|
October 2007 |
Volume 9, Issue 9, Part 2 |
|
October: The Orange Month
In this issue...
Humor:
Just in case you thought that Star Wars was only popular in the U.S., take a look at this video from the French-originating version of YouTube...
Click Here
Street Smarts:
Finding the Money for a Franchise
Industry Focus:
More on the Thriving Hotel Business
Guest Column:
Closing Sales Kindly and Efficiently
|
|
|
Finding the Money for a Franchise
The cost of buying a franchise can be substantial, but you don't have to be a trust fund baby to get into the franchise of your dreams. Where is the funding going to come from? That's the number one question franchise buyers ask. There are numerous sources of capital, but start with these basic steps first.
1. Talk to the franchisor. About one in three franchisors provide financing directly or have arrangements with third party lenders. You will find any financing arrangements spelled out in Item 10 of the UFOC. Even if the franchisor doesn't have money to offer, it is still the best source of information about your financing options.
2. Look within. It is a common misconception that you can or should borrow all the money to open a franchise. Be prepared to come up with at least 25 to 30 percent of the total start-up costs. To assess personal resources, start by preparing a personal financial statement (you'll need one to present to lenders anyway).
3. Ask family and friends. This is one of the most common ways to finance a new business. After all, who knows your dreams and capabilities better? Plus, they want to help you succeed.
4. Call your accountant. Ask your accountant to recommend a banker. A good accountant - one with small business experience - is usually a great source of leads.
5. Find a specialist. You should start at the bank where you do your personal banking, but there's a good chance you won't get what you need there. Local banks are often unable to fund franchise projects. Your chances will be much better with independent lenders like GE Capital Franchise Finance that specialize in franchise lending.
6. Search the SBA Franchise Registry (www.franchiseregistry.com). The SBA's small business lending guarantee program is a key source of loans. This program for new franchise buyers is much easier to access since the creation of the Franchise Registry, a central database of information about franchisors that have been certified by the SBA.
More on the Thriving Hotel Business
In our last issue, we talked to Bill Linehan of IHG about the hotel industry and what's fueling this hot franchise sector. This time, we looked at Carlson, one of the largest privately held corporations in the world that will be celebrating its 70th anniversary in 2008. The company's 2006 systemwide sales, including franchised operations, totaled $37.1 billion. We talked to Nancy Johnson, Executive Vice President and Brand Leader for Carlson's full-service hotel brands.
Q: How do Carlson hotels fit into the marketplace?
A: We franchise five brands: Regent Hotels International, Radisson Hotels and Resorts Worldwide, Park Plaza Hotels and Resorts, Country Inns and Suites by Carlson, and Park Inn Hotels. Each of these brands fit into distinctive segments within the industry that match very specific price points for our customers. We have a company that is family run and all of our product represents that familial atmosphere. Regardless of the price segment, from luxury down to economy, we've identified and maintained the connection with our customers by paying attention to individual needs and meeting them to achieve absolute guest satisfaction.
Q: Carlson is a worldwide organization. Globally, where are the hottest locations?
A: Dubai tops the list. But we also have quite a bit of product going up in the former Eastern Bloc and Ireland. Then there's Germany. We have beautiful product in Cologne and Frankfurt. And, of course, our flagship hotel is in Berlin.
Q: The hotel industry was flat just three years ago, but it bounced back in a big way. Why the rebound?
A: I think we've learned our lesson from over-leveraging properties back in the early '90's. People are a little smarter now about how they finance. Private equity seems to be extremely plentiful and I believe that is fueling some of the opportunities as far as development. We haven't had the supply/demand imbalance that we have suffered from historically.
Q: Financing is a big issue. Is there money out there for franchisees?
A: Yes, there is. At the recent lodging conference in Phoenix, lenders were all over the place! As I mentioned, private equity is still available. And local lenders are still funding. It's all about relationships in this business and about your credibility. This industry is interesting. It's always challenging to get a development deal done. I don't think I've ever seen a time when it was slam-dunk easy except for the pre-early '90's - and we suffered for it. I think a good business plan with a good location with a good product is going to get financed. Download FranchiseHelp's Hotel White Papers .
 Closing Sales Kindly and Efficiently
By: Flo Schell, EdM
Did you know that the very best of sales professionals are often challenged by the 'close'?
There's a reason for that. In the early stages of the sales process, the skill sets one uses are comfortable for salespersons....they're about relating and listening and sharing information and answering questions. That part is easy.
But then the conversation can get sticky because many prospects are reluctant to make the final decision.
The truth is they're often feeling fear...and so is the sales professional.
In addition, the skill sets required for the 'close' are a good bit different than those used in the earlier stages of the sales process.
Sales professionals often feel forced to step out of their comfort zone and to confront and persuade prospects to come to a decision.
And these skills are a lot tougher to master. But not impossible.
Follow this 4 step rule to close sales kindly and efficiently;
1. Be sure that your sales process is created with the close in mind; In other words, the close should be a natural next step in the sales process and one the prospect is expecting and prepared for.
2. Stay close by your prospect's side: If there's ever a time to keep in constant touch, it's during the close. Don't let your prospect's silence intimidate you. Meet it head on.
3.Be sure you create closing questions and closing phrases that are comfortable for you and that come out of your mouth easily; For best results, try these phrases out in advance of the close to see where your prospect's head is.
4. Acknowledge the fear that your prospects are sure to be feeling; Give their particular fear a name; Work together on surmounting it. Till next time, join us at our Nov. 7th 'Closing Sales Tele-Huddle'...and Happy Closing!
