August: Last Days Of Summer In this issue... Humor: Answers to Common Health Questions Which Will Amuse You. Click Here Street Smarts: A Checklist For Franchising Your Business Industry Focus: Beauty And The Boomers, A Winning Combo Guest Column: Measuring Talent and Performance in Franchise Organizations.

News You Can Use McDonald's Selling Off Boston Market Chain New Nontraditional Subways Wendy's Posts $29M Profit in Second Quartert Tax Attorney to Open Preparation Franchises Smokey Bones Revamps its Menus Private Equity Firm to Buy Comfort Keepers Featured Supplier Signs Plus We Thank Our Sponsors FREE White Paper FranchiseHelp's Franchise Meal Assembly Report Subscribe | Unsubscribe to the Newsletter

Companies have been franchising for more than 50 years now with varying degrees of success. Make no mistake, franchising a business is a major undertaking. There is a lot to think about-geographical and operational issues, potential competitors, financial investment, and much more. We thought it might be useful to break the process down into the essential to-do list for the prospective franchisor. It's not meant to be all-inclusive by any means, but it should give you an idea of what's ahead.

Legalities-Prepare a standard disclosure document. At minimum, the FTC requires every franchise to have a Uniform Franchise Offering Circular (UFOC) before offering franchises for sale in the U.S. Some states have additional registration requirements. Get ready to have literally hundreds of business issues spelled out in print.

Financials-Prepare audited financial statements. This is actually a required part of the UFOC so until your statements are audited, you won't be able to legally proceed with franchising. You'll need an accountant with experience in producing these audited statements.

Systems-This is the heart and soul of any successful franchise company. Every aspect of your business must be developed to the point where it is easily replicated. Then every detail must be documented.

Training-You will need a training program plus qualified people to provide the training. The better your training program, the more successful your new franchisees will be.

Marketing-Formalize your marketing plan. Remember, you will need two sales systems: one for your franchisees to follow that will drive customers into their units and one for you to use to recruit those new franchisees. Prepare marketing materials that can be easily duplicated.

Quality control-Create checklists, policies, procedures and tactics to ensure your systems are uniformly enforced.

Attitude-This is perhaps the most important item of all. You must be focused, positive, flexible, and dynamic-all at the same time.

Introducing: iFranchise Group FranchiseHelp recommends you contact iFranchise for assistance in franchising your business. Click Here to fill out form and an iFranchise representative will contact you.

Beauty and the Boomers, a Winning Combo

More than 79 million babies were born between 1946 and 1964, making the Baby Boomer generation the biggest in history. Each and every day, 12,000 of them turn 50-a fact that's a little hard to swallow for those of us who once said, "Never trust anyone over 30." This generation has always been about youth and vitality, so it's no surprise that Boomers are open to any new weapons to fight the war against aging. Add the fact that nearly half of all Baby Boomers are divorced and desire to "repackage" themselves for dating and you've got the makings of a hot industry: medical spas.

There are more than 1,250 medical spas in the U.S. today-up 50 percent from just a year ago. This explosive growth is seen on the franchise level, too. Radiance Medspa, a medical spa franchise, started operating only 3 years ago and already it has 105 units awarded with 3-4 new units opening each month.

So what do medical spas offer that have Baby Boomers so excited? Chuck Engleman, CEO for Radiance Medspa, says "Remember the Wizard of Oz, 'lions and tigers and bears'? We're 'skin, lips, wrinkles, and hair'. We can improve some imperfections with the skin, reduce fine lines and wrinkles, get rid of unwanted hair and improve the fullness of the lips." In addition to the popular laser treatments and dermafillers, Radiance customers can get Botox injections, get veins remvoed with sclerotherapy, or choose from a long list of cosmeceuticals aimed at making faces look younger.

A Radiance Medspa is designed to look and feel like a day spa, but there's one significant difference. "We have a very strong medical orientation," says Engleman. "Each one of our facilities is a licensed out-patient health facility with a physician medical director who is either an MD or a DO who's also been trained in the different treatment modalities that we offer. All of our clinicians are licensed and certified in the treatments that they administer. If you took a line and divided it between the day spa and a physician's office, we are closer to the physician's office, but with the feel of a spa."

