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January 2008 |
Volume 10, Issue 1, Part 1 |
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January: Setting
course for a New Year
In this issue...
Commentary:
Yes, it's a little past Christmas but we
think everyone can benefit from this story about
George Washington, especially in this time of heated
debates for the 2008 Presidential Election...
Click
Here
Street Smarts:
Debunking Franchise Myths
Industry
Focus:
Thriving in a Real Estate Slump
Guest Column:
Fear of Franchising
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Debunking Franchise Myths
We all know the upside to franchising: proven
systems, training and support, purchasing power, brand recognition,
and lower risk of failure top the list. But before you utter
those three little words, "it's all good," take a reality
check. Consider this list of common myths surrounding franchising
and get the true facts.
Myth: Success is guaranteed.
Fact: Franchising does increase your chances
for success over going it alone, but it's not a magic solution.
Any venture involves risks; a proven system merely lowers
those risks.
Myth: You can be your own
boss.
Fact: Yes, you will enjoy some perks as
a business owner, but you still have to follow someone else's
rules-the franchisor's. You may not have the power to make
even the most basic decisions about hours of operation,
pricing, suppliers, and marketing.
Myth: It's cheaper than
starting from scratch.
Fact: The cost of starting a franchise
is about the same as starting your own business when you
consider the real estate, build-out, equipment, supplies,
and advertising. You might get some price breaks from group
purchasing, but royalty fees will offset any savings.
Myth: It's easy.
Fact: Don't assume that once you make your
investment it's not going to be as hard as a regular non-franchise
business. With a franchise it's going to be an easier transition
and a lower chance of failure, but there's no way around
it-running a business is hard work.
Myth: Bigger is better.
Fact: Bigger companies do offer some advantages
like large-scale advertising, sophisticated systems, and
more capital to support the brand. But smaller franchisers
are often more flexible and responsive to franchisees.
Myth: A high-priced franchise
will yield a bigger ROI.
Fact: Often the opposite is true. The price
of the franchise has little to do with profit potential.
You need to take into account numerous factors such as market
conditions, system efficiency, location, and your own knowledge
of the industry.
Thriving in a Real Estate Slump
The real estate market has seen
better days. Everybody's talking about it - especially those
who make their living in the industry. So we wondered about
franchise companies in the real estate sector. How are they
managing to cope?
To get some answers, we turned
to a franchise organization that sits squarely in the eye
of the storm, HouseMaster. The oldest home
inspection franchise company in the country, HouseMaster
was founded in 1971 and now has over 400 units operating
throughout the U.S. and Canada. We interviewed Marianne
Murphy, VP Marketing & Development, to get her
perspective on how to adapt and thrive in the changing real
estate market.
LA: How is the real estate slump
affecting your business?
MM: For us, it's a boon. We're quite busy because we've
been through many, many market changes and we know how to
work in any climate.
LA: How do you adapt to changing markets?
MM: It's about positioning. If it's a seller's market, the
buyers need home inspections. If it's a buyer's market,
the sellers need home inspections. For example, right now
we work with foreclosure entities to post conditions as
part of the foreclosure process, making reports available
to potential bidders.
LA: It's a buyer's market right now. How do you make that
work for you?
MM: We help sellers prepare their homes in accordance with
"staging". You can stage a home, but that doesn't really
address the critical elements that consumers address when
they're negotiating the price. They may make an offer, but
they're still going to get a home inspection and negotiate
based on material conditions of the home such as foundation,
structure, roof, plumbing, etc. Those are the types of things
that consumers look to renegotiate if there are conditions
that are unacceptable. A home inspection provides the seller
with an opportunity to prepare the house for sale so that
when a buyer comes along, issues are not issues any longer.
Most sellers actually do make the repairs that are suggested
in our inspection reports.
LA: Are there other techniques that work in this market?
MM: Yes. One of the things we focus on right now is the
pre-inspection. The U.S. market is glutted with listings
so we're using the home inspection as a lead generating
tool for real estate agents. The sellers get home inspections
early on so the agent can say hey, "I've got a home inspection
on this house, call me."
LA: What would you say to the independent home inspector
who's worried about the future?