To boost your closing skills, click on the link to register for our Nov. 7 'Closing Sales Tele-Huddle'
Flo Schell, EdM, is former VP Franchise Sales, Sylvan Learning Systems, Inc, and Founder of Franchise Coaching Systems. Flo can be reached via e-mail at: mycoach@floschell.com and online at www.FloSchell.com.
Restaurant Chains Target Big 1000
 The dream of every restaurant chain - to hit 1,000 units - is happening at warp speed in 2007. The 1,000 class is growing faster than many would have predicted, particularly at a time when the $537 billion restaurant industry has suffered some recent setbacks. Years can go by without a chain reaching that number but at least five in the past year or so have reached that milestone including Sbarro, Papa Murphy's, Panda Express, WingStreet and Johnny Rockets.
One thousand units is commonly seen as the tipping point where a chain transitions from regional player to national player. The chains that recently hit 1,000 have announced ambitious expansion plans. For example, it took Papa Murphy's 23 years to reach 1,000 units and the 30-state chain now plans to add about 168 stores annually. The Asian fast-food chain Panda Express began with one unit in 1983 and will pass 1,000 in November. Panda Express plans to reach 2,000 stores in about five years. (USA Today, 10/18/07)
Fast-Food Restaurants Experiment with Self-Service Menu Kiosks
 After years of hesitance, quick-service chains and their franchisees across the country are experimenting like never before with self-service menu kiosks as they look to sell more food and cut labor costs. Most models employ a touch screen - much like an ATM - on which customers make menu selections and then pay for the order with cash or credit at the kiosk. The order is sent to the kitchen where it is filled and delivered to the counter. Pilot projects are under way at as many as 10 chains, according to the companies who sell the technology.
Many fast-food companies that experimented with self-service kiosks early this decade later ditched them after customers and owners rejected the experience as too cumbersome and impersonal. However, the fast-food restaurant business is optimistic this go-around because customers are far more used to kiosks today and the technology has improved. In recent years, kiosks have popped up extensively in grocery stores, retail outlets, airports and hotels. (AJC.com, 10/22/07)
 Of the 118 countries where McDonald's Corp. does business, none can boast more activity than Russia. On average, each location serves about 850,000 diners annually - more than twice the store traffic in McDonald's other markets. Over the past few years at the Russian outlets, new emphasis was placed on improving signature products like the Big Mac and Chicken McNuggets. Executives also called for an aesthetic overhaul, using more muted colors and lighting schemes in the stores. The changes helped lift sales and profits, ushering in one of the company's most successful performance streaks to date. In the past twelve months, McDonald's shares have shot up 33%.
Now that the company has improved operations, it is preparing to pick up the pace of store building, especially in developing markets like China, India and Russia. Rather than relying on new restaurants, the company is working to squeeze more sales and profits from its 180 existing Russian locations. They are introducing a breakfast menu and plan to add more "McCafe" sections serving espresso drinks to draw late afternoon and evening crowds. Additionally, the company is keen to bump up the number of restaurants with drive-thrus and have more locations stay open around the clock. (Wall Street Journal, 10/16/07)
Starbucks Founder Bites into Pinkberry
 Pinkberry Inc., operator or franchisor of 33 namesake frozen-yogurt shops, announced it has received $27.5 million in expansion financing from Maveron LLC, a venture capital firm co-founded by Starbucks Corp. chairman Howard Schultz. Pinkberry founders Shelly Hwang and Young Lee retain "significant equity" in the Los Angeles-based chain and plan to devote some equity to an employee stock-option program. Pinkberry operates three stores in the Los Angeles area and franchises 25 units in California and five in New York.
At the core of Pinkberry's menu is its tangy, fat-free, Korean-style frozen yogurt. The frozen yogurt is offered in original and green tea flavors with a variety of toppings such as fruit, nuts, chocolate chips and breakfast cereals. Shaved ice and smoothies are also on the menu. Pinkberry will use the funds from Maveron to open company-owned and franchise stores with the help of the venture capital firm's "brand-building leadership." Maveron, whose portfolio includes an investment in the Chicago-based Potbelly Sandwich Works sandwich chain, specializes in emerging companies and generally only holds a minority interest. (Nation's Restaurant News, 10/16/07)
 Starwood Hotels & Resorts reported this month that its third-quarter profit slipped nearly 17% on various charges and lower margins in North America, and the hospitality behemoth lowered its forward profit outlook to boot. Starwood (HOT), which owns or manages hotels under the Sheraton, St. Regis, Westin and W Hotels brands, said that it earned $129 million or 61 cents a share, down from $155 million, or 71 cents a share, in the year-ago period.
Revenue in the period rose 5.4% to $1.54 billion, helped by a 9.5% increase in revenue per available room (RevPAR) in hotels owned for at least a year. During the quarter, Starwood added 13 new hotels and resorts with about 3,500 rooms in locations ranging from suburban Chicago to China to Portugal. It expects to open approximately 75 hotels with 20,000 rooms this year while signing around 200 hotel management and franchise contracts. (Hotels magazine, 10/25/07)
Cold Stone Creamery Launches Flagship Store in Middle East
 Cold Stone Creamery launched its first ice cream outlet in the UAE's Dubai Festival City development as part of its Middle East expansion plans. The region's growing population has fueled a boom for sweet snacks and the new store hopes to sell more than 1000 ice creams a day. The launch was attended by many families who lined up for hours to receive their Cold Stone Creamery ice cream and experience making their personalized and signature creations.
Cold Stone will open a further four stores in Dubai by the end of the year and 40 across the whole region by the end of 2008. The ice cream chain is targeting an annual turnover next year in the region of Dhs 32 million and aims to gain 10 per cent of the region's ice cream market by the end of 2008. (Menareport.com, 10/20/07)
 
| 
Publisher: 
