News : Franchise Blogs

Recently, I gained additional perspective of the detailed issues and discontent in the McDonald's US franchisee (owner/operator) community.  McDonald's (MCD) has had a r

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More than 15 years ago I was struggling in the beef cattle industry because I was doing things exactly the way everyone else was doing them—raising cattle and then taking them to the feedlot. It’s a great business when things are good but when the market is down you are in the dumps as well.

Too many prospective franchise buyers I know assume that a franchise is successful because it is “big enough” to sell franchises or because it already has hundreds of franchises in operation.

For the past 25 years, I have written hundreds of articles, columns, essays, editorials and blogs.  They have appeared in many different formats.

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Note from John Gordon: Several 'fast casual' summits will be conducted beforehand. Steve and I feel the future of food retail is not to look back and see what worked in the past, but to look forward, thinking carefully about the customer. The following are Steve's good thoughts:

Is there anything the U.S. press likes more than a piece of news that makes the French look less French and more, well, American?

If you own a business, you may have considered expanding by franchising. Other companies have found success through franchising, so why couldn't you?

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What happens to a franchise if a franchisee passes away? Can the franchise be transferred to a qualified successor? Or will the business automatically be terminated?

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One of the main reasons why we all work hard is to leave something behind for our kids and grandkids. The choices we make today have consequences we can’t even imagine in the future.

Franchising provides a "proven franchise business system" is a myth I hear from prospective franchisees all the time.

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Last week I fielded an inquiry about the biggest questions retailers are asking in cross-channel right now, and I figured the answer was worth sharing.

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I have noticed that Kodak is nearly out of business. Growing up in the 1960’s and ‘70’s, every family had a Kodak Camera and I still have one of mine.

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Section 1.1031 of the Internal Revenue Code provides for the deferral of capital gain taxes.

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Maine franchisees have asked the Coalition of Franchisee Association to help organize a meeting in the morning of Wednesday, May 8 to brief on the early afternoon hearing of the Small Business Investment Protection Act (LD 1458) in front of Maine's State Senate Committee on Labor, Commerce, Research and Economic Development.

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Let's play a little game. Review Blue MauMau's alphabetized directory of franchises. HERE is the link. Take a few minutes to browse and then ask yourself how many companies you recognize. When you're done, come back to this article.

In H&R Block Tax Services v. Franklin, (pdf) the Court of Appeals concluded (over a strong dissent) that H&R Block had the right to terminate two franchise agreements where those agreements expressly stated that Franklin could terminate at any time but only allowed H&R Block to terminate for cause.

The New York School of Interior Design (founded 1916) organized a panel discussion in conjunction with NYSID's current exhibition, "Designing the Luxury Hotel: Neal Price and the Inter-Con

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The evolving face of retail foodservice continues pointing to the success of the grocerant niche filled with ready-2-eat and heat-N-eat fresh prepared food.

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Many franchisees consider themselves to be business owners.read more...

Here’s a quote for you: “If you don’t have a handle on the emotional side of the engagement with your brand, you might as well spend your marketing budget on coupons.” Don&#

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Last week I attended the CARTES North America conference. It is an event focused more directly on credit card issuers and the technologies that support them. So what was I doing there?

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When politicians say their opinion on a particular subject has “evolved” you know you’re about to hear a complete flip-flop. I suppose it’s easier than saying “I was wrong.”

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Competitive and successful franchises realize that the question is not whether or not to participate in a social media campaign, but rather how to participate.

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If you’re buying a retail franchise business, you’re going to need these. Feet. That’s right; you’re going to need a lot of foot traffic. This foot traffic needs to start in the vicinity of your franchise business. Because if you have foot traffic nearby, you’ll have a...

The fight to increase access to capital for hotel owners continues to be one of the Asian American Hotel Owners Association's points of emphasis when it comes to our legislative priorities. Anyone truly invested in the hospitality industry understands that just because the overall economic outlook has rebounded to levels seen before the downturn doesn’t mean that everything is back to normal across the board.

As we bid a last farewell to Ron Johnson at JCP (or Penney, or whatever new name comes along) it’s worthy to take a look back at his sixteen month tenure.

Good NEWS from California Senate...SB 610 Fair Franchisee Bill passed via a 5 to 2 vote yesterday at Senate Judiciary Committee! It is now headed to the Senate floor for full Senate vote, then back to the Assembly, then hopefully to Jerry Brown this fall for signature.

How long has it been since you visited your local KFC? You needed a reason or a reminder, right? We think KFC is following our advice and becoming consumer relevant once again.

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The AAFD has signed on as Co-Sponsor of California Senate Bill SB610, fair franchising legislation pending in the California legislature.

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Real fishermen have a saying: “a bad day of fishing is better than a good day at the office,” but perhaps not at McDonald’s. Not this month, anyway.

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As the medical marijuana industry continues to grow, medical marijuana franchise business models have become more popular. In fact, recently we reviewed a franchise agreement for a business that provides doctor recommendations for using medical marijuana in California.

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Walmart’s woes continue as more leaked emails reveal a growing concern among company executives over a new consumer technology that promises to completely disrupt the mass merchant’s business model.

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On the menu, in the mouth…chicken sandwiches and hamburgers are two different things. read more...

In 1968, after ITT acquired the Sheraton Corporation of America, Sheraton needed a new advertising program after the highly-successful "Keyed-up Executives Unwind at Sheraton" campaign.

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The Major League Baseball season opens Sunday with the cry of 'play ball' just preceded by the release of the 21st annual fan survey conducted by Brand Keys.

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Whether you live in the Washington D.C. area or elsewhere, starting up a business is exciting but challenging at times.

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Can you franchise innovation? Think of your local McDonald’s and their hamburgers. There is no innovation, which is the whole appeal of McDonald’s.

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Purchasing a franchise is an important decision. People will use their life savings, a home equity loan or borrow money from family members to fund the franchise.read more...

The American Association of Franchisees & Dealers (AAFD) is asking California franchise owners to support two pieces of franchising fairness legislation recently introduced in the California State Senate and State Assembly.

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It was Yogi Berra who asked that his pizza be cut into quarters because he “wasn’t hungry enough to eat six.” Yes, yes, very funny, but not so much when you realize that Americans consume 350 slices of pizza per second. That comes out to more then 3 billion pizzas a year. So with that many, you wouldn’t suppose that Americans were having a hard time when it comes to pizza.

Many prospective franchise owners are attracted to the concept of buying a franchise because they believe it combines the freedom of owning a business with the safety of a benevolent guiding hand. Franchisors cultivate this concept. The catch phrase of the International Franchise Association is “In business for yourself, but not by yourself!”

Remember the recession in the early 1990′s? It was short and deep and was dubbed the “white collar” recession since the job cuts during it and the subsequent “re-engineering” fad resulted in a greater share of white collar job cuts than previous recessions had.

With the easing of the U.S. trade embargo on Cuba, I contacted my friend Curt Strand in Aspen, Colorado to recall the creation of the Havana Hilton Hotel which opened in 1959.  Curt was president of Hilton International from 1968 until 1986.  In response to my request, he wrote the following:

Ready-2-eat and heat-N-eat fresh prepared food is the hallmark of the grocerant niche.  Technomic conducted an extensive in-depth study / survey for its Consumer Restaurant Brand Metrics online database....

Do you really want a clean franchise business? If so, why? Why wouldn’t you want a dirty franchise business? Confused?   Does It Matter? You need to find out. You need to look deep inside yourself-before you start visiting any of these franchise websites. You need to figure out if it mat...

As some of you have already heard, we scored a huge victory against BP in court yesterday, when Judge Berle denied their motion for summary judgment....

As a further indication of the yet to be written regulations under the Affordable Care Act (“ACA”), the United States Department of Labor (“DOL”) has announced employers ...

It’s no secret that I’ve long held that SAS’s relative strengths in both merchandising and customer intelligence uniquely position the company to both navigate and enable the customer-centric transformation that omni-channel retailers are experiencing right now....

Perhaps the most common and pervasive franchise myth is that franchising per se is a safe investment. Fed by a steady diet of industry hyperbole, the conventional wisdom that feeds this myth contends that when you buy a franchise you are investing in a proven brand and an established business syst...

 Can’t cook, yet love a diverse menu? In a hurry, but want a balanced meal? Look no further than your favorite convenience store....

Automobile dealerships were the first type of legally recognized and regulated franchises. In fact, in 1937 Wisconsin enacted the first state law protecting car dealers from wrongful termination and non-renewal.

In 1965, the Sheraton Corporation of America, under the leadership of President Ernest Henderson, created a brilliant advertising campaign: "Keyed-up Executives Unwind at Sheraton". It was broadly promoted all  over the U.S. in print media, TV advertising and locally by individual S...

On February 27, I had the opportunity to participate in an internet radio show on Voice America with two other strong and successful women, Vicki Cantrell, SVP, Communities and Executive Directo...

Owning or purchasing a franchise is a life-changing decision that has huge implications for an individual’s finances, career satisfaction and overall happiness. The promise of franchising is business ownership supported by a proven brand, an established market, beneficial operating system an...

OK, every family has its problems. Toyota, which started as a division of the Toyota Automatic Loom Works, managed to develop a worldwide presence and reputation, survived a number of seismic recalls and some actual seismic activity is celebrating its 75th anniversary.

March 8, 2013 is the effective date for the U.S. Department of Labor’s final rule implementing important areas of expansion in the Family and Medical Leave Act (“FMLA” or “the Act”).  As part of the implementation, a revised FMLA workplace poster has been created and is available to employers on the Internet (pdf).  All covered employers are advised to replace their existing poster with the revised version by March 8, 2013.

Our experience at Public Citizen has been that objectors to proposed class action settlements can often expect a hostile reception. Both named plaintiffs and defendants – and their lawyers — generally have a common stake in getting the settlement approved, and they have developed a rel...

Convenience Stores have be sipping / siphoning coffee market share from the restaurant sector and as Mitch Morrison reported in CSP Daily News C-stores “are finally growing their total hot beverage unit sales after the economy fell in late 2008.(They) are now back and above historical unit consumption levels.

On January 18, 2013, Julia Lawlor reported in the New York Times that hotel guests can get an excellent workout in their guestroom if it contains certain pieces of furniture and bathroom equipment.

Looks as if Office Depot is going to buy OfficeMax. That purchase would combine the #2 and #3 office supply retailers, leaving only the new entity and Staples (currently #1), in an industry that has been pretty much undifferentiated and, in the industry’s terminology, “overstored.&rdqu...

A recent decision from the Supreme Court of Georgia in the case captioned WMW Inc. v. American Honda Motor Company, Inc. (291 GA 683, 733 S.E. 2d. 269), addressed the standing of an existing Honda automobile dealership to challenge the addition of a new Honda dealership within the existing dealership’s relevant market area.

            For 2013, food service employers can expect a continued aggressive approach from the Equal Employment Opportunity Commission (&...

Franchisors that elect not to negotiate franchise agreements up front with franchisees run the risk of negotiating contracts forever. "You can pay me now or you can pay me later."

RSR has long sung the virtues of an empowered, knowledgeable workforce. It’s time to also sing the virtues of employees who care enough to do the right thing in a timely way....

Franchisors and suppliers at this year’s International Franchise Association Convention and Exhibition can breathe a sigh of relief knowing that mUrgent Corporation will not be selling its services. We can only assume that IFA blocked its past “Preferred Email Marketing Vendor from 2007 to 2010” from exhibiting after Blue MauMau’s reports on the firm’s securities fraud violations. California federal court issued an order in March 2012, resulting in a $21 million judgment by the federal government.

Few things get our email wires humming like a broad downdraft in the U.S. restaurant industry. We had just this kind of flurry last week as we published our Week 4, 2013 numbers for SalesTrack® Weekly, NPD’s national, weekly foodservice industry performance tracker. After 87 weeks (aside from calendar anomalies) of same store  sales growth, our 50 chains, in aggregate, posted a -4% decline in same store sales.

Last week, RetailWire ran a post on a new study by a professor at the University of Illinois. The gist of the study is that, in cases where “fit” is not a competitive factor in consumer decision-making, retailers should optimize retail floor space according to how much manufacturers wi...

In a recent survey conducted by David Decker of Consumer Edge Insight  of restaurant customers in the United States, when it comes to identifying what drives loyalty for restaurants, the most commonly-cited factors in determining which fast-casual restaurant is visited most often are best-tas...

Akio Tsunoda, president of the Japanese holding company, Kumon Institute of Education Co., told a global management forum back in 2010 about its franchise services to its learning center owners. "I think our overseas operations are supported by our know-how, which is easily adopted in any cou...

When attorneys negotiate commercial leases, often times they breeze through (or overlook entirely) the “boiler-plate” clauses. Think boilerplate provisions are unimportant? Ask if a franchise owner was affected by Hurricane Katrina, Superstorm Sandy, or the tornadoes that hit Bronson, Missouri.

A number of years ago certain franchisors that franchised internationally had a practice of trying to get the highest licensing fee as possible upfront....

Brand Keys announced the results of our 17th annual Customer Loyalty Engagement Index (CLEI) this week. We ended up with 54 categories and nearly 400 brands....

A 1031 exchange is a Treasury Department Regulation and Section in the Internal Revenue Code that allows taxpayers to defer the capital gains and recaptured depreciation taxes when selling real and personal property held in the productive use of a trade, business or for investment....

You don’t have to spend $250,000 to open a franchise. Unless you want to. Most of the people that I’ve worked with over the years come to the table thinking that they’ll have to bet the farm in order to become a franchise owner. But, it’s just not true. But, if you’re ...

Restaurant brand protectionism is what many chain restaurant marketing managers focus on and continued to do. All retail food and restaurant industry research consistency shows that that brand and or “Channel” protectionism is only important to the BRAND MARKETER. The research concludes it is not important to the consumer.

Job descriptions aren’t legally required and, as writing them sometimes feels daunting, you may be tempted to avoid having them or to not update the ones you do have....

NRF’s Big Show is not the only conference that falls in January. And so less than a week after my time in New York City, I found myself winging off to Phoenix Arizona for FMI’s Midwinter Executive Conference. While there, I had the opportunity to address members of their Independent Operator Program. I also got an early look at a consumer benchmark commissioned by FMI, Daymon Worldwide and the Hartman Group. The report title is “Reframing Retail through the Lens of Changing Food Culture”.

I have to start this article with a couple of caveats. I’m about to share with you a customer service fail that happened to me in the week following the NRF Big Show....

Many gas stations are oil company franchises. Typically, the oil company owns the station and leases the premises to the franchisee under an agreement that calculates rent as a percentage of sales.

There is no better advocate for the rights of hotel franchisees than Steve Belmonte, whose singular effectiveness in franchise negotiations is legendary.

Franchise consultant and founder of the Continental Franchise Review newsletter Tom Murphy died a week ago last Saturday at age 93, after a short illness. Having known Tom for almost 30 years, I seldom imagined a time that he would no longer be a part of my life in franchising.

Franchise consultant and founder of the Continental Franchise Review newsletter Tom Murphy died a week ago last Saturday at age 93, after a short illness. Having known Tom for almost 30 years, I seldom imagined a time that he would no longer be a part of my life in franchising.

Since its enactment in 1993, an unresolved issue under the Family and Medical Leave Act (“FMLA” or “the Act”) was exactly how the definition of “son or daughter” under Section 101(12) of the Act applied to adult children, 18 years of age or older and incapable of self-care because of a mental or physical disability.  In interpretive guidelines just issued by the U.S. Department of Labor (“USDOL”), which enforces the FMLA, the federal agency clarified that the age of a son or daughter at the onset of a disability is not relevant in determining a parent’s entitlement to FMLA leave.  Employers need to be aware that the new guidelines will expand the number of employees who will now be eligible to take FMLA leave to care for adult children.

Last week I attended the ICRXchange Investment Conference, where thirty restaurant chains presented. The following is some franchisor chain specific news.

If you're thinking about purchasing a franchise, pay close attention to the franchise disclosure document (FDD)—the large document that contains disclosures about the franchisor and franchise system. 

Sure, a franchise company might have a great sales pitch filled with big promises, but even though a franchise might sound like a Lamborghini what you could really end up with is a lemon. Do your due diligence and make sure the franchise you’re looking to invest your money, blood, sweat, and tears in is the real deal.

Not very long ago there was a caseload of stories about the Hostess Company disappearing into bankruptcy, and with it its roster of brands. At the time our brand metrics pointed to the fact that it wasn’t likely that competitors – let alone consumers – were just going to sit ther...

52 million tourists visited New York City in 2012, a 2.1% increase over 2011.  Mayor Michael R. Bloomberg credited the city's cultural institutions and its reputation as the safest major American city for the record.  George Fertitta, chief executive of NYC & Company, the City's marketing arm said that one-third of all overseas tourists to the United States come to New York.  The mayor projects a goal of 55 million visitors by 2015.

The Americans with Disabilities Act (ADA) is most frequently cited in reference to the employer-employee relationship; however, Title III of the ADA contains accessibility requirements for public buildings and facilities, including regulations related to signage, parking spaces, curbs, height of service counters, and size of restrooms. These regulations apply to anyone who owns, leases, or operates a place of public accommodation, which includes almost all businesses that serve the public. Any public facility that is not ADA compliant is in violation of the law, and contrary to popular belief, there are no grandfather provisions in Title III of the ADA. Essentially, if you have an architectural barrier that prevents a disabled person from using your premises then you have to remove that barrier if removal is “readily achievable.” Readily achievable means the removal may be accomplished without undue cost or effort.

The Blue MauMau site, a news service for franchise and small business owners, was maliciously attacked by a disruption in service (DoS) software. The site went down for several hours Sunday afternoon, January 13. It was discovered that a module had been placed outside its news software platform but inside its server's operating system. Its sole purpose is to chip away at the Blue MauMau news platform until the news site slowed and then finally crashed.

I want to share a tale about a glut of ice cream shops, a surplus of frozen yogurt stores and what one franchisor did about it. Ice cream retailers, the franchise industry and franchise owners everywhere need to know.

