July: Gone Fishing In this issue... Musings on Favorite Places and Vacation Spots Well, obviously - Montenegro- the wild beauty. the pearl of the Mediterranean, unique in many ways is situated in the south of the Adriatic. There is nowhere else that you can find, in such a small place, so much natural wealth, beauty, mild beaches, clear lakes, fast rivers and gorgeous mountains – like you can in the small country of Montenegro. In the morning you can wake up along the beautiful Adriatic coast, have lunch on the banks of Skadar Lake, and enjoy the evening walks in the Montenegrin Mountains. Montenegro is a place that cannot leave you indifferent. Click Here Street Smarts: Should You Franchise Your Business? Industry Focus: More Low-Cost Franchises - the Cream of the Crop Guest Column: The Common Thread For Successful Franchise Systems.

News You Can Use Casual Restaurants Target Breakfast and Snacking Burger King Focuses on International Growth Holiday Inn Chain Receives Face-Lift IHOP Completes Deal to Buy Applebee's Hotels Embrace Eco-Friendly Policies Hardee's Franchisee Acquires $8.5 Million To Buy Atlanta Stores Featured Supplier JEI Self Learning Center We Thank Our Sponsors FREE White Paper FranchiseHelp's Franchise Meal Assembly Report Subscribe | Unsubscribe to the Newsletter

You've got a thriving business and customers are lined up around the block. Your friends say that you should strike while the iron is hot and start franchising. Even your spouse is whispering in your ear, "you could be the next Ray Kroc." Looking at the industry, it seems just about any kind of business can be franchised, so why not? It may well be that your business is ripe for expansion, but it may or may not meet the criteria for a successful franchise. Here are some basic guidelines to determine if your business is a good candidate for franchising:

Is your concept proven? People buy franchises so they don't have to go through the trial-and-error themselves. Your track record should include strong and steady sales growth, experienced management, good press, and growing brand awareness.

Is your concept unique? Your business needs to be clearly different from other players in your industry. Take a look at your competitive advantage. Is it sustainable?

Can your concept be duplicated? Your system(s) must be teachable with a short learning curve - three months or less is optimal. Operating procedures need to be documented along with a checklist for quality control and training procedures.

Will your franchisees see a good return on their investment? Your franchise units should be able to generate a 15 to 20 percent return on investment after deducting the royalty.

Do you have the time to start franchising? Make no mistake, this is not the easy road to expansion. You'll work longer and harder than you ever have before and it will be at least 2-3 years before it eases up at all.

Do you have the money to franchise? A big reason why businesses franchise is because it's more economically feasible than starting a chain. But that doesn't mean it's cheap. Capital resources for a new franchise typically run into hundreds of thousands of dollars.

More Low-Cost Franchises - the Cream of the Crop

Last time we talked to Coffee News, our pick for one of the best low-cost franchises. In our research report, we found quite a variety of concepts among the 50 franchises that required less than $50,000 to get up and running. Rounding out the top three choices are Cruise One and Stroller Fit, two very different concepts with one thing in common: they offer great opportunities for a very small investment.

Cruise One is a franchised travel agency concept that specializes in booking cruises. When the founders started the company 15 years ago, their intention was to create a low-cost, high-profit franchise opportunity in the travel industry. "The cruise industry previously had been brick and mortar," explains Vivian Ewart, Senior VP. "Our concept was to take a typical travel agency, keep all the benefits and availability, but reduce the overhead and allow the members to build a business that is homebased."

To ensure high returns, Cruise One focused on the most profitable niche in travel. "We specialize in cruising exclusively. In the travel industry, there are a thousand and one different things you can do, but it's very difficult to be a specialist in all of them. So we picked the most lucrative piece of the travel industry, which is cruising" says Ewart.

"When we started, the cruise industry was still in its infancy," says Ewart.

"There was a lot of potential and it's the most exciting travel to sell. An airline ticket, that's a commodity. You don't even need help buying it now. But as ships become bigger and offer more features and benefits, the consumer actually needs us more with each passing day."

The future of cruising looks good. "From now until 2010, the cruise lines are bringing into the marketplace approximately 20 new ships, "Ewart says, There's a lot of growth in the industry. We will do $145 million in sales this year."

The Stroller Fit franchise is an "exercise with your baby" program. Franchisees lead classes inside or outdoors, depending on the climate. The 50-minute workout is designed to get the pre-postnatal mom back into shape through interval training. It is taught to all levels and works out all body parts with exercises for strength, cardio, core work, and flexibility.

According to Debbie Schmidt, Director of Franchising, this kind of exercise program is becoming very popular. "Dance aerobics was the big thing 20 years ago," says Schmidt. "Stroller fitness is something that's catching on now. This kind of workout keeps the child with the mom. The babies love it because there's interaction built in. And we do interval training to keep the babies on the move - that's key to getting through a workout."

