Dead Again. Cool film noir.
Q: Who do you admire most?
A: The entrepreneur, somebody who believes enough in their ideas to go out and make it happen.
Q: What’s your favorite franchise food?
A: California Pizza Kitchen. I’m hooked on their miso salads.

Tom Scarda is a franchise expert working with FranChoice, a consulting service that matches people with franchises based on skills and personality. He also owns a Super Suppers franchise.
Q: How will the cooling economy affect the franchise market in 2008?
A: Folks that possibly are going to be without jobs will look for that perfect “Plan B” or an opportunity to make a living, something that might be homebased and inexpensive. It could be a good thing for the franchise market.
Q: What was the best book of the year?
A: The 4-Hour Workweek by Timothy Ferriss
Q: What’s the most common question you get from potential franchisees?
A: Unfortunately, it’s “how much money can I make and what are the risks?”
Q: Who was your childhood hero?
A: Alice Cooper. All I wanted for my 10th birthday was the Billion Dollar Babies album.
Q: What’s your best bit of advice for new franchisees?
A: Don’t get hung up on a business based on your hobby, because if you do, in 6 months you’re going to hate your hobby.
Q: What’s your favorite electronic gizmo?
A: Right now it’s my iPhone.
Q: What's your philosophy of life?
A: We’re all creators and we need to create our lives moment by moment.
Q: What was your proudest moment?
A: Becoming a father.
Q: What’s your favorite hotel amenity?
A: The whirlpool sauna.

Philip Zeidman is a senior partner with DLA Piper. He was recently named Global Franchise Lawyer of the Year by Who’s Who Legal, The International Who’s Who of Business Lawyers for the third consecutive year.
Q: How will the economy affect franchising in 2008? A: Franchising will do well no matter what the economy is. In good times, people have discretionary income to spend and franchised establishments do well. And when people feel confident about the economy they feel prepared to invest in franchises. When things turn worse, franchising still does somewhat better than the economy as a whole.
Q: What was the last book you read?
A: The Know-It-All by Al Jacobs.
Q: What was the big trend in franchising in 2007?
A: The migration of franchises to multiunit operations is now an unmistakable trend. The larger numbers of multiunit operators has considerable ramifications for franchising.
Q: What’s your favorite source of business news?
A: The Economist.
Q: What law would you change?
A: My pet peeve is not any single law. It is the craven nature of legislators in election years to take positions which they fully well know run against their conscience but will help them be reelected.
Q: What’s your biggest gripe about franchisees or franchisors?
A: Both franchisees and franchisors have difficulty blaming themselves for anything as opposed to blaming the other party.
Q: If you weren’t an attorney, what would you be?
A: I would probably be a writer. Every attorney is a frustrated writer.
Q: Where’s your favorite vacation spot?
A: My own place on the beach in the Gulf of Mexico
Q: What was the best meal you ever had?
A: Almost any meal on the beach in my place on the Gulf.

Bill Edwards is the owner of Edwards Global Services, an international franchise consulting firm. He is in his 35th year of international business.
Q: What are the most interesting global franchise markets?
A: China, South Africa, Scandinavian countries, Chile, and Turkey. That’s where we’re seeing the most growth, where investors are willing to buy the rights to a foreign franchise system.
Q: What’s your favorite hotel amenity?
A: Free wireless Internet. Number two would be having a Starbucks on site.
Q: What’s your best advice for going international?
A: The number one requirement for international success is to find the right master franchisee who’s going to be able to start and grow the business in their country.
Q: If you were king, what law would you change?
A: If I were king, I’d make sure everybody was equal.
Q: How will the cooling U.S. economy affect the franchise market in 2008?
A: Globally, it’s going to help us. The dollar has declined to the point where buying U.S. franchise systems in Europe is like bargain basement day. It’s just amazing. Internationally, the markets are going to be very strong in Asia and the EU.
Q: What do you do in your leisure time?
A: I’m a student pilot.
Q: What was the most interesting trend in international franchising in 2007?
A: There were two. One was the exchange rate of the Euro that created an advantage for the Europeans. They’re really buying up franchises like crazy. Number two, China changed its franchise regulations to give us (franchises) a more level playing field.
Q: What’s your favorite hotel?
A: The Oriental Hotel in Bangkok without a doubt.
Q: The best meal you ever had? Where was it?
A: Venison at a restaurant in Brussels.

