| December
2007 |
Volume
9, Issue 12, Part 2 |
| 
December: Festivities and the end
of a year
In this issue...
Video:
Magic Tricks to give you something to contemplate.
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End
of the Year (2007) Q & A with Franchise Leaders - Dec. Part
2
It's fascinating how
different people in the same (franchising) industry can
share similar ideas on some issues yet be so diverse in
other ways. As we continue our end of the year roundup,
we found that people from all areas of franchising have
unique insights into where franchising has been and where
it's headed. Of course, we couldn't resist having some fun
uncovering the lighter side of these dynamic people.
Tune in with Marianne Murphy, Steven Greenbaum,
Don Johnson, Harold Kestenbaum and Dan Martin.
Marianne
Murphy is the VP Marketing & Development for
HouseMaster, a home inspection franchise.
Q: How is the troubled real estate market affecting
your business?
A: We’re a 30 year old franchise so we’ve been
there, seen that. In markets such as this we tend to thrive.
What happens is the crowd thins. Anybody who thinks they
could get into the business just because there was a boom
is not going to survive. And that’s what a good quality
franchise does, helps you get over the rough markets and
actually thrive in them.
Q: What’s the first job you ever had?
A: Car hopping at a Stewart’s Root Beer. And then
a Carvel, so I’ve been in franchising all my life.
Q: What’s the biggest myth about franchising?
A: That it’s easy—that it’s a “get
rich quick.” It’s not. A lot of hard work has
to go into it.
Q: If you could trade places with anyone for one
day, who would it be?
A: Lynette McKee, VP of franchising for Dunkin’ Brands.
She came from a very humble beginning and is a very motivated
woman. I just think she is a good role model and I’d
love to see how she pulls it all together.
Q: What’s the most adventurous thing you ever
did?
A: Tipping my skis over one of the back bowls at Vail. I
had no business being there and just kept going.
Q: What’s your favorite hotel amenity?
A: A pillow-top mattress.
Q: What’s your secret indulgence?
A: Dark chocolate Hershey’s Kisses.
Q: What’s your fantasy job?
A: Talk show host.
Q: if you could invite anybody to a dinner party,
who would it be?
A: I don’t cook so it would have to be Rachel Ray
because she can cook and she’s just plain fun. Besides,
if I had her cooking, I could get anybody else I wanted
to come.

Steven
Greenbaum is President, CEO and cofounder of PostNet
International, a business services franchise. He is also
slated to become the Chairman of the IFA in 2008.
Q: How will the cooling economy affect your business
in 2008?
A: We’re really a small business support center that
is needs-based, which is very different from a business
that is reliant on a trend or certain market conditions.
People use our stores as a problem solver. It’s an
extremely stable business economically, now more than ever.
Q: What’s your favorite destination?
A: I absolutely love Colorado and that’s where I live.
I have the luxury of living in my favorite place.
Q: What was the most interesting franchising trend
in 2007?
A: There are now ways of utilizing franchising in a social
environment to serve under-served communities. For example,
I’m on the board of directors of a franchise model
in Kenya that has 65 child and family wellness shops. We’re
using franchising as a vehicle to provide critical drugs
and medical services to communities in Africa where they
have no access and no hope of being treated.
Q: What’s your biggest gripe about mainstream
news?
I really get frustrated with some of the minutia. I was
shocked at how much energy and attention went into this
whole baseball steroid issue. It’s a big issue, but
how could we be so consumed by this when you look at the
world of issues that are on our plate right now?
Q: What’s your favorite franchise that you
personally frequent?
A: Del Taco. It’s a brand that we’ve known and
respected for years and it’s now under the leadership
of Sid Feltenstein, CEO of Sagittarius Brands. He’s
one of the most visionary, focused, and competent executives
in franchising today.
Q: What would you be doing if you weren’t
doing this job?
A: I can’t imagine anything else. This job is me.
I love the opportunity to be part of a shared vision, to
lead and motivate people. It’s very humbling and it’s
an honor to do what I do.
Q: Do you ever do anything adventurous?
A: All the time. I’m a single engine airplane pilot.
I also scuba dive, mountain climb, mountain bike ride, and
travel worldwide from rural parts of Africa through Europe.
Q: What’s the most important issue facing
the nation in 2008?
A: Unification. Whether we’re looking at Republicans
versus Democrats or ethnicity or other issues, as a nation
we need to come together. We need to learn how to understand
each other’s differences and challenges and work more
effectively together.
Q: What’s something you admire about another
country?
A: Who wouldn’t admire the healthcare system in Canada?
