The Internet is the predominant lead generation tool today, but not everyone understands how to use it effectively. According to Peter Casey, owner of BAWebLeads.com, a lead consolidation site, there’s a difference between handling Web leads versus leads generated through traditional methods. “A broker/consultant working with Web leads needs to recognize that the people don’t know you. They’ve gone to an Internet site, asked for information and now they’re getting a phone call. Why should they listen to you? Broker/consultants need to educate themselves and present a true value-added proposition so the person they’re speaking to can say, yes, it’s clear that this person brings something to the table that I don’t have on my own.”

Casey offers these additional tips for getting the most out of your franchise internet leads.

1. Have a routine for contacting new web leads and initiate promptly. For example a call in the a.m. followed up with an email; A call the next day in the p.m. with another email and a teaser note about what they are interested in.

2. Voicemail is a good tool for getting your message across, but keep it short and concise. And let them know that you’re responding to their request for info.

3 . When following up with email, remember you have but a brief moment to get your message across. Use the subject line to your advantage. If the prospect lives in Texas and wants a children’s franchise, the subject line could read: “Children’s franchises for Dallas TX”.

4 . Listen very carefully to what they’re telling you and what they aren’t. Having a good telephone headset will make you sound better, be more comfortable, and allow you to take better notes.

5 . Assume that the searcher knows nothing about the help available to them from franchisors (or you) for getting financing, site selection, etc. People are often afraid to let on that they don’t know what they’re doing. Offering them help encourages them to ask more questions and allows you to answer them.

6 . Be informed about the “top franchises”. FranchiseHelp and Franchise Times are great
credibility builders for you. Clients appreciate hearing “I just read an article about X franchise—I can fax a copy over if you’d like.” People like to know that you know what’s going on in the industry.

7 . Always ask for referrals, even if they’re not buying. They’re free and they often work when the original lead doesn’t.

Exit Poll from the International Franchise Expo (IFE)

The 17th annual International Franchise Exhibition in Washington D.C. ended last week. It’s the largest franchise expo of the year and although we don’t have the head count for this year, in 2007 there were over 13,000 visitors checking out the hundreds of franchise opportunities. We thought it would be interesting to do a little exit polling to find out which way the franchise winds are blowing. This week we have comments from exhibitors Leo Tudela, Dave Davis, and Skip Barrett.

Leo Tudela is the CEO for Daily Grind Unwind, Inc., a fast-growing franchise in the coffee house industry.

Q: How does exhibiting compare to other forms of prospecting?
A: It’s somewhat better because you do get face-to-face time and you can prescreen people immediately. With Internet inquiries, which is the dominant way of growing the business nowadays, you have to call and go through multiple interactions before you can figure out if they’re for real or not. So from that perspective, it’s more efficient.

Q: Did the economy affect attendance at this year’s Expo?
A: We noticed the attendance this year was significantly lower. But I didn’t attribute that to the economic situation. People are primarily using the Internet first because it’s a passive, nonconfrontational way of looking at business concepts. We have the same number of inquiries via the Internet lead generation as we did 18 months ago when the economy was different. And our January-to-date is actually stronger than it was a year ago.

Dave Davis is Vice President of Chocolate Graphics International Franchising USA. The International head office is based in Queensland Australia.

Q: Judging by the Expo, is franchising being affected by the economic downturn?
A: People are obviously a little more cautious. But coming from a suppressed economy in Australia where we went through some horrendous changes last year, I was really impressed that people are still very confident in this economy. Most of the analysts that I’ve spoken to say we’ve hit rock bottom and things are on the upturn. So it’s a very good time for anybody to enter into franchising. If one can buy at bargain basement and then have the economy spiral upwards, then obviously the value of whatever they purchased is going up, too.

Q: How was the quality of the crowd this year?
A: Most of the people that we spoke to were quality prospects, asking all the right questions. There weren’t a lot of tire kickers, rather there were a lot of very serious business people there.

Skip Barrett is Director of Franchise Development for GarageTek, an international franchise concept for custom installed garage organization and storage.

Q. Are exhibitions still a good way to find quality franchise prospects?
A: Yes, if you have the appropriate concept for the crowd. If I was just selling GarageTek, which is a $300K startup, chances are I probably wouldn’t attend. But I happened to be there with a concept that has a much lower startup cost. I thought the crowd was good for that.