Michael Isakson entered the world of franchising in 1977 as a franchisee for ServiceMaster in Bismarck, NorthDakota. Today he is the President and COO of ServiceMaster and Chairman of the International Franchise Association.
Q: How is the upcoming election going to affect the franchise industry?
A: I see very little direct effect, but depending which party wins, we may see an environment where labor relations become better or worse depending on how you look at it.
Q: What law would you change?
A: The tax structure, to make it a simple flat tax.
Q: What was interesting about the news of 2007?
A: The exclusion of real news because of the political campaign that started almost a year and a half earlier than it should have.
Q: What’s your favorite food?
A: You name it, I’ll eat it.
Q: Who do you admire?
A: I admire some of the men and women who are doing the basic jobs in our society, who are working extremely hard, raising families, and doing the right things. Q: What’s your favorite business book of all time?
A: The Marketing Imagination by Theodore Levitt
Q: Is there a goal you have yet to achieve?
A: I’d like to be able to run a marathon, but that’s not realistic. So I’d like to run a half marathon. That would take some significant conditioning on my part
Q: What do you do in your leisure time?
A: I’m very involved in ministry activities at my church.
Q: What new destination would you like to visit?
A: New Zealand.

McDonald's to Pay Forty Percent of Franchisees' Beverage Overhaul

McDonald's Corp. will pay up to 40 percent of the cost of rolling out a new specialty coffee program into U.S. franchised restaurants, or about $40,000 per store, according to Don Armstrong, chairman of McDonald's National Leadership Council, a franchisee group. Armstrong said the initiative now has the support of his fellow franchisees.

Some franchisees had objected to the leasehold costs of the beverage initiative which require retrofitting stores to sell such beverages as espresso-based drinks, sweet tea, smoothies and bottled soft drinks. Last month, McDonald's USA estimated the expense at $100,000 per restaurant. McDonald's executives said the expanded drink line would add $125,000 in annual sales to each restaurant. The new beverages, now being tested in some 800 stores, are not expected to be rolled into all 14,000 domestic McDonald's units until mid-2009. The rollout is expected to cost about $1.4 billion in total. (Nation's Restaurant News, 12/7/07)

Wendy's Marketing Chief Resigns

Wendy's International Inc. announced this month that chief marketing officer Ian Rowden has resigned for personal reasons and that the company has launched an "aggressive" national search to replace him. Rowden, who joined Wendy's in 2004, will return to his native Australia, according to the company. Until a new CMO is chosen, Wendy's marketing will be led by Paul Kershisnik, senior vice president of marketing strategy and innovation and Bob Holtcamp, vice president of brand management. Both will report to president and chief executive Kerrii Anderson.

Rowden's departure comes amid pressure from shareholders to improve profits and the possible sale of Wendy's International. Arby's parent Triarc Cos. Inc. submitted an undisclosed bid to buy the company in November. Other groups, including franchisees, also are said to be interested in buying the company, which operates or franchises 6,600 Wendy's restaurants. (Nation's Restaurant News, 12/10/07)

Survey Finds Consumers to Cut Back on Dining Out

Fifty-nine percent of Americans plan to eat out less over the next three months and only 20 percent intend to order appetizers, desserts or higher-priced entrees, according to a new consumer survey. The findings by the RBC Capital Markets securities brokerage firm point to a further belt-tightening among consumers since August, when 54 percent said they planned to dine out less and 27 percent anticipated scaling back their meals. The survey found that 43 percent of respondents are already buying restaurant meals less often than they did six months ago, up from 39 percent in August.