I want to share a tale about a glut of ice cream shops, a surplus of frozen yogurt stores and what one franchisor did about it. I think ice cream retailers, the franchise industry and franchise owners should know.

The National Hockey League ended a 4-month, 113-day lockout this past Sunday. The league and its players collectively agreed to put their skates back on, and glide back into business. It was about time. Failure to reach this goal would have been really embarrassing, as the league would have had to cancel yet-another season – the second since 2005.

PBS ran a documentary in the late 1990′s entitled “The First Measured Century”, where it described the phenomenal effort the United States undertook in the early 1900′s to begin measuring all kinds of things about Americans. (I highly recommend it.)

Researching and assessing possible franchises to buy is an exciting process. After all, you’re taking concrete steps to changing your life in a big way. That’s why it’s so important to make sure that you take this process seriously, ask potential franchisors the right questions, and make sure you look into every possible franchise opportunity with a critical eye.

What a difference a century makes.  In 1913, the Progressive Era was at its peak.  Strong political efforts were made to improve living and working conditions for working-class Americans.  Efforts were also being made to eliminate waste and corruption in government, to break up trusts and regulate private industry.  For the first time, citizens tried to improve public health, education and sanitation.  There was a concerted effort to conserve the environment and to create the U.S. National Park system.  The Organic Act of 1916 created the National Park Service "to conserve the scenery and the natural and historic objects and wildlife therein, and to provide for the enjoyment of the same in such manner and by such means as will leave them unimpaired for the enjoyment of future generations." 
  
Anti-trust legislation was enacted to break up monopolies.  The 16th Amendment to the U.S. Constitution was passed to establish a graduated income tax and the 17th Amendment to allow direct election of U.S. Senators by statewide popular vote.   The women's suffrage movement gained in strength to finally cause passage of the 19th Amendment  in 1920 giving women the right to vote. 
  
Let's hope that 2013 is as productive as 1913.

In the aftermath of the election, all employers should be mindful of the Equal Employment Opportunity Commission’s ("EEOC") recently announced Strategic Enforcement Plan ("SEP") for 2013 – 2016. On December 17, 2012, the EEOC approved the Plan in a 4-1 vote (commissioner Barker voting against). The final SEP updated and modified the draft SEP that was issued earlier in 2012.　 The plan establishes priorities for the EEOC in enforcement, investigation, research, and education.　 The Commission stated that the guiding principle for the SEP is the agency's belief that "targeted enforcement efforts will have the broadest impact to prevent and remedy discriminatory practices in the workplace" and to help the agency "make the best use of limited resources."　

Have you ever bought a product or service because a celebrity endorsed it? I'd like to think that I bought my last pair of Wrangler jeans because they were a better value and fit than anything Levi's had to offer.

Over at UnhappyFranchisee.com, a site that this bird watches to get the inside scoop on franchise unhappiness and problems within specific chains, Unhappy asks how many franchises does USA Mobile Drug Testing actually have? The answer seems to be — psst, what published number does it take to get you excited about our concept?

I’m guessing you don’t have 24 hours a day to devote to finding and digesting all of the franchise information out there on the web, so here’s my short and sweet list of top online franchise resources:

Mike Munger asks that question in a great little video. He's a Duke professor; the school has made good progress since I was there.

The line between restaurants and food retailers is growing ever thinner. The fight for America’s food dollars continues to intensify as consumers find fresh prepared ready-2-eat food options at a wide and growing array of outlets across almost every channel: convenience stores, chain drug stores, restaurants, grocery stores, club stores, vending and even more non-food retailers like dollar stores.  While manufacturers, retailers and restaurants worry about choice overload, consumers have embraced their new choices and show no signs of returning to the old ways. This fight is taking place in what is called the grocerant niche.

Were you one of the millions of people who made a New Year’s resolution earlier this week? Most people do, although it’s fair to say that New Year’s resolutions go in one year and out the other, people who make resolutions are ten times more likely to change than those who don’t actively make a resolution.

Restaurant sector challenges of negative same store sales comparables, consumer unease, rising food commodity costs and some magnitude of increased heath care costs emanating from Obama Care appeared in 2012. The same issues will be present in 2013.

The year that was supposed to come to a cataclysmic end on 12-21-12 survived the day, perhaps reassuring the doomsday crowd that they can breathe more easily for another 5,126-year Mayan Long Count Calendar cycle.

Franchise financial statements contain a wealth of information that franchisees and prospective franchisees should examine carefully.

If you sell franchise business opportunities, lead a team that does, or are a franchise executive…

Omni-channel retailing and customer centricity have been sweeping their way through the customer-facing side of the retail industry for at least the last five years. But one area that has languished in the portfolio of customer-facing interactions impacted by this wave of transformation is payments.

With year end almost upon us, human resources and payroll professionals are busier than ever! Reduce your administrative headaches by preventing problems. Check the list below to make sure you’re on top of important requirements and changes in the new year.

Franchisors and franchisees can benefit from the leadership style and management skills of the NFL’s great coaches.Being an avid sports fan, I’ve had the benefit of watching professional football for a number of years. During this time I’ve been able to observe how the best NFL head coaches have led their teams to success. Although the great  head coaches both past and present may differ in style there are certain attributes and practices these individuals share. Vince Lombardi had a different style than Bill Walsh and current Patriots head coach Bill Belichick has a far different style than Pittsburg Steelers head coach Mike Tomlin, however, these top notch leaders are more similar than what might appear on the surface.

The New Year, 2013, approaches, and as everyone knows, the number “13” has lots of symbolism.

One of the biggest problems facing prospective franchisees has been the difficulty in determining how much they might "make" if they "bought" a franchise. The very best insight into potential sales and/or profit contribution has always been through the franchisor’s Item 19 (Financial Performance Representation), which is published as part of the franchisor's Franchise Disclosure Document (FDD). This reflects sales and/or profits that existing franchisees within the system have made over the past year or so. There are no guidelines for what should be included in an Item 19, only that the franchisor is able to corroborate the data. Accordingly, franchisors are able to present whatever data they want in whatever form they choose. Accordingly, some provide very detailed information on each outlet, while others simply provide average gross sales experienced by afavorable segment of their franchisee base. Notwithstanding the level of detail, it nevertheless provides franchisees with a logical and much-needed starting point from which to do their own pro formas, and thereby determine if they can make a fair return, in terms of both money and time, on their substantial investment.

Caribou Coffee Company, Inc. (NASDAQ: CBOU) this morning announced a definitive merger agreement with the Joh. A. Benckiser Group (JAB) under which an affiliate of JAB will acquire Caribou for $340 million.

YUM! said that it's facing margin pressures from higher rents and wages in China's largest, "Tier 1" cities but is shifting its strategy toward the smaller, lower tier cities where its penetration is lowest but much deeper than its competition.

Restaurants will be struggling like never before to generate positive comparable sales this quarter. Moderate weather last winter drove above norm sales and traffic then and the publicly traded restaurants are now up against those numbers. Burger King (BKW) is especially vulnerable to investor sentiment with its IPO this year, its rebuilding underway and new menu items introduced this summer, that did generate some sales uplifts.

Recently, my friends over at Entrepreneur.com put together a cool little slideshow. In it, they laid out 10 different franchise opportunities that they felt are worth watching in the coming year. Now, predictions are just predictions; we all know that. And, crystal balls? They tend to break. (If dr...

One of the most dangerous and pervasive myths in the franchising industry is the idea that more than 90% of all franchises are successful. I can’t tell you how many times I’ve seen this statistic pop up or how many franchisees I’ve known who have bet their life savings on a franchise believing the 90% success rate myth.

Under a development agreement, a franchisor offers a franchisee the opportunity to buy the right to develop franchises in a broad geographical territory. Typically, development agreements are separate from franchise agreements, and they require the developer to open a particular number of franchised stores within a number of years. In some cases, the franchisor gives the developer the right to sub-franchise, so the developer sells franchises within the territory.

Next month, David Vladeck will a leave the helm of the FTC's Bureau of Consumer Protection--by all accounts reinvograted under his dynamic leadership--to go back to Georgetown Law. Jeff Gelles, the Philadelphia Inquirer's consumer columnist, attempts to sum up David's tenure in a piece entitled "Consumer chief leaves FTC a feistier place." A snippet:

The credit crisis that began in 2007 is driving many of the developing trends in the franchise industry. Franchisors are refranchising, providing financial incentives and funding support to franchisees and pivoting toward multi-unit franchisess, all at least partly in response to credit access issues.

The forerunner of the modern day 1031 exchange has traces to when goods and services first were traded. When cowboys traded horses or bulls and the one horse or bull was considered a better value than the one received, a weapon, food or cash was received to settle the difference, often placed in the cowboy’s boot for safekeeping.

By any measure I am a most fortunate woman. I have enough money, possessions and love in my life to make me happy and enough equanimity and trust that I don’t worry about lack. So I don’t judge consumers who are hungry for a bargain, any bargain. Is it a sad state of affairs when people swap or shorten a day with family and friends to stand on line waiting for a new toy? Sure it is. But I don’t walk in their moccasins so I can’t judge.

Black Friday, the day following Thanksgiving, has traditionally been the start of the holiday season. The name originated in Philadelphia, to describe heavy and disruptive pedestrian and vehicular traffic, which occurred the day after Thanksgiving, when many folks took off as an extended holiday and used it to shop. That was back in the 1960’s. By the mid-70’s it spread to other large cities as a retail event. Another explanation was given the increase store traffic that particular Friday, it was the point when retailer ledger entries got made – not in red ink, representing losses – but in black ink, indicating profits. Get it? Black Friday!

I have fond memories of Black Friday from back in the days before ridiculous doorbusters at ridiculous hours meant risking life and limb. Back when Black Friday deals would be magically revealed in the Thursday newspaper, and my mom and I would spend the evening sifting through the circulars, planning our attack, while “the men” watched football or snoozed in turkey-induced comas in front of the TV. My mom and I would have a great time, heading out to shop, spend some quality mother/daughter time together, have a nice lunch, and head back home. I don’t remember any urgency to the day. I do remember getting a chance to maximize a high schooler’s and then college kid’s measly Christmas budget on some Black Friday deals.

This Veterans Day, franchising continued to extended its warm embrace to veterans. For better and for worse, which is my topic.

Way back in the early 1990′s we were testing a CREST foodservice market research diary in Great Britain.  When we were reviewing the early returns, our panel partner said that the question about promotions and coupons was confusing to the panelists and wondered if we could remove it.  He couldn’t see the point in the question. As we discussed the issue, it turned out that there just weren’t deals in the market in the way we understood them in the U.S. Combo meal menus, for instance, had to say exactly how many pence would be saved by buying the combo over the individual items.

The latest Wall Street Journal economists poll shows an expected growth rate for 2013 of 2.4 percent, a decent though lackluster pace. However, the same group assesses the risk of recession at 21 percent. So we're more likely to have light-to-moderate growth, but there's a significant risk of recession.

Which why real brands always have a second chance. In fact, where there’s high engagement and loyalty, customers are six times more likely to give them a second chance. A despite all the jokes about Twinkies having a shelf-life of forever, “forever” is a word that tastes real good to real brands.

American traditions abound this week: traveling to visit family, overflowing dinner tables, football games on television, Black Friday sales and, for many workers, a long weekend. But there can also be cultural pressures to meet an elusive holiday ideal and, for many, it’s stressful when family relations go awry or dinner falls short of Martha Stewart perfection.

(Courtesy of albertogp123, on Flickr) You need to have choices. All of us do. If you’re looking around for a franchise to buy, don’t make the mistake of only focusing on one. Here’s why: The franchise concept you’ve been obsessing over for months now may turn out to be a (C...

Turn up the heat with Popeyes Cajun Turkey for Thanksgiving dinner.  Again this year Popeyes is offering its Cajun style Turkeys with mix and match options that include Popeyes Crawfish Stuffing with Cajun Gravy .  Popeyes is one restaurant company that early on entered the grocerant niche offering it’s Cajun Style Turkeys, fully cooked once a year during the holiday season.  Don’t worry about cooking Popeyes does the work for you.

Quickly, do you know the condition of your remote loQuickly, do you know the condition of your remote locations?

ON Sunday and Monday, we celebrated Veterans Day to honor those who have served our country in the armed forces. Are you, as an employer, aware of your obligations to protect the jobs and benefits of your own employees who serve in the military or your employees who have family members who serve?

We wrote a column a while ago about how J.C. Penney, wasn’t a brand in the classic sense, if you defined that as a name imbued with some differentiating meaning.  Oh, no differentiating just on price, which would more accurately make it a commodity.But since CEO Ron Johnson had consciously walked away from that strategy to something called “fair and square”, who knew what they were trying to do to win the retail wars?

In January, the Supreme Court ruled that law enforcement must obtain a valid search warrant prior to placing a GPS tracking device on a suspect’s vehicle. In United States v. Jones, Case No. 10-1259, the Supreme Court determined that placing the GPS on a suspect’s vehicle violated the Fourth Amendment, which protects against unreasonable searches and seizures. The Fourth Amendment applies only to actions taken by those acting on behalf of federal, state or local government; however, the Supreme Court’s decision may apply to the actions of franchises that track the movements of employees.

The skill-set and the desire to cook from scratch today is diminishing rapidly.  While food consumers are a highly fragmented group there are universal commonalities creating channel disruptions. Today it is all about the consumer buying the food they want prepared with the flavor profile of personal preference as mix and match meal components.

Franchisees often ask how much they can win in a lawsuit with a franchisor. The answer depends on many factors, including the type of wrong the franchisor committed and the nature of the loss you sustained.

This headline in the New York Times of September 26, 2012 tells the story of the Waldorf-Astoria's amnesty program: "Do you have a souvenir from New York's legendary Waldorf-Astoria hotel that perhaps you shouldn't have?" Matt Zolbe, Director of Sales and Marketing, said that the hotel did not start the amnesty program because it needed used silverware but because it was looking for attention on social media. He reported that about 15 people returned items such as silverware, coffee pots, coasters and teapots before the program ended on September 15th.

It’s happened again: McDonald’s (MCD) weak same store sales results for October announced today threatened to take down the entire restaurant space stock platform.

This is the ninth in a series of articles for prospective franchisees that discuss the components of a franchise disclosure document. Unlike almost all other articles about what you will learn in a franchise disclosure document, however, this series will focus on what you may not learn. This focus is intended to help you both refine and expand your due diligence efforts.

If you’ve already started your franchise search, then you know that there are a lot of franchisors on the market looking for new franchisees. Prospective franchisees must be exceedingly careful when searching for and evaluating franchise opportunities. There are many low-caliber franchises out there with slick websites and big promises that can easily sweep an unwary prospect right off their feet and right into a bad business.

It is important to have good data for your business. There are also ways to use that data to run your business better. One of the ways to run your business better is to catch problems early, while still fixable, instead of suffering the blow of a failed unit and wondering how it got to that point.

When evaluating a franchise opportunity, the return on effort or ROE can be just as important as the return on investment or ROI. When individuals consider purchasing a franchise, an important part of the evaluation process is projecting the ROI or return on investment. Although the calculation of the ROI will be an estimate, it will at least provide a snapshot of what you could expect to earn on the money that you’re investing in the franchise. To view the ROI process you can view the calculator on the FranchiseKnowHow website.

When business partners in the restaurant industry part ways—sometimes as co-owners of a restaurant, sometimes as franchisor and franchisee—the issue frequently arises whether recipes used in the business belong to one of the parties and whether that party can prohibit the other, or anyone else, from using them.

In a newly released special report, the Franchise Business Review concludes that the special discounts and incentives that hundreds of franchisors are currently offering to prospective franchisees with military experience makes it "an excellent time for veterans to consider a franchise opportunity."

 A 1031 exchange is an Internal Revenue Code tax rule that allows taxpayers to defer indefinitely capital gain and recaptured depreciation taxes when selling and replacing with like-kind real or personal property held for productive use in a trade, business or for investment. The tax deferral requires strict adherence to the 1031 tax exchange rules to effectively postpone the tax payment until the replacement property is sold or possibly eliminated if heirs sell, when received or minimized when selling a primary residence that was previously a replacement rental property in a 1031 exchange.

Party of One is simply not happening in the restaurant sector. A party of one is not a party! However if you are a Grocery store, C-store or Urban Chain Drug Store then continue throwing the party because consumers are showing up. Food retailers need to understand that consumers that are single want to buy ready-2-eat and heat-N-eat fresh prepared food rather than cook from scratch. The facts are simple and straight forward:

Bill Gates once opined, “the PC will continue to evolve and eventually you’ll think of it as a flat screen ranging from a wallet-sized device to a notebook” Prescient, huh? Well, Mr. Gates didn’t realize quite how prescient he was being.

(Courtesy of vox Efx, Flickr.com)
 
Franchise Business Review, (FBR) has been in business for several years, and has amassed a large amount of franchise data.

Over the next two weeks there will be several “pure play” restaurant franchisors that will report earnings: Dunkin Brands (DNKN), Burger King (BKW), and DineEquity (DINE). It should also be mentioned that Sonic Drive In (SONC) and Domino’s (DPZ), which are both 90% franchised, reported in last week.

Buying a franchise will be one of the largest (if not the largest) investments you will ever make. With so much money on the line, I’m surprised at just how many prospective franchisees I meet who try to take shortcuts in order to save a few pennies.

Through effective trade associations and lobbying efforts, during the last century automobile dealer franchises in the United States convinced state governments to give them significant protection against commercial abuse or unfair dealing by the manufacturer or supplier franchisors. Franchisees in other industries could learn from that example.

Bill Bishop Jr. president of Willard Bishop presented findings from the NACS/Coca-Cola Retailing Research Council. Bishop identified five major platforms of opportunity for Convenience Stores. Those five platforms are Fresh Value Fast, Female, Friendly, Family Time, My Time and My Place. My ...

While the meatiest provisions of the Affordable Care Act take effect in 2014, there are some requirements to tend to right now. Make sure you are ready to comply with the following:

The National Minority Franchising Initiative and the World Franchising Network have conducted a survey on minorities in franchising for USA Today - Franchising Today for the past six years. The articles have been titled "50 Top Franchises for Minorities."

