November: The Holidays Begin In this issue... Commentary: Political Quiz from the Publisher. Have you been watching the Democrat and Republican candidates' television debates? Click on the link below to find a very interesting quiz which is purported to tell you which candidates are most aligned with your views and opinions. Be prepared for some surprises. FYI, my number one pick is Joe Biden! Click Here Street Smarts: Selling Franchises On The Internet Industry Focus: Seasonal Franchise Strategies Guest Column: Calling all Franchisors: Is a Private Equity Transaction in Your Future?

News You Can Use Wendy's 3rd- Quarter Net Income Plummets Applebee's Shareholders Support Sale to IHOP U.S. Construction Pipeline Sets Another Record Dairy Queen to Open 500 Stores in China Taco Del Mar President Resigns Auntie Anne's Expands into Honduras and Greece Featured Supplier We Thank Our Sponsors FREE White Papers NEW! Click Here to see titles and download our free White Papers. Subscribe | Unsubscribe to the Newsletter

A decade or so ago, selling franchises was an expensive and slow process that took some heavy investing in full-page magazine ads, trade show exhibits, and direct mail campaigns with fancy marketing materials. Times have changed. Today, 80 percent of franchise leads are generated on the Internet.

Selling franchises in cyberspace seems simple enough. Any savvy franchisor with an idea and a credit card can create a dazzling Web site on Saturday, have pay-per-click ads running on Google Sunday, and be talking to prospects by Monday. But, of course, selling franchises is never that easy. Here are a few tips for making the most of the online marketplace:

Boost traffic. Use a search optimization firm to ensure people can find you. Buy keyword advertising on Google and Yahoo to drive the right people to your site.

Take a message. Don't even try to make a sale directly from your landing pages. Instead, find a way to compel visitors to leave their contact information.

Show don't tell. Video is a great way to increase click-through rates and capture rates (the number of people who leave contact information), while lowering marketing costs.

Prequalify prospects. Don't hold back information. The content on your site should include useful and pertinent information, everything a potential applicant would want to know to become a franchisee.

Let the machine do the talking. By automating a series of email messages, you can communicate regularly and consistently with prospects - with virtually no effort on your part. It can save time and money while weeding out the tire kickers

Blow your own horn. Nothing demonstrates credibility better than testimonials. Use both text and video testimonials to dramatically increase your sales team's effectiveness.

Keep it real. The Internet can do wonders, but it can't replace the human element. Make it easy for prospects to call you or arrange a face-to-face meeting.

Seasonal Franchise Strategies

There are lots of great businesses that operate full steam in the warm months, then in winter they're forced to lay off workers and hope for an early spring. But one person's off-season is another person's peak season. Just ask any of the 375 Christmas Décor franchisees. The founder, Blake Smith, came up with a cure for the off-season blues when he started putting up Christmas lights for his landscaping customers in Lubbock, Texas. Year after year the solution has worked wonders for his bottom line. Today, Christmas Décor has over 40,000 customers in 48 states and Canada.

Christmas Décor's Marketing Director, Brandon Stevens, says "Our founder had a good-sized business with a lot of employees and equipment, but work would come to a halt in the winter. One day a customer asked for help hanging up their Christmas lights. That was the start of a great idea. Over the next 5 years he developed a pretty nice system that allowed him to work in the off season when nobody else could."

Being able to operate 12 months out of the year as opposed to 9 or 10 months makes a huge difference even to a successful business. Within five years, the company grew from $250,000 to a $1.3 million company."Of that $1.3 million," Stevens points out, "about $300,000 was Christmas decor work BUT it accounted for 50% of the profit. Our average net profit is about 24% compared to different green businesses that range anywhere from 3% net up to 10% net."

As a franchise, Christmas Décor specifically targets green industry businesses. "Probably 85-90% of our franchisees are in a small business in lawn care, landscaping, pest control, or irrigation. They already have the labor force, the trucks, trailers, and tools. And they have a customer base that they can leverage through cross-selling, which helps them get started a lot faster," says Stevens.

