Popeyes and Moe’s Southwest Grill are scouting locations in the Middle East. Wing Zone is taking its delivery service to Tokyo. Wendy’s/Arby’s Group plans to open as many as 45 new stores in foreign countries this year.
With the recession crimping U.S. sales in the usually resilient fast food business -- and lending for new franchises tight -- Atlanta-based chains and brands are looking overseas for growth.
“There are a lot of markets that these companies want to tap,” said Sanford C. Bernstein analyst Sara Senatore.
The trail has been well-blazed. In 1987, Yum! Brands, owner of KFC, became the first fast-food chain to enter China. McDonald’s followed in 1990. Today, their financial results bear the fruits of that diversification. China represents about one-third of Yum’s sales and operating profit; McDonald’s gets about 60 percent of sales outside the U.S.
The latest international push is partly an outgrowth of tough competition in the United States, compounded by a tough economy and tight credit.
“In this economic environment, it is tough sledding,” said Cheryl Bachelder, CEO of Popeyes. “These are anxious times to be a franchisee.”
New restaurant openings in the U.S. have slowed down dramatically, and analysts warn demand will remain lax for some time. The recession brought home the reality of the U.S. as a mature fast-food market.
“The U.S. is the most saturated (fast-food) market in the world,” said Roland Smith, CEO of Wendy’s/Arby’s. “It’s harder to expand here, depending on your brand.”
International expansion helps balance a company’s risk and protects its profits, he said.
Here’s how four Atlanta-based companies are going after international growth:
Wendy’s/Arby’s Group
Smith, a West Point graduate, has lived and worked in Germany, Canada and Islamabad, Pakistan. Moving up the ladder at Pepsi and KFC International, he looked to international experience to differentiate himself. Now, he hopes international growth will set his company apart.
Smith has set ambitious growth plans for the new international subsidiary of Wendy’s/Arby’s, which is currently dwarfed by the domestic side. The company wants to eventually have 8,000 restaurants in international markets.
The company won’t put a timetable on that goal, but Smith said international sales should be a “significant, meaningful piece” of the business within five years. “International is like compound interest,” he said. “It starts to pay back pretty nicely in a short amount of time.”
Smith insists that Wendy’s/Arby’s still has good opportunities to expand in the U.S. “But if you look at long-term growth potential,” he said, “not to focus significantly on the international opportunity would be a big miss.”
The company says a franchise partner in the Middle East is aggressively opening stores. Dubai’s first dual-branded Wendy’s/Arby’s restaurant will open in May. Wendy’s/Arby’s has a presence in Indonesia, the Philippines and New Zealand, as well as Puerto Rico, Venezuela, Honduras, Mexico and the Bahamas.
The company wants a franchise group to open 35 Wendy’s restaurants in the Middle East and Singapore over the next 10 years. It is interviewing potential franchise companies to re-open Japan. (The company ended its deal with a franchise partner in Japan four months ago, alleging non-performance of contract obligations.) Japan is important because its people are well-acquainted with Western fast food.
Meanwhile, Wendy’s/Arby’s is considering opening company-owned restaurants as well as franchise locations in China.
“Asia is certainly a big opportunity for us,” said Smith. “You’d have to have your head in a hole in the ground not to recognize the opportunity in China. A lot of our competitors are doing very well there.”
AFC Enterprises Inc.
The franchiser and operator of Popeyes restaurants opened 95 restaurants last year; 56 were outside the U.S.
Turkey is Popeyes’ fastest-growing country. It expanded to that nation in 2008 and now has 52 restaurants there. Since 2008, the chain has also pushed into Singapore, Malaysia and Egypt. Popeyes is chasing the growing global middle class, which typically lacks the restaurant variety of the U.S., said CEO Cheryl Bachelder.
“We like to go to countries that love flavor,” said Bachelder. “We actually look at the cayenne pepper index -- the propensity of a country to eat cayenne pepper.”
Popeyes is the world’s second largest quick-service chicken concept, behind KFC. At the end of 2009, it had 1,943 restaurants in the United States, Puerto Rico, Guam and 27 foreign countries. Bachelder said the brand, wrapped in American Cajun identity, doesn’t encounter much resistance in the Middle East, where it has a foothold in Dubai, Abu Dhabi, Kuwait, Saudi Arabia and Turkey.
“They are very receptive,” she said. “We are a flavorful brand, but we are not a red, white and blue brand. We don’t get the flack that other (American) brands do, because we are seen as a multicultural brand.”
But Popeyes isn’t ignoring its roots back in America, said Bachelder.
“Many chains are actually built out in the U.S.,” she said. “We are not. We have some more runway both in the U.S. and internationally.”