If you are currently managing multiple locations, then you know how formidable the challenge can be. Your ability to effectively manage remote locations is key to your success regardless of whether you are owner, general manager, or corporate team member.

A Wendy’s franchisee’s settlement this week of an Equal Employment Opportunity Commission (“EEOC”) lawsuit, brought under the Americans with Disabilities Act (“ADA”), highlights both the increased aggressiveness of the federal agency toward fast food restaurants as well the need for employers to engage in an interactive process with job applicants and employees to make reasonable accommodations under the ADA.

Here is an excerpt from my just released report Home Care Franchise Industry Update 2012 entitled The Drivers of Home Care Franchising. There are three key factors driving the growth of the home care franchising sector.

Last week I attended the MMCF – Internet Retailer’s Mobile Marketing & Commerce Forum. I could attempt to organize everything I learned into some kind of story or structure and say that it all ties nicely together, but that would be really hard. Instead, I’ll give you a taste of what I experienced, which is an onslaught of learnings, factoids, and experiences shared by every combination of cross-channel, online-only, even mobile-only retailers.

 So you’re sitting on a bench kind of putting off going to work or at least steeling yourself for it, and a spaceship lands. Out comes some sort of creature. It/he/she sits down and asks what liquid refreshment you are absorbing. “It’s coffee,” you say. “What’s that?” it/he/she asks.

Given how specialized franchise law is, both franchisors and franchisees are encouraged to retain lawyers with expertise and experience in franchising, not ones who just dabble in the area. There are new franchise decisions coming out all of the time with outcomes that do not always reflect the plain reading of certain franchise law provisions. In other words, it’s not enough for a lawyer to know which provinces have franchise legislation and what those laws say. To properly advise a franchisor or franchisee client, a lawyer needs to read a lot of franchise cases and understand how the courts have applied franchise legislation in varying circumstances.

We are recovering from a crisis of market collapse caused in major part by abuse on the part of banks and investment houses. From mortgage backed securities where the mortgage portfolio was of extremely low quality to derivatives called credit default swaps, the Federal Reserve and the SEC enforcement division were asleep at the switch – called deregulation – and everything hit the fan.

Hotel owners, are you better off now than you were four years ago? Consider these news bits:

There have been many recent articles about the phenomenon du jour in franchising – franchisors selling off company-owned units, almost exclusively to large multi-unit franchisees – but none that touch on the economics of this emergent strategy.

Here’s something to add to your list of things to do before you sign a franchise agreement; Take a look at the franchise’s online expertise. In other words, are the things they’re doing online first-class?   Your Online Experience Can you remember what your initial thoughts w...

 Retail foodservice continues evolving with a strong focus on the consumer.  At the intersection of the consumer, technology and retail food sales we find the grocerant niche creating and expanding points of quality food distribution.  It’s at that intersection that Foodservice Solutions® Grocerant Guru identified one universal commonality driving consumers buying pattern changes.  Johnson calls it “The 65 Inch HDTV Syndrome.

Occupancy costs is everything that it costs you to be in the building; rent, common area maintenance (CAM), taxes, insurance, electrical, gas, water, fees, etc. For most franchise businesses, these costs historically range in the neighborhood of 6 to 9 percent. From my perspective at Roetzel & Andress, I continue to see downward pressure on occupancy costs. Good franchise systems are taking advantage of this and attempting to lower their occupancy costs.

Next week I'm presenting at the Mobile Marketing and Commerce Forum (MMCF), put on by Internet Retailer, on the specific topic of how web-only retailers can use mobile to compete at store shelves. I put my finishing touches on the presentation yesterday, but I've had mixed feelings in developing the topic all along.

October is National Disability Employment Awareness Month. There's no better time to remember how vital it is that employers engage in an interactive process with employees who have a disability.

This audibly gifted bird is hearing strong rumors that Arby's is looking to sell a thousand of its company-owned restaurants to large multiunit franchise owners who are in the restaurant business. Arby's, who was recently bought out by Roark Capital from Wendy's, will likely package its company-owned restaurants into hundred and two hundred location deals to sell to franchise buyers.

Employers face a January 1, 2013 deadline to update the notices they must provide to employees pursuant to the Fair Credit Reporting Act (“FCRA” or “the Act”).  The requirement and deadline are the result of the recently created Consumer Financial Protection Bureau (“CFPB”) assuming enforcement authority over the FCRA.  Prior to the creation of the new federal agency, the Federal Trade Commission had enforced the Act.

While it's hard to generalize about the different approaches that prospective franchisees take when considering a franchise investment, there's always at least one constant: they want to contain their costs.

This is the eighth in a series of articles for prospective franchisees that discuss the components of a franchise disclosure document. Unlike almost all other articles about what you will learn in a franchise disclosure document, however, this series will focus on what you may not learn. This focus is intended to help you both refine and expand your due diligence efforts.

In my prior blog, entitled You Can’t Fix What You Don’t See (posted 09/07/2012), I discussed the importance of having access to financial and operating information that is both timely and digestible. Let’s call that type of information “good data.”

Individuals considering a franchise opportunity should include franchise resale performance as part of the due diligence process.  Having an exit strategy is a critical component of any new business start-up.When individuals purchase a franchise some consider the possibility of selling it in the future or allowing their children to take ownership. For this reason, the resale potential of a franchise should be another item on the franchise evaluation checklist. However, it’s been my experience that the resale factor doesn’t receive the attention it deserves. In terms of franchise resale’s the current economic uncertainty in the U.S. serves as a reminder of how quickly things can change. A recent article in the Wall Street Journal entitled “The Economy Stole My Retirement by Sarah E. Needleman and Emily Maltby presents the challenges today’s small business owners face as they attempt to finally sell businesses they started many years ago. Since the U.S. economy is cyclical there are no guarantees that a post recovery recession will not occur in future years.

More than 100,000 books, from best-selling novels to best-selling business books are now available on Amazon.com in audio versions.

Although the National Labor Relations Board's Acting General Counsel has issued three advisory reports about his views on corporate social media policies within the past year, the Board had not decided an actual case.　 That changed on September 7, 2012, when the Board decided Costco Wholesale Corporation and United Food and Commercial Workers Union, Local 371, No. 34-CA-012421.

Most marketers have the traditional stuff down pretty well. But when it comes to digital, that’s often a different story. All brand stewards recognize theneed to market in digital, but what they should do, strategically, when they get there remains largely a trial-and-learn process with mixed results. While not much spend may be at stake, certainly time is. Rumor has it that time really is money when it comes to profits, so not leaving any of it on the table continues to matter.

Selling around 1 million cups of coffee a day in the United States 7 Eleven continues to leverage its branded fresh food program in creative consumer focused interactive participatory ways to build sales and customer loyalty.

Since I last wrote about this subject in 2009, the U.S. Census Bureau reported that there are now more Americans age 65 and older than at any time in U.S. history.  On April 1, 2010 there were 40.3 million people age 65 and older, up 5.3% from 35 million in 2000 (and just 3.1 million in 1900).
 
The 65-and-older population jumped 15.1% between 2000 and 2010, compared with a 9.7% increase for the total U.S. population.  People age 65 and older now make up 13% of the total population compared to 12.4% in 2000 and 4.1% in 1900.
 
In March, 2004, the late Professor Anthony Marshall wrote in Hotel & Motel Magazine an article entitled, "Gray Matters: How to Profit from an Aging Marketplace"

"The real joke this day and age is on hoteliers who don't make their properties safe and comfortable for seniors.  But many still don't....
Another barrier to having a hotel that's safe and comfortable for seniors is the erroneous perceptions held by staff and servers:

[This article is aimed at chamber of commerce executives across the country.] Is your Economic Outlook Forum stale? Many are.  Plenty of chambers across the country found in past years that an annual forecast program is their best-attended event of the year, but I’m also hearing many chamber leaders say that attendance is dropping. It may not be the weak economy so much as stale programming.

Like most Americans, especially those with roots in New York City, the events of 9/11 had a very profound effect on me. For a variety of reasons, I tend to think of the day in very personal terms. So last week when I got a request from our friends at Retail TouchPoints to comment on how I thought the events of that day changed retail I had to stop and think about it. In the end, I was happy to be able to say “Not at all.” That doesn’t mean retail hasn’t changed in these past eleven years. It has changed irrevocably – but in this case (unlike air travel, which has become a form of torture), we buy, sell and consume products with the same vigor we did before. It’s the “American Way.”

Smith Travel Research (STR) reported that the industry sold more rooms in July 2012 than in any other single month since STR began tracking industry performance in 1987. STR's COO Brad Garner said, "Record levels of demand will continue to stimulate ADR growth, particularly as group rooms sold firms in the historically heavy convention months of September, October and November. Discount-conditioned consumers will continue to experience a shift to a seller's market with magnitude likely accelerating in 2013."

Rik Nonelle thinks that every regional developer should read Become A Franchise Owner! That’s why he called me to have 10 signed copies of my franchise book sent to him for his regional developer meeting this week in Cincinnati.

 This is the seventh in a series of articles for prospective franchisees that discuss the components of a franchise disclosure document. Unlike almost all other articles about what you will learn in a franchise disclosure document, however, this series will focus on what you may not learn. This fo...

One of the biggest problems small to medium sized businesses (SMBs) face is lack of meaningful financial and operating information that is both timely and digestible.

McDonald’s Corporation is ramping up the growth rate of new restaurants in the U.S.A. We can understand the challenge management faces. They must keep total sales growing to increase corporate income.  If same store sales are slowing they have to try to increase sales with new stores. Stores that open below projections still produce incremental income for the corporation.

The business press and Wall Street are focusing on signals of quarter to quarter sales momentum. There is no doubt that restaurant sales momentum cooled off from late 2011 and 2012, but its far from a disaster. We have settled into a new normality that is actually closer to 2010-2011 levels.

Just when we thought that the foodservice industry was on the road to recovery, with consumers harkening in the new year with more restaurant visits, their confidence in the economy began to wane again and they pulled back on their visits.  On top of that, just when you think it’s all about the economy, mother nature slaps you on the back of the head with a drought across much of the U.S., and we have the threat of higher food costs hanging over our heads. Just like Saturday Night Live legend, Roseanne Roseannadanna, would say, “It’s always something.

I ask this question of you…future franchise owners. And, I have a great reason for doing so.

Several days ago a man shot a former co-worker in the head five times, killing him, before being killed himself by police. A number of bystanders were wounded during the exchange of gunfire that took place in front of the Empire State Building in New York City during the morning rush hour.  Apparently, the victim had previously filed a complaint against his assailant which had said he believed the man would try to kill him. The shooter, a clothing designer, had been fired from his job about a year ago and is said to have been upset that the man he shot had not sold enough of his designs. On the heels of a shooting spree during a Batman movie showing in Colorado late last month and in a Sikh temple in Wisconsin earlier this month, we continue to be reminded of the possibility of extreme violence erupting during such every day activities as seeing a movie, attending religious services and going to work.

In this last of my three part series, let me get to specific cases. The owner of a hotel and the general manager set the culture of the property.  You establish the tone, the environment in which your employees operate.

Talking about CRM in retail has been problematic for me for a very long time. I still get positive feedback, and reports from readers that it is still relevant, on research we published in 2007 on loyalty programs – “Getting Loyalty Programs Back to Loyalty“. CRM has long been a bad word in retail, ever since some retailers spent millions trying to implement it in the late ’90′s and early half of the ’00′s. There was awhile when we tried desperately to avoid the term in our surveys, because it was a sure-fire way to scare away survey respondents.

Burger King’s success this summer can in part be attributed to cool treats. Leveraging new product albeit traditional ice cream with a twist; it looks as if Bacon Sundaes and $0.50 Cones just might have done the trick.

One of the most important lessons that I've taught my daughters is that it's always better to have options in the pursuit of any goal. Many times during my career I have applied for jobs that I wasn't entirely sure I wanted. But I always wanted to be the one in the position to say no.

I've talked about how change is inevitable but in this second of a three part column, I want to talk about how to manage change in the workplace. There are three types of managers. One sees changes coming down the track. Another sees changes just in time to take some adjustments before it’s too late.  The last type gets run over by change with the same result as a Mack truck running over a paper cup.

1031 real estate exchange rules define how to go about deferring federal and state capital gains and recaptured depreciation taxes when selling and replacing a real property investment. A 1031 exchange, or Internal Revenue Code (IRC) Section 1.1031, allows any entity, both U.S. residents and foreign non-residents, to defer or postpone the payment given certain 1031 real estate exchange rules are strictly followed. The first step is to be aware that the taxes can be deferred indefinitely or until the replacement property is sold. Taxes, both federal and state, along with a twenty-five percent recaptured depreciation tax, can amount to upwards of 40 percent of the property’s sales price. If you could be given up to 40 percent of the real estate sales price interest free to use towards acquiring replacement property, wouldn’t you ask what the 1031 real estate exchange rules and requirements are?

We all love Millennials. They're the future main stream restaurant consumers. They do all sorts of cool things like Foursquare, Twitter and Yelp (at least they did last week). They like to try new things. And, they're just inexperienced enough to be optimistic.

HotelNewsNow.com reported on July 26, 2012 that prospects for U.S. hotels looks brighter. Despite a softening economy, the outlook for future monthly overall business conditions in the U.S. hotel industry increased during June, according to e-forecasting.com's Hotel Industry Leading indic...

This week I turned sixty and I am concerned and confused about the future of the hospitality industry. I am concerned about where our future leadership will come from. For those of us who are also pushing sixty or have already pushed through to the other side, here are some reminders of what we have lived through. And for those of you who believe that sixty is ancient, here is an interesting history.

As many of you know, I was among the first IT execs in the United States to successfully implement a merchandise planning system. The planning process at that time was pretty straightforward, and has remained more or less the same for the past twenty-five years. But that's changing now, in some really fundamental ways.

(Flickr-ilovememphis photostream) Technology. It makes things easier. Simpler. Less hectic. Right? Was it ever supposed to? I don’t remember. Because, I’m too darn busy-all the time. But, at least there are a few local franchise businesses that can help me with some of the things that c...

Because Cold Stone Creamery received some unflattering press recently, I started to read their franchise disclosure document (FDD) the other day to get some background information but I got knocked stone cold on the very first item of their disclosure.

Chicken is the most popular meat in North America second most popular selling meat in the world.  In the United States McDonalds has very successfully sold Chicken McNuggets since 1983 and is currenlty testing bone-in chicken wings. KFC evolved from Kentucky Fried Chicken into a global power house yet is capitulating North American market share currently too Popeye’s Chicken.  McDonalds may try and garner share from both KFC and Popeye’s leveraging grocerant niche success clues.  Thus creating Chicken Wars not only in North America but around the globe.

In a strategic move, the 16 plaintiffs who have been litigating a class action in federal court in San Francisco, have re-filed their lawsuit in the state court system, before the Los Angeles Superior Court. The new lawsuit in Los Angeles is a mass action. Green Desert Oil Group et al. v. BP West Coast Products, LLC (Los Angeles Superior Court Case No. BC49225 ). We believe that by having all the cases finally heard in one venue, the Los Angeles Superior Court, we will achieve greater unity and enable everyone to focus on promptly defeating BP.

There continues to be a number of individuals that purchase a franchise without the benefit of professional advice. It can be the biggest mistake they will ever make.

In a lifetime of crime, Willie Sutton robbed banks of almost $2,000,000.00. From 1934 through 1947 he was one of the nation’s most successful bank robbers. He made the FBI’s Ten Most Wanted list in 1950, after escaping from prison disguised in a prison guard’s uniform.He’s famous for a comment he supposedly made to a reporter who asked him why he robbed banks. His now legendary reply was "because that’s where the money is."

One good thing about vacations is they really do clear your head. So along with bringing back lots of photos of blue-footed boobies from my most recent holiday, I also brought back a fresh perspective. And those thoughts revolve around promotions.

This is the sixth in a series of articles for prospective franchisees that discuss the components of a franchise disclosure document. Unlike almost all other articles about what you will learn in a franchise disclosure document, however, this series will focus on what you may not learn.

Leveraging consumer focused migration marketing information during its most recent quarter; Popeye’s’ same-store sales increased 8.1%. Shares of Popeye’s parent company AFC Enterprises Inc. increased 52% over the last 12 months. How is your food retail company doing? Are you ready for some success clues?

Would you be surprised to hear that children lining the athletes parade route through Olympic Park in London were advised to wear "comfortable, unbranded or adidas shoes"? A bit biased, you say?

A reverse 1031 exchange enables the taxpayer to acquire the replacement property before selling the old or relinquished property. Prior to Revenue Procedure 2000-37, a reverse 1031 exchange was not recognized under Internal Revenue Section 1031(a)(3).  Private Letter Ruling 9814019 permitted a two party reverse exchange where the replacement property was acquired prior to selling the relinquished property. Before reverse 1031 exchanges were authorized, taxpayers would structure simultaneous exchanges where at one long closing, the replacement property was acquired and the relinquished property sold.

You can only do so much. Especially when it comes to home maintenance. And, it’s not because you’re lazy or unmotivated. It’s because you don’t have time. And, that’s a problem.   The Solution It’s a good thing that most problems have solutions. And, if som...

Late Thursday, CKE Restaurants announced that their planned initial public offering (IPO), to return to the New York Stock Exchange, had been cancelled due to “market conditions”. Market conditions is Wall Street speak for that investor demand for the hoped $14 to $16 stock was too weak.

The economy may be the reason that restaurant chain executives cite most often when reporting sluggish results. However deep within the four walls of C-level suites restaurant chain executives are pondering the success grocery stores delis and convenience stores are finding within the fresh prepared ready-2-eat and heat-N-eat food niche. Restaurant industry market share capitulation is not on their agenda particularly when it is restaurateur’s market share that is getting eaten by these non-traditional competitors.

One of the heroes in my book "Great American Hoteliers: Pioneers of the Hotel Industry" (AuthorHouse, 2009) is John Q. Hammons.