On average (nationally) a Christmas Decor installation runs about $1380 According to Stevens. "Each display is custom to the property, but our typical customer is going to get some roof lighting and a few windows, some shrubs and a couple of trees. And there may be some stake lighting around the walkways and driveway." The crews start installing in mid-October, sometimes even earlier. They return to take down the lights in January and finish up by early February - just in time to get ready for spring.

Calling all Franchisors: Is a Private Equity Transaction in Your Future?

By: Ed Teixeira

Over the past several years there have been a significant number of transactions involving franchisor acquisitions by private equity firms. Although the large transactions garner the majority of publicity there are private equity firms that have invested as little as three to five million dollars in a franchise company.

Although, recent events in the sub-prime mortgage market have resulted in some risk aversion and higher interest costs for potential transactions, PE firms will continue to be attracted to franchise companies that can provide the potential for good investment returns.

In general, private equity firms look for certain attributes in franchise companies.

Candidates for Private Equity Transactions are most attracted to:

• Food concepts with staying power
• Multi-owned franchisee companies operated quality franchise concepts
• Business service concepts with good upside
• Positive cash flow
• Sound organizational structure
• Profitable franchisee network
• Ability to survive operational and financial due diligence

Another slant on the private equity deals are the select private equity firms that seek to acquire majority ownership in smaller franchise companies and are willing to provide the capital to bring the franchise to the next level of growth.

In General the PE company with the most interested in franchise systems with these attributes:

• Minimum of approximately fifty franchisees
• Franchise concept with high growth potential
• Market demand for franchise products or services is strong and growing
• Franchisor leadership that could continue to participate in future plans
• Opportunity for rapid system growth, could include multi-unit franchisees or regional developers
• Good operating procedures and financial controls;"Turn -a rounds" have little appeal

Although private equity transactions in the franchise sector may slow down in the future (until the impact of the sub-prime mortgage crisis is gone) there is still significant investment capital available and an interest in franchise companies. Bottom line, franchisors should have a sound franchise concept, positive cash flow and a solid organization with a minimum of franchisee problems to attract a private equity firm.

Ed Teixeira is the President of FranchiseKnowHow, LLC a franchise development firm. He can be reached at ed@franchiseknowhow.com visit www.franchiseknowhow.com

Wendy's 3rd-Q Net Income Plummets

Wendy's International Inc. reported last month a steep drop in its third-quarter net income as year-ago profits from the now spun-off Tim Hortons, restructuring costs and expenses from the company's current strategic review chopped latest-quarter earnings by more than half from a year ago. Still, the parent company of 6,600 corporate or franchised Wendy's locations posted a 55-percent jump in income from continuing operations for the third quarter and said it expects to hit the higher end of its annual per-share earnings target of between $1.09 and $1.23. That range excludes restructuring charges and board expenses for the company's review of options.

Net income for the third quarter ended Sept 30. totaled $29.9 million, or 34 cents per share, compared with year-ago profit of $69.2 million, or 58 cents per share. In the current fourth quarter, Wendy's plans to promote its Combo Choices deal, which allows customers to mix and match a sandwich, drink and side item. In November, the chain will promote its Jalapeno Cheddar Double Melt premium hamburger. The company also will continue to roll out its breakfast offerings which are now available at about 850 restaurants. (Nation's Restaurant News, 10/25/07)

Applebee's Shareholders Support Sale to IHOP

Shareholders of the bar-and-grill chain Applebee's International approved a $1.9 billion buyout offer from pancake house operator IHOP. More than seventy percent of shares voting approved the agreement. Under terms of the deal, shareholders of Applebee's will be paid $25.50 a share, a 4.6% premium over its closing price on the day before the offer was announced. IHOP is also assuming $155 million in Applebee's debt as part of the deal. The sale is expected to close by Nov 29. The combined company would have $6.8 billion in annual sales and more than 3,200 restaurants.