Baby Boomers are the target market for this company, but the products and services appeal to a broader audience-from teenagers looking for laser-based acne treatment to patients in their 70s. "There is more diversity with respect to gender than we expected, too," says Engleman. "A lot of our clients are men. Although the number of women continues to grow, the number of men continues to grow exponentially in comparison."

Measuring Talent and Performance in Franchise Organizations
By: Mariel Miller

It is exciting today to see attention in franchising more focused on applying solid talent and performance management applications inside franchise organizations. Particularly, there is a newfound interest in “franchisee testing”, assessment, profiling and benchmarking. These terms can be new and confusing, and left to interpretation and old bias. I think it is worth our time to look at terms, ideas and, most importantly, results.

Let’s cut to the chase: Do any of these applications produce an ROI? Can a company quantify the expense and drill down to a direct and measurable effect on performance, profitability and revenues? For a long time, the answer was no. Personality was seen as just one facet, and although interesting, something that couldn't be isolated and measured precisely against performance. It is exciting to know that today, with more sophisticated investors and franchise executives, consulting and HR companies that offer these solutions must have the ROI conversation and prove value in order to stay in the game.

A good example of this can be seen in the work of one consulting firm from Princeton NJ. In an upcoming white paper, they outline the dramatic results of a validity study and “Ideal Franchisee Benchmark” created for a prominent franchise brand in 2003. Three years later, Phd-led research teams proved and published remarkable results. As quoted from the study:

“In reviewing the performance of those individuals who had been awarded a franchise after the first study, the company found that our recommendations were strongly related to performance. …Individuals who received a positive recommendation had, on average, over $100,000 more sales per month than those who were not given our positive recommendation.”

These results prove that there is a real need for a scientific approach to understanding not only the person, but the role that the incoming person is asked to fill. Herein lies the secret! Regardless if you are searching for the next master developer, home-based franchisee business owner, or unit manager, work must be done on understanding the role of the person from a “competency basis”. Add real research and a scientific method – and the results are clear.

Franchise organizations can use respected consulting firms and invest in research as part of their focus on building high-performing systems. They can also consider a less intense approach by beginning these steps in-house. Whatever the means to get this vital job done, it appears that all franchise systems should be putting this on their "to do" list.

In the next newsletter, we will discuss how a company can go about improving the selection processes in-house, the pros and cons of using consulting organizations, and more about ROI.

ExtraOrdinary Outcomes! Franchise Performance Systems is a performance coaching, training, and performance management practice. For more information about assessment, coaching or convention speaking, please call 866-417-6011 or e-mail me at Mariel@TheFranchiseAdvisor.com

McDonald's Selling Off Boston Market Chain

McDonald's Corp. is selling Golden, CO-based Boston Market, a year after spinning off Denver-based Chipolte Mexican Grill Inc. The agreement to sell the 630 unit restaurant chain to private equity firm Sun Capital Partners was expected. Although Boston Market is deemed only marginally profitable, it bodes well that Sun Capital Partners is an experienced buyer with other restaurant chains in its portfolio including Bruegger's, Fazoli's, Souper!Salad! and Sweet Tomatoes.

McDonald's acquired Boston Market in 2000 as part of what would become a failed effort to diversify its business. Boston Market, which has 14,000 employees nationwide, has about $600 million of annual sales but an operating profit of less than $5 million. The number of Boston market restaurants has declined from 750 since McDonald's bought the 28 state chain in May 2000 for $176 million. While the number of restaurants has declined, Boston Market has tried to increase its performance through home delivery and a prepared-food business in supermarkets. As of January, the company's food was in 1,300 supermarkets. (Rocky Mountain News, 8/7/2007)

New Nontraditional Subways

From New York to New Zealand, the Subway restaurant chain has opened 628 new locations and reached several milestones since the beginning of March and the end of June of this year. Domestically, the Subway chain passed the 1,000 mark in the state of California, 600 in Virginia and 500 in Tennessee. The chain also has more than 6,700 outlets outside the United States.

