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February 2007 |
Volume 8, Issue 2, Part 2 |
Franchise Buying Tips: Purchase Without Passion
Pop quiz: what's the number one rule of buying a franchise? If you answered: meet with the franchisor, go with a popular brand, or read the UFOC - you're wrong. The first rule of buying a franchise is this: Do Not Buy On Emotion.
Yet that is exactly what most franchisees do. It's good to be enthusiastic about your future business plans. It's bad to fall in love with the deal and let your emotions take the lead. Think that won't happen to you? If you talk to a hundred franchisees you will find that few knew exactly what they were getting into. Most are sensible people with plenty of information who selectively twisted the facts to support an emotional decision.
Give your emotions a cold shower and use this list of safeguards to help you cut through the hype and make an objective decision:
1. Do the math – Have your accountant make sure the figures and projections add up.
2. Get professional help – Invest in an experienced franchise attorney and / or franchise consultant. Avoid sharing your plans with friends, relatives, and other ‘yes’ people who don’t understand the risks involved.
3. Chill out - Be patient and wait for the right opportunity. If you are pressured to make a quick decision, walk away.
4. Leave your checkbook at home – You’re most vulnerable to an emotional appeal at that first meeting with the franchisor. Never hand over money before you’ve done your due diligence.
5. Be pessimistic – Take off the rose-colored glasses and run a financial model that cuts the sales projections in half, doubles the expenses, and triples the length of time until you expect to be profitable.
6. Have an exit strategy – Like a pre-nup, it seems counterintuitive. But you need to know you won’t be stuck if you make the wrong choice.
7. There are other fish in the sea – Before you fall in love with the first franchise you see, get information packages from all the other franchisors in the industry and make an objective comparison.
8. Beyond the honeymoon – Sure, you’re excited now, but can you really see yourself doing this 20 years from now?
9. Buy a proven system or one where the upside is huge Be careful with a franchise with only one unit or a very short business history. Don’t be tempted by an invitation to “get in on the ground floor”... unless the business concept really makes sense.
Wedding Travel
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Company: All About Honeymoons
Units: 105 U.S and Canada Startup costs: $9.9K-36K Franchise fee: $9K/19K/29K Address/phone: 7887 E. Belleview, #1225, Englewood, CO 80110
Phone: (800)813-9557 Website: www.allabouthoneymoons.com In business: 1994
Franchising since: 2004
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Everyone knows that Valentine's Day is the most romantic day of the year. But did you know that more couples get engaged on Valentine's Day than any other day of the year? Once the engagement is official, the next step is planning the wedding. There are over 2.4 million weddings in the U.S. every year and 96% of newlyweds will travel for a honeymoon. That's $80 billion worth of weddings and another $8 billion for honeymoons. It's a huge market - one that the founders of All About Honeymoons is targeting with great success.
Co-founder and CMO, Rick Grossman, says, "We are capitalizing on a niche market, honeymoon/destination weddings. Our concept is having a huge impact on the travel industry and is the only one of it's kind. We straddle two industries, the wedding industry and the travel industry. That's what makes us very unique and hard to copy. I've been in the wedding industry since 1983. My business partners have been in the travel industry for 14 years. Other travel agencies, even the biggest ones in the country, can't really compete with us because they know travel but they don't know the wedding side of the industry. They don't know how to find couples, work bridal shows properly, or market to brides."
Because All About Honeymoons franchisees offer full-service customized events, they consider themselves wedding professionals that sell travel, not travel agents that sell weddings. Their target clients are Echo Boomers, the kids of the Baby Boomers, who are now aged 26-30 and ready to get married. "They are different than previous newlyweds," says Grossman. "They are getting married later in life. Their average income is $85,000 and they own property. And they like to research wedding services on the Internet, so we often connect with them through websites like TheKnot.com."
Destination weddings have been growing in popularity. Forbes magazine cited them as the only niche in the travel industry that wasn't affect by 9/11. Destination Wedding Magazine stated that destination weddings have increased 400% over the last 10 years. Based on his experience, Grossman speculates that number is going to increase even more over the next several years. "There are several reasons why, but cost savings is high on the list. A domestic wedding runs about $25,000 compared to an average of $16,500 for a destination wedding." Of that, commissions to franchisees typically range from $4,000 to $10,000.