MM: One of the beauties of being part of a franchise is
that you're not out there alone trying to figure out what
the heck is going to happen. We have the big picture. We're
forecasting and looking at it as a group and reacting before
it actually happens.
 Fear
of Franchising
By:Tom Scarda
It's that time again.
Time to resolve to quit smoking, eat less and exercise more.
Other popular but less talked about resolutions are spending
more time with family, learning something new, helping others
and simply enjoying life more. The great news is that these
less recognized goals can be achieved through owning a business.
"I have no business experience," you say? Maybe a franchise
is just the thing for you.
As with any resolution, there is a lot of
commitment and excitement on the first day of the new year.
In a business search the resolve is never stronger than
when that first inquiry is made - at that time, all possibilities
are real. Images flash before your eyes of no boss to report
to, no long commute and playing golf mid-week. Unfortunately,
business searches, like most New Year's resolutions, are
usually short lived.
One night, mid-slumber, the prospective
entrepreneur sits straight up in bed and thinks, "Am I crazy?!"
All of the "what if's" creep in: Can I make money? Will
I have customers? Suddenly, she recalls a vague story about
her baby-sitter's uncle's barber who cuts the hair of a
guy who lost his shirt in a business - and it's back to
working for that idiot boss, waking to traffic reports on
the alarm clock and waiting two hours on a Sunday morning
to tee off. Wow, that was a short lived fantasy, it's only
February. What happened?
Fear of the unknown is what happened. Thankfully,
there are ways to overcome the inevitable mountain of fear.
Getting past the fear is the quintessential right of passage
for a new entrepreneur. It's a test all business owners
face and it truly separates the wanna-bes from the people
who know in their soul that there can be more to life than
working a J-O-B.
How do you get past the fear? Acceptance.
You need to acknowledge that this decision to change your
life will have more anxiety than anything else that you
would freely volunteer to do. Without facing the fear you
will inevitably stay stuck where you are. There is no one
forcing anyone to buy a franchise - unlike some other high
anxiety situations, like making a speech at your brother's
wedding. There's a sense of obligation to the sibling, so
you make the speech and pray that it will be over soon.
(The speech that is, not the marriage).
If you're considering buying a franchise,
address all of the fears up front and create a strategy
for dealing with them before they arise. We all know that
98% of those things we fear never come to pass. Focus on
the positives of business ownership and what it can do for
you and your family. Understand that at the end of your
due diligence, the real and final decision is yours and
yours alone. If you get this far you will find that the
real choice is between unhappiness (the boss, the commute,
lousy pay) verses uncertainty (the possibilities of what
could be if the chance is taken). I hope you choose uncertainty
because life isn't about finding yourself. Life is about
creating yourself.
My wish for you this New Year is to reach
out, without fear, for newer and richer experiences. Remember,
life only puts things in front of you that you can handle.
Tom Scarda is a franchise consultant with
FranChoice and also a franchise owner. Tom can be reached
at 866-545-6191 or via e-mail at: tscarda@franchoice.com.
Camille's Inks Wal-Mart Deal
 Tulsa-based Camille's Sidewalk Café has signed an agreement with
Wal-Mart Stores, Inc. to place franchises in supercenters
around the nation. The first Supercenter Camille's is expected
to open within the year in Austin, Texas followed by Scottsdale,
Arizona. The chain anticipates about 200 more units to open
in Wal-Mart stores in the next five to ten years.
The world's biggest and best-known retailer
was looking for a new restaurant for its upcoming stores,
something more upscale than its long-ago relationship with
McDonald's. The move is in line with Wal-mart's latest slogan:
"Save-Money, Live Better," indicating a revised marketing
strategy that focuses on the good things in life rather
than low prices for the Bentonville, Ark.-based company.
Wal-Mart wanted a convenient and appetizing menu like Camille's
which offers healthier foods and a casual feel. There are
currently 107 operating Camille's locations and 900 in development
worldwide. (Tulsa World, 1/5/08)
Wendy's Shares Drop
 Shares of Wendy's International fell to a 52-week low earlier this
month after the company reported disappointing preliminary
fourth-quarter same-store sales results, including its first
quarterly drop in more than a year in corporate same store
sales. Same-store sales at U.S. company-owned restaurants
fell 0.8 percent for the fourth quarter ended Dec 30, compared
with an increase of 3.1 percent for the year-earlier fourth
quarter. For U.S. franchised units, which represent about
80 percent of the Wendy's system, same-store sales for the
fourth quarter inched up 0.2 percent, compared with 2.7
percent a year ago.
