Got a cool concept and a system that’s running like a well-oiled machine? Thinking of taking it to the next level and becoming a franchisor? To help get you started right, we turned to franchise consultant Peter Casey of Capital Franchise Group for his expert insights. Before you sell your first franchise, check his list of tips:

Be willing to make several face-to-face visits. The person buying into your franchise is buying the relationship and your personal experience. Since yours is not a major franchise system, it’s more important to focus on the extra attention and the support that you’re going to provide.

Offer a bigger territory. People buying an unestablished system are going to be naturally reluctant. You need to give a lot more than you will for your second, third, and fourth deal. Their commitment to you is based on trust; prove your commitment to them by sweetening the pot.

Be patient. The process will take a lot longer in the beginning because people are going to want to spend more time and work through more issues.

Don’t break the law. Get familiar with the rules that are in place, especially regarding earnings claims. If you think selling your first franchise is hard, it’s incredibly hard selling your second or third when the first one sued you.

Have appropriate partners lined up. For example, a good commercial realtor who is well-versed with your model and willing to assist in the early stages can make franchisees feel good about you.

Have good marketing materials. Know who your target market is and what they’re looking for in a franchise opportunity. Advertise on different mediums—not just print and not just the Web.

Consider hiring a franchise broker. Someone who has closed franchise deals before can be a big help. It’s tough to run the store and be a full-time salesperson.

Hold the bar high. You’ll be very eager to take a check from anyone you can, but as a new franchisor you need to find somebody who’s had business experience.

Keep it local. Thinking you can support somebody who is in a totally different state at this early stage is unrealistic. Avoid the long distance relationship and start close to your home base.

Contact information:
Pete Casey
(800)883-4060
www.CapitalFranchiseGroup.com

The Premium Coffee Business - Still Hot or Cooling Off?

The last time we looked at the specialty coffee industry (January 2006), business was booming. Sales had topped $10 billion a year and franchisors in the business insisted that Americans' taste for pricey coffee was more than a passing fancy. Then, as now, Starbucks was the industry leader with plans to expand to 20,000 stores in the U.S. and another 20,000 elsewhere around the world. Things were looking great-until the economy shifted into low gear. Starbucks sales and stocks slipped, expansion plans were scaled back, and 100 stores were closed. Did this news herald the end of good times for coffeehouse owners?

Not according to Ron Wermes of Sonoma Coffee Café, a full service coffee store franchise. "I think the market is still going strong. Starbucks is retreating because they're realizing some of the expansion might have been too quick. They're shoring up their whole coffee approach and getting back to basics, which is offering a coffee experience rather than just a routine."

Starbucks built its empire on that gourmet coffee "experience" and Wermes believes it's vitally important. "This is a drink that someone's paying $4 to $5 for-it had better be something more than just a cup of coffee poured out of a container. In our stores, we take a great deal of time with the customer, offering samples of different choices of various products. The equipment is positioned so they can watch their drink being made especially for them and they can carry on a conversation with the barista. We get a better interaction between the consumer and our barista and the consumer gets more of an experience rather than the routine of taking their order and getting them out as quickly as possible."

But what about the latte factor? Aren't people cutting back on pricey drinks in this economy? "I don't believe so," says Wermes. "Historically, when the economy gets tight, people don't give up certain pleasures. They might cut back on going out to eat three nights a week to only one night a week or maybe forego certain luxury purchases. But they will continue to placate themselves with little things like coffee. Coffee is still a small purchase by comparison to other things that one might give up in tighter economic times. So I don't see the economy having any dramatic effect on the coffee market. The only exception is the person who is on a very strict budget and gas prices are forcing serious belt tightening across the board. But for the most part having a pleasurable cup of coffee is not something somebody is going to give up regardless of whether it's their morning fix or evening relaxation. It's one of the few things that's still basically affordable and people will spend money on even in tight economic times."

Contact info:
Ron Wermes, Franchise Development Manager
Sonoma Coffee Café
www.SonomaCoffeeCafe.com
800 381 3884

Your Ideal Client Profile & Ways to Best Reach & Connect with Them

By: Nancy Michaels

I recently had a conversation with a VIP Coaching Client and she was extremely disappointed that her full-color 5000 piece mailing sent to complete strangers didn’t get a response – not ONE response.

Honestly, she did a beautiful job with this full-color piece. There were just a few problems that I had to explain in my Reality Check consult.