I also admire the strength and the conviction of the South
African people. Over the last 14 years to see that country
emerge after Apartheid and become the nation that it has
and see the passion of the people and the empowerment movement—we
should stand up and take notice.

Don
Johnson is a business finance consultant with Diamond
Financial Services, loan packagers specializing in SBA financing.
He also cohosts a franchise radio show on the Internet.
Q: Do you think the cooling economy will affect
the franchising industry in 2008?
A: I definitely think there will be some effect, but on
a scale from 1 to 10, I’d say in the 2-3 range.
Q: What bit of advice would you give to franchise
buyers looking for financing?
A: Make sure you look at all your financing options and
make sure you get prequalified early on in the process so
you know what your loan potential is—even before you
start to look for a franchise. And obviously to speak to
a franchise financing specialist because we work with lenders
that are very pro franchise.
Q: What do you do in your leisure time?
A: I like playing with my twins who are 3 ½. I also
read a lot.
Q: What do you like to read?
A: I like biographies and autobiographies of people who
are successful. I read the Sam Walton book, and the Dave
Thomas book, and even Franchising for Dummies, which was
cowritten by Dave Thomas. But I’m a big fan of Donald
Trump, so his books like The Art of the Deal are my favorites.
Q: What’s the biggest myth about franchising?
A: People assume that once they make their investment it’s
not going to be as hard as a regular non-franchise business.
They don’t realize that they’re going to have
to work just as hard as with any other business.
Q: What’s the bravest thing you ever did?
A: Starting up a business at age 27.
Q: Who would you like to invite to a dinner party,
living or dead?
A: Babe Ruth, Abraham Lincoln, my dad, and Donald Trump.
Q: What’s your fantasy job?
A: Exactly what I’m doing.

Harold
Kestenbaum is a top franchise attorney with Ruskin
Moscou Faltischek. His book, So, You Want to Franchise
Your Business? (Entrepreneur Press) will be released
in June of 2008.
Q: How will the upcoming election affect franchising
in 2008?
A: Franchising revolves around the economy and I think that
we haven’t been helped by Bush. I’m not sure
which candidate would be more of a benefit to franchising.
We did very well with Bill Clinton in the White House. I’m
not sure she’s ( Hillary Clinton ) as good. It’s
hard to tell.
Q: What’s your biggest pet peeve about franchisors?
A: They don’t read.
Q: What was the most interesting trend in franchising
in 2007?
A: A lot more women are getting into it, both as franchisors
and franchisees.
Q: What law would you like to change?
A: The FTC rule, which is the main law for franchising,
doesn’t require a registration with the government
like the securities law does. I would love to see the FTC
change the law so you have to file in one place for the
whole country, which would be in Washington like the SEC
does. That’s not the way it is in franchising. You
have 15 different states and it’s all over the place.
Q: What was your childhood ambition?
A: To be a professional athlete or a sports agent.
Q: What is something you admire about another country?
A: The country I admire the most is probably Israel. They’re
like the little engine that could. For a small country with
a small population, they’ve done so much to better
themselves, as opposed to all these gigantic nations and
they do it with such little help from anybody except us.
Q: Who do you admire most?
A: Bill Clinton, because he grew up poor, struggled to become
President and he really made quite a man out of himself.
Q: What’s the most important issue facing
the nation in 2008?
A: I’d like to say the economy but I have a real problem
with immigration issues.
Q: What’s the bravest thing you ever did?
A: Speaking up for my son when he needed to be spoken for.
Q: Where would you like to go that you haven’t
yet gone?
A : Alaska and Israel.
Dan
Martin is President of IFX Online, a tech firm
that develops web-based applications for franchise companies.
He is also Chairman of the IFA Suppliers Forum.
Q: How is the cooling economy going to affect the
franchise industry in 2008?
A: It’s having somewhat of an impact on new sales
of franchise systems in that a number of prospective franchisees
are finding it more difficult to get financing.
Q: What was the most interesting franchise event
of 2007?
A: The IFA convention in February. It was the biggest convention
we’d ever had and it incorporated a remarkable series
of workshops, especially for startup franchisers.
Q: What’s your biggest pet peeve about franchisors?
A: They don’t document their communications enough
with their franchisees.
Q: What’s your favorite movie?
A: Saving Silverman. I saw it on DVD probably 10 times.
Q: What do you do in your leisure time?
A: Run, ride motorcycles, play tennis, and hang out at the
beach drinking Margaritas.
Q: What was the first job you ever had?
A: House painter.
Q: What’s your favorite franchise that you
personally frequent?