The Subway chain now has more than 6,400 nontraditional locations. Some of the advantages of the Subway concept are the minimal equipment needs and space requirements that are extremely flexible and allows Subway to open restaurants in places such as airports, college campuses, convenience stores, grocery stores, hospitals and many other places where space is at a premium. (CSP Daily News, 8/1/2007)

Wendy's Posts $29M Profit in Second Quarter

Wendy's International Inc. posted a net profit of $29.2 million for its second quarter ending July 1 from a loss of $29.1 million for the comparable period of a year ago when Wendy's took a write-down for the sale of the Baja Fresh fast-casual chain. The parent of the nation's third-largest burger chain credited new menu items, the new "That's Right" advertising campaign and improving operations for the positive earnings. The results come as Wendy's is contemplating a sale and other ways of boosting the value of its stock. Revenue for the most recent quarter totaled $632.9 million, nearly even with the $634.1 million of a year ago.

Product introductions during the quarter included the Baconator oversized burger, the Triple Stack cheeseburger, the 99-cent Buffalo Crispy Chicken sandwich, the Frosty Float and a new coffee, Wendy's Custom Bean. A breakfast expansion is on track to be in 650 restaurants by the end of August. Although Wendy's opened 30 new franchised and 9 company-owned restaurants during the quarter, the number of restaurants fell to 6,661, compared to 6.743 at the same time last year, due to closures of underperforming restaurants. The vast majority of restaurants, 5,958 units, are domestic. (Nation's Restaurant News, 7/28/07)

Tax Attorney to Open Preparation Franchise

Tax resolution attorney Roni Lynn Deutch -- of daytime talk show commercial fame -- is looking to stamp her name on return preparation shops throughout the Chicago area. She plans to have 100 to 130 tax center franchises in the area within the next five years, part of a move to put 5,000 offices across the United States. Capitalizing on her name -- she says it's second only to market leader H&R Block in terms of brand recognition for the industry with about 33 percent of Americans recognizing it -- Deutch aims to pull market share from Liberty Tax and Jackson-Hewitt tax centers.

Each of the tax centers will be open from mid-January through April 15 to complete and file tax returns. The rest of the year the centers will be required to be open one day a week and will offer services such as accounting and payroll. For each location, franchisees will pay between $39,000 and $93,000 including a $29,000 franchise fee which Deutch will waive for experienced preparers. The centers pay royalties of 13.5 percent to 14 percent and each office will be able to support 35,000 to 45,000 tax payers.(Chicago Sun Times, 8/3/2007)

With almost half its units shuttered and the rest up for sale, Smokey Bones Barbeque & Grill is continuing to tinker with its menu, perhaps in an attempt to make it more attractive to potential buyers. The Darden Restaurants-owned barbeque chain, which has been trying to reposition itself as more of a broad-menu grill concept, had added a ribs item and said it is working on possible additions. The 73-unit chain said the new Brown Sugar Glazed Baby Back Ribs is the first limited time offering in its eight-year history.

Darden Restaurants announced in May that it was shutting down the struggling Smokey Bones restaurant division by closing 54 units and selling the remaining 73. One party that has expressed interest in acquiring the brand is Robert Emerson, formerly chief executive and majority shareholder of North Country BBQ Ventures LLC, the largest franchisee of Famous Dave's of America Inc. Emerson said he sold his stake in the 11-unit franchise to raise capital for a possible acquisition of Smokey Bones. (Nation's Restaurant News, 7/16/2007)

Private Equity Firm to Buy Comfort Keepers

CK Franchising Inc., which provides home care around the country as Comfort Keepers, has been sold to private equity investors. Allied Capital Corp. will pay $45.2 million to support the buyout of Comfort Keepers by Boston-based private equity firm Webster Capital. Dayton, OH-based CK Franchising operates more than 500 Comfort Keepers franchises in 46 states and seven countries. Comfort Keepers ranks as the area's seventh largest home health care agency with $4 million in 2006 revenue. (Yahoo! Finance, 7/26/2007)