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March 2007 |
Volume 8, Issue 3, Part 1 |
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 March:
Good Luck Month
From The Publisher
Where will you be on
7-7-07? We are proclaiming March "The Good Luck Month". This month isn't just for the Irish but it will be everyone's good luck month. Interested in getting lucky--Read on
In this issue...
Street Smarts:
Listen up, Veterans
Industry Focus:
Spring Cleaning with Steamatic
Guest Column:
Why it Fell Apart in The 11th Hour.
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Listen Up, Veterans
Military veterans are one of the most successful groups of small business owners in the country according to the U.S. Census Bureau. They own proportionately more small businesses than the general population, plus their gross income is more than twice that of non-vet owned small businesses.
Franchise companies have long recognized that veterans fit the ideal profile of a great franchisee. The parallels in background and orientation between veterans and franchises are clear. Veterans are disciplined, understand the importance of teamwork, and are willing to follow the rules to execute a proven system. It is no surprise that VetFran, a program created to help veterans become franchise owners, is one of the most poplar programs in the history of the IFA.
VetFran, originally known as the Veterans Transition Franchise Initiative, was spearheaded by the late Don Dwyer shortly after the Gulf War ended in 1991. It was reinitiated in 2003 with the cooperation of the U.S. Department of Veterans Affairs, the Veterans Corporation, and the U.S. Small Business Administration. VetFran now boasts more than 200 participating franchise companies and has enabled more than 600 former military personnel to become franchise owners.
VetFran is a simple voluntary program designed to be a win-win. It provides franchise companies with a pool of exceptional potential franchisees while offering very real help to veterans who want to acquire a franchise. There are two basic areas of tangible assistance:
1. Information: Through VetFran, the information available to veterans goes beyond what is available to the general public. The program provides specific information about financial and other assistance available from specific franchises.
2. Financial: Participating franchise companies offer special financial incentives to qualified veterans that are not available to non-vets. Incentives typically total tens of thousands of dollars worth of aid through reduced initial franchise fees, scholarships, additional training and support, or material credits.
| Are you a veteran? For more information on the VetFran program, including a listing of the participating franchise companies, visit the IFA's website: www.ifa.org |
Spring Cleaning with Steamatic
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Company: Steamatic, Inc.
Units: 400, 100 in 25 foreign countries
Startup costs: $57.8K-125K Franchise fee: $7K-24K Address/phone: 303 Arthur St., Fort Worth, TX 76107
Phone: (800)527-1295
Website: www.steamatic.com
In business: 1949
Franchising since: 1968
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Spring cleaning is a tradition that's as American as apple pie. But these days, most of us have little time to dust off the cobwebs and clean up whatever our winter boots have tracked in. Lack of time is a major factor fueling the 20% annual growth in the $20 billion cleaning industry. Since 1948, Steamatic, Inc. has cleaned up homes, offices, and factories. The customer base is divided about 50/50
between residential and commercial customers.
Steamatic President, Bill Sims says, "There is certainly more home cleaning in spring. Most people have experienced some hard winter weather that creates a lot of dirt. For that, we utilize our patented system for cleaning carpets, furniture, draperies, and air ducts." The company's first patent, involving a hot water extraction method of cleaning, was granted in 1967. Another 21 patents have been accumulated since.
Although there is an upswing in demand for residential cleaning services in the spring, Steamatic has offset any seasonal effects by offering multiple revenue centers. For starters, Steamatic goes well beyond basic cleaning. The company is also in the disaster recovery business, taking care of problems caused by fire, water, and mold.
"Our franchise is unique," says Sims," in that we offer to our franchisees more profit centers, more services that they can offer to the public. Some of the services are quite sophisticated. For example, we offer electronics and documents restoration. We have the expertise and procedures to clean up computers and telephone switching gear caused by fire or water. We can also stop the damage to machinery caused by industrial corrosion. Same thing with documents. We have freeze-drying chambers for recovering and deodorizing all kinds of documents that have been exposed to water or fire. Most of our competitors do not perform these kinds of services."
Another profit center involves the sale of cleaning products such as spot kits, custom electrostatic air filters, anti-allergen spray, and odor controllers strong enough to eliminate the smell of ammonia or even a skunk. "We give our franchisees a chance to make more money through these multiple revenue generators and also by making our territories larger than usual. When a franchise operator has a larger population to service, there is more money to be made."