The cost of entry into Stroller Fit is extremely low. There is no storefront or office needed. Classes are conducted in parks, recreation centers, skating rinks, and sometimes churches. Most franchisees don't even have much of a marketing budget - they get new members by networking with moms. "This is very low cost to get into," says Schmidt. "Our franchisees are pretty successful in recouping their investment quickly."

The Common Thread For Successful Franchise Systems: Leadership
By: Tim Howes

Several common attributes are shared by all successful franchise systems. One of these is strong leadership. I mention this fact with some level of hesitation. One would think that with the constant onslaught of leadership books and emphasis on leadership skills in American business, citing leadership as the one necessary factor to success in franchising would be old news.

If so, why does strong leadership remain elusive at many emerging (and sometimes mature) franchise systems?

The good news is that there are no complex formulas that would require a PhD to understand. Based on our research and observations, successful franchise leaders share the following nine characteristics:

1. Understand The Importance of A Strong Brand In Franchising - Many established franchise systems allocate significant resources building, enhancing, perpetuating and protecting their brand. Unfortunately, too many founders of emerging franchise systems fail to spend the time and resources necessary to develop a powerful and well thought out brand strategy. Why? Either they think their brand is "good enough" or it's a question of priorities for limited resources.

2. Know Their Numbers - To state the obvious: franchisees that make more money are generally happier than franchisees that make less money. Strong leadership understands the importance of providing an adequate return on investment for both the franchisee and the franchisor. This requires not only an emphasis on building top line sales, but also protecting the bottom line with adequate cost controls.

3. Willing to Let Go and Delegate - A company's growth often increases the demands on a founder's time and leadership abilities. The fast growing emerging firm often grows faster than the abilities of its founder. Often the problem is simply that the founder has trouble letting go of his or her precious "baby". Founders need to delegate the $10 - $25 per hour work to other parties so they can focus on the $250 - $1,000/hr work.

4. Recruit the "Right" People - The best companies allocate capital to hire the right people in anticipation of growth, not as a response to growth. As a corollary to the above attribute, the company must have the right people on board in all functional areas such as operations, finance, sales, marketing, IT, recruitment/HR and risk management. A good leader works hard to get this accomplished.

5. Communicate Effectively - Does the leadership team communicate with employees, franchisees and outside partners in a positive, yet effective manner? Good leaders regularly communicate using a host of methods including phone, email, in-person meetings, informal gatherings and educational sessions. Do they take feedback from people "in the trenches" seriously?

6. Foster a Positive Corporate Culture From Day 1 - Good leaders create a strong, positive corporate culture from the time the first employee is hired. Has the management team defined a clear mission statement, vision and set of principles that everyone agrees to play by? Does the leadership team empower its employees, franchisees and other business partners to do the best for the organization?

7. Focused/Productive - Leaders and team members must be organized and focus on getting the right things done, efficiently and on time. David Allen, in his seminal book, Getting Things Done does a good job in describing this important ability.

8. Obsessed With Continuous Improvement and Lifetime Education- Every year, new franchise concepts come on the scene in every industry group adding to the level of competition. Strong leadership thwarts the competition by finding ways to improve operational performance in key areas whether it's by making fewer errors, increasing customer satisfaction, higher quality products, lower costs, or other areas.

9. Seek Balance - Making money shouldn't be the only driver. True leaders are able to not only balance their own personal and work lives, but help employees and franchisees do the same.

Tim Howes is an Assistant Professor of Management at Johnson and Wales University where he designs and delivers finance and entrepreneurship courses. In addition to his academic duties, Tim has spent the last 11 years developing emerging franchise systems in over 25 industry groups. Reach him at timothyhowes@comcast.net

Casual Restaurants Target Breakfast and Snacking

The traditional foodservice dayparts are stepping aside for consumers' newest focus, snacking. This information was delivered at Technomic Inc's Restaurants 2008 Trends & Directions conference which brought together more than 150 limited-service restaurant (LSR) and full-service restaurant (FSR) operators. The top 100 chains generated more than half of the industry's $350 billion in 2006 sales, Technomic reported, with total restaurant sales up 5.9% from the year prior. Leading the charge were beverage concepts - including coffee chains, smoothie shops and tea shops - pushing up 21%. This was followed by bakery-cafes such as Panera Bread with a 13% leap in sales.

With burger, pizza, chicken, Mexican and sandwich chains expected to post only single-digit growths in 2007, many LSRs are gunning for breakfast and snacking to increase their numbers. According to CREST data from NPD Foodworld, customer traffic for breakfast and a.m. snacks rose 5% in 2006 and 4% for p.m snacks, while lunch and supper traffic remained flat. Two examples of the many recent snacking options are KFC's Snacker and McDonald's Snack Wrap which provide a portion-controlled option for consumers with the midday munchies. Additionally, several LSR segments are attempting to pique consumer interest with upgraded ingredients and fresh appeal. (CSP Daily News, 6/25/07)

Burger King Focuses on International Growth

Burger King announced this month at the CIBC World Markets conference that 80 percent of the Miami-based chain's future growth would come from international expansion. Burger King's worldwide net growth goal is to add between 300 and 400 units annually. The company cited Europe, the Middle East and Latin America as today's leading international markets, but predicted that Asia would surpass all other regions in the next few years. Quick-service competitors McDonald's Corp. and Yum! Brands Inc. already have reported significant success in overseas markets.