Wing Zone
Matt Friedman, co-founder of Atlanta-based Wing Zone, hopes to bring one mouth-burning piece of Americana -- the hot chicken wing -- to Japan.
“People think we’re nuts,” said Friedman, CEO of the 100-unit chain. “There really hasn’t been a regional or international buffalo wings franchise to expand internationally.”
Friedman said Wing Zone, which has catered to college students since being established at the University of Florida in 1991, has avoided far-flung expansion. It is in Panama and Mexico, but until recently the goal was to stay close to the U.S. The company reconsidered when domestic growth slowed last year and San Francisco‚ìbased Pacific Rim Partners asked about bringing Wing Zone to Tokyo.
“The density of people there is truly like nothing else in the world,” said Friedman. The company plans 50 locations in Tokyo.
“International is probably a longer-term play,” said Friedman. “We’re gonna work out some kinks.”
Moe’s Southwest Grill
What goes well with a burrito? If you’re Paul Damico, president of Moe’s, you hope the answer is a cinnamon bun. Executives at Moe’s, which like Cinnabon is owned by Atlanta-based private equity firm Roark Capital Group, are looking at countries that already have Cinnabon franchises.
The goal: to see if those current franchisees would be interested in adding Moe’s stores. Potential markets include the United Arab Emirates, Saudi Arabia, Qatar, Lebanon, India, Singapore, and Malaysia.
Cinnabon has recently launched into India, Romania, Russia, Greece, Cyprus, England and Austria. It now is in 35 countries.
“They have the supply chain, they have the finance lined up,” Damico said of Cinnabon. The next step: getting existing Cinnabon franchisees comfortable with the Moe’s brand.
International expansion “takes a lot of time and a lot of work,” said Damico. “Is the supply chain available? What our R&D group is really focused on right now is, what can we do to customize (the menu) so the local community will embrace it? Beef is not going to be on the menu in India. Pork is not going to be on the menu in Istanbul.” (A franchisee is building a Moe’s store in the food court atop Istanbul’s tallest building.)
Moe’s also plans to open 50 U.S. restaurants this year and perhaps 100 in 2011. “The U.S. is still our core market,” said Damico.
How we got the story
Amid slow times in the U.S. restaurant industry, a number of local fast-food franchise chains have plans for expansion in international markets. Reporter Jeremiah McWilliams started tracking the trend, doing interviews and listening to conference calls with executives, equity analysts and consultants, and also reviewing company documents and transcripts of earnings conference calls.
Source: Atlanta Business News 3:37 p.m. Thursday, April 29, 2010
Tags:Fast Food Chains, Popeyes, Moe's Southwest grill, wing zone, wendy's, arby's,yum brands, mcdonalds,international expansion,franchise partner,franchise group,cinnabon,fast-food franchise,consultants,
Friday, April 30, 2010
Wednesday, April 28, 2010
Expanding Overseas & Managing Franchisor Franchisee Relationships
Nicola Mills, chief executive of franchise brand manager Pacific Retail Management, has just returned from France, where she has been helping launch the first French store of her company's Go Sushi chain. Pacific Retail, which has turnover of more than $9 million, supports four franchise chains in total, including Kick Juice Bars, Love Coffee & Crepes and Beard Papa.
Today Nicola talks to us about expanding overseas, being caught out in a takeover deal, and how franchisors can do a better job of supporting their franchisees.
Tell us about expanding into France. Are the French big fans of sushi?
Well, two French guys Arnaud and Remi approached us. Sushi is a few years behind in Australia. Australians are adopting sushi; it's almost becoming a part of our everyday food. But the French, it's fairly new.
So they saw an opportunity and came and saw us and said 'can we get involved and can we start it over here'? So we actually own 15% of the company as well as being a master franchisee which is good. They've done a deal with Kinepolis Cinemas over there, which are throughout Europe so it's France and Belgium and so on, so they've got the rights to having sites in all the cinemas throughout Europe and exclusively France.
The first one's been open five weeks and it's doing really well. We sell smaller samples because a lot of people are coming up and saying 'I haven't tried it before and can I try little bits and pieces'. Then they'll come back and say 'that's my favourite and now can I buy the full roll'. And so it's been good, it's been really good. The next step is to open up some more and start rolling them out through Europe.
So how did two guys from France come across this brand?
That's a good question. Our website – how everybody finds everything these days. They liked the look of Go Sushi, they travelled over to Australia, they looked at a number of different outlets, made a few phone calls and we were able to do the deal with them. I mean it took probably about 18 months to do the final deal with them and we could work together. They came to Australia a couple of times and I met them in Hong Kong and it all worked out in the end.