First: The biggest was that her mailing list consisted of 5,000 who had never heard of her before and who she didn’t even a luke-warm relationship with any one of them herself. This is an enormous issue to overcome, given that people make buying decisions based on people they know, like and trust. It was too little information given to create that kind of bond between a supplier/vendor and a potential corporate buyer.
Remember, you’re only as good as your list of contacts and it’s never about quantity, it’s about quality. A database of 5,000 unknown prospects is almost useless. You’d need to commit to multiple mailings to each of them in order for them to begin to understand – in a small way – what you do and what you have to offer them.

Second: It’s impossible in my experience to follow-up (yes, you have to follow-up, otherwise you should save your time and money and not send out a darn thing!) with this many people. Isn’t it far more cost- and time-efficient to limit your number of prospects to a number that’s manageable – say 100 – 150. Commit to targeting 25 at a time with a series of letters, direct mail and content-rich information that they can use. This helps to position you as a valued and trusted resource, who they would want to seek out to do business with.
It takes time to solidify trust in any relationship, but especially between professional strangers. Start with a realistic number of prospects, identify a plan to connect with them at least four times before you ever pick up the phone to follow-up. You may be surprised and they may actually call you before you have a chance to make the follow-up call.

Third: I’d venture to guess that the viable list of prospects is far fewer than 5000. Let’s be real. The world should not be your oyster when considering qualified prospects and ideal client profiles. My total list of potential buyers (Fortune 500 Companies who hire me to address their small business and solo-preneur customer base) is less than 150 companies. That’s it. I also never send a drip campaign (I’ll explain that below) to more than 25 ideal client prospects at a time – for one reason. I’d never be able to follow-up with them, the way I should with pleasant persistence.
How do I make the determination of who an ideal client is: review industry trade publications, conference programs, small business magazines, etc., to see what companies have put their money where there mouths are and are actively seeking out small and solo-preneur customers. That’s my list. These are companies that I can get excited about working with to deliver my message to their ideal customer and prospect base. It’s a no-brainer. I get to work with their customers and get well-compensated by them to do so. It’s a win-win-win all around.

Fourth: Sending out only one mailing and expecting your phone to ring is unrealistic and naïve – at best. Utilizing a Drip Campaign, of sending information-rich content to your prospects as a way to endear yourself to them and let them know that you’re interested in building a relationship based on trust, integrity and service. This approach goes a long way in hastening a solid business relationship (perhaps a personal one as well – given that we don’t get married on the first date – typically, unless you’re caught up in the moment in Vegas).
Remember the advertising rule of thumb – it takes at least six impressions on the minds of your prospects before they make the connection between who you are and what you’re selling! Hang in there and take a slow and steady approach to building rapport with your prospects. It will pay back dividends.

Fifth: Have a plan to communicate with your prospects prior to spending large wads of cash on full-color direct mail pieces, web sites, etc. I lay out a direct mail campaign and delegate the mailings to a virtual support staff and five weeks later, before I’m even starting my follow-up calls – my phone is ringing! Go figure, but it works ever time.

Business Development entrepreneur Nancy Michaels publishes the ‘GrowYourBusiness’ weekly e-zine with 13,000+ subscribers. If you're ready to start working with Fortune 500 companies, beef up your marketing, make more money, and have more fun and free time in your small business, get your FREE audio download of How to be a Big Fish In Any Pond and e-book at www.growyourbusinessnetwork.com.

Starbucks to Open 150 European Locations

Starbucks Corp is boosting its European presence with plans to license 150 new locations in the United Kingdom, France and Germany over the next three years, The Wall Street Journal reported this month. The shops are to be planted at airports and railway stations, and come as the chain looks to offset a slumping U.S. market with overseas growth. Earlier this month, through a Mexican partnership, Starbucks opened its first coffee shop in Argentina.

The European deal is Starbucks' largest licensing agreement outside the U.S., the Journal said, and could test Europeans' taste for take-out coffee. The licensing deal is being done with SSP, a U.K. food-retail operator that runs three airport Starbucks in the country and also operates Burger King and Pizza Hut outlets. In November Starbucks reported its first quarterly drop in U.S. customer traffic to established stores, and the trend has continued. (Reuters, 6/12/08)

Roark Capital Acquires Primrose Schools

Private equity firm Roark Capital has acquired Primrose Schools, a leading provider of early childhood education. Primrose, headquartered in Acworth, GA, was founded in 1982 and operates as the franchisor of 182 private child care centers generating approximately $275 million in system-wide revenues in 15 states across the country. Primrose Schools provides high quality educational programs to children 6 weeks to 5 years old and after school learning programs for 6 to 12 year olds. Primrose Schools’ philosophy is based on a balance of learning, character development and play.