Officials at both companies have characterized the deal as a way to help rejuvenate Applebee's, one of the nation's largest restaurant chains. Its profits and sales have fallen in the past year as rising fuel and housing costs and changing consumer behavior have reduced traffic in its dining rooms. The deal is viewed as a coup for IHOP, which is smaller than Applebee's but had had success in building its own brand and sales in the face of economic headwinds. IHOP plans to franchise most of Applebee's 510 company-owned stores and sell real estate tied to around 200 of those stores as a way to pay for the deal. (USA Today, 10/30/07)

U.S. Construction Pipeline Sets Another Record

Lodging Econometrics (LE), the Global Authority for Hotel Real Estate, released its latest report to the Lodging Industry, announcing that the New Construction Pipeline in the United States set a record at 5,011 projects/654,503 rooms, making Q3 the fifth consecutive record-setting quarter. According to the President of Lodging Econometrics, guestroom counts in the Pipeline are 31% higher than the last peak in 1999 and the project count is 47% greater. Factoring in cancellations and postponements, the overall Pipeline accelerated by 375 projects/43,162 rooms quarter-over-quarter.

Surpassing 5,000 projects in the Pipeline is seen as a milestone event. It reflects the surge of select service and mid-market brands developed earlier, as well as a number of new, contemporary brands launched in recent years. Designed to meet the changing requirements of today's business and leisure travelers, these new brands are rapidly gaining favor with developers. The much-discussed credit crisis has not - as yet - significantly affected those hotels already in the Pipeline or impacted developers announcing new projects. Today, developers believe that, while construction financing may be more expensive in the short run, interest rates can be expected to stabilize at a modestly higher, yet still attractive level after the markets re-price for risk and resolve their problems. (Hotels Magazine, 10/31/07)

Dairy Queen to Open 500 Stores in China

According to a published report, Dairy Queen plans to open 500 franchised restaurants in China over the next five years. Instead of being developed in shopping malls, where Dairy Queen's restaurants in China are now located, the new units will be placed on the sides of streets and near metro stations in 17 Chinese cities where Dairy Queen stores already operate. When the new restaurants open, China will be Dairy Queen's third-largest market after the United States and Canada. Minneapolis-based Dairy Queen, a holding of Berkshire Hathaway, consists of more than 5,600 units worldwide, including about 50 in China. (Nation's Restaurant News, 11/9/07)

Taco Del Mar founder and CEO, James Schmidt, assumed the duties of president of the 262-unit fast-casual this month upon the sudden departure of David Huether, who also was chief operating officer. Kevin Hansen, formerly franchise development vice president, took over as COO. Company officials confirmed Huether's departure but deferred comment. However, the franchisor noted that Huether would serve as a consultant to the company and remain a stakeholder.

Taco Del Mar franchisees have complained in recent months about rising food costs, distribution problems, lack of support and weakening sales and profitability. Thirty-five branches of the chain closed in the year ended Sept 30. In a memo sent to franchisees earlier this month, Huether, who had been president since 2004, acknowledged their concerns and outlined plans to boost profits, including a shift to smaller portions and possible value pricing. Schmidt also confirmed that the 15-year-old chain would add a value menu, as well as new support programs for franchisees. Based in Seattle, Taco Del Mar currently operates in 25 states. (Nation's Restaurant News, 11/9/07)

Auntie Anne's Expands into Honduras and Greece

Auntie Anne's Pretzels announced this month that it is continuing its global expansion with the addition of stores in two new countries, Honduras and Greece. This development brings the chain's worldwide presence to 935 locations in 14 countries. The first Honduras location was opened on October 5, 2007 in Tegucigalpa by franchisee PD Pretzel Central America S.A. Honduras is the second country in Central and South America for Auntie Anne's since expanding into the market in 2000 with the opening of a store in Venezuela. Wrap Factory South Ltd. will open the first Auntie Anne's in Greece on November 7, 2007 in The Mall Athens. Greece marks the second country in the European Union that Auntie Anne's has expanded into, joining the United Kingdom, which has been part of the system since 2002.

Auntie Anne's has opened 52 new stores to date in 2007, and has plans to open more than 20 before the end of the year. In addition to Honduras and Greece, the Pennsylvania-based franchisor's 935 stores span the U.S., South Korea, Singapore, Philippines, Malaysia, Venezuela, United Arab Emirates, Hong Kong, Indonesia, Saudi Arabia, Thailand, England and Taiwan. (QSR Magazine, 11/1/07)