Another priority for the company is to achieve average restaurant sales of $1.5 million, noting that the 50 most recently added restaurants have reached that goal compared to a systemwide average of $1.2 million. Burger King operates more than 11,200 restaurants in all 50 states and more than 65 countries and U.S. territories worldwide. Approximately 90 percent of BK restaurants are franchised. (Nation's Restaurant News, 7/11/07)

Holiday Inn Chain Receives Face-Lift

The roadside Holiday Inns that became fixtures in towns across the USA beginning in the 1950s are disappearing. London-based Intercontinental Hotels (IHG), current owner of the brand that initiated franchised motor hotels, is in the process of shedding roughly half the nearly 1,100 properties that it had in 2004, mainly by ending franchise agreements with operators of substandard properties. Among the first to go are those two-story low-rises with exterior corridors that defined the early years of Holiday Inn. In their place: multistory, contemporary-style hotels with fewer rooms and smaller restaurants.

The multiyear campaign to remove the brand from outdated hotels- the largest cutback of its kind ever undertaken by a single chain - is expected to be completed by 2009. By the time the campaign ends, Holiday Inn will have removed about 100,000 rooms and opened about 35,000 new ones in the USA. With the effort, management hopes to revive the aging chain's image which has suffered as newer competitors have cashed in on Holiday Inn's traditional strength: consistent quality at an affordable price. (USA Today, 7/19/07)

IHOP Completes Deal to Buy Applebee's

After months of plotting to acquire a restaurant chain, IHOP announced this month that it had sealed a deal to buy Applebee's for about $2.1 billion, turning the company into the nation's largest sit-down restaurant chain by locations and sales with a total of about 3,250 locations and sales of nearly $7 billion. It is a bold move considering IHOP, a pancake-restaurant chain based in Glendale, CA, has about half the market capitalization of Kansas-bases Applebee's. IHOP's chief executive Julia Stewart said she plans to revive Applebee's International Inc. by better distinguishing the chain from competitors, remodeling its restaurants and selling hundreds of company-owned locations to franchisees. Applebee's put itself up for sale in February after investor Richard C. Breeden launched a campaign for board seats.

IHOP's chief executive has invigorated the IHOP brand and improved its finances. A major part of her turnaround strategy was selling IHOP restaurants to franchisees, which increased the company's free cash flow and helped drive up its shares. The pancake house plans to sell most of Applebee's 508 company-owned restaurants and their underlying real estate during the next several years to pay down some acquisition debt. (The Wall Street Journal, 7/17/07)

Ecologically minded travelers looking for guilt-free getaways are finding more options as hotels and other tourist-related businesses go green. It's a winning turn for hotels that began to become more environmentally friendly a decade ago to cut costs but now realize they can market to a growing cadre of green consumers.

Although hotels designed from the ground up as green buildings are a rarity - just five in the nation are now certified as meeting the U.S. Green Building Council's standards - lodging chains including Marriott, Hilton and Wyndham are encouraging their construction. For example, the Hilton at Walt Disney World in Lake Buena Vista is a leader in the company's campaign to enhance its environmental credentials. Last month, it became the 24th hotel statewide - and the only Hilton in the Orlando area - certified under the Florida Green Lodging Program. Administered by state government, the program recognizes hotels that attain conservation goals, which include improved energy efficiency, reductions in solid waste and improvements in water conservation. (Orlando Sentinel, 7/9/07)

Hardee's Franchisee Acquires $8.5 Million To Buy Atlanta Stores

Denver-based Biscuits and Burgers LLC secured $8.5 million in financing to fund the previously announced purchase of 18 Hardee's units in Atlanta from franchisor CKE Restaurants, the parent of the Hardee's and Carl's Jr. fast-food chains. Longtime franchisees Steve Rosenfield and Dewey "Buddy" Brown formed Biscuits and Burgers earlier this year with the purpose of buying the Atlanta-area units. Including the Atlanta units, they own 50 Hardee's and Carl's Jr. restaurants with others located in Wyoming, Montana, Colorado and California.

CKE divulged plans earlier this year to sell 200 of its Hardee's locations to franchisees so the company could better focus on development in its core markets. The company also sold seven units in Alabama and Georgia to franchisee Ponder Enterprises Inc. CKE owns or franchises 1,906 Hardee's, 1,087 Carl's Jr. and 96 La Salsa Fresh Mexican Grill Restaurants in 43 states and 13 countries. (Nation's Restaurant News, 7/12/07)