And is this your first sort of foray overseas?
No, we actually have a master franchise agreement with Kick into India, which is obviously a very different market. We did a master franchisee agreement with an Indian partner about three years ago. He's bought five sites in India, but the GFC hit and he stopped building anything. So the site's are actually sitting there at the moment and he's kind of starting to recover, so the sites will now start getting fitted out and start opening.
We don't actually focus on the international business. While it's very nice for the ego to say that we're in France or we've got an international agreement into India, I'm very much into looking after our own backyard first, let's become a success in Australia and then see what we can do internationally. Because you can spend a lot of money on international and you don't have a lot of control and you're so far away.
So can you just give us an idea of the size of Pacific Retail Management now, particularly in Australia?
Well we're actually quite small - we've got 30 outlets. We own three brands and we manage another brand for someone else which is Beard Papa Sweets, but we own Love Coffee & Crepes, Kick Juice and Go Sushi.
We've just taken Go Sushi through a rebranding process, so we've spent quite a lot of money just doing a whole lot of consumer research, doing interviews with our franchisees, doing interviews with our suppliers, with my team, with head office. Go Sushi was a company I bought back in 2008 and it doesn't really have a story or a heartbeat. It has good products and it's fast and quick, but we're not really making enough of an impact.
So the new brand that we've created is very exciting. We launch that to the franchisees next week and I think that will make quite a big impact in the market and it's based on what consumers are telling us they want from sushi and what they want to see and where we think there's a bit of a hole in the market.
Go Sushi will be our champion brand essentially. We've only got three stores of Love Coffee & Crepes and there is an interesting story there. When we bought Go Sushi back in 2008, we thought we bought Go Sushi and a brand called The Crepe Cafe and that was a master franchise. Again we didn't buy the trademark for The Crepe Cafe, it was a master franchise agreement but as it turned out the master franchise agreement had been terminated about three months before we bought the company, but they didn't mention that. So they showed us all the paperwork, did all the due diligence and had all the signed agreements and all the proper documents and so on and so forth and we bought the company, we thought, and two weeks later we got a letter saying who are you and why are you using our logo?
So Love Coffee & Crepes was created as a bandaid at that time and we kind of worked through all the legal implications of that. But we're actually now getting a lot of enquiries for Love Coffee & Crepes and a lot of people are interested in it. So we need to start doing a bit of work on that and developing that as a full blown brand. The guy that we bought it off I found out later he'd been in jail for two years for fraud.
Did the episode teach you a bit about due diligence?
Well you can imagine every lawyer I speak to and accountant, I get that tsk, tsk, tsk, you clearly didn't do your due diligence properly. You can imagine what I get. We're about to make another acquisition and that hopefully will go through in the next four weeks. And I've checked that the owner has been in jail for fraud and are we checking all the documents!
But there's just a point that if people lie, they lie. Sometimes you can do lots of due diligence but people lie or they do fraudulent things. So I think it's more about the contracts that you enter into. The next acquisition has a lot more targets built into it and little bit less money up front. A lot more money is based on what you're telling me the stores are doing is actually what happens. If they do, we'll give you more money and if they don't, we won't. So it's just building it into the contract I suppose.
You mentioned the GFC before and how it hit India. What was the effect in Australia on your business? The franchise sector seems to have come through it pretty well.
Sushi was great. Because we were a lower priced product, our sales went up. So the GFC hit and more people were buying sushi, it was good value, it's healthy, you still buy your lunch. So people stopped buying at the higher end, so it actually had a very positive effect on us. So no complaints from me about the GFC.
And are you noticing a further pick up as the rest of the economy hits a recovery?
Because Go Sushi is still in growth we're seeing our numbers improving year on year, our turnover is improving year on year. But having said that, some of our competitors are starting to do a really, really good job and I don't think we're doing as good a job as them. So that's why we've just gone back to the consumers, talking to them, what do you need, what does the customers want?
Like I said we've just done a whole lot of work on that so that we don't get left behind because you can get complacent and because our sales have been going up year on year it all looks very nice on the board reports. But if we don't keep up with what's going on, we'll suddenly ask why have we been beaten?
You're a different sort of outfit I guess in that you're managing a few franchises. You're dealing with a number of franchisees with a number of different relationships and backgrounds. What are some of the keys to managing a franchisee/franchisor relationship well? We've just seen a study suggesting 30% of franchisees don't trust their franchisor. I would have thought the level of trust would have been quite high given how closely both parties rely on each other.