Grossman says, "This is not a cookie cutter service. It was developed to offer exactly what the bride and groom want - an ideal romantic getaway they can share with friends and family."
Banish The Fear of Selling... Forever By: Flo Schell 
We know that franchise prospects are attracted to entrepreneurship because they like what the business concept represents. A prospect buys into a pet concept because of their affection for animals…or a wellness concept because they're committed to health. We like that our prospects are passionate about our concepts. But we want them to be able to sell these concepts, too! And that's a whole lot tougher.
Most prospects come with a firm belief in the product or service…but a limited strength in sales and marketing. Yet sales and marketing skills are the very skills they need to sell themselves and their services…the skills they need to keep the business alive! If your franchise prospects and franchisees are like most…they are lacking the "selling gene". Here are 2 steps guaranteed to give your franchisees the courage they need to begin getting comfortable with selling…immediately.
Step 1: Be sure your franchisees know exactly who they're selling to, what it is they're selling, and what problems they solve for their target markets
The elder-care services sector presents a booming example. It's obvious that franchisees in this sector are selling affordable and quality health and housing services to senior citizens. In reality, they are also selling viable and comforting solutions to the baby-boomer children of these seniors. So, in the bigger sense, franchisees in this sector are really selling emotionally-laden promises to boomers and their aging parents. These are two very diverse target markets. And each of these markets has its own set of problems.
They each have the typical problems that we all have…problems with time, money, and relationships. And because we are living in the 21st century, they are faced with problems around frustration, isolation and overwhelm, too. But on top of that…these groups are dealing with the more immediate problem of finding suitable living and/or medical arrangements…and the even bigger problem of dealing with death and dying. It doesn't get much tougher than this! Wouldn't it be smart if these franchisees could articulate exactly what problems they solve and why they do it better than the rest? So that when they are contacted by a prospect…or attend a networking event…they will be able to quickly and effectively say what they do.
Take the Coaching Challenge
Help your franchisees to clearly identify their target markets. Have them make a list of every single problem they are solving for their target markets, from the obvious to the less obvious. Then have them write the answer to these 2 questions: What does their business do? How does it do it better than the rest? |
Step 2: Help your franchisees to re-define the word "selling" so that it is comfortable for them and for their customers.
As mentioned, many franchisees do not come to the table with sales and marketing skills. Some of your franchisees will be born extroverts, but just as many will be introverts or somewhere-in-between. It's scary enough being the new owner of a business without having to approach prospective customers and sell them on the business too. It is a fact that many franchisees are uncomfortable with the notion of selling their concept to others. Especially when the business is their own, because then rejection feels more personal.
Wouldn't it be great if franchisees could understand that selling is nothing more than the creation of a new relationship? And that this is something they already know how to do. Franchisees can be armed with positive solutions to the selling dilemma. Help them to locate resources such as books, seminars, and audio programs dedicated to relationship selling. And watch their confidence grow!
Take the Coaching Challenge
Have your franchisees look up the definition of the word "selling". Notice that there is nothing nasty in that definition at all. Now have them list every quality and characteristic that contributes to a positive sales experience. Help them to take on the challenge of creating a sales process that is comfortable for both them and for their customers. |
About the Author:
Flo Schell, EdM, is a Certified Sales Coach and Founder of Franchise Coaching Systems…a firm dedicated to co-creating strong bottom lines with franchise companies worldwide. Flo is former VP Franchise Development, Sylvan Learning Systems, Inc. Her book, Stop Selling: Start Clicking! , is written with franchisees in mind. It is available at: www.StopSellingStartClicking.com. Flo can be reached at www.FloSchell.com. For information on upcoming fr*ee Tele-gathering events, contact: mycoach@FloSchell.com.
Premium Ice Cream Chains Acquired by Same Company
 New York-based NexCen Brands Inc. announced that it had agreed to acquire the 184-unit Maggie Moo's International LLC and the assets of the 336-unit Marble Slab Creamery Inc., consolidating the No. 2 and No. 3 brands in the premium hand-dipped ice cream category. NexCen owns and franchises The Athlete's Foot brand and in December 2006 entered into an agreement to acquire the rights to Bill Blass, a designer apparel brand.