Q: Is franchising being affected by the economic downturn?
A: It depends on the franchise. There are some that live for (economic) situations like this. The good news for franchising is it frees up a lot of people because unemployment goes up and people take parachute packages and so on. The bad news is a lot of franchises are dependent on an economy that is a bit more robust, so there’s going to be caution out there in the marketplace.

Practical Ways for Franchisors to Deal in Today's Economy.

By: Aaron Chaitovsky

Here’s the bleak reality. Consumer spending is down. Costs are skyrocketing. Competition is getting fierce. Entrepreneurs have all heard the saying that “the best way to maximize profits is to expand and the easiest and quickest way to expand is franchising”. Sounds great, sign me up!

And many entrepreneurs did just that – expecting the riches to start rolling in.
Now let's get back to reality. You are now the franchisor and have been selling franchises for a number of years. You’ve invested more of your money than you ever imagined you would, put in endless hours and sleepless nights worrying and dealing with all of the “little” surprises and obstacles that you were never warned about. Your system is carrying some franchises that you are sorry you sold and to top it all off, there’s this wobbling economy.

We all know that “you can’t control the economy, it’s completely out of your hands”, or is it? Remember, you are the franchisor. You sold the franchisees on a program that had a game plan and a strong support system.

If you are a franchisor and any of the above sounds familiar, you are not alone. The true test to your franchise concept is how you respond to the economic forces that may be squeezing both you and your franchisees.Here are three steps you can take today that will put your franchise on the road to recovery.

Step 1. Understand who is suffering. Your first concern is to help the existing franchisees deal with the economy. Work with them one on one to find ways so that they can improve their bottom line. Stay away from promotions that only increase sales dollars but don’t increase bottom line (i.e. two for one sales).

Step 2. Speak with vendors. They need business as much as you do and might be willing to cut deals for legitimate reasons. Consider passing these savings along to your franchisees. Remember, the franchisees can be your most convincing and credible advertising vehicles.

Step 3. Reassess your business plan. These are difficult times. “Pie in the Sky” business plans and projections aren’t going to cut it in today’s marketplace. And falling short of unrealistic goals can hurt morale in your organization and with franchisees. So set more realistic short term goals and growth expectations. Share these ideas with your employees and motivate them to achieve these goals with small rewards every time the company achieves even baby steps toward this new goal.

The above is just a start. Nevertheless, it’s important to realistically and shrewdly assess the current health of your franchise in light of the economic downturn. Take your head out of the sand and instead of shying away from obstacles, recognize that handled in the right way, they can also turn into opportunities to improve your business.

Aaron J. Chaitovsky, CPA, is a partner in Citrin Cooperman & Company LLP’s New York office and chairs the firm’s Franchise Audit and Consulting Division. Aaron serves as a trusted advisor to both active and potential franchisors and franchisees to provide financial and profitability consulting to increase their bottom line. He can be reached at 212-697-1000 or via e-mail at achait@citrincooperman.com.

Burger King Experiments with Whopper Bar Concept

Burger King announced it will introduce franchisees to a downsized alternative restaurant concept called the Whopper Bar during their convention in May. Franchisor Burger King Holdings Inc. describes it as hipper and more "interactive", with features like a display prep area where crewmembers will assemble as many as 10 new types of Whoppers to customers' specifications as the patrons watch.

A spokesman for Burger King said the Whopper Bar is still in the conceptual stage and will be targeted for tight locations where a full-sized Burger King might not be feasible, such as within an airport or a casino. The present plan calls for such design components as chrome, wood, exposed brick and plasma-screen televisions showing a fire. Each outlet could feature as many as 10 Whoppers that are not on the standard menus of Burger King stores. Some burgers could be versions previously offered exclusively outside of the United States, as well as limited-time offers. (Nation's Restaurant News, 3/28/08)

Sheraton Launches Aggressive Growth Plan

Sheraton Hotels & Resorts Worldwide is initiating the most aggressive global expansion in the brand’s history, with 54 hotels scheduled to open and 20,000 new rooms to be added to the brand by 2009. The Sheraton brand’s growth plan, which includes an investment of $2 billion in new hotel openings in North America, is part of a larger initiative to revitalize and differentiate the guest experience at its 406 hotels and resorts across 71 countries. Sheraton and its owners are undertaking an aggressive multi-year strategy to improve the quality and consistency of the brand portfolio through significant enhancements, including a new lobby experience that serves as a destination for guests, stylish new guest rooms and a host of innovative guest offerings.