There's a book by Greg Nathan, called Profitable Partnerships. It's an excellent book and I think he addresses the franchisor/franchisee relationship very, very well. And he talks about stages that the franchisee/franchisor relationship goes though. It goes from the really excited to be involved with you to it's all about me, what are you doing to help me and then suddenly why do I need you and now I've learnt all this, why am I paying these royalties? It just goes through all these stages that a franchisee goes through, a bit like growing up as a child; I need you as a baby and then as adolescent I get a bit more independent and then as a teenager, well dad you're stupid, I know more than you and why should I listen to you? And then you hopefully get into that adult relationship where you can relate to each other again.
Franchisors and franchisees are a bit like that and I think probably you find that 30% of those franchisees, they'd been at different stages of the relationship. I think it does come down to all franchisors probably not doing enough at the franchisee selection stage. The people that you bring on board have to actually fit with your culture and your organisation. Do they want to be part of a team or they want to run their own business? Or will they not want to listen, will they want to take your brand, logo and systems and then get on with it and never have to deal with you again?
I think if you were to dig a bit deeper into that survey, you'd find those 30% are probably at those later stages, they're probably at that teenage stage of the franchise relationship. And maybe the right franchisee selection wasn't done at the beginning, enough about well this is who we are and these are the systems we have and these are our expectations and I don't think enough of that is done.
By the same token though, as a franchisor, do you need to try and recognise where your franchisees are in that life cycle, whether they are kids or teenagers?
Yes we do. When they first start their business, they're spending so much money, most of them are just petrified. So they stick with you very closely at that stage because they want to make sure they get everything right.
Then I've got a franchisee and she's got two stores and she's been in the group five or six years. She's very opinionated but she's very constructive, she has a very adult relationship with us. I talk to her quite a bit because she'll tell it to me straight, other franchisees will speak to her and she'll talk to me.
And then I have those that are in the "teenage space" and it's just communication, communication, communication.
So I think you can't treat every franchisee the same. They're all at different stages and their businesses are at different stages.
Tell us a little bit about yourself. How did you sort of get involved in the world franchising? Are you a former franchisee?
No, I was actually the Marketing Director at 2Day FM for many, many years and Assistant General Manager. In fact I was with Austereo for 14 years and in Canberra, Melbourne, Adelaide and Sydney. But I did my MBA through that time and at some point I just thought I just want to run my own business. So I did my real MBA by starting my own business with not knowing a lot and I learnt most of what I know now through actually going and running a business and going through all the pitfalls and dangers of actually running it.
So that was a juice bar?
That was Kick Juice. So started that and then essentially closed it down. I mean we still have a Kick Juice but we don't actually sell it as a standalone concept any further. The rent and turnover just doesn't justify it. But we do sell it as a back-to-back with a Go Sushi. So for example in Broome we've got one site and he pays one lease but we put Kick on one side and Go Sushi on the other. Kick basically pays the rent and Go Sushi is all the cream on the top. But that's where I learnt a lot of my lessons about business, negotiation, contracts and all that stuff you're probably not exposed to when you come out of a corporate job in marketing or whatever you might be in.
Looking forward, I guess the implementation of the Go Sushi rebranding would be an immediate challenge, what about some others? We do keep hearing recruitment of franchisees is an issue for a lot of franchisors, is that the same for you?
Definitely. I think there are a lot of franchisors that are in that 20 to 30 store number and they stop. You'll see a lot of franchisors, they'll get really fast growth, they'll get to 18 stores or 20 stores and be doing really well and then they get to that kind of 20 to 30 stores and it just seems that everybody stops. But I think what's happening there is a lot of franchisors are going out and they're not reinvesting money into the business. So they're not reinvesting into the profitability of the franchisee. If you're a new franchisee and you want to join a group, you talk to the other franchisees and if they're doing okay but they're not doing great or they're not making a lot of money, the prospective franchisee is not going to buy.
I think recruitment of franchisees comes back to the business refocusing on their existing franchisees and making sure that they are doing really well and that they're really profitable. It makes it so much easier to recruit new franchisees because you've got a good story, you've got a good system and people are profitable. But a lot of franchisors are focusing on spending more money on advertising and all of these different things to try and bring more people on. But then they're missing the point which is people will naturally come to the group when you're getting the current franchisees to do really well. So again the whole rebranding, what we're doing is going back to consumers and talking to our franchisees is about making our current franchisees profitable and the rest will flow on from there.
So do you have a target where you'd like to get to from 30 to X number of stores quickly or are you prepared to sort of wait?
I do have a target for pure economics, having 50 stores or more means that the franchisor can turn a profit; having 25 stores or less means you're not. If you're a good franchisor. And good franchisor means that you are actually supporting the franchisees and doing the right thing. You can make money out of having 25 stores or less but that means you're taking all the money out of the business and not reinvesting in it. So franchisors need to have 40 or 50 to actually start being profitable themselves.