NexCen has agreed to buy Maggie Moo's of Columbia, Md. for $10.8 million in cash and $5.3 million in NexCen stock. It will also buy Marble Slab of Houston for $16 million in cash and $5 million in seller notes, payable in either cash or stock. NexCen intends to grow these brands outside the United States through its international franchise network currently operating in over 40 countries worldwide. Presently, the leader in the premium hand-dipped ice cream category is Cold Stone Creamery of Scottsdale, Ariz., which has 1,400 stores worldwide. (Nation's Restaurant News, 2/15/2007)
E.Coli Outbreak Affects Yum! Sales
 An E.Coli outbreak at Taco Bells in the Northeast lowered same store sales for all domestic restaurants operated by franchisor Yum! Brands Inc. by 2 percent for the fourth quarter ended December 30. According to the company, which also operates and franchises Pizza Hut, KFC, Long John's Silver's and A&W restaurants, comparable sales at Taco Bell units fell by 5 percent. The outbreak's impact on sales, coupled with increased marketing and legal fees, cut into operating profits by $20 million.
Overall, Yum reported a 2.6 percent increase in net income on a 4-percent jump in revenues to $3.02 billion for the last quarter of fiscal 2006. The year-over-year growth in profit and revenues was driven by Yum's divisions abroad especially in China, which offset weaker performance in the United States where results reflected the E. coli outbreak in December. Yum officials have indicated that the company will begin testing the lettuce it buys before the produce leaves the farm. Shredded lettuce was suspected as being the source of the E.Coli outbreak in which 71 people in five states were confirmed to have contracted the bacteria. ( Nation's Restaurant News, 2/13/2007)
Pizza chain operator Papa John's International Inc. has opened its 50th restaurant in China. The company plans to open 250 restaurants in China in the next four years, according to a news release. Papa John's restaurants are located in 10 cities across China, including Shanghai, Hangzhou, Suzhou, Nanjing, Kunshan, Jiaxing, Beijing, Shenzhen, Dongguan, and Guangzhou. The latest outlet is located in Shanghai. Louisville-based Papa John's (NASDAQ: PZZA) has about 3,000 restaurants in 49 states and 29 international markets. (Business First of Louisville, 2/16/2007)
Checkers Hires Former BK Executive as CEO
 Checkers Drive-In Restaurants, the 800-unit double-drive thru burger chain based in Tampa, FL., has named Enrique "Rick" Silva as president and chief executive. He succeeds Keith Sirois who is retiring but will continue to serve as the chairman emeritus. Silva most recently was senior vice president of franchise operations for Burger King Corp. Checkers, which also includes the Rally's brand, was acquired in June 2006 by Wellspring Capital Management LLC, a New York-based equity firm.
Checkers believes that their new CEO will be successful in bringing Checkers and the Rally's brands to the next level of growth and profitability for both the franchisee community and company stores. Silva said his goal will be to build on the former CEO's efforts to maximize the potential of these two brands by focusing on delivering a world-class guest experience and driving operator profitability and restaurant unit growth. (Nation's Restaurant News, 2/16/2007)
 Denver-based Juan's Mexicali Café, which currently has nine locations throughout the country, is expecting to expand rapidly within the next five years with one of its first new outlets opening soon in Austin, Texas. The company plans to open more than 200 new Juan's locations nationally, 30 of those in Texas. The Juan's Mexicali menu offers many Mexican food favorites with a Californian twist such as barbeque chicken quesadillas, the Burrito Cubano and the "Flavor and Pain" hot sauce bar.
According to the National Restaurant Association (NRA), restaurant-industry sales are expected to reach $537 billion in 2007, a 5 percent increase over 2006 sales. Texas stands to bring in $32 billion of those sales or about 6 percent. Within the quick-casual segment, one flavor profile in which the NRA expects to see massive growth is the Mexican food genre which bodes well for concepts like Juan's. (Austin Business Journal, 2/12/2007)
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