There has been a flurry of news stories in the last couple of months about pricing and promotions, of which two stand out very strongly in my mind. One is JCPenney’s report that they are returning to “sale” terminology instead of the cute “best price” attempt. The other is Supervalu’s repositioning on price – the company is going to lower prices and promote less, and implement much of it by the end of its fiscal 2013. Both announcements come after what might kindly be called “disastrous” quarters. Both companies reaffirm that they have fallen into a trap of training consumers to wait for deep promotional discounts before buying anything and need to change their ways, fast.

Taking a vacation can be a daunting task for a small business owner. Almost everything in the business depends on them. But thanks to technology, it is possible to keep an eye on the business while soaking up the sun on a beach somewhere.

Following inauguration of Best Western International's "I Care Clean" program, recent research from Europe reported that almost 70% of hotel guests say that cleanliness and hygiene are most important.  The research completed across Europe by Hotelschool in The Hague in conjunction with Sealed Air's Diversey business shows that most people now make their decisions on where to stay using online ratings to tell their friends if they encounter poor conditions.

With the weather being some of the hottest in decades, one might think that iced coffee sales would be going through the roof. But if Howard Schultz, founder and CEO of Starbucks, seemed a bit jittery, it wasn’t from too much caffeine.  Analysts’ confidence were apparently on the decline when the company posted what they felt were disappointing earning results. And the share price fell nearly $5 at close of trading Friday.

This is the fifth in a series of articles for prospective franchisees that discuss the components of a franchise disclosure document. Unlike almost all other articles about what you will learn in a franchise disclosure document, however, this series will focus on what you may not learn.

As you all know, I'm a relatively new franchisee, even though my family has been in this industry and real estate development since the 50's and have a combined operational experience of more than 200 locations in Southern California and abroad under various brands.  In fact, one of my uncles sat on the first advisory board of the Original OPEC commission with the King Reza Shah Pahlavi II before he move to United States to work as regional area developer for Chevron.  I did not want to be in the gas station business but I was forced to foreclose on a site since my parents were carrying a note on a site. 

My friends over at Franchise Direct recently put together a valuable post detailing the “11 Key Steps in Opening a Franchise.”

My belief system, developed after over 35 years in franchising and being a franchisor 5 times and a consultant to hundreds of companies, is there are fundamental issues to franchising that drive success or failure.

The most critical fundamental issue is how both Psychology and Sociology affect a franchise system.

The first deals with understanding the right profile of individual (Psychology) best suited to operate or execute a particular business model.  It doesn't matter if it is retail, food service or a home-based cleaning service.  If a company doesn't scientifically understand the inner workings of their High Performers they are destined to recruit a myriad of different types of people and it is a crap shot as to whether they will be successful or not.  At that point all of the franchise relationship building exercises are a mute point because a company is trying to service,support and maneuver a "round peg into a square hole."  That will never work and those are words I quote from the head of one of the largest organizations in the world as we displayed to them who they should be seeking versus who they had been attracting. In fact, we were successful in increasing their average unit sales 38% withing the first 2 years after deploying our recommendations.  

Further complicating this issue is that companies attempt to create training and support systems that may work with some and may not work with other people.  There is no such thing as a "one-size-fits-all" solution in franchising.  Satisfaction for one profile is very different than satisfaction for another.  

For instance, we have found, using Franchise Navigator, that certain profiles are driven by a value system of their need for safety and security and they don't really care about the bottom line as long as enough comes in to satisfy their overhead and family; whereas other profiles are motivated by the "prestige" of owning a particular franchise but lack the skills to perform at the unit level and others are motivated by building "empires" and are great leaders and motivators of people and are very "bottom-line" driven.

The second part of this is how these people/individuals/franchise operators function as a group.  Each franchise company has its own particular culture, environment and society.  How people fit in or don't fit in (Sociology) is also critical. I have personally witnessed how great individuals feel like "outcasts" within a franchise system because they don't fit in while others tend to dominate groups and the franchisor while even others are complacent and are very obedient to the franchisor's system.  Interestingly, we have found that the complacent ones are not the High Performing operators but are wonderful brand ambassadors.  Which would a company prefer and how do they develop a culture that works today and is positioned for success in the future?

Franchising is a very complex business model that involves both the Psychology of understanding human nature and what motivates a franchisee to the Sociological part of whether they will fit in or stand out in their particular group or society.

As I have said, for well over 30 years, and people who know me know this, that the "very things that cause success or failure in franchising . . . has nothing at all to do with franchising."

Do you agree?

You may be somewhat reassured if the franchise in which you intend to invest provides Item 19 financial performance representations in its franchise disclosure document.

On July 14th, payment network operators VISA and MasterCard announced that they had agreed to pay over $6 billion to settle a complaint dating back to 2005, when several large retailers, including grocers Kroger, Safeway and drugstore giant Walgreen, filed price-fixing lawsuits against the two large card networks (American Express and Discover were not included).The complaints relate to alleged price-fixing by the two networks for credit card fees (not debit).

Let’s face it, entire books can and have been written about marketing and sales so we will not go into much detail here.  If you haven’t noticed by now, everyone (and I do mean everyone) has an opinion on marketing, including me.

There is no doubt in my mind that if none of the states required close scrutiny of initial registration disclosure documents, and some review of annual filings was not done [It's not.], the quality of disclosure to franchisees would deteriorate from pretty good to very bad.

Our feisty foul flew into forbidden territory yesterday, listening in on Quiznos’ conference call with franchisees. Executive chairman Harsha Agadi proudly introduced the company’s new incoming president/CEO Stuart Mathis and chief marketing officer Susan Lintonsmith, who will be officially seated in their positions on July 30, 2012.

Franchisees who invest in publicly held companies should have a line of communications with the investors in their system that is uninterrupted by corporate management.

As a certified Baby Boomer, I’ve grown quite accustomed to being catered to by every possible marketer over the course of my life. There were a lot of us: we had all the disposable income, all the cache, and most of the self-absorbed fun. Well, as Dylan (technically a pre-boomer!) said way back when, the times they are a’changin’. Last week brought us three announcements from retailers that show just how much. And the UI we saw demonstrated at SAP’s Analyst Base Camp added fuel to that fire.

By 2014, people born after 1980 will represent 50% of the US workforce and will be in their peak disposable income years. That’s just freaky. As for me, the best barometer of changes in my spending habits is the fact that I have owned my current car longer than any other car in my entire life (going on 10 years!). The younger generation who works for us, with us, and spends with us is going to be a force to be reckoned with. And we have to learn how to connect with them.

In that context, is it any real surprise that Neiman Marcus entered into a joint venture with Target, Nordstrom entered into a joint venture with TopShop, and Lord & Taylor (perhaps the most ‘venerable’ of all) became the exclusive sponsor of Project Runway’s tenth season? Wall Street analysts may be downgrading some of the luxury retailers, but those retailers are taking steps to insure relevancy with Millennials. I suspect that’s one of the reasons behind Saks’ participation in “Fashion Star” as well. As my friend Tom Scotti of Consensus Advisors pointed out, this isn’t just a win for Target and TopShop. This is a big deal for Neiman and Nordstrom (and L & T). It’s all about retaining relevancy.

This has profound implications for technology providers supporting retailers. At SAP’s analyst base camp, I was really struck by a BI demo. The simplest way to describe the UI is “KPI Widgets.” Customizing a screen for managers was about selecting the KPI widget he or she wants and putting it on the device. For example, I have a widget on my desktop that tells me the current temperature and may issue a red alert if we’re expecting wind, rain, riptides or other weather anomaly. I also have a widget that shows me how hard my computer is working. Imagine a merchant who has a widget that issues an alert on a suddenly hot product. Or perhaps I want a product-specific widget. Like “How’s my TopShop store within a store trending today?” Heck, even the word “trending” is a social media metaphor.

These metaphors are all driven by the millennial generation. Boomers and pre-boomers, live in a columnar world. Give me spreadsheets! Bowl me over with data! Millennials (thankfully) don’t have the patience.

Where do I see these changes coming?

Sit back, close your eyes, and visualize owning many franchise business units. How does it look? Owning many-units, (or multi-units as they’re more commonly called) of a franchise concept is the goal of a fair number of today’s would-be franchisees. It can be like building your own litt...

For those you who may have missed it, Summer officially started last week, and that means vacations for most people. Vacations, which used to be regarded as a luxury, have become a necessity in today’s world. Nearly 95% of folks we polled in our Customer Loyalty Engagement Index indicated they had no intentions of cutting back on their vacations.

The Small Business Administration recently provided Blue MauMau with its newest list of failure rates of small business loans sorted by franchise brands from October 1, 2001 until September 30, 2011.

This is the fourth in a series of articles for prospective franchisees that discuss the components of a franchise disclosure document. Unlike almost all other articles about what you will learn in a franchise disclosure document, however, this series will focus on what you may not learn. This focus is intended to help you both refine and expand your due diligence efforts.

Contrary to the position of Hotel Business magazine (June 7, 2012), which urged AAHOA to "back off the criticism of brand executives", I believe that AAHOA needs to push harder to overcome the sharply one-sided franchisor advantage.  Just in case you need substantiation of this position, take special notice of the typical franchise agreement in which most hotel franchisors, in addition to nonnegotiable termination and encroachment positions, have the ultimate power to arbitrarily:

Putting the legal implications of the recent Quebec Superior Court decision awarding over 16 million dollars to Dunkin' Brand franchisees in compensation for Dunkin' Brands failure to support and protect its brand in the Quebec market, I see at least five (5) lessons we can all learn from this "...sad saga...of how a once successful franchise operation ....fell precipitously from grace in less than a decade".  Some of these “lessons” are longstanding principles of good franchising but when a major franchisor like Dunkin’ Brands ignores them they bear repeating:

The Universal Franchisee Bill of Rights (UFBoR), www.franchiseebillofrights.org, passed 1000 endorsements and ratifications today.  The UFBoR was released by the Coalition of Franchisee Associations last year as a fairness doctrine after input from many franchisee advocates. 

In this Olympic year, we are certain to face a wave of analogies and metaphors related to the Games and the athletes (along with their preparation, trials, and victories).  Allow me to jump on this bandwagon….

With the big announcement last week that the U.S. Supreme Court had ruled favorably on the constitutionality of the Affordable Care Act (ACA), commonly referred to as "Obamacare", the two big trade organizations in the U.S., the National Retail Federation (NRF) and the Retail Industry Leaders Association (RILA) were quick to react, although the tone of their reactions differed significantly.

Franchise Valuations, are so totally not surprised by the FTC lawsuit against Wyndham for a breach of their database that we suffered a collective bout of hyper-yawns. We have been consistently warning the franchise community about cyber-security risks for years.Cyber attacks generally follow three steps, according to our network security expert Henry Chan:

Editor's note: Recently, the FTC sued Wyndham Hotel Group over its alleged lack of effort in securing guest card information and its misrepresentation to guests of protecting the information. (Read the article here.) This is Prof. Passikoff's column in respond to that event.

A number of franchisors are offering financial concessions to veterans interested in purchasing a franchise. Veterans need to look before they leap.

(Courtesy of Lyris F’s Flickr Photostream)   If you’re looking at some of the more popular franchises, I’m assuming that you’ve noticed a common theme; they all require employees. While the actual amount of employees needed varies from one business to another, the botto...

Many experts have written about effective business plans but few have reduced their advice to a few simple elements. Even fewer have paid any attention to a plan for a prospective franchisee.

An article by Michael Seid was recently posted at Franchise Chat, entitled  "Developing A Proper Franchising Program". The article clearly indentifies some key issues as a company considers the advantages and disadvantages of franchising and includes a "franchisability" test as to whether a business is ready to franchise. What is not included in his list is an examination of unit economics, he does mention "sources of economic revenue" for the franchisor, but largely omits any items related to franchisee profitability at the unit level, nor did he mention franchisee return on investment.

This is the third in a series of articles for prospective franchisees that discuss the components of a franchise disclosure document. Unlike almost all other articles about what you will learn in a franchise disclosure document, however, this series will focus on what you may not learn. This focus is intended to help you both refine and expand your due diligence efforts.

The Burger King going public transaction this week marked not only another organizational odyssey point for that storied brand--the fourth since 2002, and reminded us what's going in the restaurant franchising space.

As more and more people sign up for Facebook accounts and as texting overtakes phone calls we have been subject to an avalanche of books, articles and blogs such as How the Internet is making us stupid by Nicholas Carr, or 13 ways the Internet is making us smarter, by David Weinberger or even how social media influences revolutions in my own blog Revolution 2.0 and Social Media.

Few technologies have influenced the hotel and travel markets to such an extent as mobility is doing today. PMS, GDS, CRS and the Internet have all played a significant role in shaping today's hospitality landscape.

I received a call Sunday night from a friend of mine. She owns a retail store in a small mountain town in Colorado, and she’s called to pick my brain from time to time. It’s a cute little store, focused on “green” baby products. To be fair, my friend, let’s call her Michele to protect her ...

After attending the recent International Franchise Expo at The Javits Center in New York City I found it a definite improvement over the long- running IFE in Washington,D.C. There was more traffic and the number of exhibitors was higher. I didn't attend on Sunday, but several of my former clients told me the attendance and quality of prospects was very good.  Joel Goldstein, Group Marketing Director of MFV Expo told me that there were 14,313 total visitors and 334 exhibitors at IFE. In my opinion re-locating the IFE to New York was the right decision.

During the same time the IFE was being held in New York the Brazilian Franchise Association (ABF) held its Franchise Expo in San Paulo. Touted as the largest franchise show in the world the ABF Expo had 61,000 attendees with 400 exhibitors ( interestingly attorneys are not allowed to exhibit).

Brand loyalty programs appear to be driving an increasing number of guests to U.S. hotels. However, this increased volume of room nights comes with an increased cost.

While food consumers are a highly fragmented group there are universal commonalities creating channel disruptions. Consumers want what they want when they want it! Today it is all about the consumer buying what they want, where they buy it and how they buy it. You can buy fresh prepared ready-2-eat food from large format food retailers the ilk of Duane Reed, Walgreens, Safeway, Kroger, Walmart, Whole Foods, or Smaller Format retailers like Trader Joe, Fresh & Easy (Tesco), Dollar Stores, Restaurants and Vending.

Veteran writer, Carol Tice , just wrote an interesting column over at the Forbes.com website, and if you’re a military veteran who’s been leaning towards franchise ownership, it’s worth a read.

In our recent Store Report, we asked retailers to self-identify the top uses of technology in their stores today. While technology's ability to help maintain/improve the customer experience and increase revenue while holding down operational costs remains of utmost importance, retailers increasingly recognize that technology also provides a chance to arm their managers with actionable information (up from 32% to 43% this year).

New York Mayor Michael Bloomberg – indicating his concern for the health of New York’s citizens – proposed a ban on the sale of large-sized, sugared drinks, i.e., 16-oz. or more, in restaurants, sports stadia, movie theatres, and from street carts. For those of you addicted to 40-oz. drinks, the proposed ban did not include grocery or convenience stores.

Be careful what you sign at the beginning of a franchise relationship, it could come back to bite you. Most franchisors include covenants not to compete in their franchise agreements. Moreover, most franchisors are now including a clause wherein the newbee franchisee agrees that the time and geographical scope of the covenant not to compete are reasonable and that a violation thereof would cause irreparable harm to the franchisor. This is something the new franchisee, in reality, has no way of making a reasonable assessment of prior to the opening of the subject franchise. Phrases like this are most often dismissed by unrepresented prospective franchisees as mere "legaleeze." And, in fact they are - but beware - it is dangerous legaleeze - with teeth - at least in New York.

On March 19, 2012 the United States Court of Appeals, Second Circuit issued a ruling in the matter of Singas Famous Pizza Brands Corp. v. New York Adver. LLC, 11-1038-CV, 2012 WL 899231 (2d Cir. Mar. 19, 2012) ("Singas"), and affirmed the district court's granting of a preliminary injunction against a former franchisee and in favor the franchisor on a ten-mile post-term covenant not to compete. The court of Appeals concluded that the ten mile geographic restriction in the Franchise Agreement was reasonably calculated towards furthering the franchisor's legitimate interests in protecting its "knowledge and reputation" as well as its "customer good will." The Court further concluded that the franchisor would suffer irreparable harm if defendants were allowed to continue operating the competing restaurant in violation of the restrictive covenant.

In so doing, the Court found that the defendants expressly agreed in the Franchise Agreement that the ten-mile geographic restriction was "fair and reasonable," that the restriction was "reasonable and necessary" for the protection of the proprietary interest of the plaintiff, and that "violation of [the restriction] would cause substantial and irreparable injury to the plaintiff. The Court noted that it had previously held in Ticor Title, 173 F.3d at 69 that such contractual provisions "might arguably be viewed as an admission ... that plaintiff will suffer irreparable harm were [defendant] to breach the contract's non-compete provision.

Bottom line: have the legaleeze reviewed by someone who speaks legaleeze before you sign!!!

On April 5, 2012 President Obama signed a new law that holds promise to open new funding sources for franchisees. The JOBS (which stands for Jumpstart Our Business Start-ups) Act is an amalgam of six different bills that were collectively directed at helping small businesses access public capital markets and generate jobs and economic growth.

This is the second in a series of articles for prospective franchisees that discuss the components of a franchise disclosure document.

Lafe Solomon, Acting General Counsel for the National Labor Relations Board ("NLRB" , issued a third report on May 30th focusing on social media policies. According to the report, the key question when developing a social media policy is whether restrictions could "reasonably be construed to chill the exercise of Section 7 rights" under the National Labor Relations Act. The report is interesting, in that it analyzes some specific company restrictions and then goes on to state whether the General Counsel's office considers the restrictions lawful or unlawful. Overall, six out of seven policies were deemed unlawful by the General Counsel's office, but it is important to keep in mind that the General Counsel's opinion is merely advisory and does not have the force of law.