In 2008, Sheraton will open one hotel every 12 days in cities and regions around the world including Dallas, Denver, Minneapolis, Phoenix and Metropolitan Washington, D.C. in the U.S. as well as Ireland, Argentina, Egypt and China. At the end of 2010, Sheraton will expand in North America, Europe, the Middle East and Asia and augment its portfolio by almost 70 properties, 30 of which will include spas.
(Hotels Magazine, 4/7/08)

Pizza Chains Suffer Sluggish Sales

It’s a tough time to be in the restaurant business when your two main ingredients are cheese and dough. The nation’s largest pizza chains are being hammered by sluggish sales and runaway ingredient costs with dairy and wheat prices skyrocketing in the last year. For example, Domino’s Pizza sales at domestic stores are down due to the combination of unprecedented cost inflation and cautious consumer spending. Yum Brands, the owner of Pizza Hut, has had its problems, too. Though the company, which also owns Taco Bell and Kentucky Fried Chicken, doesn’t break out sales for its different chains, a company spokesman said it was experiencing the same challenges as its competitors. Same-store or comparable-store sales, those for stores open at least a year, for all of Yum’s brands were flat last year.

Most restaurants have been hit hard by rising ingredient costs as have consumers at the grocery store. Flour prices are up 93 percent from February 2007 to February this year and cheese jumped 25 percent, federal statistics show. But pizza chains have more woes than high ingredient costs. They haven’t figured out a way to compete with the value menus at McDonald’s and Burger King which are thriving as consumer pocketbooks become squeezed. Even though the pizza chains are constantly offering specials, it is pretty hard to order a meal for less than $5 – especially if it’s delivered – and usually it’s well over $10 if you include drinks and extra toppings. By contrast, a double cheeseburger, fries and a Coke can be bought for $3 plus tax at McDonald’s.
(NY Times, 4/13/08)

Ruby Tuesday's Franchisee to Expand in UAE

Casual dining restaurant group Ruby Tuesday has announced that Bin Hendi Hospitality, its franchisee in Dubai, will expand its operation to six of the seven United Arab Emirates. Bin Hendi is planning to develop seven Ruby Tuesday restaurants in Dubai and five in the UAE. Ruby Tuesday currently operates in Saudi Arabia and Kuwait. In addition to the UAE development, new restaurants are expected to open in Cairo, Kuwait and Bahrain in 2008. Ruby Tuesday said that it has been expanding its franchise presence around the world during the past several years and continues to seek international franchising opportunities.

National Arabic company for Restaurant Management (NAC), an operating and development partner of Ruby Tuesday, currently operate three Ruby Tuesdays in Kuwait and will open its fourth restaurant in Cairo. Construction of the fifth restaurant, to be located in Kuwait city, is scheduled to begin soon.
(Food Business Review Online, 3/27/08)

Weak Dollar Good for Hotels

The U.S. dollar’s continued downturn abroad has not affected the hotel industry according to a recent report. With exchange rates tipped in their favor, international tourists are flying to the U.S. and are prepared to splurge on luxuries that fewer and fewer Americans can afford. The U.S. Lodging report released from Ernst & Young’s Global Real Estate Center said the dollar’s weakness is expected to float the U.S. hotel industry through the economic slowdown that has stymied domestic travelers.

According to the U.S. Department of Commerce, foreign visitors spent $111.6 billion in the first 11 months of 2007, an increase of 13% from the previous year. International tourists are also taking advantage of their strengthened currencies to splurge on room upgrades or luxury-brand hotels. The report stated that hotel companies with strong brand names like Hilton, Marriott, Starwood, Fairmont and Intercontinental will especially benefit since they are more recognized globally.
(Forbes.com, 3/26/08)

Krispy Kreme Posts Large Loss for 4th-Q

Krispy Kreme Doughnuts Inc. reported this month wider net losses for both its fourth quarter and full year, versus the same periods a year earlier, on increased charges for closed units and decreased sales. The company, which operates or franchises 449 Krispy Kreme restaurants, booked a net loss of $31.8 million, or 50 cents per share, for the 14-week quarter ended Feb. 3, compared with a net loss of $24.4 million, or 39 cents per share, reported for the 13-week, year-earlier quarter. Impairment and lease termination charges in the latest quarter totaled 43 cents per share, the company reported. The net loss for the year was $67.1 million, or $1.05 per share, compared with a net loss of $42.2 million, or 68 cents per share, a year earlier. (Nation’s Restaurant News, 4/17/08)