Roark specializes in business and consumer service companies with attractive growth prospects and revenues ranging from $20 million to $1 billion. Specific areas of focus include franchise, direct marketing, business services and financial services. Roark’s 14 franchise brands collectively have more than 13,500 points of distribution, 2,500 franchisees, and $3.2 billion in system-wide revenues in 50 states and 33 countries. (Roark Capital Press Release, 6/16/08)

Burgers Continue to Gain in Popularity

A recent study by NPD Group, Port Washington, N.Y., in conjunction with Datassential, Chicago, found that 7% more restaurants—across all categories—are offering burgers on the menu, compared to figures from 2006. The study also found that burgers made up 14% of all restaurant orders in 2007. Representing about 8.5 billion burgers, per NPD, more and more Americans are bellying up to order beef.

However, key to the category's growth is innovation that has given the burger a more contemporary feel. According to the NPD study, burgers made with Angus beef—a reference to the cattle breed of Scottish descent from which the particular meat comes—have seen double-digit growth over the past two years. This is due to the beef's adoption by major fast food chains. Burger King, for example, introduced the Angus Burger in 2004, though the line was phased out. Now the chain offers Steakhouse Burgers that are made with Angus beef. McDonald's is currently testing its Angus Third Pounders in three U.S. markets. Restaurant operators are also customizing burgers to reflect their cuisine and concept. (Brandweek, 6/28/08)

Wyndham to Acquire Microtel and Hawthorn Suite Brands

Wyndham Worldwide Corporation announced earlier this month that it will acquire US Franchise Systems Inc. and its Microtel Inns & Suites and Hawthorn Suites hotel brands, together totaling more than 29,000 rooms, from a subsidiary of Global Hyatt Corporation.Microtel Inns & Suites, a chain of 292 all-new-construction economy hotels, with 38 more under construction, has been ranked number one in guest satisfaction in its segment by J.D. Power and Associates for the last six years. Wyndham Worldwide will enter the all-suites, extended-stay market with the addition of the 91-hotel Hawthorn Suites.

Wyndham Hotel Group said that they will enhance the support provided to franchisees of Microtel Inns & Suites and Hawthorn Suites and ensure that their hotels receive maximum benefit from their comprehensive distribution platform, information technology capabilities, field services and sales and marketing functions. Parsippany, NJ- based Wyndham Hotel Group encompasses more than 6,550 franchised hotels and approximately 551,000 hotel rooms worldwide, not including this acquisition. (Hotel Magazine, 6/2/08)


Jack in the Box Posts 2Q Losses

Jack in the Box Inc. reported last month a 3-percent drop in its second quarter profit and cited the same challenges plaguing almost all restaurant companies: higher costs and slowing sales. For the quarter ended April 13, net income fell to $26.4 million, or 44 cents per share, from $27.2 million, or 40 cents per share, in the year-ago quarter. The increase in latest-quarter per-share earnings was aided by a reduced share count. Total revenue rose 5 percent to $693.5 million, aided by new unit openings within both its namesake quick-service chain and the fast-casual Qdoba Mexican Grill. At quarter’s end, the company’s system included 2,142 Jack in the Box restaurants, 749 of which are franchised, and 423 Qdoba locations, 326 of which are franchised.

Many quick-service chains, with the exception of Burger King, have recently reported decreased or at least slowed same-store sales results. While quick-service restaurants have weathered the stalled economy and tight-fisted consumer spending better than their full-service counterparts, the early months of the year have shown that the lower-priced QSRs are also feeling a recessionary pinch. (Nation’s Restaurant News, 5/14/08)

Demand from Foreign Travelers Keeps U.S. Hotels Afloat

For the U.S. hospitality sector, the current economic downturn is different from previous recessions and is not expected to have such a severe impact. Everyone seems to agree that we are in a recession, but it is different from the recessions in 1991-1992 and 2001-2002 since during those recessions, hotels were empty. This time around there is still a solid demand for hotel lodging. Experts point to strong international demand and a relatively moderate development pipeline as the main reasons for the optimistic outlook. The continued weakness of the dollar is producing multiple beneficial effects on the U.S. hotel market and it may pull the sector through current recessionary pressures.

While domestic demand has softened, foreign travelers are keeping U.S. hotels full and room rates up. In fact, the United States has welcomed a record numbers of global visitors over the past 18 months, according to the U.S. Department of Commerce. International visitors also spent a record-breaking $122.7 billion on travel to and tourism-related activities within the U.S. in 2007, an increase of nearly 14 percent over the previous record set in 2006, according to the Commerce Department. (Global Real Estate Monitor, 6/5/08)