A: Baskin Robbins
Q: What was your proudest moment?
A: Making it to the office today on time
Q: What’s your philosophy of business?
A: Multitasking is critical.

Foodservice Sales Growth to Slow in 2008
Foodservice sales in the United States will grow at a slower rate
of 4.4 percent during 2008 or just under 1 percent in inflation-adjusted
or "real" terms, the National Restaurant Association forecast
in its comprehensive outlook for the year ahead. That predicted
rate would fall well below the association's projected 2007
real growth of 2.1 percent and the 3.5-point gap between
the real and nominal figures for 2008 - a discrepancy usually
attributed to menu price increases - underscores the cost
pressures that are expected to eat into margins despite
the price hikes.
Nonetheless, the increase forecast by the
NRA would raise total U.S. foodservice sales to $558.32
billion, a $23.6 billion rise from the projected '07 tally.
Association officials often point out that the industry's
nominal sales increase is usually larger than the total
intake of many major U.S. industries. (Nation's Restaurant
News, 12/12/2007)
Wendy's Adds Double Burger Bargains
Wendy's has added a 99-cent double cheeseburger to its value menu,
matching the double-burger bargains already offered by McDonald's
and Burger King. In Southern California, BK is using billboards
to tout its 99-cent double cheeseburger as being bigger
than McDonald's. Privately, BK has acknowledged that McDonald's
$1 double-cheeseburger has been a strong customer draw.
Wendy's entrant in the emerging value battle
will be promoted via national television advertising from
Dec 31. through the end of January. Called the Snack Attack,
the new sandwich consists of two hamburger patties with
cheese between them. According to Wendy's executives, the
addition of the burger is the first step in a new initiative
that will hopefully broaden the way people think about value
from Wendy's. The chain currently operates or franchises
6,600 restaurants worldwide. (Nation's Restaurant News,
12/18/07)
Darden's Profit Drops
Darden Restaurants Inc. reported a 29.5-percent year-over-year drop
in profit for the second quarter ended Nov 25. with results
weighed down by its October acquisition of Rare Hospitality
International, Inc., a "difficult consumer environment"
and a "tougher than anticipated cost environment." Because
profits fell short of projections, Darden cut its per share
earnings forecast for the fiscal year ending in May. The
company now expects annual earnings per share to grow between
2 percent and 4 percent from fiscal 2007, including charges
related to the acquisition of Rare. In September, Darden
had said it expected year-over-year earnings growth of as
much as 10 percent.
The operator of 1,738 casual dining restaurants
said latest-quarter net earnings fell to $43.5 million or
30 cents per share from $61.7 million or 41 cents a share,
a year earlier. The $1.4 billion acquisition of Rare, as
well as charges for a legal settlement in California, negatively
affected per-share profit by 12 cents per share. The Rare
acquisition added the Longhorn Steakhouse and The Capital
Grille brands to Darden's portfolio, which already included
Red Lobster, Olive Garden, Bahama Breeze and Seasons 52.
The company recently received regulatory approval to proceed
with the sale of its Smokey Bones barbeque chain to an affiliate
of Sun Capital Partners for about $80 million. (Nation's
Restaurant News, 12/19/07)
CKE Restaurants Inc., which operates Carl's Jr. and Hardee's restaurants, announced this month that it sold 30 Hardee's restaurants in the Kansas City area as part of an ongoing refranchising program. CKE said franchisees Steve Rosenfield and Buddy Brown bought the restaurants. The two franchisees already operate Hardee's locations in Georgia, Montana and Wyoming. The refranchising program, announced in April, is expected to involve about 200 Hardee's locations in the Midwest and Southeast. So far, the company said it has sold 136 restaurants to franchisees and secured commitments for 59 new franchise restaurants under development agreements.
(CNNmoney.com, 12/5/07)
Nestle USA is planning to sell smoothie maker Jamba Inc's drinks at
grocery stores in eight states in the western United States,
the Wall Street Journal said in its online edition. The
deal is Jamba's first venture beyond its own retail stores
where its drinks had been sold exclusively. Two types of
Jamba's fruit drinks will be sold in supermarkets in California,
Utah, Nevada, Washington, Oregon, Idaho, Arizona and Colorado
starting in the second quarter next year.
According to the president of Nestle USA's
beverage division, the deal will be expanded to other states
and into new channels like convenience stores. Nestle USA,
a unit of Nestle, will manufacture and distribute the drinks,
the Journal said, adding it may eventually sell Jamba Juice
in other countries. (Reuters.com, 12/4/07)
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