Sims says the future of the industry looks good. “Especially in the residential customer base, there are more two-income families with more disposable income to afford a professional cleaning service. We have not seen any drop off in that part of our industry. And of course, fires and broken pipes occur every day.”
 Why It Fell Apart In The 11th Hour
By: David McLean
Every Franchisor has his heart broken every now and then and, for some, far too often in the 11th hour.
A wise franchisor will speak with ex prospective franchisees and find out why they didn’t move ahead. Unfortunately, franchisors are usually too busy managing their businesses or working with new franchise candidates. It’s a vicious cycle. Chances are they will keep losing candidates and never know why. Franchisors need to take a hard look at their franchise opportunity from a perspective franchisee's point of view.
If you have experienced franchise sales that have fallen apart in the final stages, chances are it had nothing to do with what you did in the final stages. It's more than likely that it has to do with everything that happened prior to that point. Many prospects are non-confrontational; many will keep going with the flow even though they have concerns right from the beginning.
Here are a few things that you MUST have in place or correct:
1. Validation: One of the most important elements in consummating a franchise sale is having strong validation from your franchisees. From my experience in franchise development, I can tell you that no matter how good I was, if I didnt have good references from existing franchisees, it was an uphill battle. As a franchisor, you will never have 100% of your franchisees completely satisfied. However, that doesn’t mean that you can’t have every one of them speaking highly of you and the franchise.
The majority of franchise owners fall into two camps; they are either emotional or logical. Emotional franchisees want a franchisor who sincerely cares and supports them well. Logical franchisees are usually all about the numbers. If you focus on the combined variables mentioned above, you usually can’t lose. When prospective franchisees call your existing franchisees, they will either hear about how caring and supportive you are and/or how profitable their business is. You need to appease both the emotional and logical franchisee to ensure outstanding overall references.
What your prospective franchisees hear or sense from existing franchisees could be what gives them cold feet in the 11th hour.
2. Image: Here’s the ugly truth; too many franchisors have terrible images. I have had many franchisors contact me requesting franchise development assistance. I often have to bluntly tell them that the first thing they need to change is their image. I have seen franchisors with the most unattractive logos, websites and marketing material. If you’re lucky, you might be able to generate leads but a poor image will more than likely make your prospects extra cautious. Their sense for finding flaws in your franchise system will be heightened.
A prospective franchisee needs to be confident in your abilities as a franchisor as well as in the franchise opportunity. It all starts with an attractive image. If you don’t impress them in the beginning, they will eventually pick apart your entire franchise system. Once their confidence in your system is gone and they get to the final step, it’s very hard for them to sign that Franchise Agreement. Having a solid image makes most prospective franchisees less analytical about all the details of the system.
Spend the money on a professional image by revamping or even redesigning your logo, marketing material, website, office or anything else that your prospective franchisees may encounter.
3. Interest and Responsiveness: It’s amazing to me, how many prospects I speak with, who tell me all about the franchisors they were interested in who never called them back or only called them back 1-2 weeks later. I love those prospects because they’re much easier to impress just because I show an interest in them. Always remember that one of your competitors will gladly be responsive and spend the necessary time with them.
Most prospective franchisees are looking for a “good business”. Chances are they didn’t grow up dreaming about wearing plastic gloves and placing cold-cuts on 12” bread. Prospects are pretty open minded to many franchise business opportunities. You will not only be competing with franchisors in your specific niche, you will be competing with every franchisor. If it takes your franchise sales people too long to respond to franchise inquiries, prospects will start working with other franchisors. Initially, your franchise opportunity might have been their first choice but at this point it will probably fall to the bottom of their list.
When it comes to decision time, they will review the franchise opportunities in contention. The one edge that other franchisors will have over you is that they showed more interest in the prospect. That might be all it takes for the prospect to go with a competitor. Prospects tend to prefer the franchisors who showed an interest right from the beginning. Building confidence and a good rapport starts with calling all prospects as soon as the lead comes in. Being supportive in the beginning is a sign of how well you will support them once they become franchisees.
Just remember that the moment that you drop the ball with a prospect another Franchisor will pick it up.