Beyond that kind of 50 store number I suppose for me it's actually not about store targets, I don't actually want a lot of stores, I would just like all my stores to be profitable. So if that means we have 60 stores then that's what we have; it's better than having 200 stores and 100 of them are dying or not doing well
Is the percentage of the franchisees that are profitable; is it far off where you want it to be?
The franchisees we've got at the moment, some of them are doing very, very well and some of them are doing okay, but most of them are doing fine. But I'd like to see them all doing really, really well. It works for everybody and that's what our team is focused on.
Source:James Thomson Wednesday, 28 April 2010 09:45
Today Nicola talks to us about expanding overseas, being caught out in a takeover deal, and how franchisors can do a better job of supporting their franchisees.
Tell us about expanding into France. Are the French big fans of sushi?
Well, two French guys Arnaud and Remi approached us. Sushi is a few years behind in Australia. Australians are adopting sushi; it's almost becoming a part of our everyday food. But the French, it's fairly new.
So they saw an opportunity and came and saw us and said 'can we get involved and can we start it over here'? So we actually own 15% of the company as well as being a master franchisee which is good. They've done a deal with Kinepolis Cinemas over there, which are throughout Europe so it's France and Belgium and so on, so they've got the rights to having sites in all the cinemas throughout Europe and exclusively France.
The first one's been open five weeks and it's doing really well. We sell smaller samples because a lot of people are coming up and saying 'I haven't tried it before and can I try little bits and pieces'. Then they'll come back and say 'that's my favourite and now can I buy the full roll'. And so it's been good, it's been really good. The next step is to open up some more and start rolling them out through Europe.
So how did two guys from France come across this brand?
That's a good question. Our website – how everybody finds everything these days. They liked the look of Go Sushi, they travelled over to Australia, they looked at a number of different outlets, made a few phone calls and we were able to do the deal with them. I mean it took probably about 18 months to do the final deal with them and we could work together. They came to Australia a couple of times and I met them in Hong Kong and it all worked out in the end.
And is this your first sort of foray overseas?
No, we actually have a master franchise agreement with Kick into India, which is obviously a very different market. We did a master franchisee agreement with an Indian partner about three years ago. He's bought five sites in India, but the GFC hit and he stopped building anything. So the site's are actually sitting there at the moment and he's kind of starting to recover, so the sites will now start getting fitted out and start opening.
We don't actually focus on the international business. While it's very nice for the ego to say that we're in France or we've got an international agreement into India, I'm very much into looking after our own backyard first, let's become a success in Australia and then see what we can do internationally. Because you can spend a lot of money on international and you don't have a lot of control and you're so far away.
So can you just give us an idea of the size of Pacific Retail Management now, particularly in Australia?
Well we're actually quite small - we've got 30 outlets. We own three brands and we manage another brand for someone else which is Beard Papa Sweets, but we own Love Coffee & Crepes, Kick Juice and Go Sushi.
We've just taken Go Sushi through a rebranding process, so we've spent quite a lot of money just doing a whole lot of consumer research, doing interviews with our franchisees, doing interviews with our suppliers, with my team, with head office. Go Sushi was a company I bought back in 2008 and it doesn't really have a story or a heartbeat. It has good products and it's fast and quick, but we're not really making enough of an impact.
So the new brand that we've created is very exciting. We launch that to the franchisees next week and I think that will make quite a big impact in the market and it's based on what consumers are telling us they want from sushi and what they want to see and where we think there's a bit of a hole in the market.
Go Sushi will be our champion brand essentially. We've only got three stores of Love Coffee & Crepes and there is an interesting story there. When we bought Go Sushi back in 2008, we thought we bought Go Sushi and a brand called The Crepe Cafe and that was a master franchise. Again we didn't buy the trademark for The Crepe Cafe, it was a master franchise agreement but as it turned out the master franchise agreement had been terminated about three months before we bought the company, but they didn't mention that. So they showed us all the paperwork, did all the due diligence and had all the signed agreements and all the proper documents and so on and so forth and we bought the company, we thought, and two weeks later we got a letter saying who are you and why are you using our logo?
So Love Coffee & Crepes was created as a bandaid at that time and we kind of worked through all the legal implications of that. But we're actually now getting a lot of enquiries for Love Coffee & Crepes and a lot of people are interested in it. So we need to start doing a bit of work on that and developing that as a full blown brand. The guy that we bought it off I found out later he'd been in jail for two years for fraud.
Did the episode teach you a bit about due diligence?