One of the policies considered barred employees from disclosing "confidential guest, team member or company information" on social networking sites. Solomon deemed this policy unlawful because it could "reasonably be interpreted as prohibiting employees from discussing and disclosing information regarding their own conditions of employment, as well as the conditions of employment of employees other than themselves." In the same vein, he also deemed a policy that prohibited employees from posting music, photos, videos, quotes or personal information of others without obtaining the owner's permission, including employer logos and trademarks, to be unlawful. The report noted that, "[a]lthough the employer has a proprietary interest in its trademarks, including its logo if trademarked, we f[ind] that employees' non-commercial use of the employer's logo or trademarks . . . would not infringe on that interest."

Several other policies were similarly found to be unlawfully overbroad. One instructed employees to make sure their posts are "completely accurate and not misleading," while another told employees not to post "offensive, demeaning, abusive or inappropriate remarks." Even policies that cautioned employees to "think carefully" about friending colleagues and not to comment on pending legal matters were found violative of the NLRA.

The examples of acceptable policies within the report included those with an advisory tone and those that reiterated rules that could be extended outside the context of social media. For example, the report approved a warning that "you are solely responsible for what you post online," and it also found acceptable a policy stating that, "[b]efore creating online content, consider some of the risks and rewards that are involved. Keep in mind that any of your conduct that adversely affects your job performance . . . may result in disciplinary action up to and including termination." Similarly, a provision that "harassment, bullying, discrimination, or retaliation that would not be permissible in the workplace is not permissible between co-workers online, even if it is done after hours from home and on home computers," was found lawful.

Though the recent report certainly is not all inclusive, it does represent a starting point for employers who are trying to decide what language to include within their social media policy. Of course, employers should stay tuned as more guidance from the NLRB, as well as the courts, is sure to come.
 
http://www.nlrb.gov/news/acting-general-counsel-releases-report-employer-social-media-policies

CANTON, Mass. — Just when you thought Dunkin' has reformed, tales of former corporate spies have re-emerged. Private eye Michael Mershimer, who left Dunkin's employ years ago, says he was hired by the crafty franchisor to dig up the dirt on untrustworthy franchisees.

William James once said, “A man has as many social selves as there are individuals who recognize him.” But with brand ubiquity on the largest social network to ever exist, recognition is the least of a brand’s concerns. Having built a brand guesthouse on Facebook real estate, brands are asking what they should actually be doing now that they’ve invested in the neighborhood.

 
There’s so much to do when you start a new business, but it’s important to implement security measures from the start. Everything from Trojan viruses to opportunistic thieves can threaten your company, so here’s how to keep everything safe.

Like it or not, sometimes a good, old-fashioned sports metaphor is the best way to make a point.  While searching for the best way to describe the importance of helpfulness and communication between fellow franchisees, I am inevitably drawn to a football team comparison. 

Twenty-one of the largest trade show companies in the United States have expressed strong opposition to demolishing the Javits Center.These organizations insist that they will not patronize Cuomo's proposed 3.8 million square foot convention center at the Aqueduct raceway in Ozone Park, Queens.  It is too far away from Manhattan's theaters, museums, concert halls, shopping and hotels.  The automobile traffic on the highways is already overcrowded and bumper ̶ to bumper.  Just imagine the dreadful gridlock if thousands more vehicles were on the surrounding highways.

I don’t want to be a Donald Downer today.  But, in our non-perfect world, things regularly happen that are out of our control.

In May, a batch of disappointing restaurant sales/and/or earnings news were delivered: Wendy’s (WEN), Red Robin (RRGB) and Ruby Tuesday’s (RT). McDonald’s (MCD) did report softer April same store sales than hoped, but has not reported earnings yet.

Mark Siebert, in an article titled “The Quality Control Myth” (Entrepreneur.com) states, “Time and again, prospective franchisors say that the only thing holding them back from franchising their business is the fear that franchisees won't sustain the quality standards they've established.  A typical lament is, ‘I've worked too long and too hard building this brand to let someone else screw it up.’”

Franchisors and franchisor representatives need to place greater emphasis on qualifying a franchise candidate throughout the franchising process. Utilizing traditional selling techniques in franchising is not the most effective path to follow. Throughout my franchise career I’ve held the belief that one should not sell a franchise using the traditional principles of selling that have been and continue to be presented in various formats. I recall being interviewed for a franchise executive position early in my career when I raised a red flag by stating to the president of a franchise company that “you don’t sell a franchise but rather you provide a qualified prospect the information they need to make an informed decision.” I probably could have avoided the red flag by being clearer when I made the statement. I was able to clarify my comment and got the job. In retrospect, the basis for my comment was having been the VP of franchise operations where I had a minor role in the franchise sales process and saw some franchisees brought into the network by being aggressively sold.

Google+ launched brand pages six months ago, introducing new social nomenclatures like “circles,” "hangouts," and "+1s." But it appears that anticipated ballooning of interest in "+1s" has been burst by the "pins" of Pinterest. And although Google continues to invest in product and marketing, the consensus among digital marketers seems to be that Google+ is where folks go to set up a profile, but then seldom return.

We talk the talk - but when was the last time you did a serious health check in your franchise system to ensure that your brand values, mission and principles are clearly understood and practiced by everyone, including headquarters staff, field support personnel, franchisees, shareholders, and stakeholders?

In the wildly popular Men are from Mars, Women are from Venus book series, author John Gray explores the fundamental differences between genders’ perspectives and communication methods. While Gray hasn’t delved into the realm of franchising, there is little doubt that the vantage points of franchisor and franchisee are also distinctly different, which can lead to some, let’s say, interesting issues with communication between the two groups.

Normally, this column is supposed to cover the tax changes over the prior year and how they impact the hospitality industry. Last year, we commented about how 2010 was an interesting year but little in the tax field had passed. 2010 was all about health care reform, the change in control of the House and the rise of the tea party. It was a very political and partisan year. If anything, 2011 was worse. Never has so little been accomplished by so many. Brinkmanship was the key word for 2011. It will be known more for what did not occur rather than what did. It is not unusual for partisan politics to take center stage in an election year. While 2011 was not, the race for the Presidency and control of the House and Senate began before all the winners from 2010 were known.

 

 
(Ed Callow torquespeak photostream-flickr)
 
Some franchise business opportunities are easier to visualize owning than others. There are several reasons for it, and one of them has to do with history; your history. Let me explain…

On May 18th, the national press, both The New York Times and The Wall Street Journal, wrote about restaurant franchising. Some additional notes are warranted.

Mediation is often touted as the greatest thing since sliced bread for faster, fairer, and cheaper dispute resolution. Is it?

Franchisors that are considering exporting their franchise concept to other countries are advised to prepare by following a checklist of key items. However, there is one area that is often overlooked or shortchanged in the process.

It seems like the entire franchise industry is focused on funding, and with good reason; franchise loans are still a bit challenging to secure.

Being forced to buy imaginary products is just one of the nonsensical results of government policy affecting franchisors and franchisees.

According to the new PKF Trends survey, the U.S. lodging industry produced a 12.7% profit growth in 2011.  80.5% of participating hotels enjoyed an increase in total revenue while 72.3% achieved growth in profits.  The recently released 2012 edition of Trends presents data from a sample of nearly 7000 financial statements of United States hotels.  For the Trends report, hotel profits are defined as net operating income (NOI) before deductions for capital reserves, rent, interest, income taxes, depreciation and amortization.

On May 14, 2012, the U.S. District Court for the District of Columbia set aside a controversial final rule of the National Labor Relations Board ("NLRB") that was designed to make it easier and faster for unions to hold organizing elections.   Chamber of Commerce of the United States of America, et al. v. NLRB, Case No. 11-02262 (D.D.C. May 14, 2012).  Business groups are hailing the decision, but the celebration may be short lived.  Because the ruling was essentially decided on a procedural point, the NLRB may seek to resurrect the rule, which creates a very short window for union elections, and leaves employers with little time to react to an organized union campaign.

A good coach will make his players see what they can be rather than what they are.
-Ara Parasheghian

PepsiCo announced aggressive marketing plans, boosting ad spending by 20% and bringing back deceased pop icon Michael Jackson as part of a worldwide campaign.

Many years ago I was pulled away from my usual assignments to do a major product production tolling agreement between two of America’s larger food companies. It was a stroke of luck for me because it provided something new for my interest in multivariate risks management. Since then I have prepared many multivariate high risk agreements, and it is always an enjoyable as well as remunerative adventure. When you think of every brand as a franchise in itself, it fits perfectly into my customary practice of managing franchise relationship disconnect issues.

It is very important to ensure proper method of data availability on time. In that case, replication needs to be adopted in order to manage current backup information and system settings so that it can deliver fast restoration of data after any kind of disaster. As we know that it is not possible to avoid any kind of natural disaster or human error; but it is always mandatory to take proper measures for application protection, so that users do not face any kind of problem related to data loss. And, data replication is found to be the only way to remove or minimize the time lapse experienced in these situations.

Everything the light touches this year is rapper Nicki Minaj’s kingdom. From the Billboard Top 100 to the Super Bowl half-time show, and her reign is about to expand to a major role in a new ad campaign for Pepsi.

Visit any website that offers advice on starting a new business or expanding an existing one and you’ll find articles and advice on the importance of writing a business plan. There are tips ranging from how to write an effective business plan to the reasons why it’s so important.

In Street Smart Franchising, Mathews, DeBolt, and Percival state, “Not every franchise is a good opportunity.  Franchising is like any business, encompassing everything from genius to conventionality to incompetence.”  Hmmmm.  It seems like genius should be fairly easy to spot, conventionality ought to be evident, and incompetence…just a Google search away from discovery.

In today’s IT driven world, every business, regardless of its size or nature, relies on numerous software applications to carry out their organizational functions. Be it about managing customer data or calculating the revenue generated, there is a plethora of options for companies to facilitate almost all of their organizational functions. However, as soon as we mention the use of software solutions, the need for a reliable data hosting platform automatically comes into being. In order to ensure that their software applications are able to perform up to their optimal efficacy, companies need to have reliable databases that are capable of satiating the needs of the applications being used.

    I’ve had the honor of working with several of our military veterans over the years. I’ve participated in Veteran’s Symposiums. And, I’ve helped veterans find franchise businesses. I love working with veterans. I figure that it’s the least I can do. ItR...

Mark Siebert, in an article for Entrepreneur, states, “Of all the tasks that befall the new franchisor, perhaps none is as important as the role of training.  If the brand is the heart of any great franchise, training is the physical conditioning that keeps that heart beating strongly and consistently.” 

The Franchize Consultants’ April 2012 New Zealand Franchising Confidence Index demonstrates growing business confidence across a number of measures crucial to franchisor and franchisee success. The quarterly April results consolidate upon the rebound in confidence captured in January 2012.

Blue MauMau has asked me to look at Taco Bell’s U.S. sales trends, in light of its rollout of the new Doritos Locos Taco. Some have wondered on BMM if sales at Taco Bell were stagnant. After looking at the recent Taco Bell Q1 earning call, making unit visits and reviewing marketing/new product information, I observe the following about the chain's operating tempo (OPTEMPO): U.S. sales look to be up.

On April 25, 2012, the United States Equal Employment Opportunity Commission ("EEOC") issued revised enforcement guidance on the extent to which employers may rely on an individual’s criminal history in making hiring or other employment selection decisions.

Yet, “unfunded mandates,” poor support, inadequate internal communication, and more are common issues in franchising, which undermines a ‘zees’ ability to be successful.  Stories of professional, financial, and personal franchisee meltdowns abound, even as their franchisor is recognized in the media as “Best Of,” “Fastest-Growing,” or “Most….”

Last week, on your way to work, you noticed that there was an empty retail space in one of the more popular strip centers in your area. Although you’ve shopped there in the past, for some strange reason, you can’t remember what used to be in that empty space. Whatever.

I wrote recently about a couple of trips to Europe that I took that underscored some of the differences that I see between the evolution in omni-channel in the US vs. the evolution in Europe. I identified six: differences in demand forecasting, price transparency, cross-channel inventory optimization, personalization / relevancy, store labor, and finally, inventory localization. Today I want to tackle the last one – inventory localization.

From 2008 and 2009, the average U.S. hotel suffered a 13.2 percent decline in occupancy along with a 5.9 percent drop in average daily rate (ADR). During this period, hotel managers were challenged to find tactics that maximized revenue for their hotels. On the sales side, adjusting room rates and experimenting with distribution channels garnered the most attention. However, back in the accounting offices of U.S. hotels, decisions had to be made regarding the offering of credit to potential guests.

Representing franchise investors who are capable of developing entire territories or states is a very different ballgame from representing single unit investors. The reason is simple. Single unit investors have no leverage.

As we break with our tradition of sending you notes that speak directly to the world of branding business, we hope you will indulge us just this once as we take a moment to congratulate a Brand Keys partner, Amy Shea, on the publication of her book, Defending Happiness and Other Acts of Bravery from Danzatore Publishing.

California lawmakers need to be aware of how much the Level Playing Field for Small Businesses Act, Assembly Bill 2305, will benefit the state’s consumers. The reason? The legal franchise model as it exists today allows franchisors loopholes to skirt their civic responsibilities. 

The Service Station Franchisee Association (SSFA) supports California's fair franchising bill, AB 2305.  According to the association, more than 700 of its members live and own/operate service stations in California.Based on taxable sales revenue generated at a average BP ARCO AMPM store, two stations Taxable Sales generated can be compared to one Wal-Mart Store. Its members employ more than 50,000 workers and generate over $ 17.5 billion taxable sales dollars annually in our local community, according to the group. Of note is that more than half of all AMPM ARCO THRIFTY franchisees are currently in pending litigation against BP (franchisor), either in a Class Action Suit or Mass Action Suit in California and Federal courts across the nation. This is their letter to the assembly members of the Business, Professions and Consumer Protection committee that will hear public testimony on AB 2305 this coming Tuesday at 9 a.m. in room 437 on the Rotunda side of the Capital Building, Sacramento .(Editor's comment.)

Keith Miller, chair of the Coalition of Franchisee Associations, a group representing franchisees among some of America's largest chains, was one of two individuals asked to give testimony on the need for Assembly Bill 2305 The Level Playing Field for Small Businesses Act.

It's interesting how the more things change the more things stay the same. Case in point is a recent blog post by an opponent to California's Assembly Bill 2305, "The Level Playing Field for Small Businesses Act of 2012."  I have heard this kind of rambling rhetoric before, some ten or (is it closer to) twenty years ago?! Might not have come from the same pulpit, but it definitely has the same preachy tone.

On April 6, I faxed this support letter on California's need for the The Level Playing Field for Small Businesses Act (AB2305) to the honorable Jared Huffman, assembly member of the California State Assembly.

  The .biz domain name is celebrating it’s 10th Anniversary, and the business website that you’re now on is part of the celebration! Little did I know that when I found out that the “.com” domain was already taken for my book’s official website, that it would actu...

California's proposed legislation known as "The Level Playing Field for Small Businesses Act of 2012," A.B. 2305, seeks to ensure a balanced environment in the franchisor/franchisee relationship. Without statutory acknowledgement of the need for fair franchising, current and prospective small business owners will struggle to succeed as franchisors maintain an unhealthy leverage advantage.

Was there ever a more appropriately-named state bill? The franchise playing field needs to be leveled because most franchise agreements are sharply one-sided in favor of franchisors who have the arbitrary power to:

The Cold Stone Creamery franchise is replete with a history of problems that include franchisee lawsuits and an expose in the Wall Street Journal. Learn why this franchise was destined to have problems.

Californians need jobs.  Franchising has historically provided those jobs in the hotel, restaurant and service industry. Without a change which rewards franchisees as owners, risk capital will not be attracted to California. California will lose out on job creation, and its budget woes will be worsened if the Level Playing Field for Small Business Act of 2012 is not passed, Bill AB 2305. 

Over 7 years have now passed since I was a franchisee of the largest oil change chain in the U.S., but I continue to marvel at the antics of those executives that manage, or used to manage the franchises folks invest (and sometimes lose) their life savings in.

Undoubtedly, in the aggressive climate of franchise development, many companies will license a franchise to anyone who "can fog a mirror and write a check." This is one of the dirty little secrets of many business ventures not just franchising.

California State Assemblyman Jared Huffman (D-San Rafael) recently introduced AB 2305, The Level Playing Field for Small Business Act of 2012. This important piece of legislation helps protect franchisees from unfair business practices and enables them to continue creating jobs, contribute to communities and help grow local economies.  On April 17, the Judicial Committee of the California Assembly will hold a hearing on the Level Playing Field Act. Click here for a draft etter to fax Assemblyman Huffman in support of his bill.

Franchisors are against California's fair franchising bill 2305, known as the Level Playing Field for Small Businesses Act. Below are what opponents postulate but here are the actual facts on why the assembly bill is good for California business.

Always steaming and bubbling, chatter from the franchising world of YUM restaurants has been picked up by Mr. Hoot.

You walk into your business lawyer's office.  You want him to review your Franchise Disclosure Document.  He has a new associate, who beckons you forth.

With the official cry of ‘play ball’ yesterday, the 2012 MLB season began. It was accompanied by the christening of a new ballpark for the Miami Marlins, a 20th-anniversary park celebration for St. Louis, and the release of The Brand Keys 2012 Sports Loyalty Index.

Small business owners contemplating franchising their business should possess basic business skills. Before embarking on the road to franchising, the small business owner should inventory their business skills and if necessary sharpen them before attempting to franchise their business.

There is no lack of "spin" or "hype" in the world of franchising. "Top Franchise," "Best Franchise," "Fastest-Growing Franchise"…..all of these designations can be confusing, or (in many cases) misleading, particularly for prospective franchisees.

The Coalition of Franchisee Associations respectfully requests California franchisees to attend a hearing at the State Capital to support California AB 2305, The Level Playing Field for Small Business Act of 2012.  The Act creates a fairer environment in regards to the provisions contained in franchise agreements and helps reduce the unequal bargaining power present in the franchisee- franchisor relationship. More specifically, the bill contains the following provisions:

With the addition of the following eighteen new brands, I have now reported on more than 108 new hotel announcements in the past 24 months:

  If you’re an engaged franchise buyer, you’re probably becoming increasingly aware of all the things you need to do before you write The Check. There are lots of details! I talk a lot about doing proper research on this franchise blog, as well as on some of the other blogs and webs...