About the Author: David McLean is the “Franchise Counselor” at FranchiseHelp. He has almost 10 years of franchise experience and has helped hundreds of entrepreneurs find successful franchise opportunities throughout his career. He is the President and CEO of FranchiseOfficer, Inc., an organization that offers free consulting to franchise buyers looking for the “Right” franchise. If you wish to speak with David McLean, you can reach him by email at david@franchiseofficer.com
Remodeled McDonald's Stores Drive Up Sales
 Since 2003, McDonald's has remodeled or redecorated half of its 13,700 U.S. locations. The revamped stores often look more like hip urban cafes than a burger joint, with stylish furniture, pendant-shaped light fixtures, dark wood-paneled walls, and contemporary artwork. Some stores also have couches, large tables with high-back chairs and Wi-Fi access.
The store makeovers are just part of a multipronged strategy that has helped the Oak-Brook, IL-based fast food empire post 46 consecutive months of U.S. sales growth. For its latest quarter, the company reported that fourth-quarter net income more than doubled to $1.2 billion, helped by the spin-off Chipotle Mexican Grill. Revenue rose 11 percent to $5.6 billion. Additionally, McDonald's attributes most of the sales growth to a strategy of boosting revenue through existing stores rather than by adding new locations. (Orlando Sentinel, 3/5/2007)
Top Food Trends for 2007
 A recent survey of 1,146 members of the American Culinary Association has revealed the top food trends for 2007. According to the list published by the National Restaurant Association, the number one hot food trend of the year is bite-sized desserts like a mini Passion Fruit Soufflé at the sweet price of $1 to $1.50. The second hottest food trend was the increased use of locally grown produce.
The National Restaurant Association's list of food trends "provides a perfect mirror of what is hot today." Other hot items in the report include: ethnic foods (Asian, Pan-Asian, Mediterranean, Latin), premium products (bottled water, upscale coffees, exotic mushrooms), products perceived to have healthful benefits (organic, grass-fed and free range), flavorful foods (fresh herbs, pan searing and grilling) and convenience (specialty sandwiches). (Today's Restaurant News, February 2007)
The focus on healthy food items will continue for 2007 with several well-known food chains debuting new health-conscious menu items. T.G.I. Friday's will unveil this month the first national program in the casual dining business that offers a variety of menu items with smaller portions - and lower prices - all day. Also, Subway will announce plans for Fresh Fit meals that substitute apples or raisins for chips and 1% milk or water for soft drinks with a sub sandwich.
Friday's new menu is named Right Portion, Right Price and will include 10 entrees sold in portions about 30% smaller and priced about one-third less than regular entrees. Subway's Fresh Fit meal will launch this month as well and will be the chain's biggest rollout in 2007. (USA Today, 3/1/2007)
Matchmaking Service for Franchise Owners
 Allegra Network, one of the world's largest graphic communications franchises, will offer a matchmaking service for franchise owners. Through Allegra's Conversion Print Center Program, the company "matches" franchise members with existing printing company owners who are seeking an exit strategy. The chain works with both the buyer and the seller throughout the entire sale process to ensure the business is left in the right hands. This includes a valuation study to determine what the existing business is worth, training the new business owner on industry and organizational business systems, marketing and other franchise support needed to convert the business to the Allegra Print & Imaging brand. Currently, Allegra has more than 600 locations across the U.S. (Franchisewire.com, 3/9/2007)
 In a strategic move to embrace its 30-year heritage but differentiate itself in the casual dining market, Max & Erma's is rolling out a new contemporary design prototype that is already a hit in 3 markets. Customers can look forward to new features such as a two-story entry tower, patios, internal and external fireplaces and 6,000 square feet of open, spacious interior. The rollout of the new restaurant design is part of an aggressive franchise development campaign that focuses on seasoned restaurateurs interested in adding to their multi-brand portfolios. Established in 1972, Max & Erma's operate 78 casual dining full-service restaurants and franchise 23 restaurants. An additional 30 franchised locations are slated to open in the next two years. (Franchisewire.com, 3/1/2007)
 A 46-unit franchisee of the Friendly's family restaurant chain plans to evaluate the purchase of all or a part of the franchisor, according to the licensee's newly retained financial advisor. The franchisee, Kessler Family LLC, is the largest franchisee of Friendly Ice Cream Corp. It is considering a sale and other ways of boosting the value of its shareholders' investment. If Friendly proceeds with a sale, Kessler would consider a purchase as part of its consideration of strategic alternatives. The franchisor presently owns or franchises 514 restaurants concentrated in the eastern Untied States. Friendly is under pressure from dissident shareholder Saldar Bilgari, who controls about a 15 percent stake in the chain, to accelerate franchising, reduce debt and change corporate governance policies. (Nation's Restaurant News, 3/12/2007)
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