Well you can imagine every lawyer I speak to and accountant, I get that tsk, tsk, tsk, you clearly didn't do your due diligence properly. You can imagine what I get. We're about to make another acquisition and that hopefully will go through in the next four weeks. And I've checked that the owner has been in jail for fraud and are we checking all the documents!
But there's just a point that if people lie, they lie. Sometimes you can do lots of due diligence but people lie or they do fraudulent things. So I think it's more about the contracts that you enter into. The next acquisition has a lot more targets built into it and little bit less money up front. A lot more money is based on what you're telling me the stores are doing is actually what happens. If they do, we'll give you more money and if they don't, we won't. So it's just building it into the contract I suppose.
You mentioned the GFC before and how it hit India. What was the effect in Australia on your business? The franchise sector seems to have come through it pretty well.
Sushi was great. Because we were a lower priced product, our sales went up. So the GFC hit and more people were buying sushi, it was good value, it's healthy, you still buy your lunch. So people stopped buying at the higher end, so it actually had a very positive effect on us. So no complaints from me about the GFC.
And are you noticing a further pick up as the rest of the economy hits a recovery?
Because Go Sushi is still in growth we're seeing our numbers improving year on year, our turnover is improving year on year. But having said that, some of our competitors are starting to do a really, really good job and I don't think we're doing as good a job as them. So that's why we've just gone back to the consumers, talking to them, what do you need, what does the customers want?
Like I said we've just done a whole lot of work on that so that we don't get left behind because you can get complacent and because our sales have been going up year on year it all looks very nice on the board reports. But if we don't keep up with what's going on, we'll suddenly ask why have we been beaten?
You're a different sort of outfit I guess in that you're managing a few franchises. You're dealing with a number of franchisees with a number of different relationships and backgrounds. What are some of the keys to managing a franchisee/franchisor relationship well? We've just seen a study suggesting 30% of franchisees don't trust their franchisor. I would have thought the level of trust would have been quite high given how closely both parties rely on each other.
There's a book by Greg Nathan, called Profitable Partnerships. It's an excellent book and I think he addresses the franchisor/franchisee relationship very, very well. And he talks about stages that the franchisee/franchisor relationship goes though. It goes from the really excited to be involved with you to it's all about me, what are you doing to help me and then suddenly why do I need you and now I've learnt all this, why am I paying these royalties? It just goes through all these stages that a franchisee goes through, a bit like growing up as a child; I need you as a baby and then as adolescent I get a bit more independent and then as a teenager, well dad you're stupid, I know more than you and why should I listen to you? And then you hopefully get into that adult relationship where you can relate to each other again.
Franchisors and franchisees are a bit like that and I think probably you find that 30% of those franchisees, they'd been at different stages of the relationship. I think it does come down to all franchisors probably not doing enough at the franchisee selection stage. The people that you bring on board have to actually fit with your culture and your organisation. Do they want to be part of a team or they want to run their own business? Or will they not want to listen, will they want to take your brand, logo and systems and then get on with it and never have to deal with you again?
I think if you were to dig a bit deeper into that survey, you'd find those 30% are probably at those later stages, they're probably at that teenage stage of the franchise relationship. And maybe the right franchisee selection wasn't done at the beginning, enough about well this is who we are and these are the systems we have and these are our expectations and I don't think enough of that is done.
By the same token though, as a franchisor, do you need to try and recognise where your franchisees are in that life cycle, whether they are kids or teenagers?
Yes we do. When they first start their business, they're spending so much money, most of them are just petrified. So they stick with you very closely at that stage because they want to make sure they get everything right.
Then I've got a franchisee and she's got two stores and she's been in the group five or six years. She's very opinionated but she's very constructive, she has a very adult relationship with us. I talk to her quite a bit because she'll tell it to me straight, other franchisees will speak to her and she'll talk to me.
And then I have those that are in the "teenage space" and it's just communication, communication, communication.
So I think you can't treat every franchisee the same. They're all at different stages and their businesses are at different stages.
Tell us a little bit about yourself. How did you sort of get involved in the world franchising? Are you a former franchisee?
No, I was actually the Marketing Director at 2Day FM for many, many years and Assistant General Manager. In fact I was with Austereo for 14 years and in Canberra, Melbourne, Adelaide and Sydney. But I did my MBA through that time and at some point I just thought I just want to run my own business. So I did my real MBA by starting my own business with not knowing a lot and I learnt most of what I know now through actually going and running a business and going through all the pitfalls and dangers of actually running it.
So that was a juice bar?