Irate customers. No matter how good you are at what you do, what business you are in, or where it is located, you will at some point find yourself facing an irate customer.  Maybe a product was flawed, a delivery was late, or a charge was inaccurate. How you deal with that customer not only will determine how he or she feels about your organization, but how you feel about yourself.

One fine day, a franchisor, an area developer, and some franchisees decided to build a franchise system together. They found many good locations and built a number of great units.

I’ve long been an advocate for stores in retail. Not just that they must exist, but that, in order to thrive, the model they currently exist under has to evolve given the rapidly changing consumer environment. Consumers are more empowered, which means stores can no longer play the role of “expert”. They must now become a “facilitator” – helping shoppers weigh various sources of information to come to their own decisions, rather than be the source of information shoppers turn to in order to make a decision. A subtle distinction on the surface, but profound when it comes to shopper relevance.

But for all that this is an emerging challenge for retailers, there is still an age-old problem for stores: getting valuable information out of employees’ heads and into the hands of decision-makers [Editor's note: Dave's isn't franchised but for franchise chains it needs to go to franchisees and franchisor decision-making staff] who can act on that information. These two challenges – the new one of evolving store relevancy and the old one of capturing the customer knowledge inherent in good store associates – are colliding in some interesting ways.

David’s Bridal is a retailer on the front lines of this collision. The company has always been a high-touch retailer, with store consultants more as facilitators (perhaps sometimes facilitating between the different strong opinions of bride, bridesmaids, and mothers in a wedding party), rather than serving as the definitive voice about what’s hot in bridal or prom fashion. David’s Bridal has never been a company in search of a self-service strategy to cut store labor costs. Their consultants can’t be simple order takers or cashiers. They have to be very knowledgeable about the smallest details of their gowns – for example, why a certain beading costs more than another beading.

In that sense, David’s Bridal has already discovered the answer to the question of how to keep stores relevant – they never went to low cost, low service, so they now don’t have to figure out what to do with low cost/low service employees in a store environment where shoppers increasingly demand high touch service, no matter the cost of what they’re buying.

But store employees can also play an important role in sensing – and predicting – customer demand. That’s where David’s Bridal turned its initiative with First Insight from a consumer-oriented initiative into something much more.

First Insight provides a “high-speed solution for consumer-testing new products”. Shoppers play an online game where they get to pick the products they like and indicate the prices they’d be willing to pay for them. The output is presented to the retailer with recommendations on which products to invest in and which items to avoid. For a bridal gown shopper, in a best-case scenario, David’s Bridal only gets one shot to capture the shopper’s business (as in, you only get married once – hopefully), so it’s doubly important for the company to make sure that it’s meeting its customers’ expectations for both styles and prices. However, in the middle of a proof of concept with First Insight, the company realized there was another important potential source of feedback – its store consultants.

According to Jeff Warzel, the SVP of Supply Chain at David’s Bridal, the company had already organized around communicating new product information to consultants in stores, via a “style ambassador” – a designated employee at every store who serves as the frontline liaison for new products. In the middle of the First Insight POC, David’s Bridal decided it wanted to see how consultants’ participation in the game might compare to the consumer panel’s results regarding new bridal gown styles.

When it came to implementation of the consultant panel, David’s left it up to the Style Ambassador at each store. She may choose to aggregate the responses of the whole team and input one response from the whole store, or have each consultant input her own responses. The important part is the fact that the input represents the “wisdom of the crowd”.

The results from store consultants differed in some really interesting ways from the consumer-focused panels that David’s is using. First, the company discovered that the consultants are very good at separating their own personal preferences in dress styles from the preferences they believe their customers will exhibit. For example, they might see a floral print and personally think “I hate florals” but see a strong opportunity for the style to sell well with their customers. A future area of opportunity for David’s is to take the First Insight results from the consultants and combine it with the consumer panels to provide a more localized view of differences by region or store, rather than looking at the styles in aggregate.

But more importantly, the consultant panel is better at predicting what prices people may be willing to pay. The difference may be a little unique to David’s product set, but it goes to show how tapping into consultant expertise in a way that can be aggregated can provide for some unexpected benefits. In David’s case, the company found that (not surprising, once you think about it) people in general don’t have a strong sense for how much bridal gowns cost. The product is theoretically a one-time buy, so there’s not a lot of long-term education or expectations for price – for what makes for a more expensive dress vs. a less expensive dress. Consultants understand these subtleties very well, and so seem to be much better at identifying the prices that will get people to buy.

From an overall results perspective, the company reports that with the revenue earned and costs saved from adjustments they made to the forecasts for two specific styles – one adjusted upwards and one downwards based on the First Insight results – they paid for the entire implementation.

Mr. Warzel also reports a significant intangible benefit – strong engagement with the consultants. “It’s exciting for them. It makes them feel empowered. That excitement and morale is very important to us.” It also helps out the designer and the buyer, by giving them a very fast – sometimes less than 2 week turn-around time – way of tapping into crowd-sourced expertise that can help them make a decision about a product they’re not sure about.

Another benefit that comes from the speed and ease of deployment is that David’s Bridal can expand the panel far beyond their in-store testing process. The company used to test every new style in a select few test stores. This required manufacturing of samples in Asia, shipping them to the stores in North America, and waiting for feedback. Now, through the electronic delivery of product images and an automated way for collecting and analyzing the feedback, the company is able to reduce total time-to market by three months for the styles that are not store-tested.

In a retail industry where the role of the store associate is increasingly being challenged, it’s refreshing to find a company that both understands, and is actively tapping into, store employee expertise in shaping the customer experience. Here’s at least one way to make sure all that frontline knowledge can be leveraged – to the benefit of the company, the employee, and the consumer.

Franchise Business Review (FBR) dubiously reports that restaurant franchisees consistently (in their survey) have the lowest franchisee side satisfaction ratings. FBR President Michelle Rowan, in the interview opines that that is due to all the challenges that segment faces: employee turnover, food costs and the expense/equipment needed to start a food franchise.

  As a franchise advisor, I’ve had the pleasure of working with some pretty remarkable women. Remarkable in the sense that they came from very successful careers in corporate America, and had the courage to walk away from them. Walking away from a $125,00 a year job offer and right into t...

Last week I attended the Retail Business and Technology Expo in London. It’s the second year of the show. Their strategy to drive traffic appears to be paying off – registered attendees were reportedly up significantly.  Floor space was at a premium (vendors that typically buy whole pads at NRF in January had almost miniscule booths by comparison – in a capacity venue).

Section 1031 is a useful section of the tax code that allows a taxpayer to defer taxable gains on a property by using it as an exchange rather than a simple sale. In order to successfully fulfill a 1031 transaction, you need to follow the specific 1031 exchange requirements. The 1031 exchange rules are very precise and need to be followed exactly in order to get the tax deferred exchange.

As the digital world becomes more and more complex, the need for deliberate, thorough security grows. Yes, we know, you’ve got everything “password protected.” And yes, not every hacker is like the guys in the movies who are able to keyboard their way through complicated layers of encrypted, password-protected security faster than a gamer boots up a new version of Call of Duty.

The economy is looking better, with growth in employment, retail spending, and manufacturing production.  Will the economic recovery spread to real estate?

  If you’re a young franchise buyer, it’s a whole different world for you.  I recommend brushing up on your sales skills; you’re going to need them! Since almost every major bank from California to Maine isn’t going to take you seriously, you have one option; your famil...

One item of a franchisor's FDD Area Development is worth a serious look: how many locations have been sold but are not opened.

Utah's top SBA official touts buying a franchise as buying into a proven business model.

No. Not a joke. And not a set-up for a joke. Two years ago, in examining the leading-indicator values and expectations of the then-nascent “tablet” category, we commented that consumer values dealing with tablets and telecommunications seemed to be criss-crossing.The result being tablet attribute, benefit, and values fusing with something that let you make a call. That’s the nice thing about real loyalty metrics. They’re leading-indicators, meaning signs of what’s going to happen in the next 12 to 18 months.

Here is data show improving employment, car sales, hotel occupancy. Home prices have turned the corner (probably), small businesses still struggle, interest rates are low and the stock market is resilient.

“Beware the Ides of March” was the warning to Julius Caesar by a soothsayer who predicted that harm would befall the Roman ruler. The word Ides comes from the Latin word "idus" and means "half division". It was a word that was widely used in the Roman calendar indicating mid-month.  Hence, the soothsayer was warning Julius Caesar to be weary of March 15th.

Most franchisors enter into franchise agreements where the franchisee is a legal entity in which the owner cannot be personally liable for debts. In most cases, franchisors demand that the franchisee owner(s) sign a personal guarantee in which each owner personally guarantees that the franchisee shall meet all of its obligations under the franchise agreement. In 2011 an appellate court(1) had the opportunity to scrutinise such a personal guarantee.

The franchise industry should be able to find a way to answer five questions about franchising. Whether it’s the IFA, the Census Bureau, an academic institution or another entity, this is fundamental information that ought to be available on a regular basis. Although the U.S. Census Bureau has started to provide some important and useful data pertaining to franchise firms and franchisees it doesn’t go far enough. Since we can’t expect the Census Bureau to configure its reporting to suit a particular industry, I would take the position that this activity is the responsibility of the industry itself. Perhaps statistically sound surveys could be use to provide some of this information.

  It’s perfectly normal to get a little nervous as you approach Decision Day. Unless you’re a robot, your emotions are going to be up and down.   (Really up and down)   I can’t completely help you stay even, during this intense time in your life. This, “Buyin...

I attended two conferences last week – the CARTES North America conference and the Digital Signage Expo, both in Las Vegas. CARTES is not the kind of conference that a lot of retailers attend. This is a banking show – the vendors sell technologies that make credit cards or provide services around credit cards. The buyers are card issuers – who also are a lot of the people that are going to turn around and try to convince retailers to carry their products or accept their credit instruments from consumers.

Lawsuits and arbitrations often sort out disputes in their legal sense. They rarely sort out disputes in a satisfactory personal or financial sense. Anyone familiar with the litigation and arbitration process can tell you about how unsatisfactory the result was in most instances. They cost a fortune.

  My book, Become A Franchise Owner! The Start-Up Guide To Lowering Risk, Making Money, And Owning What You Do, just hit the top spot over at Amazon.com.   It’s currently Number 1 in the Small Business Franchise category!   Click The Image And See!     Thank you for y...

Governor Cuomo’s proposal to replace the Javits Center with a new convention center in Ozone Park, Queens is a huge mistake which will damage the hotel business in New York:

A federal judge has ruled that implementation of a rule, requiring most private sector employers to post notice of employee union rights, will not be stayed pending an appeal of the court ruling allowing it to proceed.

      The franchise industry needs you. If you’re a woman, and you’ve thought about what I call “Owning what you do,” here’s your chance.   If fancy corporate offices just aren’t doing it for you anymore, and you’d prefer to have an offi...

Now entering the Franchise Zone. Ye Lovers of Truth, Turn Back Now! Have you ever wondered why even the major business and news media seem to perpetuate the same old franchise myths, nonsensical rankings and serious misinformation? I saw a brilliant example of this recently when Forbes re...

Last week I attended the SAS Analyst event, one they hold every year in Steamboat Springs, CO. Among the four analysts at RSR, I’m pretty much a shoe-in for this event, given where I’m based, but this year I had more of an agenda than usual, as partner Steve Rowen and I are conducting RSR’s Business Intelligence benchmark report this year.

So, yeah, I’ve been hearing a lot of chatter about “big data” and strange words like “Hadoop” and I confess I haven’t been paying much attention. I usually like to operate at either an IT strategy level, or tactically, at the intersection between technology and process. I definitely try to avoid the deeper levels of the technology stack as much as I can – doesn’t mean that I can’t go there, but it doesn’t mean I like it there either.

But sometimes there are things that happen deeper in the technology stack that have strategic implications, and it seems that advances in technology’s ability to manage Big Data – thanks to things like in-memory analytics and game-changers like Hadoop – qualify as exactly that kind of situation: a hardcore tech thing that has big strategic implications. I have to give props to Brian Kilcourse on this one – he’s been nattering away over here both privately and publicly that this is a big deal. It took some sit-down time with SAS to get me to pay attention.

SAS opened its conference with an image that has stuck with me. They put up a slide that had a big lock on it, labeled Big Data, and a key, labeled Big Analytics. Now, in retail, I think SAS has been challenged to overcome a dichotomous reputation – on the one hand, they are well-known for their Merchandising solution, which is a very robust application – a real app, not a toolset or anything. On the other hand, they are known as the beloved toolset of the deep-dark analyst types that live within marketing analytics, teasing precious insights out of jumbled consumer data.

This idea of Big Analytics poses an opportunity to dash each of these singly-unfair reputations to pieces. If ever a moment was made for SAS, it seems like now is the time – the technology is there, the solutions are there, and the retail need is growing by the terabyte.

The challenge is getting the business side of the retail house to understand exactly what’s going on in this murky world of the tech stack and how it could change their lives. The reality of some of these improvements that are coming – optimize prices in 20 minutes instead of 5 hours, develop a demand forecast across every store and SKU in 90 minutes instead of 19 hours – is amazing, and yet these examples just don’t seem to do the opportunity justice.

I look at it this way. Right now, most retailers plan a relatively small number of key items and do so across an aggregated view of stores – A stores, B stores, C stores – maybe up to 5-10 different classifications of stores. The rest of the assortment is spread on a more aggregated basis, because no one in their right mind can truly plan every SKU across every store. Hold on to this thought for a moment: there is aggregation on both sides of the planning process – on the product side, and on the location side.

What if, with the same amount of people and in the same amount of time, you could eliminate that aggregation? Plan every SKU down to differences by department by location AND by customer segment? Price optimization and size/pack optimization have already revealed that a lot of value is hidden in the averages created by looking at an aggregated view of products. Assortment promises to reveal more – as does being able to look at each location uniquely, and not aggregated based on some model store. Now, among the merchandising providers out there, who legitimately has both the ability to disaggregate planning on the product side AND on the location/customer side? One company comes to mind right away: SAS. Between Merchandising and Customer Intelligence, SAS has the solutions that promise to be centerpieces in the fight over granular merchandise planning.

To me, this is the promise of Big Analytics – “high performance analytics” in SAS’s parlance. When applied to merchandise planning, think of this – it took over 10 years before anyone started to feel like they had truly milked all of the margin opportunity out of a less aggregated method of setting prices. And in that time, the margin benefits they achieved were big enough that Wall Street sat up and took notice – started actually talking about the technology that retailers were using and not just the products they were selling or the stores they were opening.

If the industry can achieve the equivalent in assortment optimization, I think we’re talking about a bigger opportunity.

Hopefully it won’t take 10 years to get there.

In a sweeping decision with significant implications for franchise and other vertical distribution arrangements, the Ontario Superior Court of Justice has dismissed a $2 billion franchise and competition class action against Tim Hortons on the merits.

If you have been watching the great show Undercover Boss you can see for yourself there are two patterns and themes occurring and repeating themselves.

  I’d really like to see more women enter the world of franchising–specifically, franchise ownership.   In my role as a franchise ownership advisor, I’ve been able to provide actionable advice and tips to several women. Some of them, like Margie Toombs, went on to become ...

In 1933 Fred Astaire and Ginger Rodgers were dancing their way around Rio de Janeiro. In those days Rio represented the the glamorous image of Brazil to outsiders. Today Brazil is the fifth largest country in the world with the ninth largest economy.  The city of São Paulo is also the financial center of South America. 

The result of a dismissed franchisee class action lawsuit victory is that franchisor Tim Horton's is losing a business war.  In a rare summary judgment motion., the reasons for the judgment, part 1 and part 2 can be read here, a judge dismissed the franchisee's class action. But Tim's will now struggle mightily to get same operator expansion as a result of this legal victory.

The Asian American Hotel Owners Association's January 27, 2012 letter of appreciation to Choice Hotel’s President & CEO Steve Joyce is less than it appears.  Apparently, Joyce has agreed to the following:

      If you feel that franchise ownership is in your future, read on…   The amount of information that’s within reach these days can be overwhelming at times. It can be tough to know what to believe–even who to believe.         The Key &n...

Dressing well can get you a job at Denny's. And free food, if you cook fast. James Summers of Madison, WI walked into a Denny's wearing a tie and carrying a briefcase. He told workers he was the new manager, and proceeded to cook himself a burger and fries. The real manager was suspici...

New York Governor Andrew Cuomo’s proposal to build the country’s largest convention center in Ozone Park, Queens near the Aqueduct racetrack- casino is a poor idea. This new 3.8 million-square foot exhibition hall and hotel would presumably free up the 18 acres owned by the state and occupied since the 1980s by the Jacob K. Javits Convention Center. Governor Cuomo said the Javits Center which is in the middle of a $500 million renovation is too small to compete for the large trade shows now going to Chicago, Orlando and Las Vegas.

When H.R. 3765, the Temporary Payroll Tax Cut Continuation Act of 2011 was signed by President Obama on December 23rd, 100 percent bonus depreciation or the ability to quickly write off equipment purchases ended. Congress was not able to offset the expense with equivalent revenue generators.

    Stop your search for a franchise to buy this instant! You may be going about it the wrong way….   If you’re like most potential franchise owners, you put your sweats on, kick off your shoes off, and jump online–hoping that you’ll somehow magically be able ...

In 2010 Carmen M. Reinhart and Kenneth S. Rogoff wrote a book entitled “This Time is Different: Eight Centuries of Financial Folly”.    Writing on the heels of the Great Recession the book’s message was a simple one:  no matter how different the latest financial crisis always appears, there are remarkable similarities with past experiences from other countries and from history.

It’s no secret that many Americans could benefit from losing a few pounds. OK, more than a few. Over two-thirds of adult Americans are considered overweight. Kids’ body-mass ratios are totally out of whack, and that’s not such a good thing.