The president and CEO of Wendy's said the
company's plan to improve sales in 2008 includes new products,
customer service improvements and more effective advertising.
In the fourth quarter, Wendy's rolled out a 99-cent double
cheeseburger called the Stack Attack. The company said it
would continue to promote premium large hamburgers and its
breakfast menu which is available in certain markets. Wendy's
operates or franchises more than 6,600 restaurants. (Nation's
Restaurant News, 1/4/08)
 Taco Bell plans to run print ads that tout how the items on its newly expanded Fresco reduced fat menu stack up against "popular hamburgers." The expanded Fresco lineup is being showcased in part to broaden the Mexican chain's appeal beyond their usual demographic of young males. The new Fresco menu lists nine items that are made with Taco Bell's Fiesta Salsa instead of cheese and sauce. Taco Bell is stressing that each of the menu items contains fewer than 9 grams of fat. Because the salsa - a mix of tomatoes, cilantro and onions - contains only 5 calories per serving, the Fresco items are presumably lower in calories. The items range in calorie counts from the Fresco Crunchy Taco, with 150 calories, to the Fresco Zesty Chicken Border Bowl, with 350 calories. Also offered are Fresco versions of the chain's Burrito Supremes, burritos and soft tacos.
(Nation's Restaurant News, 12/28/07)
Starwood Focuses on Caribbean for Growth
 The Caribbean region will be a key focus for portfolio
growth in the next few years for Starwood Hotels and Resorts.
With 12 Caribbean properties currently in its portfolio
and five more under construction, Starwood's room inventory
in the Caribbean will total 7,500 rooms within the next
two years.
Even as construction work progresses on the
five resorts, new locations and sites are constantly being
scouted. Under consideration are islands such as Dominica,
Barbados, St. Croix, Curacao and Abaco in the Bahamas. Due
to open in the first quarter of 2009 is the W Retreat &
Spa in Vieques, Puerto Rico. Other soon-to-open Starwood
properties include the Westin Roco Ki Beach & Casino Resort
near Punta Cana, Dominican Republic and the 500-room Sheraton
Puerto Rico, adjacent to the Puerto Rico Convention Center
in San Juan. (Travelweekly.com, 1/15/08)
 Increased consumer demand for hamburgers is helping Five Guys Burgers
and Fries bring its version of the beloved American staple
to new markets nationwide. The 220-unit chain, based in
Arlington, Virginia, currently operates in Alabama, Delaware,
Florida, Georgia, Indiana, the Carolinas, Ohio, Pennsylvania,
Virginia, Wisconsin and Washington D.C. On November 1st,
the concept opened its first outpost in New York City. Executives
from Five Guys hope to take the chain to 500 stores by 2008.
Five Guys, whose annual sales are about $200
million, began franchising in 2003. The chain currently
consists of 30 company-owned stores and 190 franchised units.
Executives at Five Guys attribute the rapid growth to a
solid economic model. A Five Guys unit costs approximately
$300,000 to open and has an average unit volume of $1 million.
(Nation's Restaurant News, 1/18/08)
El Pollo Loco Gets $45M Investment
 The private equity firm Freeman Spogli & Co. has paid $45 million for an undisclosed stake in El Pollo Loco Inc., the franchisor and operator of flame grilled chicken restaurants. El Pollo Loco said the funds would be used for the chain's "accelerated" national expansion and for general corporate purposes. Freeman Spogli has invested in a number of restaurant companies during the past two decades including AFC Enterprises Inc., parent of the Popeyes Chicken and Biscuits concept, and CKE Restaurants, operator and franchisor of the Carl's Jr. burger chain. El Pollo Loco franchises 230 restaurants and operates 159 more in nine states with the highest concentration in California.
(Nations's Restaurant News, 12/27/07)
 
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