That was Kick Juice. So started that and then essentially closed it down. I mean we still have a Kick Juice but we don't actually sell it as a standalone concept any further. The rent and turnover just doesn't justify it. But we do sell it as a back-to-back with a Go Sushi. So for example in Broome we've got one site and he pays one lease but we put Kick on one side and Go Sushi on the other. Kick basically pays the rent and Go Sushi is all the cream on the top. But that's where I learnt a lot of my lessons about business, negotiation, contracts and all that stuff you're probably not exposed to when you come out of a corporate job in marketing or whatever you might be in.
Looking forward, I guess the implementation of the Go Sushi rebranding would be an immediate challenge, what about some others? We do keep hearing recruitment of franchisees is an issue for a lot of franchisors, is that the same for you?
Definitely. I think there are a lot of franchisors that are in that 20 to 30 store number and they stop. You'll see a lot of franchisors, they'll get really fast growth, they'll get to 18 stores or 20 stores and be doing really well and then they get to that kind of 20 to 30 stores and it just seems that everybody stops. But I think what's happening there is a lot of franchisors are going out and they're not reinvesting money into the business. So they're not reinvesting into the profitability of the franchisee. If you're a new franchisee and you want to join a group, you talk to the other franchisees and if they're doing okay but they're not doing great or they're not making a lot of money, the prospective franchisee is not going to buy.
I think recruitment of franchisees comes back to the business refocusing on their existing franchisees and making sure that they are doing really well and that they're really profitable. It makes it so much easier to recruit new franchisees because you've got a good story, you've got a good system and people are profitable. But a lot of franchisors are focusing on spending more money on advertising and all of these different things to try and bring more people on. But then they're missing the point which is people will naturally come to the group when you're getting the current franchisees to do really well. So again the whole rebranding, what we're doing is going back to consumers and talking to our franchisees is about making our current franchisees profitable and the rest will flow on from there.
So do you have a target where you'd like to get to from 30 to X number of stores quickly or are you prepared to sort of wait?
I do have a target for pure economics, having 50 stores or more means that the franchisor can turn a profit; having 25 stores or less means you're not. If you're a good franchisor. And good franchisor means that you are actually supporting the franchisees and doing the right thing. You can make money out of having 25 stores or less but that means you're taking all the money out of the business and not reinvesting in it. So franchisors need to have 40 or 50 to actually start being profitable themselves.
Beyond that kind of 50 store number I suppose for me it's actually not about store targets, I don't actually want a lot of stores, I would just like all my stores to be profitable. So if that means we have 60 stores then that's what we have; it's better than having 200 stores and 100 of them are dying or not doing well
Is the percentage of the franchisees that are profitable; is it far off where you want it to be?
The franchisees we've got at the moment, some of them are doing very, very well and some of them are doing okay, but most of them are doing fine. But I'd like to see them all doing really, really well. It works for everybody and that's what our team is focused on.
Source:James Thomson Wednesday, 28 April 2010 09:45
Tuesday, April 27, 2010
Jan-Pro Marks 20 Years Of Franchise Expansion Crossing The 10,000 Franchisee Mark
Jan-Pro Celebrates 20 Years of Franchise Expansion – Breaks the 10,000 Franchisee Mark
Jan-Pro International, Inc., a global leader in commercial cleaning breaks the 10,000 franchisee mark with domestic as well as international growth in the UK, Ireland, Canada, Puerto Rico and Dubai.
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Cincinnati, OH (PRWEB) April 26, 2010 -- Jan-Pro International, Inc. (Jan-Pro), a global leader in commercial cleaning, one of the fastest growing industries worldwide, announced today the company’s achievement of crossing the 10,000 franchisee mark, with the opening of new offices in North America and Dubai United Arab Emirates.
Rich Kissane, President & CEO, Jan-Pro
With over 90 regional offices, a presence in all 50 states and 4 countries, the achievement of surpassing the 10,000 franchisee mark continues to make Jan-Pro a favorite choice among those looking for a solid franchise business. Industry experts seem to agree. Entrepreneur Magazine has chosen Jan-Pro as "the #1 fastest growing franchise" in 2008, 2009 and 2010, an honor never before achieved in the history of the award. Jan-Pro achievements are also highlighted by the CBS news video "top rated franchise," and many other global citations.
Most recently, Jan-Pro opened a new regional office, Jan-Pro of Western PA/NE Ohio. "We were looking into several businesses and we chose Jan-Pro," said Michael Humm, President. "One thing that swayed us to invest in Jan-Pro was the integrity and openness of the Jan-Pro people we talked with and met. Everything we were told stands true today."