Kashmir Hill at Forbes has a great article, "How Target Figured Out a Teen Girl Was Pregnant Before Her Father Did."  Short summary: the company looks at buying patterns and can estimate the probability that a regular customer is pregnant.  It sent coupons to a 17-year-old high school student. The girl's father complained to the store manager about coupons that might encourage a high school student to get pregnant. A few days later the father has a talk with the girl--and learns she is, in fact, pregnant.

IFA President, Steve Caldeira, recently wrote a letter to the Wall Street Journal  complaining that a recent article about the perils of franchising “ignores that more than 90% of franchisees renew their contracts with their franchisers at the end of their terms.”  The obvious claim is that more than 90% of franchisees are successful and happy. 

A Texas ruling could impact franchise arbitration clauses. John Carey was an employee of 24 Hour Fitness and  agreed to settle any disputes by arbitration. Subsequently he brought suit, alleging violations of federal labor law. The company pointed to the arbitration clause, but ...

What if a Tweet fell in the forest and nobody heard it? The controversial National Labor Relations Board has customarily been ignored by small employers, but that is changing as the NLRB flexes its muscles; nowhere is this more true than in the area of social media. The NLRB's General Coun...

While attending the 2012 International Franchise Association convention in Orlando this week, I could not help but note that the more things change the more they stay the same.

“Money can’t buy happiness.”  As much as this is a commonly held belief, there is still a misconception in franchising that “as long as franchisees are making money, they’re happy.”  As a former franchisee and Area Developer (and now researcher), I disagree with this notion. 

Whenever you hear people arguing about whom the real “job creators” are, remember: you already know who I am.    I handed your coffee to you just this morning.  When you bought a sandwich for lunch, I made it for you.   When you get your car serviced, I greet you.  When your relatives visit, I check them into your local motel.  When your kids’ clubs need a sponsor, they see me.  When little league or soccer comes calling, I answer.   You know me.  I’m your neighbor, and I create jobs in our community.  I’m your local franchisee and I invest in and live on Main Street, USA.

  If you’re smack dab in the middle of a search for a franchise to buy, I won’t blame you for disagreeing with me here.  You’re new friend, Mr. Adrenalin, has been hanging out with you as of late, and your family members are looking at you like you’re an alien.   ...

After attending the Franchise Expo South in Miami last month, a couple of trends seemed to be prevalent.  If the Expo was an accurate forecasting tool, it would be safe to say that the future of franchising lies in frozen yogurt (with your choice of toppings), pizza, and early childhood education.  All run by veterans.

Janney Montgomery Restaurant Analyst Mark Kalinowski surveys McDonald's (MCD) closely, and has recently published a full "average typical traditional store" McDonalds franchisee income statement, and is attached below via PDF. Given the heavy "numbers culture" that is present in the restaurant space, this is of course interesting to many of us.

Reading through the millions of words discussing Facebook’s impending IPO, and striving to distract myself from deep-seeded envy of everyone who has worked there and is holding stock options, I came upon a letter from founder Mark Zuckerberg, who wrote to potential shareholders about “The Hacker Way".  The letter was timely, coming right when RSR was moving to a whole new website platform, and it explained a lot. It also led me to wonder if it isn’t time for a reboot of our entire IT mindset.

Hotel industry leaders are praising the Obama administration’s new “National Travel and Tourism Strategy.”  The major points announced in mid-January include the following:

  From Ray Kroc, the founder of the McDonald’s corporation;   “In business for yourself, not by yourself.”   Kroc was referencing the business model of franchising-the business system itself, when he came up with that powerful quote. And, it still holds true today. ...

The number of home based franchises continues to grow and in some franchise segments the home based feature exists in the majority of the franchise companies. Looking back into franchise history the typical franchise was a bricks and mortar franchise whether it was a KFC, Dunkin Donuts or McDonalds.

  You heard it here first.   The author of the newest book on franchise ownership, that Tweet-First-Ask-Questions-Later guy that you’ve come to…well…(know and love?) is asking for your vote.     Please Vote For Me!   My new book–my 1st hardcover book...

One of the responsibilities of a franchisor (and its development team) is to establish realistic franchisee expectations.  Of course, this includes an accurate disclosure of expected return on investment, but it needs to go beyond “the numbers.”  What sort of opening support can the franchisee expect from the franchisor?  What ongoing training and support are offered?  What can be expected in terms of new product and market development?  Is there open, helpful communication between franchisor and franchisees, as well as between franchisees? 

Phelps Dunbar has been advising our clients over the last year to expect an increase in EEOC charges and litigation following the passage of the Amendments to the Americans with Disabilities Act.   Since the EEOC's final regulation under the Act were published in March of last year we have seen a sharp increase in EEOC charges filed under the ADA.  Many of those charges have now worked their way through the EEOC process and we are seeing an increase in litigation that the EEOC is pursuing on behalf of employees who allege that they have been denied a reasonable accommodation under the ADA.

In a press release the EEOC issued following a consent decree it obtained against an employer, an EEOC Director was quoted as saying the following:  "When an employer is on notice that one of its employees cannot perform a job function due to a disability, the ADA requires that the employer distinguish between the essential and non-essential functions of that job. The employer must then work to identify a reasonable accommodation for the employee's disability. Earnest, interactive communication with the employee, viewing the purpose of the job and its functions realistically, and carefully researching and considering options for reasonable accommodation of the disability are all keys to ADA compliance."

The EEOC filed two new lawsuits under the ADA in the last few weeks.  In the first one, the EEOC alleged that a company refused to hire an individual for a managing consultant position because of his disability, ocular albinism. Ocular albinism is an inherited condition in which the eyes lack melanin pigment. Because of the lack of melanin pigment in his eyes, the plaintiff had a variety of vision problems which substantially limit his ability to see.  According to the EEOC's complaint, when the company learned that the plaintiff did not have a driver's license and does not drive because of his disability, the company rescinded the offer of employment. Although the plaintiff was fully qualified to perform the duties of the managing consultant position, the employer unlawfully failed to hire him for the position because of his disability, the complaint alleges.

In a separate lawsuit, the EEOC sued a power grid operator, alleging that the company unlawfully discriminated against an employee and fired her she because she suffered from post-partum depression.  The EEOC alleged that the company refused to grant the employee's request for some leave time to help her deal with the condition taking the position that "this company could easily have prevented this situation by working toward a reasonable accommodation, which it was legally obliged to do."

These two lawsuits reflect the fact that the EEOC is taking aggressive measures to enforce the ADA.  Employers should review their policies and make sure that they are engaging in the interactive process when determining the accommodation under the ADA.

Coming out of lodging industry recessions, we have historically observed fairly significant increases in hotel operating expenses.Since the initial revenue recovery is typically driven by occupancy, variable expenses naturally rise with the increased volume of rooms occupied and guests served. In addition, hotel managers desire to reinstate the services and amenities that were discontinued during the downturn contributes to above-average expense growth.

  I met John Jantsch, the man behind Duct Tape Marketing, about 5 years ago.  He was the keynote speaker at an event in Cleveland. I had read his bestselling marketing book, and was excited to hear what he had to say. Check out this short snippet of his presentation at Cleveland’s Corpor...

Attorneys and consultants who work with associations see their share of troubled boards of directors. In fact, I believe that troubled boards outnumber focused efficient boards by a substantial margin. Notwithstanding their problems, most boards seem to get by, although they could be better.

While there are many business factors and legal points to consider when negotiating a commercial lease, in today’'s uncertain economy, the “"bottom line cost”" of the lease often tops the list of concerns for a commercial tenant.  You are probably aware that most commercial landlords pass the cost of all repairs and maintenance of the premises and the common areas to their tenants.  Tenants often find, however, that their CAM charges are more expensive than anticipated.  While there are many factors that need to be evaluated and provisions that need to be negotiated in a commercial lease, as you head into negotiations, arm yourself with these three tips for keeping your CAM charges in line with your expectations. 

According to CCH, the Internal Revenue Service Chief Counsel has concluded that qualified restaurant property and qualified retail improvement property are eligible for fifty percent bonus depreciation in both 2008 and 2009. Moreover, taxpayers are not required to take any special steps to claim bonus depreciation for these items. The key factor, the Chief Counsel determined, was that property that also is qualified leasehold improvement property qualifies for bonus depreciation, even if the restaurant or retail property would not qualify by itself.

Times Square being the crossroads of New York, it follows that One Times Square is the center of the known universe.

On July 19, 2011, the United States District Court, District of Connecticut, Warren W. Eginton, Senior District Judge ruled that EA Independent Franchisee Association, LLC ("plaintiff") could proceed with its lawsuit against Edible Arrangements International, Inc. ("EA") , and certain affiliates thereof (collectively, "defendants").

  As a potential franchise owner, you’re undoubtedly going to have questions. I can easily provide you with great due diligence questions to ask, but if you don’t know who to go to them with, they won’t do you any good. Recently, I wrote a guest column for CNBC.com on research...

Every MBA student from time immemorial has been asked to memorize the following as soon as he starts school: “The purpose of a corporation is to maximize shareholder wealth.” On some levels it seems to be an indisputable axiom. But on other levels, after the economic debacles of 2008-2009 people with political persuasions right, left and center have begun to ask the question: “Why?” Doesn’t a corporation also have a responsibility to its other stakeholders: employees [and franchisees] and customers and the communities within which it thrives? More importantly, can we take these other stakeholders into consideration without sacrificing corporate profits? Retailers as diverse as The Container Store, Zappos, Whole Foods Market, Starbucks and Costco have embraced a philosophy called “Conscious Capitalism” which presumes they indeed do have this responsibility. At the same time, they are thriving by most traditional economic metrics.

As the founder of the Franchise Research Institute, I am sometimes asked why mega-franchises like McDonalds and Subway don't seem to rely on franchisee satisfaction surveys to market their franchise opportunities, when it proves to be such a valuable tool for other franchisors, not only for marketing purposes but also for key internal decisions. It's my opinion that these brands have reached the almost mythic status of being "too big to fail."

What anyone who is considering becoming a franchisee needs to ponder is this:  A mega-brand may have reached the critical mass which allows it seemingly unstoppable momentum the marketplace, but that doesn't assure franchisee success.  Our mission is to provide real data which tells the "back story" of how franchisors support their franchisees.  This goes far beyond momentum!

A 1031 construction exchangeenables the taxpayer to defer federal and state capital gains and recapture depreciation taxes on the sale of existing property, and construct improvements to a replacement property.

  Park Ridge, Illinois. Population: 37,480 Location: 15 miles northwest of Chicago.     FFI, (Franchise Friendly Index) 100 __________________________________________________________________________________________   Not all local communities are what I call, “Franchise F...

I have you noticed that Kodak is nearly out of business. Growing up in the 1960’s and ‘70’s, every family had a Kodak Camera and I still have one of mine. Those yellow boxes were everywhere and getting your very own Kodachrome camera was seemingly a rite of passage, heck, Paul Simon even wrote a song about it.

As digital cameras gained popularity, Kodak stuck to what they believed. They sneered at digital’s quality, righteous in their knowledge that Americans would NEVER give up shiny pictures for their photo albums.

Back in the mid-1970’s, Patels from Africa and Asia began to emigrate to the United States where any immigrant willing to invest $40,000 in a business could apply for permanent residence, the first step to citizenship.  There were limited opportunities for such investments.  At the time, distressed roadside motels could be acquired outright for $40,000 because of the oil embargo and the resultant nationwide shortage of gasoline.

  How many McDonald’s Big Macs would you have to sell in order to break even on your investment in a McDonald’s franchise? And…why should it matter?     It matters because once in awhile, people looking at franchises need to be humbled. It’s good for the soul....

Within the next 15 years we will see dramatic changes in the franchising business. Today the business is saturated with “me too” so-called concepts that lack adequate business model legs to survive even at marginal profitability through the life span of their franchise agreements. Their FDDs are fiction and fantasy, and those who buy them lack relevant sophistication for small business investment (to put it mildly). In plain English, they are sold to fools who sign ridiculous draconian franchise agreements critically lacking in merit level consideration. Soon they are whining to be let out of the deals as realities they could have discovered pre-investment descend upon them and they recognize the terminality of what they did. This will begin to change.

This auditory gifted bird has heard that Blackstreet Capital Management LLC has bought out the franchisor of quick printing shops, Alphagraphics, Inc. Employees of Alphagraphics had a conference call with the new owner last week. Blackstreet reassured concerned staff that the private equity firm thought things were great in the system. No changes anticipated for now. (Where have we heard this before?)

  No…no! Not that type of cabinet.   This type of cabinet!     From CNBC; Today, President Obama made the announcement that the SBA would become a cabinet-level agency in front of small-business owners at the White House. The head of the SBA was a cabinet-level position u...

I had the opportunity to travel throughout the States in November and December. I visited a lot of restaurants, seeing not only good things and good people but also operational issues that result in leaving dollars on the table. These are things that slice revenues and generate more expenses for a business.I have seen these issues frequently in 2010 and 2011.

Mark Siebert, CEO of the iFranchise Group, recently asked in Entrepreneur magazine, “Would a franchisor make a good President?” Franchisees have had their turn in President #43 George W. Bush, an owner of the Texas Rangers baseball franchise, but one day franchisors may yet have a turn.

I've posted a new video on my Forbes.com page on the subject Business Planning With A Risk of Recession.Here's the introduction:

In 2010, franchisees won a long, hard-fought battle against the finance industry, as Congress passed a bill which would regulate the exorbitant debit card fees that were being set by credit card companies and banks. Today, it appears that the battle has just begun.

  If you’re just starting your search for that perfect franchise business opportunity, you may not be aware of some of the issues that Quiznos, (a submarine sandwich franchise chain) has been facing. I’m here to school you on some of them. That way, you can learn from their mistake...

What’s wrong with franchising in 2012? Perhaps I would invoke the words of Charles Dickens and assert that franchising is experiencing “the best of times and the worst of times." The whole of the franchising community is neither entirely flawed nor without blemish.

Police arrested a Burger King cashier who preyed on a disabled woman. The 38 year-old woman went for lunch every day at the Irvine, CA franchise. Her family became suspicious when she never returned home with any change. Local police staked out the restaurant and arrested Luis Maximo Lucero Ba...

  That question probably comes in at number #2 or number#3 on your Top 10 list of things that you really want to know when you’re looking at franchises. And, rightly so.   Now, I have a question for you;   Which way would you like me to answer the money question up above?  &nb...

Although the economy is not growing rapidly, some companies are anticipating strong growth and recognizing the challenges that growth can present. Yes, growth is not always easy. There can be challenges to financial resources, labor and the one we'll discuss today, vendor performance.

The National Labor Relations Board (NLRB) has agreed to postpone the effective date of a new rule requiring employers to post notices informing employees of their right to form a union. The postponement comes at the request of a federal court hearing a legal challenge to the rule. The NLRB ruled that postponing the effective date would allow the resolution of that challenge. 

Recently, I was asked: "If you could negotiate any terms up front, what would be the key ones?" Here is my general approach:

  Sometimes, small business owners need inspiration. Successful ones are great listeners. They’re also people who are smart enough to implement some of the things they see, hear, and read-things that they know they should do to grow their businesses.   As The New Year approaches, sla...

Although it is normally up to corporate to do advertising and to keep the company's overall reputation positive, franchisees are also responsible for upholding the company's reputation. In fact, their very success depends on it.Many large corporations have suffered because of the actions of their franchisees, which has then resulted in low rates of business for franchise owners.

  If you’re an author, you can create your own free page on Amazon.com. I did.   (Click the screen shot)     As you can see, I was able to add;   My biography   A link to my book (in all formats)   A customer discussion area   A link to my main ...

PKF-HR forecasts that rooms revenue (RevPAR) for U.S. hotels will rise 8.1 percent in 2011, and increase another 6.1 percent in 2012. Analyzing the performance of U.S. hotels in 2010 and 2011, we have seen the progression of indicators that one would expect during an industry recovery.Occupancy levels increased in 2010, followed by real average daily rate (ADR) growth in 2011. The only surprise has been the pace and magnitude of the surge in hotel demand.

A review of 1031 exchange activity reflects $73.6 billion dollars deferred in 2005 decreasing to $2.5 billion estimated by the Joint Committee on Taxation in 2011. There is an increase in exchange activity for 2012 with a projected $3.2 billion amount of tax deferrals. As a Qualified Intermediary who accommodates exchanges, it is my opinion that there are three fundamental reasons for the decline.

Should a business buy its own building in this market? A small business owner recently asked me that very question.   I think it’s a great idea to consider in many areas, given the weak real estate market, but it’s not a slam dunk decision.

As one of the world's largest and fastest growing markets, India has become an attractive possibility for expansion by U.S. franchisors. It provides an excellent franchise opportunity for qualified franchisors. It has a middle class estimated to be over 30% of population. That's 300 million people. It also has the world's largest English speaking population. In the recent past, India has seen a significant development in franchising with ever increasing U.S. brands operating in India. An added advantage that India offers is a large population of well educated young people familiar with technology and software. However, in addition to having a huge population and ever growing middle class, India provides a friendly franchising climate.

The New York Times (11/13/11) reported "Airbnb's Lodging Gets Tested, and a Mixed Bag Is The Result":

  Denise O’ ‘Berry, a small business expert, author, and friend, just spent the last week producing a video describing the contents of my new book on franchising. I met Denise, (but not in-person yet) through my association with Small Business Trends, where I’m the “Fran...

  When most people think of risk, they only think about their risk.  That’s completely normal.   When someone contacts me about my franchise advisory services, I can usually sense some apprehension on their part.   A. They really don’t know who I am. B. They’re ner...

The Internal Revenue Service plans to release a new information reporting form that taxpayers will need to use in 2011. The new form, Form 8938 (Statement of Specified Foreign Financial Assets), will need to be filed by taxpayers with specific types and amounts of foreign financial assets or foreign accounts. The IRS said it is important for taxpayers to determine whether they are subject to this new requirement because the law imposes significant penalties for failing to comply.