In its tracking of the burgeoning breakfast market, RBC's data indicated small upward shifts in consumers' tendency to eat that meal at home or skip it altogether and a slight erosion in recent months in morning traffic for quick-service chains and the sit-down category. As for coffee preferences, the survey detected slippage for Starbucks, McDonald's, Dunkin Donuts and others, while "local coffee shops" gained favor, with 20 percent of the respondents saying they patronized them now, compared with 17 percent in August. (Nation's Restaurant News, 11/18/07)

Yum Forecasts 10% Profit Rise in 2008

Yum! Brands Inc., the parent of Pizza Hut, KFC, Taco Bell and several smaller quick-service other brands, said this month that it expects to post a 10-percent increase in its 2008 per-share profit which has been the company's long-term target for years. To achieve the 10-percent profit growth, Louisville- based Yum expects 20 percent growth in both revenue and operating profit in its booming China region and flat revenue growth and a 5-percent operating profit jump at both its international division and its U.S. operations.

The projections for flat revenue growth are based mainly on Yum's expanded refranchising efforts, especially in the United States, where the company said it expects to decrease its restaurant ownership to less than 10 percent of its chains by 2010, down from the current 20-percent ownership. Yum said that it would concentrate on refranchising its Pizza Hut, KFC and Long John Silver's brands. In the United States, Yum said it expects a blended same store sales jump between 2 percent and 3 percent in 2008 which was the same range it had expected for this year prior to the Taco Bell E.coli scare and the rat infestation at a New York KFC unit. Those incidences led to dramatic same-store losses. (Nation's Restaurant News, 12/7/07)

Roark Capital Group Acquires Batteries Plus

Roark Capital Group, a private equity group, has acquired Batteries Plus, a leading dedicated retailer of batteries and battery accessories in the U.S. Headquartered in Hartland, Wisconsin, Batteries Plus generates approximately $200 million in system-wide sales through 292 franchise and 15 company-owned locations in 41 states and Puerto Rico. Batteries Plus offers its retail and commercial customers over 15,000 unique products in addition to services such as installation and battery testing.

Roark specializes in business and consumer service companies with attractive growth prospects and revenues ranging from $20 million to $1 billion. Roark's 13 franchise brands collectively have more than 13,000 points of distribution, 4,000 locations, 2,000 franchisees and $2.9 billion in system-wide revenues in 20 US states and 33 countries. The firm has more than $1.5 billion of equity capital under management.

Record Year for Hotel Real Estate Growth

Year-to-date U.S. hotel transaction volume has exceeded $45 billion dollars, achieving a record pace for the fourth consecutive year. Half of that, or $23 billion, was generated by nine separate U.S. mega-deals - or portfolio deals valued at $600 million or more. The top three mega deals made up more than half of the $23 billion. The Lightstone Group acquired Extended Stay America for $8 billion; Morgan Stanley bought eight premier properties in the Luxury CNL hotel portfolio for $4 billion and Ashford Hospitality purchased the CNL hotel portfolio for $2.4 billion.

The 15th edition of Jones Lang LaSalle Hotels' global Hotel Investor Sentiment Survey ("HISS") highlights investors' ongoing activity in the hotel sector. In the survey, trading performance expectations represent the survey respondents' projection of how occupancy and ADR will change in the future. The survey reported that the short and medium range outlook for positive trading performance has contracted in the U.S. to 25.8% and 23.6% respectively. New York and San Francisco displayed the most positive short term outlook, with the highest percentage of investors expressing confidence in these markets over the next six months (70.2% and 61.8%, respectively). These high barrier-to-entry cities are top destinations witnessing record occupancy rates, boosted by foreign travelers taking advantage of the low U.S. dollar. In addition, the weak dollar, which is expected to remain weak, will fuel increased off-shore investment in to U.S. real estate. (Hotel Magazine 12/4/07)