The Jan-Pro of the Western Carolinas office exemplifies the attractiveness of Jan-Pro as a business opportunity. "I was a sales rep for one of the largest pharmaceutical companies in the world," says Ivan Copney, Jan-Pro Western Carolinas Unit Franchisee. "I participated in testing and discovered I had a strong desire to start a business of my own. I looked at several, my decision to join Jan-Pro was made when I met with Master Franchise owners, Vickie and David Burns and saw the passion they have for the business."
The opening of the Jan-Pro Western PA/N.E. Ohio Jan-Pro office and the Western Carolinas office are just part of Jan-Pro’s expansion. The company has also been adding franchisees worldwide, and for example, has recently announced the signing of a new Jan-Pro franchisee serving the Dubai United Arab Emirates, to open July 2010.
A $113 billion industry, commercial cleaning is viewed by many financial analysts as recession resistant and highly stable. And according to the U.S. Bureau of Labor Statistics, the fastest growing occupation for the next decade is that of a professional cleaning specialist.
"We've come a long way in our 20 years, from our beginnings of one office in Providence, Rhode Island back in 1991, to our accomplishments today," said Rich Kissane, President & CEO, Jan-Pro. "As demand for a solid business in the cleaning industry continues to grow, our strategy has been clear – to provide solid solutions and a proven system, making Jan-Pro a top choice for any entrepreneur wanting a great business."
About Jan-Pro International, Inc.:
Jan-Pro was founded in 1991 by Jacques Lapointe in Providence, Rhode Island, with a desire to offer the highest quality cleaning techniques and systems available. Currently, the Jan-Pro team is comprised of business leaders with experience around the world, as well as seasoned cleaning industry executives. Today, company structure is comprised of Master Franchisees and Unit franchisees. Jan-Pro regularly receives inquiries from around the world.
Tags:Jan-Pro,commercial cleaning franchise, Rich Kissane, fastest growing franchise, top rated franchise,business opportunity,master franchisees, unit franchisees,solid franchise business
Edible Arrangements Franchise Option For Florists To Expand Their Gift Giving Business.
Edible Arrangements Franchise a Savvy Option for Florists Looking to Expand Their Gift-Giving Business
"From my personal experience, these two businesses have strong delivery components and many other operational similarities making the addition of an Edible Arrangements franchise a natural fit for current florists," said Tariq Farid, Founder and CEO, Edible Arrangements, Inc. "Our business models are very compatible as florists have a great understanding of the gift-giving industry, are accustomed to working with perishable products and recognize the schedule required to ensure success."
Farid is recently the recipient of two Entrepreneur of the Year awards from the International Franchise Association and Ernst & Young in Metro New York. He learned early that corporate support can make the difference between a struggling or thriving franchise. It is for this reason that Edible Arrangements offers its franchisees comprehensive corporate and onsite level training, unparalleled technology, national brand recognition, extensive support and now, financing.
Individuals seeking to own and operate an individual Edible Arrangements franchise should posses a minimum liquidity of $60,000 and the ability to invest approximately $146,882 - $292,000. Multi-unit store development plans, international master franchisee licenses and financing options are also available for qualified applicants.
"Our products which are not carried by mass market retailers offer outstanding value to consumers: visual beauty, great taste and nutritional value, which would greatly compliment a florists existing enterprise portfolio," said Farid.
Edible Arrangements experienced strong growth in 2009 with the opening of 74 new stores and franchise agreements for more than 85 locations in the U.S. and internationally. As part of the company's 2010 aggressive growth strategy, Edible Arrangements is seeking to add several new development agreements in the Pacific Northwest, Midwest, and other areas of the United States, while expanding its presence to India, Brazil, Mexico, Spain, Canada, South Africa, Singapore, and Egypt.
Since its inception, Edible Arrangements has earned countless accolades from the industry, including its ranking as first in its category by Entrepreneur Magazine's Annual "Franchise 500" Ranking for the past five consecutive years. In addition, the company has also ranked for six consecutive years in Inc. Magazine's top 5,000 fastest growing privately-held companies.
About Edible Arrangements
Edible Arrangements International, Inc. is the leading purveyor of delicious, high quality, artistically designed, fresh fruit arrangements that are practical and healthy gifts. Founded in 1999 in East Haven, CT. by Tariq Farid, Edible Arrangements has been ranked first in its category by Entrepreneur Magazine's Annual "Franchise 500" Ranking for the past five consecutive years. With over 900 locations operating or opening soon worldwide, Edible Arrangements is rapidly expanding across the United States, Canada, Puerto Rico, the United Kingdom, Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Italy, Turkey and Hong Kong.
All franchise offerings are made only by Franchise Disclosure Document.
Tags:Edible Arrangements, florists franchise, tariq farid, gift franchise, franchise offerings, top franchise, best franchise, franchise opportunity, gifts and greetings franchise.
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