Last week I reported on the Court of Appeals ruling in Samica v Mail Boxes Etc., affirming the district court decision in granting summary judgment to the franchisor. In reading the decision, I was baffled as to how 200 franchisees, who have been battling their issues in court for the past five years, could get it so wrong.

  I’ll admit it; I’m kind of partial to Franchise Direct. First off, they’re a strategic partner of mine. Secondly, I really like their website, and always have. Plus, they do something that no other major franchise websites do; comprehensive reports.     These days...

“Statistics are no substitute for judgment.”  – Henry Clay   According to a report put out by the International Franchise Association, franchising is huge.   As of 2005;   There were 909,253 franchised business establishments in the United States.   Franch...

When I first heard about Chik-fil-A’s threats against Vermont silk-screen artist Bo Muller-Moore over his use of the slogan “Eat More Kale,” claiming that the slogan infringes or dilutes their trademark in the advertising slogan “Eat Mor Chikin” my first reaction was outrage.  Certainly nobody is going to confuse eating kale with eating chicken, so an infringement claim is absurd.  And the cute “Eat Mor Chikin” slogan does not give the Atlanta-based chain any general entitlement to prevent others from using the phrase “Eat More.”  So there is also no dilution, wholly apart from the fact that Muller-Moore might well argue that “Eat More Kale” is protected as a parody of Eat Mor Chikin.

  You may have one reason, or you may have several reasons for wanting to invest in a franchise business.   Like;     You want to have more control in your life   You want a business of your own   You wish to follow someone else’s proven business system   ...

Hotel owners can adjust their portfolios by replacing underperforming assets through the use of a 1031 improvement exchange-strategy. According to the Internal Revenue Code Section 1.1031, 1031 exchange allows no gain to be recognized when property held for investment or business use is exchanged for like-kind property held for investment or business use. With the 1031 improvement exchange, hotel owners sell an existing hotel to acquire a hotel, renovating the new property with newly-acquired property such as like-kind furniture and equipment in the old property while deferring the capital gains and recaptured depreciation tax.

 Last week there was a big flap in the US about Footpath by Path Intelligence, a tracking software that detects the signal coming out of your mobile phone. It uses it to track your path through a location, typically a mall but also potentially in a large format retailer. It requires the location to install hardware to do the tracking, but nothing is installed on the shopper's mobile phone, not even a chance to opt out of the tracking. Theoretically, the location is supposed to put up signs notifying shoppers that this is happening, but it's not exactly a requirement.

The 114-Year-old Belleview Biltmore hotel in Belleair, Florida is on its last legs. It is reported (by Lori Helfand,  St. Petersburg Times 11/18/11) that:

  If you’re ready to start seriously looking into franchise ownership, I have something for you.   Would you like to learn how to carefully choose and properly research a franchise that’s right for you?   I’ll be your franchise guide; my book on franchising was wri...

-  Confidentiality (nondisclosure agreements, trade secrets, salary information, etc.)

  The official launch of Become a Franchise Owner! happens on The Small Business Advocate Radio Program at 8:00 AM, Monday…   I’ve been a guest on Jim Blasingame’s business show 25 times since 2006, and when we were talking about my book earlier this year, here’s wh...

Of the countless articles and information available on franchising, I would suggest that the majority of content is directed to finding and evaluating a franchise opportunity. I haven’t seen a great deal of information that addresses what makes a franchisee successful. For this reason, here are the factors that I think can mean success for a franchisee.

In late October 2011, the Information Office of the State Council in China published a white paper entitled "The Socialist System of Laws with Chinese Characteristics." The white paper acknowledges that the use of laws are necessary to safeguard fair and orderly competition among market players, and acknowledges that to assure scientific and economic advancement, "there is a rising demand for more scientific and democratic legislation, as increasingly diversified stakeholders and complicated interest patterns make it harder to regulate social interests through legislation."

 


My editor at Wiley Publishing came up with the number 40. She came up with this seemingly random number after reading through several of my blog posts that I’ve written over the past 6 years or so on franchise due diligence.

When it comes to short-term E-Commerce promotions, be careful what you wish for or you will surely crash. Target.com learned that lesson and then it was Domino's turn. But Domino's Pizza explained away its crash with a twist: It blamed "bad apple" customers.

The spouse of a franchisee may be compelled to disclose bank account information. Willie Earl Williams Jr sold his McDonald's franchise and invested the money in ProShred franchises. Things went badly, and Williams sued the franchisor in New York federal court. The franchisor responded tha...

A no-reliance and an integration clause will not shield the Cousins Subs franchisor from claims of intentional fraud, says a federal judge.

submit_url = "http://becomeafranchiseowner.biz/there-arent-any-envelope-stuffing-franchises-for-sale"; And, I’m very happy about that.   The Federal Trade Commission (FTC), has just amended their Business Opportunity Rule. This massive document now includes…you g...

Despite inconsistent economic news, increases in lodging demand and property-level net operating income (NOI) have most industry participants feeling optimistic that hotel property values are heading upward. Scott Smith MAI and Bill Morton report the following analysis of the 2011 edition of PKF Consulting USA's Hospitality Investment Survey (conducted in the spring of 2011) sheds some light on the market and transaction factors that are influencing this line of thinking.

Employers pay FUTA tax at a rate of 6.0% (beginning July 1, 2011) on the first $7,000 of covered wages paid annually to each employee. The rate for the first half of 2011 was 6.2%, including the 6% permanent tax rate and the 0.2% temporary surtax that expired on June 30, 2011 This tax may be offset by credits of up to 5.4% against their FUTA tax liability for amounts paid to a state unemployment fund by January 31 of the subsequent year. As a result, the net FUTA rate for many employers is 0.6% in the second half of 2011 (0.8% in the first half).

submit_url = "http://becomeafranchiseowner.biz/buy-hot-franchises";   It never fails. Whenever I do one of my rather unique presentations on franchise ownership (like the one I just did in New York City), I get asked this question;   “Joel, what’s the hottes...

A Subway franchisee selling his location recently asked me if a 1031 exchange allowing the owner to defer the capital gain and recaptured depreciation tax could apply to his sale.

The Internal Revenue Service has launched a new program that will enable many employers to resolve past worker classification issues and achieve certainty under the tax law at a low cost by voluntarily reclassifying their workers.This new program will allow employers the opportunity to get into compliance by making a minimal payment covering past payroll tax obligations rather than waiting for an IRS audit.

A Deferred Sales Trust (DST) is a tax deferral and asset diversification strategy that can be a compelling alternative to a 1031 Exchange for appropriate clientèle owning highly appreciated real and personal property, and businesses. Taxpayers and consulting professionals should consider this strategy if they or their clients want to defer federal and state capital gain and recaptured depreciation taxes, prefer a more diversified asset portfolio and/or more predictable income stream, and choose not to acquire like-kind replacement property.   

Tablet devices are such hybrids that it’s hard for me to call them “Mobile devices.” I mean, it’s obvious that you can move around with them…people take them everywhere. But I don’t think they take them out shopping with them. They’re mobile in a ‘next-gen laptop’ sort of way, not in a smart phone way. It’s a fine point, and you’d think it’s a subject for academics, not for retailers. Well, turns out that’s not the case. Let’s take a stroll through time.

Back in the early days of (what was then called) multi-channel retailing, I worked for another research firm. We did some consumer-based research and discovered what later became a core retail axiom – we found multi-channel shoppers tend to spend more than their single channel counterparts, and they were almost always more profitable. This was obviously very important data and led retailers to expand their on-line offerings. It led to the “buy online, pick up in stores” phenomenon, and all the technological and organizational complexities associated with that.

Then along came the smart phone, and until now, the device has been viewed more as a leveler of the retail pricing playing field than anything else. At least one retailer has blamed a bad quarter on shoppers price-comparing with their mobile phones. Retailers are just now trying to get themselves in the mobile promotional offering game – and finding ways to engage their customers in stores using the phone, rather than have them disinter-mediated and price checking on the web.

Finally, along came the iPad. Now personally, I’m not much of a fan (to clarify – I’m not a fan of it as a consumer device. I do think it rocks as a business and health care tool), but I am, of course in the significant minority. The thing that most people seem to like about the iPad is they can take it anywhere and putter with it in the most relaxed circumstances. And this matters to retailers because just like the multi-channel phenomenon brought us more profitable customers, the iPad phenomenon is bringing us shoppers who spend more money than those using an Android device or PC.  I’m quoting NetworkWorld quoting John Squire, Chief Strategy Officer at IBM Coremetrics. “The iPad user is converting – meaning they’re buying something – almost twice as frequently as other mobile users [Android or iPhone]…but they also buy more than the average PC shopper or average mobile shopper.”

On some levels this is a fairly obvious piece of data – the iPad isn’t cheap, so it’s only natural that those shoppers have more disposable income. But on another level it’s important. In an era when retailers crave knowledge about their most valuable customers, finding out those who are using the iPad is good to know. Delivering special offers to the iPad might be a good idea.

So that brings me back to the title of this article. Is an iPad a mobile device when it’s used for shopping? Or is shopping and spending an outcome of being in a relaxed, pressure-free environment? I’m voting for the relaxed, pressure-free environment angle, which leads me to a final question. Apart from delivering offers and a clean site to these devices it begs another question: if we made our stores more relaxed, less pressure-filled environments, would customers start spending more there too? For me, that’s a really interesting question. And it’s one we’re going to have to explore as an industry.

Access to credit has been a challenge for many businesses, though others have plenty of cash. Let's review some basic facts about business credit:

Last week, I published the Restaurants and Private Equity, 2011 Update Paper. It is available here: (www.bluemaumau.org/restaurants_private_equity_and_franchising_overview).   

submit_url = "http://becomeafranchiseowner.biz/franchise-business-buyers-get-rid-of-your-ego";   All of us have an ego; there’s nothing wrong with it, because it helps us navigate through our wild and woolly world. We need to have self-esteem. (We all have it. Sometimes...

Franchisees must pay for teachers slapping their "flat buns" even if they can't watch teacher do it.

When is an earnings claim not an earnings claim? When made on FranchiseGator or to the SBA.

submit_url = "http://becomeafranchiseowner.biz/heres-what-you-gain-by-becoming-the-owner-of-a-franchise-business";   According to my friend, Ivan Walsh, this is what you gain; “When you enter into their business, you gain by seeing at first hand how a successful busines...

51% owners of Quiznos, Rick and Dick Schaden are still trying to find a way to save their highly leveraged franchising company. According to what this bird is hearing among finance experts at a current national restaurant conference in Sin City, what is at stake for the firm is lender's default or worse.  That is to say, what looks increasingly likely is a notice of default, a debt for equity swap or dare I say — the filing of Chapter 11 bankruptcy.

submit_url = "http://becomeafranchiseowner.biz/will-you-use-the-franchise-system";     The franchise business model is a brilliant one. All you have to do as a franchisee is follow the directions…..follow the franchise system, as it’s suggested. Simple, huh?...

Cold Stone Creamery gets the last laugh, with an assist from the ABA Forum on Franchising. Kahala's outside counsel bided its time, and has now embarked on a publicity campaign to proclaim its love of Robert Zarco. Much like Michael Corleone in The Godfather II, Kahala general counsel Michae...

Experts estimate that there are 300 to 400 independent organized groups of franchisees, which are increasing. Julie Bennett of Franchise Times reports in the September issue that they range from “giants like the North American Association of Subway Franchisees serving almost 24,000 domestic units and run by a professional staff in Fairfield, Connecticut, to Expetec… an association of 24 franchisees.” Bennett reports that after years of getting hammered in court, IndFAs recently won several legal battles:

submit_url = "http://becomeafranchiseowner.biz/i-could-have-earned-more-franchise-broker";   That’s right, folks.   I could have made a lot more money when I was a franchise broker.   It’s not that I’m opposed to making money. It’s just that ...

Franchisors need to get on the social media bandwagon. Reports that measure social media indicate that its use continues to grow and that it’s is being used by more and more people.

It happens every year — usually in February or March. Business owners across the country meet with their accountants to review the prior year.

Pacific Management Consulting has updated its 2010 private equity and restaurants report to identify what is going on in the U.S. restaurant space by private equity (PE) firm. The result? A lot of activity, investments, and some high profile failures. There have just been a modest number of apparent successes to date.

Friendly Ice Cream Corp. last month became the latest in a string of classic American restaurant chains to file for bankruptcy protection. The Wilbraham company, founded in 1935 , abruptly closed more than 60 locations and now hopes to reinvent itself as a leaner, more viable business by early December.

Yep, consumers continue not only to spend, but to increase their spending in most months. Here's the latest data:

Franchisors now have two stark choices, follow the International Franchise Association's consistently losing argument that "physical presence" is required or work out a deal.

submit_url = "http://becomeafranchiseowner.biz/should-you-be-the-boss";     Running a business is hard work. Being a business owner is, too.   Are you up to the task? Are your finances in good enough shape? Find out here.   What about your energy-level? Have y...

On September 14, 2011, the United States Court of Appeals for the Fifth Circuit upheld a $1.8 million jury verdict for 55 waiters at a Chili’s Grill and Bar.  The waiters alleged they were compelled by their employer to participate in an illegal tip pooling arrangement.

submit_url = "http://becomeafranchiseowner.biz/look-for-a-franchise-to-own";   If you’re serious about becoming a franchise owner someday, and you’re focused on lowering your financial risk, do this first;   (Future franchise owners)   Figure Out Your F...

  I’ve been able to get one wish (so far) granted by my amazing editors at Wiley Publishing;   To make a chapter of my franchise book available to you– at no charge.         I’ve seen several other authors do this; I’ve even grabbed a few free b...

Hats off to the Asian American Hotel Owners Association for the threat to sever its relationship with Choice Hotels International because of Choice’s persistent, self-defeating anti-franchisee positions. Choice has consistently failed to recognize that their franchisees are the heart and soul of their business.  It’s no surprise to me that AAHOA finally blew the whistle and said “No More”.

  Shopping around for a franchise to own can be super-frustrating. There are so many choices!   Not only are there thousands of opportunities to choose from, there are hundreds of franchise websites to look through. (Disclosure; one of my strategic partners is Franchise Direct. Their websi...

  Let me rephrase that; James is a really frustrated downsized middle manager. And, you’re going to get to meet him.   In my franchise book.   After receiving his Business Degree at The University of Chicago Booth School of Business in 1990, James scored a nice management positi...

? ? ? ? ? ? ? ? ? ?    Absolutely!       Not.   You’ll have enough pressure on you when you start a franchise business. You don’t need the added pressure of immediate income replacement. Read what I wrote concerning the reality of making money early on as a fran...

  Weekends are a great time to do franchise research. It used to be that you had to go to your local library, and pour through several different books, magazines, and other assorted publications to get the information you needed. Not anymore. (Libraries are still pretty cool places.) Online res...

You’re probably not doing your franchise search right.   “How do you know, Joel?”   I base my statement above on the hundreds…probably…thousands of conversations that I’ve had before, during, and after seminars that I’ve presented on franchise ...

  If you’re  considering the idea of someday owning a franchise business, and you’d like to take steps to lower your financial risk, this free small business webinar is for you.       I was approached by the staff at *MyEntre.Net, a division of the University of No...

  If you’re thinking of writing a book someday, and you’d like to be approached by a book publisher like I was, there’s one thing that you need to do, and it’s huge.   Revealing the huge secret that you’re about to discover has caused me several sleepless nig...

                                                             CSU   I’ve been meaning to share this with you ever since Wiley Publishing approached me about writing a much-needed franchise book. Those of you who know me probably wouldn’t think of me a...

It’s all George’s fault. Totally.   (George Nemeth)   I started reading what George had to say on Brewed Fresh Daily,  one of the first real blogs in Cleveland. BFD was (and still is) a blog that presents pertinent information regarding the economic climate in Cleveland, Ohi...

This is the email I received from Wiley Publishing; *************************************************************************************************** Hi, Joel. I’m the editor of David Siteman Garland’s new book. Thank you for the awesome review; David is a gem author. The review brou...

Social media and brand awareness creates unique problems for a franchise system, the well understood division of national and local advertising has to be revisited. One important question is, should every franchisee own it's own website?

Is Your Restaurant Management Staff Social Media Proactive or Reactive? Delicately handling customer service issues has always been a skill restaurant managers have had to develop to be effective in their roles.

Franchise lawyers will gather at the 34th ABA Forum on Franchising from October 19-21. Co-chair Mike Lindsey told me he thinks attorneys attending this year's event will be abuzz about several major lawsuits.

Franchisees and other employers get a short extension of time before they have to comply with the controversial new rule.

1031 tax deferred exchanges and franchises have more in common than may you think. Generating cash flow is king while saving tax dollars is a close second. Over the past couple of years, I have accommodated exchanges for owners of franchises.  What they each have in common was the sale of real and personal property and replacing real and personal property. By selling and replacing within 180 calendar days, the capital gains and recaptured depreciation taxes were deferred. Those deferred taxable dollars totaled roughly 40% of the sale and an interest free loan.

In a recent report "Keeping Up with the Mobile Consumer," the primary reason retailers are addressing a consumer mobile strategy is because they see that consumers are already using mobile as part of their shopping experience.

Small business and franchise owners, here are important employment law tips for handling a new generation of employees.

After suffering through record-breaking declines in revenues and profits during 2009, it is not surprising that U.S. hoteliers were a bit conservative when preparing their operating budgets for 2010.In the fall of 2009 (when the 2010 budgets were being prepared), hotel owners and operators were anticipating some degree of a turnaround in 2010. How could conditions possible get worse?

I often considered writing another book about franchising and was undecided whether it would be a re-write of my previous book, Franchising From the Inside Out.

Many years ago I heard a story, which I believe is accurate, the then McDonald's CEO Ray Kroc spoke at Harvard Business School and confounded the students and faculty by asking what business McDonald's is in.After many answers that failed to satisfy him, he advised the attendees that while definitely in the fast food hamburger business, McDonald's is in many ways a real estate company, as they control many of the best street locations in the United States.